EXECUTIVE EMPLOYMENT AND COMPENSATION AGREEMENT Date: Effective as of March 31, 1999 Parties: South Umpqua Bank, a bank chartered under the laws of the State of Oregon, its subsidiaries and affiliates (the "Company") and Daniel A. Sullivan (the...

                     EXECUTIVE EMPLOYMENT AND
                      COMPENSATION AGREEMENT

Date:     Effective as of March 31, 1999

Parties:  South Umpqua Bank, a bank  chartered  under the laws of the State of
          Oregon, its subsidiaries and affiliates (the "Company")

          and

          ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Executive")

Agreement: The Company and the Executive agree as follows:

     1.   Effective Date Of Agreement

     This Agreement is effective as of March 31, 1999.

     2.   Term Of Employment

     The term of this Agreement  shall commence as of March 31, 1999 and shall
continue until the close of the Company's  business on November 2, 2001 ("Term
of Employment").

     3.   Obligation Of The Parties To Negotiate In Good Faith

     Upon the  expiration  of the Term of  Employment,  the  parties  agree to
negotiate  with  one  another  in  good  faith  regarding   another  Executive
Employment  and  Compensation  Agreement.  Upon the  expiration of the Term of
Employment, the Executive shall be deemed to be an "employee at will."

     4.   Employment Position, Duties, And Responsibilities

     The  Company  agrees to continue  the  Executive  in its employ,  and the
Executive  agrees  to  remain in the  employ  of the  Company  for the Term of
Employment  in the  position  and with the  duties and  responsibilities  of a
Senior Vice  President  and Chief  Financial  Officer of the Company and shall
report to the President  and Chief  Executive  Officer of the Company.  At all


                                   10.3 - 1


times  during  the Term of  Employment  the  Executive  shall hold a title and
position  of  responsibility  commensurate  with  the  Executive's  title  and
position on March 31, 1999.

     5.   Compensation

     During the Term of Employment, the Executive shall be paid by the Company
as follows:

          a.   Annual Base Salary

          A minimum annual base salary of $104,500("Base Salary"),  payable at
     the rate of not less than  $8,708.34 per month,  for the remainder of the
     calendar  year 1999,  and for the  remainder  of the Term of  Employment,
     together  with such  increases as may be awarded by the Company from time
     to time in  accordance  with the  Company's  regular  practices of salary
     increases for executives; plus

          b.   Annual Executive Performance Bonus

          An annual executive  performance bonus under the Company's Executive
     Bonus  Compensation  Plan or  such  equivalent  successor  plan as may be
     adopted by the Company from time to time ("Performance Bonus").

          c.   Retirement Plans

          The Executive  shall be a full and vested  participant in all of the
     Company's   retirement,   and  deferred   compensation   plans,   if  any
     ("Retirement Plans") to the extent permitted by such plans; plus

          d.   Fringe Benefits

          The Executive  shall be entitled to a monthly car allowance of $500,
     payment or  reimbursement  of: club dues and initiation fees for Roseburg
     Golf and Country Club and the Multnomah Athletic Club; other club dues or
     dues  for  civic  organizations  which  in the  opinion  of the  Board of
     Directors  are  beneficial  to the Company;  and  Executive's  reasonable
     expenses incurred by the Executive in the conduct of his duties.

     6.   Employee Benefit Plans

     In addition  to the  payments  and other  benefits  provided  for in this
Agreement,  the Executive  shall be entitled to  participate  in the Company's
Incentive  Stock  Option  Plan,  Non-Qualified  Stock  Option  Plan,  and  the
Executive  Profit Sharing and Thrift Plan, if any, to the extent  permitted by


                                   10.3 - 2


such plans.  If no such plans are in effect as of the date of this  Agreement,
then the Executive  shall become a  participant  as soon as such plan or plans
become operative.

     Nothing in this  Agreement  shall  preclude the Company from  amending or
terminating any employee benefit plan or practice.

