Document:

Exhibit 10.6

                                PremierWest Bank
                          Salary Continuation Agreement

         This Salary Continuation Agreement is entered into as of this ___day of
__________________, 2002, by and between PremierWest Bank, an Oregon-chartered,
FDIC-insured bank with its main office in Medford, Oregon (the "Bank"), and
Richard R. Hieb, Executive Vice President and Chief Operating Officer of the
Bank (the "Executive").

         Whereas, the Executive, has contributed substantially to the success of
the Bank and its parent corporation, PremierWest Bancorp ("Bancorp"), and the
Bank desires that the Executive continue in its employ,

         Whereas, to encourage the Executive to remain an employee of the Bank,
the Bank is willing to provide salary continuation benefits to the Executive,
payable out of the Bank's general assets,

         Whereas, none of the conditions or events included in the definition of
the term "golden parachute payment" contained in section 18(k)(4)(A)(ii) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of the Bank, is contemplated insofar as the
Bank is concerned.

         Now Therefore, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                   Article 1
                                   Definitions

         Whenever used in this Agreement, the following terms shall have the
meanings specified:

         1.1 "Accrual Balance" means the amount required to be accrued by the
Bank under generally accepted accounting principles to account for benefits that
may become payable to the Executive under this Agreement.

         1.2 "Base Annual Salary" means the current base annual salary of the
Executive at the earliest of (1) the date of the Executive's death; (2) the date
of the Executive's Disability; (3) the date the Executive's employment with the
Bancorp or the Bank terminates within 12 months after a Change in Control; or
(4) the Executive's Normal Retirement Date. Current Base Annual Salary shall be
defined by reference to compensation of the type that would be required to be
reported by Securities and Exchange Commission Rule 228.402(b) (17 C.F.R.
228.402(b)), specifically column (c) of that rule's Summary Compensation Table
(or any successor provision). Salary compensation amounts deferred at the
election of the Executive are included in Base Annual Salary.

         1.3 "Change in Control" means if any one of the following events
occurs:

                  (a) Merger. Bancorp merges into or consolidates with another
         corporation, or merges another corporation into Bancorp, and as a
         result less than 50% of the combined voting power of the resulting
         corporation immediately after the merger or consolidation is held by
         persons who were the holders of Bancorp's voting securities immediately
         before the merger or consolidation,

                  (b) Acquisition of Significant Share Ownership. (1) a report
         on Schedule 13D or another form or schedule (other than Schedule 13G)
         is filed or is required to be filed under sections 13(d) or 14(d) of
         the Securities Exchange Act of 1934, if the schedule discloses that the
         filing person or persons acting in concert has or have become the
         beneficial owner of 25% or more of a class of Bancorp's voting
         securities, or (2) a person or persons acting in concert has or have
         become the beneficial owner of 10% or more of a class of Bancorp's
         voting securities and the person or the person's or group's nominee
         becomes the Chairman of the Board of Bancorp, but this paragraph (b)
         shall not apply to beneficial ownership of voting shares of Bancorp
         held in a fiduciary capacity by an entity in which Bancorp directly or
         indirectly beneficially owns 50% or more of the outstanding voting
         securities,

                  (c) Change in Board Composition. during any period of two
         consecutive years, individuals who constitute Bancorp's board of
         directors at the beginning of the two-year period cease for any reason
         to constitute at least a majority thereof; provided, however, that --
         for purposes of this paragraph (c) -- each director who is first
         elected by the board (or first nominated by the board for election by
         stockholders) by a vote of at least two-thirds (2/3) of the directors
         who were directors at the beginning of the period shall be deemed to
         have been a director at the beginning of the two-year period, or

                  (d) Sale of Assets. Bancorp sells to a third party all or
         substantially all of Bancorp's assets. For this purpose, sale of all or
         substantially all of Bancorp's assets includes sale of the shares or
         assets of the Bank.

         1.4 "Disability" means the Executive suffers a sickness, accident or
injury which has been determined by the carrier of any individual or group
disability insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Bank of the
carrier's or Social Security Administration's determination upon the request of
the Bank.

         1.5 "Early Termination" means the Executive's Termination of Employment
with the Bank before Normal Retirement Age for reasons other than death,
Disability, Termination under Article 5 of this Agreement, involuntary
termination within 12 months after a Change in Control, and voluntary
termination with Good Reason within 12 months after a Change in Control.

         1.6 "Early Termination Date" means the month, day and year in which
Early Termination occurs.

         1.7 "Effective Date" means _______________________.

         1.8 "Good Reason" for purposes of this Agreement means "Good Reason" as
that term is defined in any employment or severance agreement to which the
Executive is or may hereafter be a party. If the term "Good Reason" is not
defined in an employment agreement or severance agreement, it means:

                  (a) a material reduction in Executive's title or
         responsibilities,

                  (b) a reduction in base salary as in effect on the date of a
         Change in Control,

                  (c) relocation of the Bank's principal executive offices, or
         requiring the Executive to change his or her principal work location,
         to any location that is more than 15 miles from the location of the
         Bank's principal executive offices on the date of this Agreement,

                  (d) the adverse and substantial alteration in the nature and
         quality of the office space within which the Executive performs his or
         her duties, including the size and location thereof, as well as the
         secretarial and administrative support provided to the Executive,

                  (e) the failure by the Bank to continue to provide the
         Executive with compensation and benefits substantially similar to those
         provided to the Executive under any of the employee benefit plans in
         which the Executive becomes a participant, or the taking of any action
         by the Bank which would directly or indirectly materially reduce any of
         such benefits or deprive the Executive of any material fringe benefit
         to which the Executive was entitled at the time of the Change in
         Control, or

                  (f) the failure of the Bank to obtain a satisfactory agreement
         from any successor or assign of the Bank to assume and agree to perform
         this Agreement, as contemplated in Section 7.5 hereof.

                                       2
<PAGE>
         1.9 "Normal Retirement Age" means the Executive's 65th birthday.

         1.10 "Normal Retirement Date" means the later of the Normal Retirement
Age or the Executive's Termination of Employment with the Bank.

         1.11 "Person" means an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or other entity.

         1.12 "Plan Year" means a twelve-month period commencing on January 1,
and ending on the last day of December of each year. The initial Plan Year shall
commence on the Effective Date of this Agreement.

         1.13 "Termination of Employment" with the Bank means that the Executive
shall have ceased to be employed by the Bank for any reason whatsoever,
excepting a leave of absence approved by the Bank. For purposes of this
Agreement, if there is a dispute over the employment status of the Executive or
the date of termination of the Executive's employment, the Bank shall have the
sole and absolute right to decide the dispute, unless a Change in Control shall
have occurred.

                                   Article 2
                                Lifetime Benefits

         2.1 Normal Retirement Benefit. Upon the Executive's Termination of
Employment on or after the Normal Retirement Age for reasons other than death,
the Bank shall pay to the Executive the benefit described in this Section 2.1
instead of any other benefit under this Agreement.

         2.1.1    Amount of Benefit. The annual benefit under this Section 2.1
                  is $70,533. In its sole discretion, the Bank's board of
                  directors may increase the annual benefit under this Section
                  2.1.1, but any increase shall require recalculation of
                  Schedule A.

         2.1.2    Payment of Benefit. Beginning with the month after the
                  Executive's Normal Retirement Date, the Bank shall pay the
                  annual benefit to the Executive in 12 equal monthly
                  installments on the first day of each month. The annual
                  benefit shall be paid to the Executive for 15 years.

         2.2 Early Termination Benefit. For Early Termination, the Bank shall
pay to the Executive the benefit described in this Section 2.2 instead of any
other benefit under this Agreement.

