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Employment Agreement - UMPQUA HOLDINGS CORP - 11-9-2004

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Employment Agreement - UMPQUA HOLDINGS CORP - 11-9-2004 Powered By Docstoc
					EXHIBIT 10.3 UMPQUA HOLDINGS CORPORATION EMPLOYMENT AGREEMENT FOR ROBERT M. DAUGHERTY DATED AS OF MARCH 13, 2004

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PURPOSE OF AGREEMENT....................................................... TERM OF AGREEMENT.......................................................... NO TERM OF EMPLOYMENT...................................................... DUTIES; POSITION........................................................... 4.1 Position.......................................................... 4.2 Obligations of Officer............................................ COMPENSATION............................................................... 5.1 Base Salary....................................................... 5.2 Performance Bonus................................................. 5.3 Vacation.......................................................... 5.4 Club Memberships.................................................. 5.5 Other Benefits.................................................... 5.6 Stock Options..................................................... 5.7 Deferred Compensation............................................. TERMINATION................................................................ 6.1 For Cause......................................................... 6.2 Without Cause..................................................... 6.3 For Good Reason................................................... 6.4 Death or Disability............................................... 6.5 Resignation....................................................... DEFINITIONS................................................................ 7.1 Cause............................................................. 7.2 Good Reason....................................................... 7.3 Disability........................................................ 7.4 Change in Control................................................. PAYMENT UPON TERMINATION................................................... SEVERANCE BENEFIT.......................................................... CHANGE IN CONTROL BENEFIT.................................................. CHANGE IN CONTROL RETENTION BONUS.......................................... EXECUTIVE SEVERANCE PLAN................................................... 12.1 In General........................................................ 12.2 Administration of Executive Severance Plan........................ 12.3 Claims Procedures................................................. RESIGNATION PAYMENT........................................................ CONFIDENTIAL INFORMATION................................................... DISPUTE RESOLUTION......................................................... NOTICES.................................................................... GENERAL PROVISIONS......................................................... 17.1 Governing Law..................................................... 17.2 Saving Provision.................................................. 17.3 Survival Provision................................................

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17.4 17.5 Counterparts...................................................... Entire Agreement.................................................. 11 11

TABLE OF CONTENTS
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PURPOSE OF AGREEMENT....................................................... TERM OF AGREEMENT.......................................................... NO TERM OF EMPLOYMENT...................................................... DUTIES; POSITION........................................................... 4.1 Position.......................................................... 4.2 Obligations of Officer............................................ COMPENSATION............................................................... 5.1 Base Salary....................................................... 5.2 Performance Bonus................................................. 5.3 Vacation.......................................................... 5.4 Club Memberships.................................................. 5.5 Other Benefits.................................................... 5.6 Stock Options..................................................... 5.7 Deferred Compensation............................................. TERMINATION................................................................ 6.1 For Cause......................................................... 6.2 Without Cause..................................................... 6.3 For Good Reason................................................... 6.4 Death or Disability............................................... 6.5 Resignation....................................................... DEFINITIONS................................................................ 7.1 Cause............................................................. 7.2 Good Reason....................................................... 7.3 Disability........................................................ 7.4 Change in Control................................................. PAYMENT UPON TERMINATION................................................... SEVERANCE BENEFIT.......................................................... CHANGE IN CONTROL BENEFIT.................................................. CHANGE IN CONTROL RETENTION BONUS.......................................... EXECUTIVE SEVERANCE PLAN................................................... 12.1 In General........................................................ 12.2 Administration of Executive Severance Plan........................ 12.3 Claims Procedures................................................. RESIGNATION PAYMENT........................................................ CONFIDENTIAL INFORMATION................................................... DISPUTE RESOLUTION......................................................... NOTICES.................................................................... GENERAL PROVISIONS......................................................... 17.1 Governing Law..................................................... 17.2 Saving Provision.................................................. 17.3 Survival Provision................................................

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17.4 Counterparts...................................................... 17.5 Entire Agreement.................................................. 17.6 Previous Agreements............................................... 17.7 Waiver............................................................ 17.8 Assignment........................................................ 17.9 Attorneys' Fees................................................... ADVICE OF COUNSEL.......................................................... 11 11 11 11 11 12 12

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Exhibit A - Employment Agreement - Performance Bonus Criteria Exhibit B - Employment Agreement - Change In Control Bonus Exhibit C - Employment Agreement - Deferred Compensation Interests Exhibit D Employment Agreement - Employment Separation Agreement and Release of Claims ii

EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") by and between Umpqua Holdings Corporation ("Umpqua")

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17.4 Counterparts...................................................... 17.5 Entire Agreement.................................................. 17.6 Previous Agreements............................................... 17.7 Waiver............................................................ 17.8 Assignment........................................................ 17.9 Attorneys' Fees................................................... ADVICE OF COUNSEL..........................................................

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Exhibit A - Employment Agreement - Performance Bonus Criteria Exhibit B - Employment Agreement - Change In Control Bonus Exhibit C - Employment Agreement - Deferred Compensation Interests Exhibit D Employment Agreement - Employment Separation Agreement and Release of Claims ii

EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") by and between Umpqua Holdings Corporation ("Umpqua") and Robert M. Daugherty ("Officer"), is dated March 13, 2004. This Agreement is effective subject to and as of the closing of the merger (the "Merger") between Umpqua and Humboldt Bancorp ("Humboldt") pursuant to an Agreement and Plan of Reorganization dated March 13, 2004. The closing date of the Merger is the "Effective Date." 1. PURPOSE OF AGREEMENT. On the Effective Date, this Agreement shall replace Officer's existing employment agreement with Humboldt dated April 15, 2002, as amended May 2, 2002 (the "HB Agreement"). Officer agrees that he will not be entitled to any further benefits under the HB Agreement, except that Officer is entitled to any benefit arising under the HB Agreement due to the Merger and he will be entitled to those benefits without having to terminate his employment with Umpqua as Humboldt's successor. Those benefits are listed on Exhibit B. This Agreement sets forth the terms of Officer's employment with Umpqua and provides Officer benefits in certain circumstances where Officer's employment is terminated or another Change in Control (defined below) occurs. 2. TERM OF AGREEMENT. This Agreement starts on the Effective Date and expires on the third anniversary of the Effective Date. 3. NO TERM OF EMPLOYMENT. Notwithstanding the term of this Agreement, Umpqua may terminate Officer's employment at any time for any lawful reason or for no reason at all, subject to the provisions of this Agreement. 4. DUTIES; POSITION. 4.1 Position. As of the Effective Date, Officer shall be employed as President-Umpqua Bank California Region, and will perform such duties as may be designated by Umpqua's board of directors (the "Board") or Umpqua's Chief Executive Officer, to whom Officer will directly report (the "Supervisor"). 4.2 Obligations of Officer. (a) Officer agrees that to the best of Officer's ability and experience, Officer will at all times loyally and conscientiously perform all of the duties and obligations required of Officer pursuant to the express and implicit terms of this Agreement and as directed by the Board or the Supervisor. 1

(b) Officer shall devote Officer's entire working time, attention and efforts to Umpqua's business and affairs, shall faithfully and diligently serve Umpqua's interests and shall not engage in any business or employment activity that is not on Umpqua's behalf (whether or not pursued for gain or profit) except for (a) activities approved in writing in advance by the Board and (b) passive investments that do not involve Officer providing any advice or services to the businesses in which the

EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") by and between Umpqua Holdings Corporation ("Umpqua") and Robert M. Daugherty ("Officer"), is dated March 13, 2004. This Agreement is effective subject to and as of the closing of the merger (the "Merger") between Umpqua and Humboldt Bancorp ("Humboldt") pursuant to an Agreement and Plan of Reorganization dated March 13, 2004. The closing date of the Merger is the "Effective Date." 1. PURPOSE OF AGREEMENT. On the Effective Date, this Agreement shall replace Officer's existing employment agreement with Humboldt dated April 15, 2002, as amended May 2, 2002 (the "HB Agreement"). Officer agrees that he will not be entitled to any further benefits under the HB Agreement, except that Officer is entitled to any benefit arising under the HB Agreement due to the Merger and he will be entitled to those benefits without having to terminate his employment with Umpqua as Humboldt's successor. Those benefits are listed on Exhibit B. This Agreement sets forth the terms of Officer's employment with Umpqua and provides Officer benefits in certain circumstances where Officer's employment is terminated or another Change in Control (defined below) occurs. 2. TERM OF AGREEMENT. This Agreement starts on the Effective Date and expires on the third anniversary of the Effective Date. 3. NO TERM OF EMPLOYMENT. Notwithstanding the term of this Agreement, Umpqua may terminate Officer's employment at any time for any lawful reason or for no reason at all, subject to the provisions of this Agreement. 4. DUTIES; POSITION. 4.1 Position. As of the Effective Date, Officer shall be employed as President-Umpqua Bank California Region, and will perform such duties as may be designated by Umpqua's board of directors (the "Board") or Umpqua's Chief Executive Officer, to whom Officer will directly report (the "Supervisor"). 4.2 Obligations of Officer. (a) Officer agrees that to the best of Officer's ability and experience, Officer will at all times loyally and conscientiously perform all of the duties and obligations required of Officer pursuant to the express and implicit terms of this Agreement and as directed by the Board or the Supervisor. 1