     During the Term of Employment, the Executive's benefits set forth in this
Agreement shall not be less than those benefits  available to the Executive as
of the date of this Agreement.  The nature, level, and extent of such benefits
to which  Executive  is  entitled  may be  reduced  only with the  Executive's
written consent.

     7.   Termination Of Executive's Employment During the Term Of Employment

          a.   Termination  Of The  Executive's  Employment By The Company For
               "Cause"

          In the event the Executive's employment is terminated by the Company
     during the Term of Employment  for "cause" (as defined in Section 9), the
     Executive  shall be  entitled  to receive  payment  only for those  sums,
     benefits, and other fringe benefits which have accrued to and are due and
     owing the Executive as of the effective  date of the  termination  of his
     employment  ("Effective  Date").  Executive  shall not be entitled to any
     other sums for the remainder of the Term of Employment.

          b.   Termination Of The Executive's Employment By The Company Within
               One  Year  After  Hiring  A  New  Chief  Executive  Officer  or
               President

          In the event that the Company hires a new Chief Executive Officer or
     President  and the  Executive's  employment  is terminated by the Company
     within one (1) year  following  the date of  employment  of the new Chief
     Executive  Officer or President,  then the Executive shall be entitled to
     receive and the Company shall be obligated to pay the Executive:

               1.  All  compensation,  benefits,  and  other  fringe  benefits
          accrued to the Effective Date;

               2. A minimum  amount  equal to nine (9) months'  Base Salary as
          defined in Section 5.(a);and



                                   10.3 - 3


               3. An  amount  equal  to the  projected  Performance  Bonus  as
          defined in Section  5.b.  for the year in which the  Effective  Date
          occurred, pro-rated based upon the number of months during such year
          in which the  Executive was employed.  For example,  if  Executive's
          employment was terminated  after six months of a bonus year, and the
          projected  bonus for the Executive  for that year was $20,000,  then
          the Executive would be entitled to receive the sum of $10,000 as the
          projected pro-rated bonus for that year.

               4. Health insurance  benefits available to the Executive on the
          Effective  Date  shall  continue  in full  force and  effect for the
          maximum time allowed by law following the Effective Date.

          c.   Payment of Sums Due Executive

               All sums due the Executive  pursuant to this Section 7 shall be
          paid by the  Company  to the  Executive  in full,  in  cash,  or the
          equivalent of cash, within five days from the Effective Date.

     8.   Termination Of Employment In Connection  With A Change In Control Of
          Company

     The   provisions  of  this  Section  8  shall  govern  all  severance  or
termination payments to the Executive in the event that the Company is subject
to a "change in control" (as defined in Section 10).

          a.   Termination  of  Employment  Of The Executive By The Company Or
               The Company's  Successor In Interest,  In  Anticipation  Of, In
               Connection With, Or After A Change In Control

               In the event that the  Company,  its  successor  in interest by
          merger, its transferee,  or the new owner of a controlling  interest
          in the Company's  stock,  terminates the  Executive's  employment or
          causes the termination of the Executive's employment during the Term
          of Employment  in  anticipation  of, in connection  with, or after a
          change in control has occurred,  then the Company,  its successor in
          interest by merger,  its transferee,  or the new owner of its stock,
          as the case may be,  shall pay the  Executive an amount equal to two
          times the average of the total  annual  compensation,  as defined in
          Section 5.a. and b.,  including the Base Salary plus the Performance
          Bonus, paid to the Executive during the last two full calendar years
          of employment  (including  employment  pursuant to a prior agreement
          dated November 3, 1997 between the Company and the Executive).