         2.2.1    Amount of Benefit. The benefit under this Section 2.2 is the
                  Early Termination Annual Benefit amount set forth in Schedule
                  A for the Plan Year ending immediately before the Early
                  Termination Date (except that during the first Plan Year the
                  benefit is the amount set forth for Plan Year 1). If the
                  Executive is entitled to an Early Termination Annual Benefit
                  amount as set forth in the attached Schedule A, interest will
                  be credited on the Accrual Balance at an annual rate of 7.0%,
                  compounded monthly, during the period between Termination of
                  Employment and the Normal Retirement Date. In its sole
                  discretion, the Bank's board of directors may increase the
                  annual benefit under this Section 2.2.1, but any increase
                  shall require recalculation of Schedule A.

         2.2.2    Payment of Benefit. Beginning with the month after the Normal
                  Retirement Age, the Bank shall pay the annual benefit to the
                  Executive in 12 equal monthly installments on the first day of
                  each month. The annual benefit shall be paid to the Executive
                  for 15 years.

         2.3 Disability Benefit. If the Executive terminates employment because
of Disability before the Normal Retirement Age, the Bank shall pay to the
Executive the benefit described in this Section 2.3 instead of any other benefit
under this Agreement.

         2.3.1    Amount of Benefit. The benefit under this Section 2.3 is the
                  Disability Annual Benefit amount set forth in Schedule A for
                  the Plan Year ending immediately before the date on which
                  Termination of

                                       3
<PAGE>
                  Employment occurs (except that during the first Plan Year the
                  benefit is the amount set forth for Plan Year 1). In its sole
                  discretion, the Bank's Board of Directors may increase the
                  annual benefit under this Section 2.3.1, but any increase
                  shall require recalculation of Schedule A.

         2.3.2    Payment of Benefit. Beginning with the month after Normal
                  Retirement Age, the Bank shall pay the Disability Annual
                  Benefit amount to the Executive in 12 equal monthly
                  installments on the first day of each month. The annual
                  benefit shall be paid to the Executive for 15 years.

         2.4 Change-in-Control Benefit. If the Executive's employment with the
Bank terminates involuntarily within 12 months after a Change in Control, or if
the Executive terminates employment voluntarily for Good Reason within 12 months
after a Change in Control, the Bank shall pay to the Executive the benefit
described in this Section 2.4 instead of any other benefit under this Agreement.
However, no benefits shall be payable under this Agreement if the Executive's
employment is terminated under Article 5 of this Agreement.

         2.4.1    Amount of Benefit. The benefit under this Section 2.4 is
                  determined by vesting the Executive in the Normal Retirement
                  Age Accrual Balance ($687,377) required by Section 2.1,
                  without reduction for the time value of money or other
                  discount. In its sole discretion, the Bank's board of
                  directors may increase the benefit under this Section 2.4.1,
                  but any increase shall require recalculation of Schedule A.

         2.4.2    Payment of Benefit: The Bank shall pay the Change-in-Control
                  benefit under Section 2.4 of this Agreement to the Executive
                  in one lump sum within three days after the Executive's
                  Termination of Employment.

         2.5 Petition for Payment of Vested Normal Retirement Benefit, Vested
Early Termination Benefit or Vested Disability Benefit. If the Executive is
entitled to the normal retirement benefit provided by Section 2.1, the Early
Termination benefit provided by Section 2.2, or the Disability benefit provided
by Section 2.3, the Executive may petition the board of directors to have the
Accrual Balance amount corresponding to that particular benefit paid to the
Executive in a single lump sum after (1) deduction of any normal retirement
benefits, Early Termination benefits or Disability benefits already paid and (2)
addition of interest at the rate of 7.0% on the Accrual Balance not yet paid for
the period from Termination of Employment to payment of the lump sum amount. The
board of directors shall have sole and absolute discretion about whether to pay
the remaining Accrual Balance in a lump sum. If payment of the remaining Accrual
Balance is paid in a single lump sum, the Bank shall have no further obligations
under this Agreement.

         2.6 Change-in-Control Payout of Vested Normal Retirement Benefit,
Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the
Executive at the Time of a Change in Control. If a Change in Control occurs at
any time during the entire 15-year salary continuation benefit payment period
and if at the time of that Change in Control the Executive is receiving the
benefit provided by Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank
shall pay the remaining salary continuation benefits to the Executive, the
Executive's beneficiaries, or the Executive's estate in a lump sum within three
days after the Change in Control. The lump-sum payment due to the Executive,
beneficiaries, or estate as a result of a Change in Control shall be an amount
equal to the Accrual Balance amount corresponding to that particular benefit
then being paid to the Executive, beneficiaries, or estate under Section 2.1.2,
Section 2.2.2, or Section 2.3.2 after (1) deduction of any normal retirement
benefits, Early Termination benefits, or Disability benefits already paid and
(2) addition of interest at the rate of 7.0% on the Accrual Balance not yet paid
for the period from Termination of Employment to payment of the lump sum amount.

         2.7 Contradiction in Terms of Agreement and Schedule A. If there is a
contradiction in the terms of this Agreement and the Schedule A attached hereto
concerning the benefits due under Section 2.2, 2.3, or 2.4 hereof, then the
actual amount of benefits prescribed by this Agreement shall control.

                                       4
<PAGE>
                                   Article 3
                                 Death Benefits

         3.1 Death During Active Service. Except as provided in Section 5.1, if
the Executive dies in active service to the Bank before Normal Retirement Age,
instead of any benefit payable under this Agreement the Bank shall pay to the
Executive's beneficiary(ies) the benefit described in the Executive Survivor
Income Agreement attached to this Agreement as Addendum A.

         3.2 Death During Benefit Period. If the Executive dies after benefit
payments under Article 2 of this Agreement have commenced but before receiving
all such payments, the Bank shall pay the remaining benefits to the Executive's
beneficiary(ies) at the same time and in the same amounts they would have been
paid to the Executive had the Executive survived.

         3.3 Death After Termination of Employment But Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under Article 2 but
dies before payments commence, the benefits shall be payable to the Executive's
beneficiary(ies), but payments shall commence on the first day of the month
after the date of the Executive's death. Payments shall be made in the same
amounts they would have been paid to the Executive had the Executive survived.

         3.4 Petition for Benefit Payments. If the Executive dies before
receiving any or all benefit payments to which he or she is entitled under
Section 2.1, Section 2.2, or Section 2.3, the Executive's beneficiary(ies) or
estate may petition the Board of Directors to have the Accrual Balance
corresponding to that particular benefit paid to the Executive's
beneficiary(ies) or estate in a single lump sum after (1) deduction of any
normal retirement benefits, Early Termination benefits, or Disability benefits
already paid and (2) addition of interest at the rate of 7.0% on the Accrual
Balance not yet paid for the period from the Executive's Termination of
Employment to payment of the lump sum amount. The board of directors shall have
sole and absolute discretion about whether to pay the remaining Accrual Balance
in a lump sum. If payment of the remaining Accrual Balance is paid in a single
lump sum, the Bank shall have no further obligations under this Agreement.

         3.5 Change-in-Control Payout of Vested Normal Retirement Benefit,
Vested Early Termination Benefit or Vested Disability Benefit Being Paid to the
Executive's Estate or Beneficiaries at the Time of a Change in Control. If a
Change in Control occurs at any time during the entire 15-year salary
continuation benefit payment period and if at the time of that Change in Control
the Executive's estate or beneficiaries is receiving the benefit provided by
Section 2.1.2, Section 2.2.2, or Section 2.3.2, the Bank shall pay the remaining
salary continuation benefits to the Executive's beneficiaries or estate in a
lump sum within three days after the Change in Control. The lump-sum payment due
to the Executive's beneficiaries or estate as a result of a Change in Control
shall be an amount equal to the Accrual Balance amount corresponding to that
particular benefit then being paid to the Executive's estate or beneficiaries
under Section 2.1.2, Section 2.2.2, or Section 2.3.2 after (1) deduction of any
normal retirement benefits, Early Termination benefits, or Disability benefits
already paid and (2) addition of interest at the rate of 7.0% on the Accrual
Balance not yet paid for the period from Termination of Employment to payment of
the lump sum amount.