(b) Officer shall devote Officer's entire working time, attention and efforts to Umpqua's business and affairs, shall faithfully and diligently serve Umpqua's interests and shall not engage in any business or employment activity that is not on Umpqua's behalf (whether or not pursued for gain or profit) except for (a) activities approved in writing in advance by the Board and (b) passive investments that do not involve Officer providing any advice or services to the businesses in which the investments are made. 5. COMPENSATION. For all services performed under this Agreement, Umpqua agrees to pay the following compensation and benefits: 5.1 Base Salary. Officer's base salary (the "Base Salary") is the same as Officer's base salary with Humboldt immediately prior to the Effective Date and is subject to increase in Umpqua's sole discretion. 5.2 Performance Bonus. Officer is entitled to receive an annual performance bonus, which will be targeted at 45% of the Base Salary, provided the performance criteria set forth in Exhibit A hereto are satisfied (the "Performance Bonus"). For the fiscal year in which the Effective Date occurs, Officer will be entitled to (1) any appropriately pro rated bonus due under the HB Agreement for the period ending on the day prior to the Effective Date, and (2) the Performance Bonus based on the actual Base Salary amount paid by Umpqua to Officer in that fiscal

(b) Officer shall devote Officer's entire working time, attention and efforts to Umpqua's business and affairs, shall faithfully and diligently serve Umpqua's interests and shall not engage in any business or employment activity that is not on Umpqua's behalf (whether or not pursued for gain or profit) except for (a) activities approved in writing in advance by the Board and (b) passive investments that do not involve Officer providing any advice or services to the businesses in which the investments are made. 5. COMPENSATION. For all services performed under this Agreement, Umpqua agrees to pay the following compensation and benefits: 5.1 Base Salary. Officer's base salary (the "Base Salary") is the same as Officer's base salary with Humboldt immediately prior to the Effective Date and is subject to increase in Umpqua's sole discretion. 5.2 Performance Bonus. Officer is entitled to receive an annual performance bonus, which will be targeted at 45% of the Base Salary, provided the performance criteria set forth in Exhibit A hereto are satisfied (the "Performance Bonus"). For the fiscal year in which the Effective Date occurs, Officer will be entitled to (1) any appropriately pro rated bonus due under the HB Agreement for the period ending on the day prior to the Effective Date, and (2) the Performance Bonus based on the actual Base Salary amount paid by Umpqua to Officer in that fiscal year. If Officer's employment terminates on the third anniversary of the Effective Date, the Performance Bonus for that year will be pro rated. 5.3 Vacation. Officer is entitled to four (4) weeks vacation per year, to be used in accordance with Umpqua's vacation policy. 5.4 Club Memberships. Umpqua will pay the cost of a membership in the Sutter Club and of a golf membership in a country club mutually acceptable to Umpqua and Officer in or around Sacramento, California. 5.5 Other Benefits. Officer is entitled to participate, under the terms of the respective plans, in other benefit plans and perquisites generally available to Umpqua's executive officers, including, but not limited to, an auto allowance of $750 per month. 5.6 Stock Options. All outstanding stock options granted by Humboldt to Officer prior to the Effective Date (the "Assumed Options") will be assumed by Umpqua pursuant to the Plan of Merger. An option to purchase 27,600 shares of Umpqua common stock (the "New Option") will be granted to Officer on the Effective Date to cover those options referenced in Section 7(c) of the HB Agreement that had not yet been granted as of the Effective Date. The option will be a nonqualified option and will be subject to the terms and conditions of Umpqua's 2003 Stock Incentive Plan and the stock 2

option agreement evidencing such grant. The Assumed Options and the New Option will all vest as of the Effective Date. Any other stock options granted to Officer during the term of this Agreement will be subject to immediate vesting upon a Change in Control. 5.7 Deferred Compensation. Unless the Board in the future offers a deferred compensation plan to its executive officers and except as set forth in this subsection, Officer shall not be entitled to participate in a deferred compensation plan with respect to future compensation. Umpqua will continue to account for any of Officer's deferred compensation prior to and earned as of the Effective Date, as listed on Exhibit C hereto, under the terms of Officer's Deferred Compensation Agreement with Humboldt dated December 18, 2003 (the "HB Deferred Compensation Plan"). Umpqua will continue to account for these interests by assuming all of Humboldt's rights and obligations under the HB Deferred Compensation Plan and preserving the distribution and other relevant features of that plan for so long as Officer has an interest in that plan. Umpqua will transfer such deferred amounts to a "Rabbi Trust" with an independent institutional trustee and under terms and conditions reasonably acceptable to Umpqua and Officer and without any costs to Umpqua. Officer will pay the administrative and other costs incurred in connection with the Rabbi Trust. The funds transferred to the Rabbi Trust will be credited with interest at Umpqua's prime lending rate, plus 1%, as in effect from time to time. The crediting of interest will be made

option agreement evidencing such grant. The Assumed Options and the New Option will all vest as of the Effective Date. Any other stock options granted to Officer during the term of this Agreement will be subject to immediate vesting upon a Change in Control. 5.7 Deferred Compensation. Unless the Board in the future offers a deferred compensation plan to its executive officers and except as set forth in this subsection, Officer shall not be entitled to participate in a deferred compensation plan with respect to future compensation. Umpqua will continue to account for any of Officer's deferred compensation prior to and earned as of the Effective Date, as listed on Exhibit C hereto, under the terms of Officer's Deferred Compensation Agreement with Humboldt dated December 18, 2003 (the "HB Deferred Compensation Plan"). Umpqua will continue to account for these interests by assuming all of Humboldt's rights and obligations under the HB Deferred Compensation Plan and preserving the distribution and other relevant features of that plan for so long as Officer has an interest in that plan. Umpqua will transfer such deferred amounts to a "Rabbi Trust" with an independent institutional trustee and under terms and conditions reasonably acceptable to Umpqua and Officer and without any costs to Umpqua. Officer will pay the administrative and other costs incurred in connection with the Rabbi Trust. The funds transferred to the Rabbi Trust will be credited with interest at Umpqua's prime lending rate, plus 1%, as in effect from time to time. The crediting of interest will be made monthly and the interest will compound monthly. Upon Officer's retirement or other termination of employment, the Rabbi Trust funds will no longer be credited with interest at Umpqua's prime lending rate, plus 1%; instead, investment direction of such funds will be granted to Officer or the rate paid on the account will be as mutually agreed. Funds in the Rabbi Trust may be subject to forfeiture as provided in Section 13 of this Agreement. Umpqua agrees to grant its consent to any amendments that are required to be made to the HB Deferred Compensation Plan to give effect to the intention of this Section and Exhibit C, after an opportunity to review any such amendment. 6. TERMINATION. Officer's employment may be terminated before the expiration of this Agreement as described in this Section, in which event Officer's compensation and benefits shall terminate except as otherwise provided in this Agreement. 6.1 For Cause. Upon Umpqua's termination of Officer for Cause (as defined in Section 7.1 below) ("Termination For Cause"). 6.2 Without Cause. Upon Umpqua's termination of Officer without Cause, with or without notice, at any time in Umpqua's sole discretion, for any reason other than for Cause or for no reason ("Termination Without Cause"). A Change in Control does not in itself constitute Termination Without Cause. 6.3 For Good Reason. Upon Officer's termination of the employment for Good Reason (as defined in Section 7.2 below) ("Termination For Good Reason"). 3

6.4 Death or Disability. Upon Officer's death or Disability (as defined in Section 7.3 below). 6.5 Resignation. Upon Officer's voluntary resignation without Good Reason ("Resignation"), written notice of which Officer must give Umpqua at least six (6) months in advance of Resignation. 7. DEFINITIONS. 7.1 Cause. For the purposes of this Agreement, "Cause" for Officer's termination will exist upon the occurrence of one or more of the following events: (a) Dishonest or fraudulent conduct by Officer with respect to the performance of Officer's duties with Umpqua; (b) Conduct by Officer that materially discredits Umpqua or any of its subsidiaries or is materially detrimental to the reputation of Umpqua or any of its subsidiaries, including but not limited to conviction or a plea of nolo contendere of Officer of a felony or crime involving moral turpitude; (c) Officer's willful misconduct or gross negligence in performance of Officer's duties under this Agreement,

6.4 Death or Disability. Upon Officer's death or Disability (as defined in Section 7.3 below). 6.5 Resignation. Upon Officer's voluntary resignation without Good Reason ("Resignation"), written notice of which Officer must give Umpqua at least six (6) months in advance of Resignation. 7. DEFINITIONS. 7.1 Cause. For the purposes of this Agreement, "Cause" for Officer's termination will exist upon the occurrence of one or more of the following events: (a) Dishonest or fraudulent conduct by Officer with respect to the performance of Officer's duties with Umpqua; (b) Conduct by Officer that materially discredits Umpqua or any of its subsidiaries or is materially detrimental to the reputation of Umpqua or any of its subsidiaries, including but not limited to conviction or a plea of nolo contendere of Officer of a felony or crime involving moral turpitude; (c) Officer's willful misconduct or gross negligence in performance of Officer's duties under this Agreement, including but not limited to Officer's refusal to comply in any material respect with the legal directives of the Board or the Supervisor, if such misconduct or negligence has not been remedied or is not being remedied to the Board's reasonable satisfaction within thirty (30) days after written notice, including a detailed description of the misconduct or negligence, has been delivered by the Board to Officer; (d) An order or directive from a state or federal banking regulatory agency requesting or requiring removal of Officer or a finding by any such agency that Officer's performance threatens the safety or soundness of Umpqua or any of its subsidiaries; or (e) Material breach of Officer's fiduciary duties to Umpqua if such breach has not been remedied or is not being remedied to the Board's reasonable satisfaction within thirty (30) days after written notice, including a detailed description of the breach, has been delivered by the Board to Officer. 7.2 Good Reason. For purposes of this Agreement, "Good Reason" for Officer's resignation of employment will exist upon the occurrence of one or more of the following events, without Officer's consent, if Officer has informed Umpqua in writing of the circumstances described below in this Section 7.2 that could give rise to resignation for Good Reason and Umpqua has not removed the circumstances within thirty (30) days of the written notice: 4

(a) A reduction of Officer's Base Salary, unless the reduction is in connection with, and commensurate with, reductions in the salaries of all or substantially all executive officers of Umpqua; (b) A material reduction in Executive's title or responsibilities; (c) A relocation of Officer's principal office, such that Officer's one-way commute distance from the location of his office as of the Effective Date is increased by more than forty (40) miles; (d) Failure of Umpqua's successor to assume and perform this Agreement; or (e) Any material breach by Umpqua of this Agreement. 7.3 Disability. For purposes of this Agreement, "Disability" shall mean that (i) Officer has been unable to perform Officer's duties under this Agreement as a result of Officer's incapacity due to physical or mental illness for at least 90 consecutive calendar days or 150 calendar days during any consecutive 12 month period and (ii) a physician selected by Umpqua and its insurers and acceptable to Officer or Officer's legal representative (with such agreement on acceptability of the physician not to be unreasonably withheld), determines the incapacity to be (a) total and permanent and (b) prohibiting of Officer's ability to perform the essential functions of Officer's position with or without reasonable accommodation.