                                   10.3 - 4


          b.   Termination  Of  Employment  By  Executive  After A  Change  In
               Control And Occurrence Of A "Triggering Event"

               In the  event  that the  Executive  terminates  his  employment
          during  the Term of  Employment  after a  change  in  control  and a
          "triggering event" (as defined in Section 10) has occurred, then the
          Company, its successor in interest by merger, its transferee, or the
          new owner of a controlling  interest in the Company's  stock, as the
          case may be, shall pay the Executive the following amount: an amount
          equal to two times the average of the total annual compensation,  as
          defined in Section 5.a. and b.,  including  the Base Salary plus the
          Performance  Bonus,  paid to the Executive  during the last two full
          calendar  years of employment  (including  employment  pursuant to a
          prior  agreement  dated November 3, 1997 between the Company and the
          Executive).

          c.   Payments to Executive

               Executive shall be paid those amounts specified in this Section
          8 in full, in cash or the  equivalent  of cash,  five days after the
          Effective Date.

          d.   Excess Parachute Payment

               If the lump sum payment under this Section 8 of this Agreement,
          either alone or together with other  payments to which the Executive
          is entitled to receive from the Company, would constitute an "excess
          parachute  payment"  as  defined  in  Section  280G of the  Internal
          Revenue  Code of  1986,  as  amended  (the  "Code"),  such  lump sum
          severance  payment shall be reduced to the largest  amount that will
          result in no portion of the lump sum payment under this Section 8 of
          this  Agreement  being  subject to the excise tax imposed by Section
          4999 of the Code. The determination of any reduction in the lump sum
          severance  payment under this Section 8 of this Agreement,  pursuant
          to the foregoing  provisions,  shall be made by mutual  agreement of
          the Company and the Executive.

     9.   Definition Of "Cause"

     "Cause" is defined as personal dishonesty,  willful misconduct, breach of
fiduciary  involving personal profit,  failure to perform his stated duties as
Senior Vice President and Chief Financial  Officer of the Company,  or failure
of the Executive to devote his full time and undivided attention during normal
business  hours to the  business  and  affairs  of the  Company,  (except  for
reasonable vacations,  illness or disability and time devoted by the Executive
to serving as a director or member of any committee or  organization  engaging
in charitable and community activities).



                                   10.3 - 5


     10.  Definition Of "Change In Control" and "Triggering Event"

     A "change  in  control"  is defined as any  transaction,  act,  series of
transactions or series of acts that either:

          (a) would  constitute  a change in control for  purposes of The Bank
     Act (ORS Chapters 706 through 716), the Bank Holding Company Act of 1956,
     as amended,  The Bank Merger Act, as amended,  The Change In Bank Control
     Act, as amended,  or The  Securities  Exchange  Act Of 1934,  as amended,
     (collectively referred to herein as the "Acts"),  assuming the Company is
     subject  to the  foregoing  Acts  regardless  of whether  the  Company is
     actually subject to the provisions of any such Acts;

          (b) would result in any person,  entity or group of persons as those
     terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
     of 1934 (but  excluding  an Employee  Stock  Ownership  Plan)  becoming a
     beneficial owner, directly or indirectly of the securities of the Company
     representing  20% or more of the combined  voting power of the  Company's
     then outstanding shares; or

          (c) would result in individuals who were directors of the Company as
     of the date of this  Agreement  ceasing to constitute at least a majority
     of the Board of Directors of the Company at any time prior to November 3,
     2001.

     A "triggering  event" is defined as any one of the following events which
take place after a change in control has occurred:

          (a) failure to elect or reelect the  Executive to the same or higher
     office or  removal  of the  Executive  from the  office  of  Senior  Vice
     President and Chief Financial Officer;

          (b)  a  significant  diminution  in  the  nature  or  scope  of  the
     authorities,  powers,  functions,  or duties  related to the  position of
     Senior  Vice  President  and  Chief  Financial  Officer  of  the  Company
     (including status, offices, and reporting  requirements),  or a reduction
     in the  compensation  to which  Executive  is  entitled  as set  forth in
     Section 5 which is not  remedied  within  30 days  after  receipt  by the
     Company of written notice from the Executive;