                                   Article 4
                                  Beneficiaries

         4.1 Beneficiary Designations. The Executive shall designate a
beneficiary or beneficiaries by filing a written designation with the Bank. The
Executive may revoke or modify the designation at any time by filing a new
designation. However, designations will be effective only if signed by the
Executive and accepted by the Bank during the Executive's lifetime. The
Executive's beneficiary designation shall be deemed automatically revoked if the
beneficiary predeceases the Executive, or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive dies
without a valid beneficiary designation, all payments shall be made to the
Executive's estate.

                                       5
<PAGE>
         4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incapacitated person or incapable person. The Bank may require such proof
of incapacity, minority or guardianship as the Bank deems appropriate before
distribution of the benefit. Distribution shall completely discharge the Bank
from all liability for such benefit.

                                   Article 5
                               General Limitations

         5.1 Suicide or Misstatement. The Bank shall not pay any benefit under
this Agreement if the Executive commits suicide within three years after the
date of this Agreement. Additionally, the Bank shall not pay any benefit under
this Agreement if the Executive has made any material misstatement of fact on
any application or resume provided to the Bank, or on any application for any
benefits provided by the Bank to the Executive.

         5.2 Removal. If the Executive is removed from office or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. 1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order.

         5.3 Insolvency. If the Commissioner of the Oregon Department of Banking
appoints the Federal Deposit Insurance Corporation as receiver for the Bank
under Oregon Revised Statutes section 711.405, all obligations under this
Agreement shall terminate as of the date of the Bank's declared insolvency.

                                   Article 6
                          Claims And Review Procedures

         6.1 Claims Procedure. A person or beneficiary ("claimant") who has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:

         6.1.1    Initiation - Written Claim. The claimant initiates a claim by
                  submitting to the Bank a written claim for the benefits.

         6.1.2    Timing of Bank Response. The Bank shall respond to such
                  claimant within 90 days after receiving the claim. If the Bank
                  determines that special circumstances require additional time
                  for processing the claim, the Bank can extend the response
                  period by an additional 90 days by notifying the claimant in
                  writing, prior to the end of the initial 90-day period, that
                  an additional period is required. The notice of extension must
                  set forth the special circumstances and the date by which the
                  Bank expects to render its decision.

         6.1.3    Notice of Decision. If the Bank denies part or all of the
                  claim, the Bank shall notify the claimant in writing of such
                  denial. The Bank shall write the notification in a manner
                  calculated to be understood by the claimant. The notification
                  shall set forth:

                  6.1.3.1  The specific reasons for the denial,

                  6.1.3.2  A reference to the specific provisions of the
                           Agreement on which the denial is based,

                  6.1.3.3  A description of any additional information or
                           material necessary for the claimant to perfect the
                           claim and an explanation of why it is needed,

                  6.1.3.4  An explanation of the Agreement's review procedures
                           and the time limits applicable to such procedures,
                           and

                                       6
<PAGE>
                  6.1.3.5  A statement of the claimant's right to bring a civil
                           action under ERISA (Employees Retirement Income
                           Security Act) Section 502(a) following an adverse
                           benefit determination on review.

         6.2 Review Procedure. If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows:

         6.2.1    Initiation - Written Request. To initiate the review, the
                  claimant, within 60 days after receiving the Bank's notice of
                  denial, must file with the Bank a written request for review.

         6.2.2    Additional Submissions - Information Access. The claimant
                  shall then have the opportunity to submit written comments,
                  documents, records and other information relating to the
                  claim. The Bank shall also provide the claimant, upon request
                  and free of charge, reasonable access to, and copies of, all
                  documents, records and other information relevant (as defined
                  in applicable ERISA regulations) to the claimant's claim for
                  benefits.

         6.2.3    Considerations on Review. In considering the review, the Bank
                  shall take into account all materials and information the
                  claimant submits relating to the claim, without regard to
                  whether such information was submitted or considered in the
                  initial benefit determination.

         6.2.4    Timing of Bank Response. The Bank shall respond in writing to
                  such claimant within 60 days after receiving the request for
                  review. If the Bank determines that special circumstances
                  require additional time for processing the claim, the Bank can
                  extend the response period by an additional 60 days by
                  notifying the claimant in writing, prior to the end of the
                  initial 60-day period, that an additional period is required.
                  The notice of extension must set forth the special
                  circumstances and the date by which the Bank expects to render
                  its decision.

         6.2.5    Notice of Decision. The Bank shall notify the claimant in
                  writing of its decision on review. The Bank shall write the
                  notification in a manner calculated to be understood by the
                  claimant. The notification shall set forth:

                  6.2.5.1  The specific reasons for the denial,

                  6.2.5.2  A reference to the specific provisions of the
                           Agreement on which the denial is based,

                  6.2.5.3  A statement that the claimant is entitled to receive,
                           upon request and free of charge, reasonable access
                           to, and copies of, all documents, records and other
                           information relevant (as defined in applicable ERISA
                           regulations) to the claimant's claim for benefits,
                           and

                  6.2.5.4  A statement of the claimant's right to bring a civil
                           action under ERISA Section 502(a).

                                   Article 7
                                  Miscellaneous

         7.1 Amendments and Termination. This Agreement may be amended or
terminated only by a written agreement signed by the Bank and the Executive.

         7.2 Binding Effect. This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrators
and transferees.

         7.3 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Bank, nor does it interfere with the Bank's right to discharge
the Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.

                                       7
<PAGE>
         7.4 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached, or encumbered in any manner.

         7.5 Successors; Binding Agreement. By an assumption agreement in form
and substance satisfactory to the Executive, the Bank will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Bank to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank would be required to perform this Agreement if no such
succession had occurred. The Bank's failure to obtain such an assumption
agreement before the succession becomes effective shall be considered a breach
of this Agreement and shall entitle the Executive to the Change-in-Control
benefit provided in Section 2.4.

         7.6 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.

         7.7 Applicable Law. Except to the extent preempted by the laws of the
United States of America, the validity, interpretation, construction, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon, without giving effect to the principles of
conflict of laws of such state.

         7.8 Unfunded Arrangement. The Executive and the Executive's
beneficiary(ies) are general unsecured creditors of the Bank for the payment of
benefits under this Agreement. The benefits represent the mere promise by the
Bank to pay such benefits. The rights to benefits are not subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's life
is a general asset of the Bank to which the Executive and beneficiary(ies) have
no preferred or secured claim.

         7.9 Administration. The Bank shall have the powers that are necessary
to administer this Agreement, including but not limited to the power to:

                  (a) interpret the provisions of the Agreement,

                  (b) establish and revise the method of accounting for the
                  Agreement,

                  (c) maintain a record of benefit payments, and

                  (d) establish rules and prescribe forms necessary or desirable
                  to administer the Agreement.

         7.10 Named Fiduciary. The Bank shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan,
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

         7.11 Severability. If for any reason any provision of this Agreement is
held invalid, such invalidity shall not affect any other provision of this
Agreement, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall in no way affect the remainder of
the provision, and the remainder of such provision, together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

         7.12 Headings. The headings of sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.

         7.13 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return

                                       8
<PAGE>
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.

                  (a) If to the Bank, to:
                      Board of Directors
                      PremierWest Bank
                      P.O. Box 40
                      Medford, Oregon 97501-0003

                  (b) If to the Executive, to:
                      Richard R. Hieb
                      ______________________________

                      ______________________________

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

         7.14 Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Executive concerning the subject matter hereof. No
rights are granted to the Executive under this Agreement other than those
specifically set forth herein.

         In Witness Whereof, the Executive and a duly authorized Bank officer
have signed this Agreement as of the day and year first written above.

Executive                                 The Bank:
                                          PremierWest Bank

______________________________            By:  ______________________________
Richard R. Hieb
                                          Its: ______________________________

                                       9
<PAGE>

                             BENEFICIARY DESIGNATION

                                 PREMIERWESTBANK
                          SALARY CONTINUATION AGREEMENT

         I designate the following as beneficiary of any death benefits under
this Salary Continuation Agreement:

Primary:
          ----------------------------------------------------------------------

Contingent:
             -------------------------------------------------------------------

NOTE:  TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE(S)
       AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.
               -----

         I understand that I may change these beneficiary designations by filing
a new written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me, or
if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.