(a) A reduction of Officer's Base Salary, unless the reduction is in connection with, and commensurate with, reductions in the salaries of all or substantially all executive officers of Umpqua; (b) A material reduction in Executive's title or responsibilities; (c) A relocation of Officer's principal office, such that Officer's one-way commute distance from the location of his office as of the Effective Date is increased by more than forty (40) miles; (d) Failure of Umpqua's successor to assume and perform this Agreement; or (e) Any material breach by Umpqua of this Agreement. 7.3 Disability. For purposes of this Agreement, "Disability" shall mean that (i) Officer has been unable to perform Officer's duties under this Agreement as a result of Officer's incapacity due to physical or mental illness for at least 90 consecutive calendar days or 150 calendar days during any consecutive 12 month period and (ii) a physician selected by Umpqua and its insurers and acceptable to Officer or Officer's legal representative (with such agreement on acceptability of the physician not to be unreasonably withheld), determines the incapacity to be (a) total and permanent and (b) prohibiting of Officer's ability to perform the essential functions of Officer's position with or without reasonable accommodation. 7.4 Change in Control. For purposes of this Agreement, a "Change in Control" shall be deemed to have occurred when any of the following events take place: (a) Any person (including any individual or entity), or persons acting in concert, become(s) the beneficial owner of voting shares representing fifty percent (50%) or more of Umpqua. (b) A majority of the Board is removed from office by a vote of the Umpqua's shareholders over the recommendation of the Board then serving. (c) Umpqua is a party to a plan of merger or plan of exchange and upon consummation of such plan, the shareholders of Umpqua immediately prior to the transaction do not own or continue to own (i) at least forty percent (40%) of the shares of the surviving company (if the then current CEO of Umpqua continues as CEO of the surviving organization), or (ii) at least a majority of the shares of the surviving organization (if the then current CEO of Umpqua does not continue as CEO of the surviving organization). 5

8. PAYMENT UPON TERMINATION. Upon termination of Officer's employment for any of the reasons set forth in Section 6 above, Officer will receive payment for all Base Salary and benefits accrued as of the date of Officer's termination ("Earned Compensation"), which shall be paid by the end of the business day following termination or sooner if required by applicable law. 9. SEVERANCE BENEFIT. In the event of Termination Without Cause or Termination for Good Reason, in addition to receiving Earned Compensation, Officer will receive a severance benefit equal to nine (9) months Base Salary, based on Officer's Base Salary just prior to termination (the "Severance Benefit"). The Severance Benefit shall be paid in equal installments over the number of months of continued base salary, starting on the next regular payday following termination. Receipt of the Severance Benefit is conditioned on Officer having executed the Separation Agreement in substantially the form attached hereto as Exhibit D and the revocation period having expired without Officer having revoked the Separation Agreement. Receipt and continued receipt of the Severance Benefit is further conditioned on Officer not being in material violation of any material term of this Agreement or in material violation of any material term of the Separation Agreement. Officer shall not be required to mitigate the amount of any payment under this Section (whether by seeking new employment or otherwise) and no such payment shall be reduced by earnings that Officer may receive from any other source. 10. CHANGE IN CONTROL BENEFIT. After announcement of a proposed Change in Control and for a period continuing for one year following a Change in Control, in the event of Termination Without Cause or Termination for Good Reason, instead of receiving the Severance Benefit set forth in Section 9 above, Officer

8. PAYMENT UPON TERMINATION. Upon termination of Officer's employment for any of the reasons set forth in Section 6 above, Officer will receive payment for all Base Salary and benefits accrued as of the date of Officer's termination ("Earned Compensation"), which shall be paid by the end of the business day following termination or sooner if required by applicable law. 9. SEVERANCE BENEFIT. In the event of Termination Without Cause or Termination for Good Reason, in addition to receiving Earned Compensation, Officer will receive a severance benefit equal to nine (9) months Base Salary, based on Officer's Base Salary just prior to termination (the "Severance Benefit"). The Severance Benefit shall be paid in equal installments over the number of months of continued base salary, starting on the next regular payday following termination. Receipt of the Severance Benefit is conditioned on Officer having executed the Separation Agreement in substantially the form attached hereto as Exhibit D and the revocation period having expired without Officer having revoked the Separation Agreement. Receipt and continued receipt of the Severance Benefit is further conditioned on Officer not being in material violation of any material term of this Agreement or in material violation of any material term of the Separation Agreement. Officer shall not be required to mitigate the amount of any payment under this Section (whether by seeking new employment or otherwise) and no such payment shall be reduced by earnings that Officer may receive from any other source. 10. CHANGE IN CONTROL BENEFIT. After announcement of a proposed Change in Control and for a period continuing for one year following a Change in Control, in the event of Termination Without Cause or Termination for Good Reason, instead of receiving the Severance Benefit set forth in Section 9 above, Officer shall receive 24 months Base Salary, based on Officer's Base Salary just prior to the termination of employment, as well as 200% of the bonus Officer received in the previous year (the aforementioned Base Salary and bonus are collectively referred to as the "Change in Control Benefit"). The Change in Control Benefit shall be paid in equal installments over 24 months, starting on the next regular payday following termination. Receipt of the Change in Control Benefit is conditioned on Officer having executed the Separation Agreement in substantially the form attached hereto as Exhibit D and the revocation period having expired without Officer having revoked the Separation Agreement. Receipt and continued receipt of the Change in Control Benefit is further conditioned on Officer not being in material violation of any material term of this Agreement or in material violation of any material term of the Separation Agreement. Officer shall not be required to mitigate the amount of any payment under this Section (whether by seeking new employment or otherwise) and no such payment shall be reduced by earnings that Officer may receive from any other source. 11. CHANGE IN CONTROL RETENTION BONUS. If Officer remains employed for 12 months following a Change in Control, in addition to Officer's applicable base salary and bonus during that 12 month period, Officer will receive 12 months Base Salary and 50% of the bonus Officer received in the previous year (the aforementioned Base Salary and bonus are collectively referred to as the "Retention Bonus"). The Retention Bonus shall be paid in equal installments over 12 months, starting on the next regular payday following the first anniversary of the Change in Control. If Officer receives a 6

benefit under this Section 11, such benefit shall cease when Officer begins to receive any further benefit under Section 10. 12. EXECUTIVE SEVERANCE PLAN. 12.1 In General. Those provisions of this Agreement (including this Section 12) related to the Severance Benefit set forth in Section 9 and Change in Control Benefit set forth in Section 10 constitute part of the terms of the Umpqua Holdings Corporation Executive Severance Plan (the "Executive Severance Plan") with respect to the Officer, and such terms and the general terms of the Executive Severance Plan established by Umpqua shall comprise the entirety of the Executive Severance Plan as it applies to Officer. Umpqua intends for the Plan to be considered a welfare benefit plan within the meaning of Section 3 (1) of the Employee Retirement Income Security Act ("ERISA"), and a plan which is unfunded and maintained by the Umpqua solely for the purpose of providing benefits for a select group of management or highly compensated employees within the meaning of ERISA Regulation Section 2520.104-24. A copy of the Executive Severance Plan will be furnished to the Officer upon request.

benefit under this Section 11, such benefit shall cease when Officer begins to receive any further benefit under Section 10. 12. EXECUTIVE SEVERANCE PLAN. 12.1 In General. Those provisions of this Agreement (including this Section 12) related to the Severance Benefit set forth in Section 9 and Change in Control Benefit set forth in Section 10 constitute part of the terms of the Umpqua Holdings Corporation Executive Severance Plan (the "Executive Severance Plan") with respect to the Officer, and such terms and the general terms of the Executive Severance Plan established by Umpqua shall comprise the entirety of the Executive Severance Plan as it applies to Officer. Umpqua intends for the Plan to be considered a welfare benefit plan within the meaning of Section 3 (1) of the Employee Retirement Income Security Act ("ERISA"), and a plan which is unfunded and maintained by the Umpqua solely for the purpose of providing benefits for a select group of management or highly compensated employees within the meaning of ERISA Regulation Section 2520.104-24. A copy of the Executive Severance Plan will be furnished to the Officer upon request. 12.2 Administration of Executive Severance Plan. Umpqua's Chief Executive Officer and Human Resources Director are each plan administrators (the "Plan Administrator") of the Executive Severance Plan and the Plan Administrator shall have the discretionary authority to administer and construe the terms of the Executive Severance Plan, including the authority to decide if Officer is entitled to the Severance Benefit or Change in Control Benefit and the authority to determine if there is Termination for Cause or Termination for Good Reason. 12.3 Claims Procedures. Officer may file a claim for a payment under the Executive Severance Plan by filing a written request for such a payment with the Plan Administrator. If the Plan Administrator prescribes a form for such a claim, the claim must be filed on such form. The claim should be sent to the attention of the Plan Administrator of the Executive Severance Plan at the address set forth for Umpqua in Section 19. If the Plan Administrator denies the claim, in whole or in part, the Plan Administrator shall notify the Officer within 90 days of the Plan Administrator's receipt of the claim, unless the Plan Administrator determines that special circumstances require an extension of time for processing the claim. If the Plan Administrator determines that an extension of time is required, written notice of the extension shall be furnished to Officer prior to the termination of the initial 90-day period. Such extension notice shall indicate the special circumstances and the date by which the Plan Administrator expects to issue a determination with respect to the claim. The period of the extension will not exceed 90 days beyond the termination of the original 90-day period. If the Plan Administrator does not provide written notice, Officer may deem the claim denied and seek review according to the appeals procedures set forth below. The notice of denial of Officer's claim shall state: 7

a. the specific reasons for the denial, b. specific references to pertinent provisions of the Executive Severance Plan on which the denial was based; c. a description of any additional material or information needed for Officer to perfect Officer's claim and an explanation of why the material or information is needed, and d. a statement (1) that the Officer may request a review upon written application to the Plan Administrator, review or receive (free of charge) pertinent Plan documents and records, and submit issues and comments in writing, (2) that any appeal that Officer wishes to make of the adverse determination must be in writing to the Plan Administrator within sixty (60) days after Officer receives notice of denial of benefits, and (3) that Officer may bring a civil action under ERISA Section 502(a) following an adverse benefit determination upon review. The notice of denial of benefits shall specify that Officer must forward any appeal to the Plan Administrator at the address provided in such notice. The notice may state that failure to appeal the action to the Plan Administrator in writing within the sixty (60) day period will render the determination final, binding and conclusive.