          (c) the Company requiring the Executive to be based at any office or
     location  more  than 100 miles  from ▇▇▇  ▇▇▇▇▇▇▇▇▇  ▇▇▇▇ ▇▇.,  ▇▇▇▇▇▇▇▇,
     ▇▇▇▇▇▇,  or the  Company  requiring  the  Executive  to travel on Company
     business to a  substantially  greater  extent than  required  immediately
     prior to the date of this Agreement; or



                                   10.3 - 6


          (d) breach by the Company of any  provision  of this  Agreement  not
     covered  within the foregoing  clauses (a), (b), and (c) of this section,
     which is not  remedied  within 30 days after  receipt  by the  Company of
     written notice from the Executive;

          For the  purposes of this Section 10 and this  Agreement,  "Company"
     shall  include  the  Company's  successor  in  interest  by  merger,  its
     transferee of all or  substantially  all of the  Company's  assets and/or
     liabilities,  or the new owner of a controlling interest of the Company's
     stock.

          (e) The  liquidation,  dissolution,  consolidation  or merger of the
     Company or one or more of the Company's  subsidiaries  or affiliates,  or
     the  transfer  of all or a  significant  portion  of  the  assets  and/or
     liabilities  of the Company,  or one of its  subsidiaries  or affiliates,
     unless a successor or successors (by merger,  consolidation or otherwise)
     to  which  all or a  significant  portion  of the  Company's  assets  and
     liabilities or the assets and liabilities of any of its subsidiaries have
     been  transferred,  shall  have  assumed  and  discharged  all duties and
     obligations of the Company to the Executive under this Agreement.

     An  election by the  Executive  to  terminate  his  employment  after the
occurrence of a change in control and the occurrence of a triggering  event as
defined herein, shall entitle the Executive to payment of those sums specified
in Section 8.b.

     11.  Unexercised Stock Options

     In the event that the Executive  shall hold as of the Effective  Date any
outstanding  and  unexercised  (whether or not  exercisable at the time) stock
options or options previously granted by the Company,  the disposition of such
options shall be made in accordance with the Company's  Incentive Stock Option
Plan (if any).

     12.  Right To Seek Arbitration

     Either  party shall have the right,  in addition to all other  rights and
remedies  provided by law at their  election,  either to seek  arbitration  in
Oregon,  under  the  rules  of  the  American  Arbitration  Association  or to
institute a judicial  proceeding,  in either case within 90 days after  having
received notice of termination of his employment.

     13.  Obligation To Mitigate Damages

     In the event of the Executive's termination of employment,  the Executive
shall not be required to mitigate damages by seeking other employment.



                                   10.3 - 7


     14.  Confidential Information

     Executive agrees not to disclose at any time any confidential information
obtained by him while in the employ of the Company.  The executive also agrees
that upon leaving the  Company,  he will not take with him any document of the
Company's which is of a confidential or proprietary nature.

     15.  Withholding

     All payments required to be made by the Company to the Executive pursuant
to this Agreement shall be subject to applicable federal and state withholding
requirements.

     16.  Notices

     All notices, requests,  demands, and other communications provided for by
this Agreement will be in writing and shall be sufficiently  given if and when
mailed in the  continental  United States by registered or certified  mail, or
personally delivered to the party entitled thereto at the address stated below
or to such  changed  addresses  as the  addressee  may have  given by  similar
notice:

      To the Company:          South Umpqua Bank
                               ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
                               ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇  ▇▇▇▇▇

      To the Executive:        ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
                               ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
                               ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇  ▇▇▇▇▇

     Any such notice delivered in person shall be deemed to have been received
on the date of delivery.

     17.  General Provisions

          (a) There shall be no right of set-off or counter-claim  against any
     payments  to the  Executive,  his  surviving  spouse,  beneficiaries,  or
     estate.  All sums to which the  Executive  is  entitled  pursuant to this
     Agreement shall, upon his death, be paid to his surviving spouse,  heirs,
     or to his estate, if there is no surviving spouse.