Signature:  ________________________________

Date:       ________________________________

Accepted by the Bank this _____day of _________________, 2002.

By:         ________________________________

Title:      ________________________________

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                   SCHEDULE A
                                PREMIERWEST BANK
                          SALARY CONTINUATION AGREEMENT

                                 RICHARD R. HIEB

         PLAN YEAR                            EARLY TERMINATION   DISABILITY ANNUAL
          ENDING   EXECUTIVE'S                 ANNUAL BENEFIT    BENEFIT PAYABLE AT  CHANGE-IN-CONTROL
  PLAN   DECEMBER  AGE AT PLAN    ACCRUAL      PAYABLE AT NORMAL      NORMAL        BENEFIT PAYABLE IN A
  YEAR      31,     YEAR END    BALANCE (1)   RETIREMENT AGE (2)  RETIREMENT AGE       LUMP SUM
------------------------------------------------------------------------------------------------------
<S>        <C>         <C>     <C>                <C>               <C>              <C>
   1       2002        58       $    10,304     $       24,102      $       24,102       $     687,377

   2       2003        59       $    76,800     $       29,266      $       29,266       $     687,377

   3       2004        60       $   151,863     $       34,784      $       34,784       $     687,377

   4       2005        61       $   236,323     $       40,697      $       40,697       $     687,377

   5       2006        62       $   331,082     $       47,028      $       47,028       $     687,377

   6       2007        63       $   437,120     $       57,061      $       57,061       $     687,377

   7       2008        64       $   555,501     $       64,429      $       64,429       $     687,377

   8       2009        65       $   687,377     $       70,733      $       70,733       $     687,377

   9       2010        66       $   658,896

   10      2011        67       $   628,571

   11      2012        68       $   596,282

   12      2013        69       $   561,903

   13      2014        70       $   525,298

   14      2015        71       $   486,323

   15      2016        72       $   444,825

   16      2017        73       $   400,641

   17      2018        74       $   353,596

   18      2019        75       $   303,505

   19      2020        76       $   250,172

   20      2021        77       $   193,385

   21      2022        78       $   132,922

   22      2023        79       $    68,545

   23      2024        80       $         0
</TABLE>

(1) The accrual balance reflects payment at the beginning of each month during
retirement. (2) Benefit is based on present value of the current payment stream
of the vested accrual balance using a standard discount rate (7.00%).

                                       11EXHIBIT 10.9
                               PREMIERWEST BANCORP
                                STOCK OPTION PLAN

                                    ARTICLE I
                               PURPOSE OF THE PLAN

         The purpose of this Stock Option Plan (the "Plan") is to advance the
interests of PremierWest Bancorp, an Oregon business corporation (the "Company")
and its shareholders by enabling the Company to attract and retain the services
of people with training, experience and ability and to provide additional
incentive to employees and non-employee directors of the Company by awarding
them an additional opportunity to participate in the ownership of the Company.

                                   ARTICLE II
                                   DEFINITIONS

         As used herein, the following definitions will apply:

         (a)  "Available Shares" means the number of shares of Common Stock
              available at any time for issuance pursuant to Incentive Stock
              Options or Nonqualified Stock Options under this Plan as provided
              in Article III.

         (b)  "Award" means any grant of an Incentive Stock Option and any grant
              of a Nonqualified Stock Option under this Plan.

         (c)  "Board of Directors" means the Board of Directors of the Company.

         (d)  "Internal Revenue Code" means the Internal Revenue Code of 1986,
              as amended.

         (e)  "Committee" means the committee of the Company's Board of
              Directors appointed to administer the Plan.

         (f)  "Common Stock" means the Common Stock of the Company.

         (g)  "Company" means PremierWest Bancorp, an Oregon business
              corporation, and, unless the context otherwise requires, any
              majority owned subsidiary of the Company and any successor or
              assignee of the Company by merger, consolidation, acquisition of
              all or substantially all of the assets of the Company or
              otherwise.

         (h)  "Disabled" means a mental or physical impairment which has lasted
              or which is expected to last for a continuous period of 12 months
              or more and which renders an Optionee unable, in the Committee's
              sole discretion, of performing the duties which were assigned to
              the Optionee during the 12 month period prior to such
              determination. The Committee's determination of the existence of
              an individual's disability will be effective when communicated in
              writing to the Optionee and will be conclusive on all of the
              parties.

         (i)  "Effective Date" means the date on which this Plan is approved by
              the Board of Directors.

                                      -1-
<PAGE>
         (j)  "Employee" means any person employed by the Company.

         (k)  "Exercise Price" means the price per share at which a shares of
              Common Stock may be purchased upon exercise of an Incentive Stock
              Option or Nonqualified Stock Option.

         (l)  "Fair Market Value" means:

              1)  If the Common Stock is traded on a national securities
                  exchange or on either the Nasdaq National Market or Nasdaq
                  SmallCap Market, the average between the lowest and highest
                  reported sales price per share of Common Stock for such date,
                  or if no transactions occurred on such date, on the last date
                  on which trades occurred;
              2)  If the Common Stock is not traded on a national securities
                  exchange or on Nasdaq but bid and asked prices are regularly
                  quoted on the OTC Bulletin Board Service, by the National
                  Quotation Bureau or any other comparable service, the weighted
                  average (based upon the reported number of shares traded)
                  between the highest bid and lowest asked prices per share of
                  Common Stock as reported by such service for the five business
                  days (including only days on which a trade occurred) ending on
                  and including such date as of the close of trading or, if such
                  date was not a business day, on the preceding business day; or
              3)  If there is no public trading of the Common Stock within the
                  terms of subparagraphs 1 or 2 of this subsection, the price
                  per share of Common Stock, as reasonably determined by the
                  Committee in its sole discretion.

         (m)  "Incentive Stock Option" means an option to purchase shares of
              Common Stock that the Committee indicates is intended to qualify
              as an incentive stock option within the meaning of Section 422 of
              the Internal Revenue Code and is granted under Article VI of this
              Plan.

         (n)  "Nonqualified Stock Option" means an option to purchase shares of
              Common Stock that the Committee either indicates is intended to be
              a nonqualified stock option or indicates is not intended to
              qualify as an incentive stock option within the meaning of Section
              422 of the Internal Revenue Code and is granted under Article VII
              of this Plan.

         (o)  "Optionee" means any individual who is granted either an Incentive
              Stock Option or a Nonqualified Stock Option under this Plan.

         (p)  "Reserved Shares" means the number of shares of Common Stock
              reserved for issuance pursuant to all Awards under this Plan as
              provided in Section 3.1 of Article III.

         (q)  "Securities Act" means the Securities Act of 1933, as amended.

         (r)  "Significant Shareholder" means any person who owns stock
              possessing more than ten percent (10%) of the total combined
              voting power of all classes of stock of the Company or any parent
              or subsidiary of the Company. For purposes of this definition a
              person shall be considered as owning all stock owned, directly or
              indirectly by or for such person's brothers and sisters, spouse,
              ancestors and lineal descendants. In addition, stock owned,
              directly or indirectly, by or for a corporation, partnership,
              estate or trust shall be considered as being owned proportionately
              by or for its shareholders, partners or beneficiaries to the
              extent required by Section 422 of the Internal Revenue Code.

                                      -2-
<PAGE>
                                   ARTICLE III
                            STOCK SUBJECT TO THE PLAN

         3.1 AGGREGATE NUMBER OF RESERVED SHARES. Subject to adjustment in
accordance with Section 9.1, the total number of shares of Common Stock reserved
for issuance pursuant to all Awards under this Plan is initially established at
800,000 shares.