a. the specific reasons for the denial, b. specific references to pertinent provisions of the Executive Severance Plan on which the denial was based; c. a description of any additional material or information needed for Officer to perfect Officer's claim and an explanation of why the material or information is needed, and d. a statement (1) that the Officer may request a review upon written application to the Plan Administrator, review or receive (free of charge) pertinent Plan documents and records, and submit issues and comments in writing, (2) that any appeal that Officer wishes to make of the adverse determination must be in writing to the Plan Administrator within sixty (60) days after Officer receives notice of denial of benefits, and (3) that Officer may bring a civil action under ERISA Section 502(a) following an adverse benefit determination upon review. The notice of denial of benefits shall specify that Officer must forward any appeal to the Plan Administrator at the address provided in such notice. The notice may state that failure to appeal the action to the Plan Administrator in writing within the sixty (60) day period will render the determination final, binding and conclusive. If Officer appeals to the Plan Administrator, Officer may submit in writing whatever issues and comments Officer believes to be pertinent. The Plan Administrator shall reexamine all facts related to the appeal and make a final determination about whether the denial of benefits is justified under the circumstances. The Plan Administrator shall advise Officer in writing of: a. its decision on appeal, b. the specific reasons for the decision, c. the specific provisions of the Plan on which the decision is based, and d. Officer's right to receive, upon request and free of charge, reasonable access to, and copies of, all relevant documents and records. Notice of the Plan Administrator's decision shall be given within sixty (60) days of Officer's written request for review, unless additional time is required due to special circumstances. In no event shall the Plan Administrator render a decision on an appeal later than one hundred twenty (120) days after receiving a request for a review. If the Plan Administrator fails to provide a decision with respect to Officer's appeal within the 60 (or, if applicable, 120) day period Officer may deem his or her appeal denied and may pursue the arbitration remedy set forth below. In the event that Officer fails to pursue his or her administrative remedies as set forth above within the specified periods, Officer shall have no further right to the benefits subject to 8

Officer's claim and agrees by executing this Agreement that he or she shall have no right to pursue such claim in arbitration or in a court of law. For purposes of this Claims Procedure under the Executive Severance Plan, Officer may act through a representative authorized in writing to act on his behalf, provided that such authorization is furnished to the Plan Administrator. In the event that Umpqua denies Officer's appeal of the denial of his or her claim, in whole or in part, Umpqua and Officer may agree to submit the Plan Administrator's decision to binding arbitration in lieu of Officer's right to pursue Officer's claim in any court of law. 13. RESIGNATION PAYMENT. 13.1 Payment due to Resignation or Termination with Cause. If during the one year period beginning on the

Officer's claim and agrees by executing this Agreement that he or she shall have no right to pursue such claim in arbitration or in a court of law. For purposes of this Claims Procedure under the Executive Severance Plan, Officer may act through a representative authorized in writing to act on his behalf, provided that such authorization is furnished to the Plan Administrator. In the event that Umpqua denies Officer's appeal of the denial of his or her claim, in whole or in part, Umpqua and Officer may agree to submit the Plan Administrator's decision to binding arbitration in lieu of Officer's right to pursue Officer's claim in any court of law. 13. RESIGNATION PAYMENT. 13.1 Payment due to Resignation or Termination with Cause. If during the one year period beginning on the Effective Date, Officer terminates his employment by Resignation or is terminated for Cause, Officer will forfeit $250,000 of his interest in the HB Deferred Compensation Plan and agrees to instruct the trustee of the Rabbi Trust to transfer such funds to Umpqua. 13.2 Reasonableness of Termination Payment. Officer acknowledges and agrees that Officer's failure to fulfill the full three-year commitment to Umpqua will deprive it of his unique abilities and experience with Humboldt. The parties agree that the actual monetary damage to Umpqua that is likely to result due to Termination is difficult to predict; however, the parties agree that the amount of damage that would result will likely be most significant in the first year of employment because Umpqua will not have had time to familiarize itself with the California Region's employees and customers and integrate the California Region's operations into existing Umpqua operations. The parties, therefore, agree that the forfeiture amount set forth in Section 13.1 above is reasonable and not a penalty in light of the aforementioned considerations and the difficulties of proof of the actual damages that would be incurred by Umpqua. 14. CONFIDENTIAL INFORMATION. The parties acknowledge that in the course of Officer's duties, Officer will have access to and become familiar with certain proprietary and confidential information of Umpqua and its subsidiaries not known by its actual or potential competitors. Officer acknowledges that such information constitutes valuable, special, and unique assets of Umpqua's business, even though such information may not be of a technical nature and may not be protected under trade secret or related laws. Officer agrees to hold in a fiduciary capacity and not use for Officer's benefit, nor reveal, communicate, or divulge during the period of Officer's employment with Umpqua or at any time thereafter, and in any manner whatsoever, any such data and confidential information of any kind, nature, or description concerning any matters affecting or relating to Umpqua's business, its customers, or its services, including information developed by Employee, alone or with others, or entrusted to Umpqua by its customers or others, to any person, firm, entity, or company other than Umpqua or persons, firms, entities, or companies designated by Umpqua. Officer agrees that all memoranda, notes, records, papers, customer files, and other documents, 9

and all copies thereof relating to Umpqua's operations or business, or matters related to any of Umpqua's customers, some of which may be prepared by Officer, and all objects associated therewith in any way obtained by Officer, shall be Umpqua's property ("Umpqua Property"). Upon termination or at Umpqua's request, Officer shall promptly return all the Umpqua Property to Umpqua. 15. DISPUTE RESOLUTION. Except where such matters are deemed governed by ERISA and are subject to Section 12 above, the parties agree to submit any dispute arising under this Agreement to final, binding, private arbitration in Portland, Oregon. This includes not only disputes about the meaning or performance of the Agreement, but disputes about its negotiation, drafting, or execution. The dispute will be determined by a single arbitrator in accordance with the then-existing rules of arbitration procedure of Multnomah County Circuit Court, except that there shall be no right of de novo review in court and the arbitrator may charge his or her standard arbitration fees rather than the fees prescribed in the Multnomah County Circuit Court arbitration procedures. The proceeding will be commenced by the filing of a civil complaint in Multnomah County Circuit Court and a simultaneous request for transfer to arbitration. The parties expressly agree that they may choose an arbitrator

and all copies thereof relating to Umpqua's operations or business, or matters related to any of Umpqua's customers, some of which may be prepared by Officer, and all objects associated therewith in any way obtained by Officer, shall be Umpqua's property ("Umpqua Property"). Upon termination or at Umpqua's request, Officer shall promptly return all the Umpqua Property to Umpqua. 15. DISPUTE RESOLUTION. Except where such matters are deemed governed by ERISA and are subject to Section 12 above, the parties agree to submit any dispute arising under this Agreement to final, binding, private arbitration in Portland, Oregon. This includes not only disputes about the meaning or performance of the Agreement, but disputes about its negotiation, drafting, or execution. The dispute will be determined by a single arbitrator in accordance with the then-existing rules of arbitration procedure of Multnomah County Circuit Court, except that there shall be no right of de novo review in court and the arbitrator may charge his or her standard arbitration fees rather than the fees prescribed in the Multnomah County Circuit Court arbitration procedures. The proceeding will be commenced by the filing of a civil complaint in Multnomah County Circuit Court and a simultaneous request for transfer to arbitration. The parties expressly agree that they may choose an arbitrator who is not on the list provided by the Multnomah County Circuit Court Arbitration Department, but if they are unable to agree upon the single arbitrator within ten days of receipt of the Arbitration Department list, they will ask the Arbitration Department to make the selection for them. The arbitrator will have full authority to determine all issues, including arbitrability, to award any remedy, including permanent injunctive relief, and to determine any request for costs and expenses in accordance with Section 17.9 of this Agreement. The arbitrator's award may be reduced to final judgment in Multnomah County Circuit Court. The complaining party shall bear the arbitration expenses and may seek their recovery if it prevails. Notwithstanding any other provision of this Agreement, an aggrieved party may seek a temporary restraining order or preliminary injunction in Multnomah County Circuit Court to preserve the status quo during the arbitration proceeding. 16. NOTICES. All notices, requests, demands, and other communications provided for by this Agreement will be in writing and shall be deemed sufficient upon receipt, when delivered personally or by a nationally-recognized delivery service (such as Federal Express), or three (3) business days after being deposited in the U.S. mail as certified mail, return receipt requested, with postage prepaid, if such notice is addressed to the party to be notified at such party's address as set forth below or as subsequently modified by written notice. To Umpqua: Umpqua Holdings Corporation 200 SW Market Street Suite 1900 Portland, Oregon 97201 Attention: Raymond P. Davis, Chief Executive Officer To Officer: Robert Daugherty 9320 Los Lagos Circle South Granite Bay, CA 95746 10