          (b) The Company  and the  Executive  recognize  that each party will
     have no adequate remedy at law for breach of this Agreement;  and that in
     the event of any such  breach,  the Company and the  Executive  agree and
     consent that the other shall be entitled to apply for and obtain a Decree
     of Specific Performance.



                                   10.3 - 8


          (c) No right or interest to or in any payment shall be assignable by
     the Executive,  provided, however, that this provision shall not preclude
     the Executive from  designating one or more  beneficiaries to receive any
     amount or  amounts  that may be  payable to him after his death and shall
     not preclude the legal  representative  of his estate from  assigning any
     right hereunder to the person or persons  entitled thereto under his Will
     or in the case of  intestacy  to the person or persons  entitled  thereto
     under the laws of intestate succession of the State of Oregon.

     18.  Successors To The Company

     This  Agreement  shall be  binding  upon and inure to the  benefit of the
Company and any successor of the Company,  including  without  limitation  any
corporation  or   corporations   acquiring   directly  or  indirectly  all  or
substantially all of the assets and/or liabilities,  or a controlling interest
in the  stock  of the  Company,  whether  by  merger,  consolidation,  sale or
otherwise (and such successor shall thereafter be deemed "the Company" for the
purposes of this  Agreement),  but shall not  otherwise be  assignable  by the
Company.

     19.  Amendment Or Modification

     This Agreement may not be amended or modified without the written consent
of the parties to this  Agreement.  A waiver by either party to this Agreement
of any  breach  by the other  party  shall not be deemed to be a waiver of any
subsequent or continuing breach.

     20.  Severability

     In  the  event  that  any   portion  of  this   Agreement   is   declared
unenforceable,  the remaining  portions of this Agreement  shall be unaffected
and shall remain in full force and effect.

     21.  Legal Expenses

     If the  Company  fails to comply with any of its  obligations  under this
Agreement,  or in the event  that the  Company or any other  person  takes any
action or declares this Agreement  unenforceable  or institutes any litigation
or other  legal  action  designed  to deny,  diminish  or to recover  from the
Executive the benefits intended to be provided to the Executive hereunder, and
provided  further that the Executive has complied with all of his  obligations
under this  Agreement,  the Company hereby  authorizes the Executive to retain
counsel of his  choice at the sole  expense of the  Company to  represent  the
Executive in connection  with the  initiation or defense of any  litigation or
other  legal  action  whether  by or against  the  Company,  or any  director,
officer,  shareholder,  or other  person  affiliated  with the  Company in any


                                   10.3 - 9


jurisdiction.  The  reasonable  fees and  expenses of counsel  selected by the
Executive as provided  herein shall be paid or  reimbursed to the Executive by
the Company on a regular  periodic basis upon  presentation  by Executive of a
statement  or  statements  prepared by such  counsel in  accordance  with such
counsel's  customary practices up to a maximum aggregate amount of $60,000 for
legal  fees  and  expenses  which  shall be paid  regardless  of  whether  the
Executive prevails in any legal action.

     22.  Continuation Of Benefits

     During any period of time that the  validity  or  enforceability  of this
Agreement is being  challenged  by any party,  the Company  shall  continue to
cover the Executive and his beneficiaries  under the Company's cafeteria plan,
hospital plan, health care plan, dental plan, life or other insurance or death
benefit  plan, or other  present or future  similar group or employee  benefit
plan or program for which key  executives  of the Company are  eligible to the
same  extent  as if the  Executive  had  continued  to be an  employee  of the
Company.


DATED as of ________________

                                SOUTH UMPQUA BANK

                                By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
                                    -----------------------------------------
                                    ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Director, President and
                                        Chief Executive Officer


                                /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
                                ---------------------------------------------
                                ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇


                                  10.3 - 10