         3.2 NUMBER OF AVAILABLE SHARES. At any point in time, the number of
Available Shares shall be the number of Reserved Shares at such time minus:

              (a) the number of shares of Common Stock issued under this Plan
                  upon the exercise of Incentive Stock Options and Nonqualified
                  Stock Options prior to such time; and
              (b) the number of shares covered by Incentive Stock Options and
                  Nonqualified Stock Options that have been granted under this
                  Plan and that have not yet expired, been terminated or been
                  cancelled to the extent that such options have not been
                  exercised at such time.

As a result of the foregoing, if an Incentive Stock Option or Nonqualified Stock
Option expires, terminates or is cancelled for any reason without having been
exercised in full, the shares of Common Stock covered by such option that were
not purchased through the exercise of such option will be added back to the
Available Shares. However, shares of Common Stock used by an Optionee to satisfy
Tax Withholding obligations upon the exercise of a Nonqualified Stock Option
shall nonetheless, for purposes of this Plan, be considered as having been
issued upon the exercise of such option.

         3.3 RESERVATION OF SHARES. Available Shares shall consist of authorized
but unissued shares of Common Stock of the Company. The Company will, at all
times, reserve for issuance shares of Common Stock equal to the sum of (i) the
number of shares covered by Incentive Stock Options and Nonqualified Stock
Options that have been granted and which have not yet expired, been terminated
or been cancelled to the extent that such options have not been exercised at
such time and (ii) the number of Available Shares.

         3.4 ANNUAL LIMIT ON NUMBER OF SHARES TO ANY ONE PERSON. No person will
be eligible to receive Awards under this Plan which, in aggregate, exceed 50,000
shares in any calendar year. In connection with the hiring or commencement of
services from such person such limit shall be 50,000 shares during such calendar
year.

                                   ARTICLE IV
                      COMMENCEMENT AND DURATION OF THE PLAN

         4.1 EFFECTIVE DATE OF THE PLAN. This Plan will be effective as of the
Effective Date, subject to the provisions of Section 4.2.

         4.2 SHAREHOLDER APPROVAL OF THE PLAN. This Plan will be submitted for
the approval of the shareholders of the Company within twelve (12) months of the
Effective Date. This Plan will be deemed approved by the shareholders if
approved by a majority of the votes cast at a duly held meeting of the Company's
shareholders at which a quorum is present in person or by proxy. Awards may be
made under this Plan prior to such shareholder approval provided that such
Awards are conditioned upon such approval and state by their terms that they
will be null and void if such shareholder approval is not obtained.

                                      -3-
<PAGE>
         4.3 TERMINATION OF THE PLAN. This Plan will terminate ten years from
the Effective Date. In addition, the Board of Directors will have the right to
suspend or terminate this Plan at any time. Any termination of this Plan will
not affect the exercisability of any Incentive Stock Options or Nonqualified
Stock Options granted under this Plan prior to such termination. Termination of
the Plan will not terminate or otherwise affect any Incentive Stock Option
Agreement (as defined in Section 6.1), or Nonqualified Stock Option Agreement
(as defined in Section 7.1) then in effect.

                                    ARTICLE V
                           ADMINISTRATION OF THE PLAN

         Subject to the provisions of this Plan and any additional terms or
conditions which may, from time to time, be imposed by the Board of Directors,
the Committee will administer this Plan and will have the authority, in its sole
discretion, to grant Incentive Stock Options and to grant Nonqualified Stock
Options in accordance with Articles VI and VII, respectively. The Committee may,
from time to time, adopt rules and regulations relating to the administration of
this Plan and may, but is not required to, seek the advice of legal, tax,
accounting and compensation advisors. Decisions of the Committee with respect to
the administration of this Plan, the interpretation or construction of this Plan
or the interpretation or construction of any written agreement evidencing an
Award will be final and conclusive, subject only to review by the full Board of
Directors. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in this Plan or in any agreement evidencing an Award
in the manner and to the extent it deems appropriate.

         The Board of Directors shall appoint the members of the Committee,
which shall consist of at least two directors from the Board of Directors. For
purposes of this paragraph, directors who are not "outside directors" as such
term is defined in Treasury Regulation ss.1.162-27(e)(3) and directors who are
not "non-employee directors" as such term is defined in Rule 16b-3 issued by the
Securities and Exchange Commission under Section 16 of the Securities Exchange
Act of 1934, as amended, ("Rule 16b-3") shall be referred to as "disqualified
directors." Disqualified directors may serve on the Committee. However,
disqualified directors shall be deemed (notwithstanding any statement to the
contrary which may be contained in minutes of a meeting of the Committee) to
have abstained from any action requiring under Section 162(m) of the Internal
Revenue Code the approval of a committee consisting solely of outside directors
or from any action requiring under Rule 16b-3 the approval of a committee
consisting solely of non-employee directors. The assent of any such disqualified
director shall be ignored for purposes of determining whether or not any such
actions were approved by the Committee. If the Committee proposes to take an
action by unanimous consent in lieu of a meeting and such action would require
under Section 162(m) of the Internal Revenue Code the approval of a committee
consisting solely of outside directors or such action would require under Rule
16b-3 the approval of a committee consisting solely of non-employee directors,
the disqualified director shall, for purposes of such consent, be deemed to not
be a member of the Committee.

         If no Committee is appointed, the Board of Directors shall act as the
Committee and will have all the powers, duties and responsibilities of the
Committee as set forth in this Plan. In addition, the Board of Directors may at
any time by resolution abolish the Committee and assume the duties and
responsibilities of the Committee.

                                      -4-
<PAGE>
                                   ARTICLE VI
                   INCENTIVE STOCK OPTION TERMS AND CONDITIONS

         Incentive Stock Options may be granted under this Plan in accordance
with the following terms and conditions.

         6.1 REQUIREMENT FOR A WRITTEN INCENTIVE STOCK OPTION AGREEMENT. Each
Incentive Stock Option will be evidenced by a written option agreement
("Incentive Stock Option Agreement"). The Committee will determine from time to
time the form of Incentive Stock Option Agreement to be used. The terms of the
Incentive Stock Option Agreement must be consistent with this Plan and any
inconsistencies will be resolved in accordance with the terms and conditions
specified in this Plan. Except as otherwise required by this Section 6, the
terms and conditions of each Incentive Stock Option do not need to be identical.

         6.2 WHO MAY BE GRANTED AN INCENTIVE STOCK OPTION. An Incentive Stock
Option may be granted to any Employee who, in the judgment of the Committee, has
performed or will perform services of importance to the Company in the
management, operation and development of the business of the Company or of one
or more of its subsidiaries. The Committee, in its sole discretion, shall
determine when and to which Employees Incentive Stock Options are granted under
this Plan.

         6.3 NUMBER OF SHARES COVERED BY AN INCENTIVE STOCK OPTION. The
Committee, in its sole discretion, shall determine the number of shares of
Common Stock covered by each Incentive Stock Option granted under this Plan. The
number of shares covered by each Incentive Stock Option shall be specified in
the Incentive Stock Option Agreement evidencing such option.

         6.4 VESTING SCHEDULE UNDER AN INCENTIVE STOCK OPTION. The Committee, in
its sole discretion, shall determine whether an Incentive Stock Option is
immediately exercisable as to all of the shares of Common Stock covered by such
option or whether it is only exercisable in accordance with a vesting schedule
as determined by the Committee. The vesting terms and conditions, if any, of
each Incentive Stock Option as determined by the Committee shall be specified in
the Incentive Stock Option Agreement evidencing such option. Notwithstanding the
foregoing, to the extent that an Incentive Stock Option (together with other
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code held by such Optionee with an equal or lower exercise price per
share) purports to become exercisable for the first time during any calendar
year as to shares of Common Stock with a Fair Market Value (determined at the
time of grant) in excess of $100,000, such excess shares shall be considered to
be covered by a nonqualified stock option and not an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code. Notwithstanding
Section 9.2 of this Plan or the terms set forth in the Incentive Stock Option
Agreement, any Incentive Stock Option granted under this Plan that was not
either approved by (i) a committee of non-employee directors within the
requirements of Rule 16b-3 or (ii) the full board of directors of the Company,
shall not be exercisable until at least six months after the date of such grant.