17. GENERAL PROVISIONS. 17.1 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by federal ERISA, as it relates to the Severance Benefit and Change in Control Benefit as discussed in Section 12 above, and otherwise by the laws of the State of Oregon. 17.2 Saving Provision. If any part of this Agreement is held to be unenforceable, it shall not affect any other part. If any part of this Agreement is held to be unenforceable as written, it shall be enforced to the maximum extent allowed by applicable law. 17.3 Survival Provision. The confidential information and dispute resolution provisions of this Agreement shall survive after termination of this Agreement, and shall be enforceable regardless of any claim Employee may have against Umpqua. Also, if any benefits provided in Sections 9, 10, or 11 of this Agreement are still owed, or claims pursuant to Section 12, 13, or 14 are still pending, at the time of termination of this Agreement, this Agreement shall continue in force, with respect to those obligations or claims, until such benefits are paid in full or claims are resolved in full. 17.4 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

17. GENERAL PROVISIONS. 17.1 Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by federal ERISA, as it relates to the Severance Benefit and Change in Control Benefit as discussed in Section 12 above, and otherwise by the laws of the State of Oregon. 17.2 Saving Provision. If any part of this Agreement is held to be unenforceable, it shall not affect any other part. If any part of this Agreement is held to be unenforceable as written, it shall be enforced to the maximum extent allowed by applicable law. 17.3 Survival Provision. The confidential information and dispute resolution provisions of this Agreement shall survive after termination of this Agreement, and shall be enforceable regardless of any claim Employee may have against Umpqua. Also, if any benefits provided in Sections 9, 10, or 11 of this Agreement are still owed, or claims pursuant to Section 12, 13, or 14 are still pending, at the time of termination of this Agreement, this Agreement shall continue in force, with respect to those obligations or claims, until such benefits are paid in full or claims are resolved in full. 17.4 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. 17.5 Entire Agreement. This Agreement constitutes the sole agreement of the parties regarding Officer's benefits in the event of termination or Change in Control and together with Umpqua's employee handbook governs the terms of Officer's employment. Where there is a conflict between the employee handbook and this Agreement, the terms of this Agreement shall govern. 17.6 Previous Agreements. This Agreement replaces in its entirety the HB Agreement and supersedes all prior oral and written agreements between the Officer and Umpqua, or any affiliates or representatives of Umpqua regarding the subject matters set forth herein. 17.7 Waiver. No waiver of any provision of this Agreement shall be valid unless in writing, signed by the party against whom the waiver is sought to be enforced. The waiver of any breach of this Agreement or failure to enforce any provision of this Agreement shall not waive any later breach. 17.8 Assignment. Officer shall not assign or transfer any of Officer's rights pursuant to this Agreement, wholly or partially, to any other person or to delegate the performance of its duties under the terms of 11

this Agreement. The rights and obligations of Umpqua under this Agreement shall inure to the benefit of and be binding in each and every respect upon the direct and indirect successors and assigns of Umpqua, regardless of the manner in which the successors or assigns succeed to the interests or assets of Umpqua. This Agreement shall not be terminated by the voluntary or involuntary dissolution of Umpqua, by any merger, consolidation or acquisition where Umpqua is not the surviving corporation, by any transfer of all or substantially all of Umpqua's assets, or by any other change in Umpqua's structure or the manner in which Umpqua's business or assets are held. Officer's employment shall not be deemed terminated upon the occurrence of one of the foregoing events. In the event of any merger, consolidation or transfer of assets, this Agreement shall be binding upon and shall inure to the benefit of the surviving corporation or the corporation to which the assets are transferred. 17.9 Attorneys' Fees. If either party institutes a proceeding to enforce its rights under, or to recover damages for breach of, this Agreement, the prevailing party shall be awarded all costs and expenses of the proceeding, including, but not limited to, attorneys' fees, filing and service fees, witness fees, and arbitrator's fees. If arbitration is commenced, the arbitrator will have full authority and complete discretion to determine the "prevailing party" and the amount of costs and expenses to be awarded under this paragraph. 18. ADVICE OF COUNSEL. OFFICER ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, OFFICER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS

this Agreement. The rights and obligations of Umpqua under this Agreement shall inure to the benefit of and be binding in each and every respect upon the direct and indirect successors and assigns of Umpqua, regardless of the manner in which the successors or assigns succeed to the interests or assets of Umpqua. This Agreement shall not be terminated by the voluntary or involuntary dissolution of Umpqua, by any merger, consolidation or acquisition where Umpqua is not the surviving corporation, by any transfer of all or substantially all of Umpqua's assets, or by any other change in Umpqua's structure or the manner in which Umpqua's business or assets are held. Officer's employment shall not be deemed terminated upon the occurrence of one of the foregoing events. In the event of any merger, consolidation or transfer of assets, this Agreement shall be binding upon and shall inure to the benefit of the surviving corporation or the corporation to which the assets are transferred. 17.9 Attorneys' Fees. If either party institutes a proceeding to enforce its rights under, or to recover damages for breach of, this Agreement, the prevailing party shall be awarded all costs and expenses of the proceeding, including, but not limited to, attorneys' fees, filing and service fees, witness fees, and arbitrator's fees. If arbitration is commenced, the arbitrator will have full authority and complete discretion to determine the "prevailing party" and the amount of costs and expenses to be awarded under this paragraph. 18. ADVICE OF COUNSEL. OFFICER ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, OFFICER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF. UMPQUA HOLDINGS CORPORATION By: Raymond P. Davis, Chief Executive Officer OFFICER Robert M. Daugherty 12

EXHIBIT A - EMPLOYMENT AGREEMENT PERFORMANCE BONUS CRITERIA Officer shall be entitled to the Performance Bonus if the following criteria are met for the given fiscal year by the Umpqua bank branches in California excluding any branch acquisitions after the Effective Date (the "California Region"): 2004 - Net Income. Pre-Tax Net Income from the California Region for the period from January 1, 2004 to December 31, 2004 equals $1.06 per share (excluding impact of merger-related expenses) on Humboldt's fully diluted shares outstanding as of the Effective Date. - Integration/Synergy. Accomplishment of the following integration/synergy goals by December 31, 2004: [To be determined by Umpqua and Officer prior to the Effective Date]. - Growth. Accomplishment by the California Region of the following growth goals for the period of January 1, 2004 (based on pro forma inclusion of Feather River) to December 31, 2004. Increase in Core Deposits by 8%

EXHIBIT A - EMPLOYMENT AGREEMENT PERFORMANCE BONUS CRITERIA Officer shall be entitled to the Performance Bonus if the following criteria are met for the given fiscal year by the Umpqua bank branches in California excluding any branch acquisitions after the Effective Date (the "California Region"): 2004 - Net Income. Pre-Tax Net Income from the California Region for the period from January 1, 2004 to December 31, 2004 equals $1.06 per share (excluding impact of merger-related expenses) on Humboldt's fully diluted shares outstanding as of the Effective Date. - Integration/Synergy. Accomplishment of the following integration/synergy goals by December 31, 2004: [To be determined by Umpqua and Officer prior to the Effective Date]. - Growth. Accomplishment by the California Region of the following growth goals for the period of January 1, 2004 (based on pro forma inclusion of Feather River) to December 31, 2004. Increase in Core Deposits by 8% Increase in loans by 10% Subsequent Years Performance Bonus criteria for 2005, 2006, and 2007 to be determined by Umpqua and Officer by January 1 of the respective year. 1

EXHIBIT B - EMPLOYMENT AGREEMENT CHANGE IN CONTROL BONUS 1. Special Incentive Bonus. Special Incentive Bonus as set forth in Section 7(b)(ii)(2) and (3) of the HB Agreement, provided the requisite stock price targets are satisfied. Such amount, if any, will be deferred in accordance with Section 5.7 of this Agreement. 2. Accelerated Option Granting. Accelerated grant of options scheduled to be granted January 1, 2005 under Section 7(c) of the HB Agreement. Such grant will be made by Umpqua in accordance with Section 5.6 of this Agreement. 3. Accelerated Vesting of Options. Full vesting of all unvested equity-based compensation, including but not limited to those stock options in item 2 above, as required by Section 14(b)(i)(4) of the HB Agreement and as provided in Section 5.6 of this Agreement. 4. Change in Control Benefit. Change in Control payment calculated in accordance with Section 14(b)(i)(1) of the HB Agreement. Such amount will be deferred under the HB Deferred Compensation Plan in accordance with Section 5.7 of this Agreement. 5. Incentive Compensation. Earned but unpaid incentive compensation awarded as set forth in Section 7(b)(i) and 14(b)(2) of the HB Agreement, in accordance with Section 5.2 of this Agreement. Such amount will be deferred under the HB Deferred Compensation Plan.

EXHIBIT B - EMPLOYMENT AGREEMENT CHANGE IN CONTROL BONUS 1. Special Incentive Bonus. Special Incentive Bonus as set forth in Section 7(b)(ii)(2) and (3) of the HB Agreement, provided the requisite stock price targets are satisfied. Such amount, if any, will be deferred in accordance with Section 5.7 of this Agreement. 2. Accelerated Option Granting. Accelerated grant of options scheduled to be granted January 1, 2005 under Section 7(c) of the HB Agreement. Such grant will be made by Umpqua in accordance with Section 5.6 of this Agreement. 3. Accelerated Vesting of Options. Full vesting of all unvested equity-based compensation, including but not limited to those stock options in item 2 above, as required by Section 14(b)(i)(4) of the HB Agreement and as provided in Section 5.6 of this Agreement. 4. Change in Control Benefit. Change in Control payment calculated in accordance with Section 14(b)(i)(1) of the HB Agreement. Such amount will be deferred under the HB Deferred Compensation Plan in accordance with Section 5.7 of this Agreement. 5. Incentive Compensation. Earned but unpaid incentive compensation awarded as set forth in Section 7(b)(i) and 14(b)(2) of the HB Agreement, in accordance with Section 5.2 of this Agreement. Such amount will be deferred under the HB Deferred Compensation Plan. 6. Reimbursements. Reimbursement of expenses not yet reimbursed by Humboldt as of the Effective Date, receipts for which have been provided to Umpqua no later 30 days after the Effective Date. 1

EXHIBIT C - EMPLOYMENT AGREEMENT DEFERRED COMPENSATION INTERESTS The following amounts shall be deposited by Umpqua as of the Effective Date in the Rabbi Trust referenced in Section 5.7 of the Agreement and maintained in connection with the HB Deferred Compensation Plan. 1. Special Incentive Bonus amount under Section 7(b)(ii)(2) of the HB Agreement, provided the requisite stock price target is satisfied. Total possible amount: $100,000 2. Special Incentive Bonus amount under Section 7(b)(ii)(3) of the HB Agreement, provided the requisite stock price target is satisfied. Total possible amount: $100,000 3. Change in Control bonus under Section 14(b)(i)(1) of the HB Agreement. Total amount of $901,084. 4. Earned but unpaid incentive compensation awarded as set forth in Section 7(b)(i) and Section 14(b)(2) of the HB Agreement, in accordance with Section 5.2 of this Agreement. 5. Previously deferred amounts under the HB Deferred Compensation Plan.

EXHIBIT C - EMPLOYMENT AGREEMENT DEFERRED COMPENSATION INTERESTS The following amounts shall be deposited by Umpqua as of the Effective Date in the Rabbi Trust referenced in Section 5.7 of the Agreement and maintained in connection with the HB Deferred Compensation Plan. 1. Special Incentive Bonus amount under Section 7(b)(ii)(2) of the HB Agreement, provided the requisite stock price target is satisfied. Total possible amount: $100,000 2. Special Incentive Bonus amount under Section 7(b)(ii)(3) of the HB Agreement, provided the requisite stock price target is satisfied. Total possible amount: $100,000 3. Change in Control bonus under Section 14(b)(i)(1) of the HB Agreement. Total amount of $901,084. 4. Earned but unpaid incentive compensation awarded as set forth in Section 7(b)(i) and Section 14(b)(2) of the HB Agreement, in accordance with Section 5.2 of this Agreement. 5. Previously deferred amounts under the HB Deferred Compensation Plan. Total of $173,306 deferred as of March 10, 2004, which is as of that date at $175,000. 1

EXHIBIT D - EMPLOYMENT AGREEMENT EMPLOYMENT SEPARATION AGREEMENT AND RELEASE OF CLAIMS This is a confidential agreement between you, Robert Daugherty, and us, Umpqua Holdings Corporation. This agreement is dated for reference purposes _____________, 20___, which is the date we delivered this agreement to you for your consideration. For purposes of this Agreement Umpqua Holdings Corporation together with each of its subsidiaries or affiliates is referred to as "Umpqua." 1. TERMINATION OF EMPLOYMENT. Your employment terminates [or was terminated] on _______________, 20___ (the "Separation Date"). 2. PAYMENTS. In exchange for your agreeing to the release of claims and other terms in this agreement, we will pay you the Severance Benefit specified in Section 9 or Section 10, as appropriate, of the Employment Agreement between you and Umpqua Holdings Corporation dated March 13, 2004 (the "Employment Agreement"). You acknowledge that we are not obligated to make these payments to you unless you agree to comply with the terms of this agreement. 3. COBRA CONTINUATION COVERAGE. Your normal employee participation in Umpqua's group health coverage will terminate on the Separation Date. Continuation of group health coverage thereafter will be made available to you and your dependents pursuant to federal law (COBRA). As long as you timely elect COBRA continuation coverage, Umpqua will waive the requirement that you pay for the cost of continuation coverage through the Separation Date. Continuation of group health coverage thereafter is entirely at your expense, as provided under COBRA. 4. TERMINATION OF BENEFITS. Except as provided in paragraph 3 above, your participation in all employee benefit plans and programs ended on the Separation Date. Your rights under any pension benefit or

EXHIBIT D - EMPLOYMENT AGREEMENT EMPLOYMENT SEPARATION AGREEMENT AND RELEASE OF CLAIMS This is a confidential agreement between you, Robert Daugherty, and us, Umpqua Holdings Corporation. This agreement is dated for reference purposes _____________, 20___, which is the date we delivered this agreement to you for your consideration. For purposes of this Agreement Umpqua Holdings Corporation together with each of its subsidiaries or affiliates is referred to as "Umpqua." 1. TERMINATION OF EMPLOYMENT. Your employment terminates [or was terminated] on _______________, 20___ (the "Separation Date"). 2. PAYMENTS. In exchange for your agreeing to the release of claims and other terms in this agreement, we will pay you the Severance Benefit specified in Section 9 or Section 10, as appropriate, of the Employment Agreement between you and Umpqua Holdings Corporation dated March 13, 2004 (the "Employment Agreement"). You acknowledge that we are not obligated to make these payments to you unless you agree to comply with the terms of this agreement. 3. COBRA CONTINUATION COVERAGE. Your normal employee participation in Umpqua's group health coverage will terminate on the Separation Date. Continuation of group health coverage thereafter will be made available to you and your dependents pursuant to federal law (COBRA). As long as you timely elect COBRA continuation coverage, Umpqua will waive the requirement that you pay for the cost of continuation coverage through the Separation Date. Continuation of group health coverage thereafter is entirely at your expense, as provided under COBRA. 4. TERMINATION OF BENEFITS. Except as provided in paragraph 3 above, your participation in all employee benefit plans and programs ended on the Separation Date. Your rights under any pension benefit or other plans in which you may have participated will be determined in accordance with the written plan documents governing those plans. 5. FULL PAYMENT. You acknowledge having received full payment of all compensation of any kind (including wages, salary, vacation, sick leave, commissions, bonuses and incentive compensation) that you earned as a result of your employment by us. 6. NO FURTHER COMPENSATION. Any and all agreements to pay you bonuses or other incentive compensation are terminated. You understand and agree that you have no right to receive any further payments for bonuses or other incentive compensation. We owe no further compensation or benefits of any kind, except as described above. 7. RELEASE OF CLAIMS. (a) You hereby release (i) Umpqua and its subsidiaries, affiliates, and benefit plans, (ii) each of Umpqua's past and present shareholders, officers, directors, agents, employees, representatives, administrators, fiduciaries and attorneys, and (iii) the predecessors, successors, transferees and assigns of each of the persons and entities described in this sentence, from any and all claims of any kind, known or unknown, that arose on or before the date you signed this agreement. 1

(b) The claims you are releasing include, without limitation, claims of wrongful termination, claims of constructive discharge, claims arising out of employment agreements, representations or policies related to your employment, claims arising under federal, state or local laws or ordinances prohibiting discrimination or harassment or requiring accommodation on the basis of age, race, color, national origin, religion, sex, disability, marital status, sexual orientation or any other status, claims of failure to accommodate a disability or religious practice, claims for violation of public policy, claims of retaliation, claims of failure to assist you in applying for future position openings, claims of failure to hire you for future position openings, claims for wages or compensation of any kind (including overtime claims), claims of tortious interference with contract or expectancy, claims of fraud or

(b) The claims you are releasing include, without limitation, claims of wrongful termination, claims of constructive discharge, claims arising out of employment agreements, representations or policies related to your employment, claims arising under federal, state or local laws or ordinances prohibiting discrimination or harassment or requiring accommodation on the basis of age, race, color, national origin, religion, sex, disability, marital status, sexual orientation or any other status, claims of failure to accommodate a disability or religious practice, claims for violation of public policy, claims of retaliation, claims of failure to assist you in applying for future position openings, claims of failure to hire you for future position openings, claims for wages or compensation of any kind (including overtime claims), claims of tortious interference with contract or expectancy, claims of fraud or negligent misrepresentation, claims of breach of privacy, defamation claims, claims of intentional or negligent infliction of emotional distress, claims of unfair labor practices, claims arising out of any claimed right to stock or stock options, claims for attorneys' fees or costs, and any other claims that are based on any legal obligations that arise out of or are related to your employment relationship with us. (c) You specifically waive any rights or claims that you may have under the California Labor Code, the Civil Rights Act of 1964 (including Title VII of that Act), the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities Act of 1990 (ADA), the Fair Labor Standards Act of 1938 (FLSA), the Family and Medical Leave Act of 1993 (FMLA), the Worker Adjustment and Retraining Notification Act (WARN), the Employee Retirement Income Security Act of 1974 (ERISA), the National Labor Relations Act (NLRA), and all similar federal, state and local laws. (d) You agree not to seek any personal recovery (of money damages, injunctive relief or otherwise) for the claims you are releasing in this agreement, either through any complaint to any governmental agency or otherwise. You agree never to start any lawsuit or arbitration asserting any of the claims you are releasing in this agreement. You represent and warrant that you have not initiated any complaint, charge, lawsuit or arbitration involving any of the claims you are releasing in this agreement. You agree not to apply for future employment with Umpqua and that Umpqua has no obligation to consider you for future employment. (e) You represent and warrant that you have all necessary authority to enter into this agreement (including, if you are married, on behalf of your marital community) and that you have not transferred any interest in any claims to your spouse or to any third party. (f) This agreement does not affect your rights, if any, to receive pension plan benefits, medical plan benefits, unemployment compensation benefits or workers' compensation benefits. This agreement also does not affect your rights, if any, under agreements, bylaw provisions, insurance or otherwise, to be indemnified, defended or held harmless in connection with claims that may be asserted against you by third parties. (g) You understand that you are releasing potentially unknown claims, and that you have limited knowledge with respect to some of the claims being released. You acknowledge that there is a risk that, after signing this agreement, you may learn information that might have affected your decision to enter into this agreement. You assume this risk and all other risks of any mistake in entering into this agreement. You agree that this release is fairly and knowingly made. (h) You are giving up all rights and claims of any kind, known or unknown, except for the rights specifically given to you in this agreement. 2