         6.5 EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. The Exercise Price
under each Incentive Stock Option will be at least 100% of the Fair Market Value
of a share of Common Stock as of the date on which the Incentive Stock Option
was granted. However, the Exercise Price under each Incentive Stock Option
granted to an Optionee who is a Significant Shareholder will be at least 110% of
the Fair

                                      -5-
<PAGE>
Market Value of a share of Common Stock as of the date on which the Incentive
Stock Option was granted.

         6.6 DURATION OF AN INCENTIVE STOCK OPTION--GENERALLY. The Committee
will determine, in its sole discretion, the term of each Incentive Stock Option
provided that such term will not exceed 10 years from the date on which such
option was granted. However, the term of each Incentive Stock Option granted to
an Optionee who is a Significant Shareholder will not exceed 5 years from the
date on which such option was granted. The term of each Incentive Stock Option
shall be set forth in the written option agreement evidencing such option. The
Optionee shall have no further right to exercise an Incentive Stock Option
following the expiration of such term.

         6.7 THE EFFECT OF TERMINATION OF THE OPTIONEE'S EMPLOYMENT ON THE TERM
OF AN INCENTIVE STOCK OPTION. If an Optionee, while possessing an Incentive
Stock Option that has not expired or been fully exercised, ceases to be an
Employee of the Company for any reason other than as a result of the death or
disability of the Optionee (as provided for in Section 6.8 and 6.9,
respectively), the Incentive Stock Option may be exercised, to the extent not
previously exercised and subject to any vesting provisions contained in the
Incentive Stock Option Agreement, at any time within 3 months following the date
the Optionee ceased to be an Employee of the Company except that this provision
will not extend the time within which an Incentive Stock Option may be exercised
beyond the expiration of the term of such option. The Incentive Stock Option
Agreement may, in the discretion of the Committee, provide that if the
Optionee's employment is terminated by the Company for cause, as determined by
the Company's President or Board of Directors in their reasonable discretion,
the Incentive Stock Option will terminate immediately upon the Company's notice
to the Optionee of such termination.

         6.8 THE EFFECT OF THE DEATH OF AN OPTIONEE ON THE TERM OF AN INCENTIVE
STOCK OPTION. If an Optionee, while possessing an Incentive Stock Option that
has not expired or been fully exercised, ceases to be an Employee of the Company
as a result of the death of the Optionee, the Incentive Stock Option may be
exercised, to the extent not previously exercised and subject to any vesting
provisions contained in the Incentive Stock Option Agreement, at any time within
12 months following the date of the Optionee's death except that this provision
will not extend the time within which an Incentive Stock Option may be exercised
beyond the expiration of the term of such option.

         6.9 THE EFFECT OF THE DISABILITY OF AN OPTIONEE ON THE TERM OF AN
INCENTIVE STOCK OPTION. If an Optionee, while possessing an Incentive Stock
Option that has not expired or been fully exercised, ceases to be an Employee of
the Company as a result of the Optionee becoming Disabled, the Incentive Stock
Option may be exercised, to the extent not previously exercised and subject to
any vesting provisions contained in the Incentive Stock Option Agreement, at any
time within 12 months following the date of the Optionee becoming Disabled
except that this provision will not extend the time within which an Incentive
Stock Option may be exercised beyond the expiration of the term of such option.

         6.10 TRANSFERABILITY. No Incentive Stock Option may be transferred by
the Optionee other than by will or the laws of descent and distribution upon the
death of the Optionee.

         6.11 TAX TREATMENT AND SAVINGS CLAUSE. Nothing contained in this Plan,
any Incentive Stock Option Agreement, any document provided by the Company to an
Optionee or any statement made by or on behalf of the Company shall constitute a
representation or warranty of the tax treatment of any option or that such
option shall qualify as an incentive stock option under Section 422 of the
Internal Revenue Code. Any option that is designated as an Incentive Stock
Option but which, either in whole or in part, fails for any reason to qualify as
an incentive stock option within the meaning of Section 422 of the Internal
Revenue

                                      -6-
<PAGE>
Code or which fails to satisfy requirements under this Plan which apply only to
Incentive Stock Options shall be treated as an incentive stock option to the
fullest extent permitted under Section 422 of the Internal Revenue Code and this
Plan and shall otherwise, notwithstanding such designation, be treated as a
Nonqualified Stock Option under this Plan.

                                   ARTICLE VII
                 NONQUALIFIED STOCK OPTION TERMS AND CONDITIONS

         Nonqualified Stock Options may be granted under this Plan in accordance
with the following terms and conditions.

         7.1 REQUIREMENT FOR A WRITTEN NONQUALIFIED STOCK OPTION AGREEMENT. Each
Nonqualified Stock Option will be evidenced by a written option agreement
("Nonqualified Stock Option Agreement"). The Committee will determine from
time-to-time the form of Nonqualified Stock Option Agreement to be used under
this Plan. The terms of the Nonqualified Stock Option Agreement must be
consistent with this Plan and any inconsistencies will be resolved in accordance
with the terms and conditions specified in this Plan. Except as otherwise
required by this Section 7, the terms and conditions of each Nonqualified Stock
Option do not need to be identical.

         7.2 WHO MAY BE GRANTED A NONQUALIFIED STOCK OPTION. A Nonqualified
Stock Option may be granted to any Employee and any director of the Company and
any other individual who, in the judgment of the Committee, has performed or
will perform services of importance to the Company in the management, operation
and development of the business of the Company or of one or more of its
subsidiaries. The Committee, in its sole discretion, shall determine when and to
whom Nonqualified Stock Options are granted under this Plan.

         7.3 NUMBER OF SHARES COVERED BY A NONQUALIFIED STOCK OPTION. The
Committee, in its sole discretion, shall determine the number of shares of
Common Stock covered by each Nonqualified Stock Option granted under this Plan.
The number of shares covered by each Nonqualified Stock Option shall be
specified in the Nonqualified Stock Option Agreement evidencing such option.

         7.4 VESTING SCHEDULE UNDER A NONQUALIFIED STOCK OPTION. The Committee,
in its sole discretion, shall determine whether a Nonqualified Stock Option is
immediately exercisable as to all of the shares of Common Stock covered by such
option or whether it is only exercisable in accordance with a vesting schedule
as determined by the Committee, in its sole discretion. The vesting terms and
conditions, if any, of each Nonqualified Stock Option as determined by the
Committee shall be specified in the Nonqualified Stock Option Agreement
evidencing such option. Notwithstanding Section 9.2 of this Plan or the terms
set forth in the written option agreement, any Nonqualified Stock Option granted
under this Plan that was not either approved by (i) a committee of non-employee
directors within the requirements of Rule 16b-3 or (ii) the full board of
directors of the Company, shall not be exercisable until at least six months
after the date of such grant.

         7.5 EXERCISE PRICE OF A NONQUALIFIED STOCK OPTION. The Exercise Price
under each Nonqualified Stock Option will be at least 100% of the Fair Market
Value of a share of Common Stock as of the date on which the Nonqualified Stock
Option was granted. However, if it is subsequently determined that the Exercise
Price as stated in the Nonqualified Stock Option Agreement is less than 100% of
the Fair Market Value of a share of Common Stock as of the date on which an
option was granted, such fact will not invalidate a Nonqualified Stock Option.

                                      -7-
<PAGE>
         7.6 DURATION OF A NONQUALIFIED STOCK OPTION--GENERALLY. The Committee
will determine, in its sole discretion, the term of each Nonqualified Stock
Option provided that such term will not exceed 10 years from the date on which
such option was granted. The term of each Nonqualified Stock Option shall be set
forth in the Nonqualified Stock Option Agreement evidencing such option. The
Optionee shall have no further right to exercise a Nonqualified Stock Option
following the expiration of such term.