8. NO ADMISSION OF LIABILITY. Neither this agreement nor the payments made under this agreement are an admission of liability or wrongdoing by Umpqua. 9. UMPQUA MATERIALS. You represent and warrant that you have, or no later than the Separation Date will have, returned all keys, credit cards, documents and other materials that belong to us. 10. NONDISCLOSURE AGREEMENT. You will comply with the covenant regarding confidential information in Section 13 of the Employment Agreement. 11. NO DISPARAGEMENT. You may not disparage Umpqua or Umpqua's business or products, and may not

8. NO ADMISSION OF LIABILITY. Neither this agreement nor the payments made under this agreement are an admission of liability or wrongdoing by Umpqua. 9. UMPQUA MATERIALS. You represent and warrant that you have, or no later than the Separation Date will have, returned all keys, credit cards, documents and other materials that belong to us. 10. NONDISCLOSURE AGREEMENT. You will comply with the covenant regarding confidential information in Section 13 of the Employment Agreement. 11. NO DISPARAGEMENT. You may not disparage Umpqua or Umpqua's business or products, and may not encourage any third parties to sue Umpqua. 12. COOPERATION REGARDING OTHER CLAIMS. If any claim is asserted by or against Umpqua as to which you have relevant knowledge, you will reasonably cooperate with us in the prosecution or defense of that claim, including by providing truthful information and testimony as reasonably requested by us. 13. NO INTERFERENCE. You will not, apart from good faith competition, interfere with Umpqua's relationships with customers, employees, vendors, or others. 14. INDEPENDENT LEGAL COUNSEL. You are advised and encouraged to consult with an attorney before signing this agreement. You acknowledge that you have had an adequate opportunity to do so. 15. CONSIDERATION PERIOD. You have 21 days from the date this agreement is given to you to consider this agreement before signing it. You may use as much or as little of this 21-day period as you wish before signing. If you do not sign and return this agreement within this 21-day period, you will not be eligible to receive the benefits described in this agreement. 16. REVOCATION PERIOD AND EFFECTIVE DATE. You have 7 calendar days after signing this agreement to revoke it. To revoke this agreement after signing it, you must deliver a written notice of revocation to Umpqua's President before the 7-day period expires. This agreement shall not become effective until the 8th calendar day after you sign it. If you revoke this agreement it will not become effective or enforceable and you will not be entitled to the benefits described in this agreement. 17. GOVERNING LAW. This agreement is governed by the laws of the State of Oregon that apply to contracts executed and to be performed entirely within the State of Oregon. 18. DISPUTE RESOLUTION. Except where such matters are deemed governed by ERISA and are subject to Section 7 above, the parties agree to submit any dispute arising under this Agreement to final, binding, private arbitration in Portland, Oregon. This includes not only disputes about the meaning or performance of the Agreement, but disputes about its negotiation, drafting, or execution. The dispute will be determined by a single arbitrator in accordance with the then-existing rules of arbitration procedure of Multnomah County Circuit Court, except that there shall be no right of de novo review in court and the arbitrator may charge his or her standard arbitration fees rather than the fees prescribed in the Multnomah County Circuit Court arbitration procedures. The proceeding will be commenced by the filing of a civil complaint in Multnomah County Circuit Court and a simultaneous request for transfer to arbitration. The parties expressly agree that they may choose an arbitrator who is not on the list provided by the Multnomah County Circuit Court Arbitration Department, but if they are unable to agree upon the single 3

arbitrator within ten days of receipt of the Arbitration Department list, they will ask the Arbitration Department to make the selection for them. The arbitrator will have full authority to determine all issues, including arbitrability, to award any remedy, including permanent injunctive relief, and to determine any request for costs and expenses in accordance with Section 19 of this Agreement. The arbitrator's award may be reduced to final judgment in Multnomah County Circuit Court. The complaining party shall bear the arbitration expenses and may seek their recovery if it prevails. Notwithstanding any other provision of this Agreement, an aggrieved party may seek a temporary restraining order or preliminary injunction in Multnomah County Circuit Court to preserve the status

arbitrator within ten days of receipt of the Arbitration Department list, they will ask the Arbitration Department to make the selection for them. The arbitrator will have full authority to determine all issues, including arbitrability, to award any remedy, including permanent injunctive relief, and to determine any request for costs and expenses in accordance with Section 19 of this Agreement. The arbitrator's award may be reduced to final judgment in Multnomah County Circuit Court. The complaining party shall bear the arbitration expenses and may seek their recovery if it prevails. Notwithstanding any other provision of this Agreement, an aggrieved party may seek a temporary restraining order or preliminary injunction in Multnomah County Circuit Court to preserve the status quo during the arbitration proceeding. 19. ATTORNEYS' FEES. If either party institutes a proceeding to enforce its rights under, or to recover damages for breach of, this agreement, the prevailing party shall be awarded all costs and expenses of the proceeding, including, but not limited to, attorneys' fees, filing and service fees, witness fees, and arbitrator's fees. If arbitration is commenced, the arbitrator will have full authority and complete discretion to determine the "prevailing party" and the amount of costs and expenses to be awarded under this paragraph. 20. FINAL AND COMPLETE AGREEMENT. This agreement is the final and complete expression of all agreements between us on all subjects and supersedes and replaces all prior discussions, representations, agreements, policies and practices. You acknowledge you are not signing this agreement relying on anything not set out herein. UMPQUA HOLDINGS CORPORATION By: ____________________________________ Ray Davis, Chief Executive Officer I, THE UNDERSIGNED, HAVING BEEN ADVISED TO CONSULT WITH AN ATTORNEY, HEREBY AGREE TO BE BOUND BY THIS AGREEMENT AND CONFIRM THAT I HAVE READ AND UNDERSTOOD EACH PART OF IT. Robert Daugherty Date 4

EXHIBIT 10.4 UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT Effective as of July 10, 2004

UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT EFFECTIVE AS OF JULY 10, 2004 TABLE OF CONTENTS
ARTICLE 1

EXHIBIT 10.4 UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT Effective as of July 10, 2004

UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT EFFECTIVE AS OF JULY 10, 2004 TABLE OF CONTENTS
ARTICLE 1 ESTABLISHMENT OF TRUST TRUST DEPOSITS......................................................... IRREVOCABILITY......................................................... GRANTOR TRUST.......................................................... TRUST ASSETS........................................................... ACCEPTANCE OF TRUST.................................................... ARTICLE 2 PLAN AS PART OF TRUST AGREEMENT INCORPORATION BY REFERENCE............................................. BENEFIT PROVISIONS..................................................... AMENDMENT OF PLAN...................................................... SEPARATE PLAN SUB-ACCOUNTS............................................. CONFLICTS WITH TRUST................................................... TRUSTEE RELIANCE....................................................... ARTICLE 3 PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES PAYMENT SCHEDULE AND TAXES............................................. ENTITLEMENT TO BENEFITS................................................ PAYMENTS BY SPONSOR OR SUBSIDIARIES.................................... ARTICLE 4 TRUSTEE RESPONSIBILITY WHEN SPONSOR IS INSOLVENT CESSATION OF PAYMENTS ON SPONSOR INSOLVENCY............................ CLAIMS OF CREDITORS.................................................... RECOMMENCEMENT OF PAYMENTS............................................. ARTICLE 5 PAYMENTS TO SPONSOR PAYMENTS TO THE SPONSOR................................................

1.1 1.2 1.3 1.4 1.5

1 1 2 2 2

2.1 2.2 2.3 2.4 2.5 2.6

2 2 2 2 3 3

3.1 3.2 3.3

3 4 4

4.1 4.2 4.3

4 4 5

5.1

5

i
ARTICLE 6 INVESTMENT AUTHORITY TRUSTEE AUTHORITY...................................................... INVESTMENT OPTION...................................................... ARTICLE 7 DISPOSITION OF INCOME DISPOSITION OF INCOME..................................................

6.1 6.2

6 7

7.1

8

UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT EFFECTIVE AS OF JULY 10, 2004 TABLE OF CONTENTS
ARTICLE 1 ESTABLISHMENT OF TRUST TRUST DEPOSITS......................................................... IRREVOCABILITY......................................................... GRANTOR TRUST.......................................................... TRUST ASSETS........................................................... ACCEPTANCE OF TRUST.................................................... ARTICLE 2 PLAN AS PART OF TRUST AGREEMENT INCORPORATION BY REFERENCE............................................. BENEFIT PROVISIONS..................................................... AMENDMENT OF PLAN...................................................... SEPARATE PLAN SUB-ACCOUNTS............................................. CONFLICTS WITH TRUST................................................... TRUSTEE RELIANCE....................................................... ARTICLE 3 PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES PAYMENT SCHEDULE AND TAXES............................................. ENTITLEMENT TO BENEFITS................................................ PAYMENTS BY SPONSOR OR SUBSIDIARIES.................................... ARTICLE 4 TRUSTEE RESPONSIBILITY WHEN SPONSOR IS INSOLVENT CESSATION OF PAYMENTS ON SPONSOR INSOLVENCY............................ CLAIMS OF CREDITORS.................................................... RECOMMENCEMENT OF PAYMENTS............................................. ARTICLE 5 PAYMENTS TO SPONSOR PAYMENTS TO THE SPONSOR................................................