         7.7 THE EFFECT OF TERMINATION OF THE OPTIONEE'S EMPLOYMENT OR SERVICE
AS A DIRECTOR ON THE TERM OF A NONQUALIFIED STOCK OPTION. If an Optionee who is
an Employee of the Company, while possessing a Nonqualified Stock Option that
has not expired or been fully exercised, ceases to be an Employee of the Company
for any reason other than as a result of the death or disability of the Optionee
(as provided for in Section 7.8 and 7.9, respectively), the Nonqualified Stock
Option may be exercised, to the extent not previously exercised and subject to
any vesting provisions contained in the Nonqualified Stock Option Agreement, at
any time within 3 months following the date the Optionee ceased to be an
Employee of the Company except that this provision will not extend the time
within which an Nonqualified Stock Option may be exercised beyond the expiration
of the term of such option..

         If an Optionee who is not an Employee but is a director of the Company,
while possessing a Nonqualified Stock Option that has not expired or been fully
exercised, ceases to be a director of the Company for any reason other than as a
result of the death or disability of the Optionee (as provided for in Section
7.8 and 7.9, respectively), the Nonqualified Stock Option may be exercised, to
the extent not previously exercised and subject to any vesting provisions
contained in the Nonqualified Stock Option Agreement, at any time within 12
months following the date the Optionee ceased to be a director of the Company
except that this provision will not extend the time within which an Nonqualified
Stock Option may be exercised beyond the expiration of the term of such option..

         The Nonqualified Stock Option Agreement may, in the discretion of the
Committee, provide that if the Optionee's employment is terminated by the
Company for cause, as determined by the Company's President or Board of
Directors in their reasonable discretion, the Nonqualified Stock Option will
terminate immediately upon the Company's notice to the Optionee of such
termination.

         7.8 THE EFFECT OF THE DEATH OF AN OPTIONEE ON THE TERM OF A
NONQUALIFIED STOCK OPTION. If an Optionee, while possessing a Nonqualified Stock
Option that has not expired or been fully exercised, ceases to be an Employee,
ceases to serve as a director of the Company or ceases to provide services to
the Company as a result of the Optionee's death, the Nonqualified Stock Option
may be exercised, to the extent not previously exercised and subject to any
vesting provisions contained in the Nonqualified Stock Option Agreement, at any
time within 12 months following the date of the Optionee's death except that
this provision will not extend the time within which a Nonqualified Stock Option
may be exercised beyond the expiration of the term of such option.

         7.9 THE EFFECT OF THE DISABILITY OF AN OPTIONEE ON THE TERM OF A
NONQUALIFIED STOCK OPTION. If an Optionee, while possessing a Nonqualified Stock
Option that has not expired or been fully exercised, ceases to be an Employee,
ceases to serve as a director of the Company or ceases to provide services to
the Company as a result of the Optionee becoming Disabled, the Nonqualified
Stock Option may be exercised, to the extent not previously exercised and
subject to any vesting provisions contained in the Nonqualified Stock Option
Agreement, at any time within 12 months following the date of the Optionee
becoming Disabled except that this provision will not extend the time within
which a Nonqualified Stock Option may be exercised beyond the expiration of the
term of such option.

         7.10 TRANSFERABILITY. The Committee may, in the Nonqualified Stock
Option Agreement

                                      -8-
<PAGE>
evidencing any Nonqualified Stock Option, provide that such Nonqualified Stock
Option be transferred by gift to the Optionee's spouse, children or a trust for
the exclusive benefit of any combination of the Optionee, the Optionee's spouse
and the Optionee's children provided that any transfer of a Nonqualified Option
shall be conditioned upon the Optionee and the transferee of such Nonqualified
Stock Option executing and delivering to the Company a form of
Transfer/Assumption of Nonqualified Stock Option Agreement as the Company may
request. Notwithstanding any transfer of a Nonqualified Stock Option, the
Optionee shall remain liable to the Company for any income tax withholding
amounts which the Company is required to withhold at the time that the
transferred Nonqualified Stock Option is exercised. If the Nonqualified Stock
Option Agreement does not expressly provide that such Nonqualified Stock Option
is transferable, such Nonqualified Stock Option may not be transferred by the
Optionee, other than by will or the laws of descent and distribution upon the
death of the Optionee, without the prior written consent of the Committee, which
consent may be withheld in the Committee's sole discretion.

                                  ARTICLE VIII
                     EXERCISE OF OPTIONS TO PURCHASE SHARES

         8.1 NOTICE OF EXERCISE. An Incentive Stock Option or Nonqualified Stock
Option may only be exercised by delivery to the Company of written notice signed
by the Optionee or a permitted transferee under Section 7.10 (or, in the case of
exercise after death of the Optionee, by the executor, administrator, heir or
legatee of the Optionee, as the case may be) directed to the President of the
Company (or such other person as the Company may designate) at the principal
business office of the Company. The notice will specify (i) the number of shares
of Common Stock being purchased, (ii) the method of payment of the Exercise
Price, (iii) the method of payment of the income tax withholding if the option
is a Nonqualified Stock Option, and (iv), unless a registration under the
Securities Act is in effect with respect to the Plan at the time of such
exercise, the notice of exercise shall contain such representations as the
Company determines to be necessary or appropriate in order for the sale of
shares of Common Stock being purchased pursuant to such exercise to qualify for
exemptions from registration under the Securities Act or other applicable
securities laws.

         8.2 PAYMENT OF EXERCISE PRICE. No shares of Common Stock will be issued
upon the exercise of any Incentive Stock Option or Nonqualified Stock Option
unless and until payment or adequate provision for payment of the Exercise Price
of such shares has been made in accordance with this subsection. The Committee,
in its sole discretion may provide in the Incentive Stock Option Agreement or
the Nonqualified Stock Option Agreement for the payment of the Exercise Price in
cash, by delivery of a full-recourse promissory note, by the surrender of shares
of Common Stock or other securities issued by the Company (provided that such
other securities have been held by the Optionee for at least six months prior to
the date on which the Option is being exercised) in accordance with Section 8.4,
or by any combination of the foregoing. The Committee may, in its sole
discretion, permit an Optionee to elect to pay the Exercise Price by authorizing
a duly registered and licensed broker-dealer to sell the shares of Common Stock
to be issued upon such exercise (or, at least, a sufficient portion thereof) and
instructing such broker-dealer to immediately remit to the Company a sufficient
portion of the proceeds from such sale to pay the entire Exercise Price.

         8.3 PAYMENT OF TAX WITHHOLDING AMOUNTS. Unless the Committee, in its
sole discretion, determines otherwise, each Optionee must, upon the exercise of
any Incentive Stock Option or Nonqualified Stock Option (including a
Nonqualified Stock Options transferred by the Optionee pursuant to Section
7.10), either with the delivery of the notice of exercise or upon notification
of the amount due, pay to the Company or make adequate provision for the payment
of all amounts determined by the

                                      -9-
<PAGE>
Company to be required to satisfy applicable federal, state and local tax
withholding requirements ("Tax Withholding"). The Incentive Stock Option or
Nonqualified Option Agreement may provide for, or the Committee may allow in its
sole discretion, the payment by the Optionee of the Tax Withholding (i) in cash,
(ii) by the Company withholding such amount from other amounts payable by the
Company to the Optionee, including salary, (iii) by surrender of shares of
Common Stock or other securities of the Company in accordance with Section 8.4,
(iv) by the application of shares that could be received upon exercise of the
Incentive Stock Option or Nonqualified Stock Option in accordance with Section
8.4, or (v) any combination of the foregoing.

         By receiving and upon exercise of an Incentive Stock Option or a
Nonqualified Stock Option, the Optionee shall be deemed to have consented to the
Company withholding the amount of any Tax Withholding from any amounts payable
by the Company to the Optionee. The Committee may, in its sole discretion,
permit an Optionee to elect to pay the Tax Withholding by authorizing a duly
registered and licensed broker-dealer to sell the shares to be issued upon such
exercise (or, at least, a sufficient portion thereof) and instructing such
broker-dealer to immediately remit to the Company a sufficient portion of the
proceeds from such sale to pay the Tax Withholding. No shares will be issued
upon an exercise of an Incentive Stock Option or a Nonqualified Stock Option
unless and until payment or adequate provision for payment of the Tax
Withholding has been made. If, either as a result of the exercise of an
Incentive Stock Option or a Nonqualified Stock Option or the subsequent
disqualifying disposition of shares acquired through such exercise, the Company
determines that additional withholding is or becomes required beyond any amount
paid or provided for by the Optionee, the Optionee will pay such additional
amount to the Company immediately upon demand by the Company. If the Optionee
fails to pay the amount demanded, the Company may withhold that amount from
other amounts payable by the Company to the Optionee, including salary.

         8.4 PAYMENT OF EXERCISE PRICE OR WITHHOLDING WITH OTHER SECURITIES. To
the extent permitted in Section 8.2 and Section 8.3 above, the Exercise Price
and Tax Withholding may be paid by the surrender of shares of Common Stock or
other securities of the Company. The notice of exercise shall indicate that
payment is being made by the surrender of shares of Common Stock or other
securities of the Company. Payment shall be made by either (i) delivering to the
Company the certificates or instruments representing such shares of Common Stock
or other securities, duly endorsed for transfer, or (ii) delivering to the
Company an attestation in such form as the Company may deem to be appropriate
with respect to the Optionee's ownership of the shares of Common Stock or other
securities of the Company. Shares of Common Stock shall, for purposes of this
Section 8 be valued at their Fair Market Value as of the last business day
preceding the day the Company receives the Optionee's notice of exercise. Other
securities of the Company shall, for purposes of this Section 8, be valued at
the publicly reported price, if any, for the last sale on the last business day
preceding the day the Company receives the Optionee's notice of exercise, or, if
there are no publicly reported prices of such other securities of the Company,
at the fair market value of such other securities as determined in good faith by
the Board of Directors. To the extent permitted in Section 8.3 above, Tax
Withholding may, if the Optionee so notifies the Company at the time of the
notice of exercise, be paid by the application of shares which could be received
upon exercise of any other stock option issued by the Company. This application
of shares shall be accomplished by crediting toward the Optionee's Tax
Withholding obligation the difference between the Fair Market Value of a share
of Common Stock and the Exercise Price of the stock option specified in the
Optionee's notice. Any such application shall be considered an exercise of the
other stock option to the extent that shares are so applied.

         8.5 COMPLIANCE WITH SECURITIES LAWS. No shares will be issued with
respect to the exercise of any Incentive Stock Option or Nonqualified Stock
Option unless the exercise and the issuance of the

                                      -10-
<PAGE>
shares will comply with all relevant provisions of law, including, without
limitation, the Securities Act, any registration under the Securities Act in
effect with respect to the Plan, all applicable state securities laws, the
Securities Exchange Act of 1934, as amended, the Internal Revenue Code, the
respective rules and regulations promulgated thereunder, and the requirements of
any stock exchange upon which the Common Stock may then be listed, and will be
further subject to the approval of counsel for the Company with respect to such
compliance. The Company will not be liable to any Optionee or any other person
for failure to issue shares upon the exercise of an option where such failure is
due to the inability of the Company to obtain all permits, exemptions or
approvals from regulatory authorities which are deemed by the Company's counsel
to be necessary. The Board may require any action or agreement by an Optionee as
may from time to time be necessary to comply with the federal and state
securities laws. The Company will not be obliged to prepare, file or maintain a
registration under the Securities Act with respect to the Plan or to take any
actions with respect to registration or qualification under any state securities
laws.

         8.6 ISSUANCE OF SHARES. Notwithstanding the good faith compliance by
the Optionee with all of the terms and conditions of an Incentive Option
Agreement or Nonqualified Option Agreement and with this Article VIII, the
Optionee will not become a shareholder and will have no rights as a shareholder
with respect to the shares covered by such option until the issuance of shares
pursuant to the exercise of such option is recorded on the stock transfer record
of the Company. Notwithstanding the foregoing, the Company shall not
unreasonably delay the issuance of a stock certificate and shall exercise
reasonable efforts to cause such stock certificate to be issued to the Optionee
as soon as is practicable after the compliance by the Optionee with all of the
terms and conditions of the Incentive Option Agreement or Nonqualified Option
Agreement, as the case may be, and with this Article VIII.

         8.7 NOTICE OF ANY DISQUALIFYING DISPOSITION AND PROVISION FOR TAX
WITHHOLDING. Any Optionee that exercises an Incentive Stock Option and then
makes a "disqualifying disposition" (as such term is defined under Section 422
of the Internal Revenue Code) of the shares so purchased, shall immediately
notify the Company in writing of such disqualifying disposition and shall pay or
make adequate provision for all Tax Withholding as if such Incentive Stock
Option was a Nonqualified Stock Option in accordance with Section 8.3.

                                   ARTICLE IX
                          CHANGES IN CAPITAL STRUCTURE

         9.1 ADJUSTMENTS OF NUMBER OF SHARES AND EXERCISE PRICE. If the
outstanding shares of Common Stock are hereafter increased, decreased, changed
into or exchanged for a different number or kind of shares of Common Stock or
for other securities of the Company or of another corporation, by reason of any
reorganization, merger, consolidation, reclassification, stock split-up,
combination of shares of Common Stock, or dividend payable in shares of Common
Stock or other securities of the Company, the Committee will make such
adjustment as it deems appropriate in the number and kind of shares of Common
Stock or other securities covered by subsequent Awards. In addition, the Board
of Directors will at such time make such adjustment in the number and kind of
shares of Common Stock or other securities covered by outstanding Incentive
Stock Options and outstanding Nonqualified Stock Options, as well as make an
adjustment in the Exercise Price under each option as the Board of Directors
deems appropriate. Any determination by the Board of Directors as to what
adjustments may be made, and the extent thereof, will be final, binding on all
parties and conclusive.

                                    ARTICLE X

                                      -11-
<PAGE>
                              UNDERWRITERS LOCK-UP

         Each written agreement evidencing an Award will specify that the
Optionee, by accepting the Award agrees that whenever the Company undertakes a
firmly underwritten public offering of its securities, the Optionee will, if
requested to do so by the managing underwriter in such offering, enter into an
agreement not to sell or dispose of any securities of the Company owned or
controlled by the Optionee provided that such restriction will not extend beyond
12 months from the effective date of the registration statement filed in
connection with such offering.

                                   ARTICLE XI
                                EMPLOYMENT RIGHTS

         Nothing in this Plan nor in any written agreement evidencing an Award
will confer upon any Optionee any right to continued employment with the Company
or to limit or affect in any way the right of the Company, in its sole
discretion, (a) to terminate the employment of such Optionee at any time, with
or without cause, (b) to change the duties of such Optionee, or (c) to increase
or decrease the compensation of the Optionee at any time. Unless the written
agreement evidencing an Award expressly provides otherwise, vesting under such
agreement shall be conditioned upon:

         1)   for Employees of the Company, the continued employment of the
              Optionee; or
         2)   for directors who are not Employees, the Optionee continuing to
              serve as a director of the Company.

and nothing in this Plan shall be construed as creating a contractual or implied
right or covenant by the Company to continue such employment or service as a
director.

                                   ARTICLE XII
                                AMENDMENT OF PLAN

         The Board of Directors may, at any time and from time to time, modify
or amend this Plan as it deems advisable except that any amendment increasing
the number of shares of Common Stock issuable under the Plan, or any amendment
that expands the group of persons eligible to receive Awards, shall only become
effective if and when such amendment is approved by the shareholders of the
Company. Except as provided in Section 9 hereof, no amendment shall be made to
the terms or conditions of an outstanding Incentive Stock Option or Nonqualified
Stock Option without the written consent of the Optionee.

DATED as of and approved by the Board of Directors of the Company at a meeting
held on March 28, 2002.

Approved by the shareholders of the Company on May 23 2002.

                                      -12-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00048-of-00352.parquet"}]]