1.1 1.2 1.3 1.4 1.5

1 1 2 2 2

2.1 2.2 2.3 2.4 2.5 2.6

2 2 2 2 3 3

3.1 3.2 3.3

3 4 4

4.1 4.2 4.3

4 4 5

5.1

5

i
ARTICLE 6 INVESTMENT AUTHORITY TRUSTEE AUTHORITY...................................................... INVESTMENT OPTION...................................................... ARTICLE 7 DISPOSITION OF INCOME DISPOSITION OF INCOME.................................................. ARTICLE 8 ACCOUNTING BY TRUSTEE ACCOUNTING BY TRUSTEE.................................................. ARTICLE 9 RESPONSIBILITY OF THE TRUSTEE PRUDENT PERSON......................................................... TRUSTEE INDEMNIFICATION................................................ LEGAL COUNSEL.......................................................... HIRING AGENTS.......................................................... TRUSTEE POWERS......................................................... LIMITATION ON POWERS................................................... ARTICLE 10

6.1 6.2

6 7

7.1

8

8.1

8

9.1 9.2 9.3 9.4 9.5 9.6

9 9 9 9 9 10

6.1 6.2

ARTICLE 6 INVESTMENT AUTHORITY TRUSTEE AUTHORITY...................................................... INVESTMENT OPTION...................................................... ARTICLE 7 DISPOSITION OF INCOME DISPOSITION OF INCOME.................................................. ARTICLE 8 ACCOUNTING BY TRUSTEE ACCOUNTING BY TRUSTEE.................................................. ARTICLE 9 RESPONSIBILITY OF THE TRUSTEE PRUDENT PERSON......................................................... TRUSTEE INDEMNIFICATION................................................ LEGAL COUNSEL.......................................................... HIRING AGENTS.......................................................... TRUSTEE POWERS......................................................... LIMITATION ON POWERS................................................... ARTICLE 10 FEES AND EXPENSES OF THE TRUSTEE TRUSTEE EXPENSES AND FEES.............................................. ARTICLE 11 RESIGNATION AND REMOVAL OF THE TRUSTEE TRUSTEE RESIGNATION.................................................... TRUSTEE REMOVAL........................................................ TRANSFER OF ASSETS..................................................... APPOINTMENT OF SUCCESSOR............................................... ARTICLE 12 APPOINTMENT OF SUCCESSOR APPOINTMENT OF SUCCESSOR............................................... TERMINATION............................................................ ARTICLE 13 AMENDMENT OR TERMINATION AMENDMENT.............................................................. TERMINATION............................................................ GOVERNING LAW.......................................................... SUCCESSOR AND ASSIGNS.................................................. TRUSTEE'S SUCCESSORS...................................................

6 7

7.1

8

8.1

8

9.1 9.2 9.3 9.4 9.5 9.6

9 9 9 9 9 10

10.1

10

11.1 11.2 11.3 11.4

10 10 10 10

12.1 12.2

10 11

13.1 13.2 13.3 13.4 13.5

11 11 11 11 11

ii

UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT RECITALS THIS TRUST AGREEMENT is made and entered into effective as of July 10, 2004 by and between Umpqua Holdings Corporation (the "Sponsor"), which, as successor in interest by merger, sponsors the Humboldt Bancorp Deferred Compensation Plan (the "Plan"), and Wells Fargo Bank, a national banking association (the "Trustee"). The Sponsor has established the Plan. The Plan is intended to be a "top hat plan" (i.e., an unfunded plan of deferred compensation maintained for members of a select group of management or highly compensated employees of subsidiaries of the Sponsor under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan's accounts represent the deferred compensation interests of Robert M. Daugherty under a Deferred Compensation Agreement dated December 18, 2003, as

UMPQUA HOLDINGS CORPORATION DEFERRED COMPENSATION PLAN TRUST AGREEMENT RECITALS THIS TRUST AGREEMENT is made and entered into effective as of July 10, 2004 by and between Umpqua Holdings Corporation (the "Sponsor"), which, as successor in interest by merger, sponsors the Humboldt Bancorp Deferred Compensation Plan (the "Plan"), and Wells Fargo Bank, a national banking association (the "Trustee"). The Sponsor has established the Plan. The Plan is intended to be a "top hat plan" (i.e., an unfunded plan of deferred compensation maintained for members of a select group of management or highly compensated employees of subsidiaries of the Sponsor under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Plan's accounts represent the deferred compensation interests of Robert M. Daugherty under a Deferred Compensation Agreement dated December 18, 2003, as amended, and under an Employment Agreement dated March 13, 2004 (collectively, the "Daugherty Agreements"), and of Patrick J. Rusnak under a Deferred Compensation Agreement dated December 29, 2000, as amended, and under an Employment Agreement dated March 13, 2004 (collectively, the "Rusnak Agreements"). The Sponsor wishes to establish an irrevocable trust fund for the purpose of providing a source from which to pay benefits under the Plan, the trust fund being subject to the claims of the Sponsor's creditors in the event of the Sponsor's bankruptcy or insolvency. Contributions to the trust fund shall be held by the Trustee and invested, reinvested and distributed in accordance with the provisions of this Trust Agreement. The Trust established by this Trust Agreement is intended to be a "grantor trust," with the result that the corpus and income of the trust are treated for tax purposes as assets and income of the Sponsor. Accordingly, the Sponsor and the Trustee, intending to be legally bound, declare and agree as follows. ARTICLE 1 ESTABLISHMENT OF TRUST 1.1 TRUST DEPOSITS. The Sponsor shall deposit with the Trustee, in trust, certain funds, as required under the Plan, which funds shall be held, administered and disposed of by the Trustee as provided in this Trust Agreement. 1.2 IRREVOCABILITY. The Trust shall be irrevocable. 1

1.3 GRANTOR TRUST. The Trust is intended to be a grantor trust, of which the Sponsor is the grantor, within the meaning of sub-part E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 TRUST ASSETS. The principal of the Trust, and any earnings, shall be held separate and apart from other funds of the Sponsor and shall be used exclusively for the uses and purposes of the Plan and general insolvency creditors of the Sponsor as set forth in this Trust Agreement. 1.5 ACCEPTANCE OF TRUST. The Trustee accepts the Trust established under this Trust Agreement, and it agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust Agreement. ARTICLE 2

1.3 GRANTOR TRUST. The Trust is intended to be a grantor trust, of which the Sponsor is the grantor, within the meaning of sub-part E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. 1.4 TRUST ASSETS. The principal of the Trust, and any earnings, shall be held separate and apart from other funds of the Sponsor and shall be used exclusively for the uses and purposes of the Plan and general insolvency creditors of the Sponsor as set forth in this Trust Agreement. 1.5 ACCEPTANCE OF TRUST. The Trustee accepts the Trust established under this Trust Agreement, and it agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust Agreement. ARTICLE 2 PLAN AS PART OF TRUST AGREEMENT 2.1 INCORPORATION BY REFERENCE. The Plan (including the deferred compensation provisions of the Daugherty Agreements and the Rusnak Agreements) is expressly incorporated into this Trust Agreement and made a part of this Trust Agreement with the same force and effect as if the Plan had been fully set forth within this Trust Agreement. A copy of the Plan has been delivered to the Trustee. All terms defined in the Plan shall have the same meanings when used in this Trust Agreement unless expressly provided to the contrary. The Sponsor shall deliver to the Trustee copies of all amendments to the Plan made after the date of this Trust Agreement. It is expressly understood, however, that the Trustee is not considered a party to the Plan and that the Sponsor will retain the full responsibility for the interpretation and implementation of Plan provisions. 2.2 BENEFIT PROVISIONS. The terms of the Plan shall govern the amount, form and timing of benefit payments under the Plan and a Plan participant or beneficiary may make application for payment directly to the Sponsor who shall have sole responsibility for determining a participant's or beneficiary's eligibility for payment. 2.3 AMENDMENT OF PLAN. The incorporation of the Plan into this Trust shall not affect the provisions of the Plan concerning the amendment or termination of the Plan. 2.4 SEPARATE PLAN SUB-ACCOUNTS. The Trustee shall establish and maintain separate accounts within the trust for each participant, based on instructions it receives from the sponsor or its designee. Also based on instructions it receives from the Sponsor or its designee, the Trustee shall establish and maintain separate subaccounts to show separately the participant's deferred signing bonus account and employer discretionary contribution account. Each sub-account will separately account for deemed earnings and losses credited or debited to that sub-account, and the applicable deemed investments of that sub-account, based on information provided to the Trustee by the Sponsor or its designee. The Trustee shall have no obligation to verify any information provided by the sponsor or its designee under this section, and will be entitled to rely on that information. 2

2.5 CONFLICTS WITH TRUST. If any provision of the Plan is inconsistent with any provision of this Trust, the terms of this Trust shall control. 2.6 TRUSTEE RELIANCE. Any direction received by the Trustee from the Sponsor or its representatives concerning the Trustee's receipt, holding, disposition, investment, or other treatment of the assets of the Trust shall conclusively be deemed to be in accordance with the terms of the applicable Plan, and the Trustee shall be entitled to rely, and shall be held harmless by the Sponsor in relying, on the propriety of the direction. ARTICLE 3 PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES 3.1 PAYMENT SCHEDULE AND TAXES. The Sponsor shall deliver to the Trustee a schedule (the "Payment

2.5 CONFLICTS WITH TRUST. If any provision of the Plan is inconsistent with any provision of this Trust, the terms of this Trust shall control. 2.6 TRUSTEE RELIANCE. Any direction received by the Trustee from the Sponsor or its representatives concerning the Trustee's receipt, holding, disposition, investment, or other treatment of the assets of the Trust shall conclusively be deemed to be in accordance with the terms of the applicable Plan, and the Trustee shall be entitled to rely, and shall be held harmless by the Sponsor in relying, on the propriety of the direction. ARTICLE 3 PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES 3.1 PAYMENT SCHEDULE AND TAXES. The Sponsor shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates the amounts payable in respect of the Plan participant upon his or her becoming entitled to receive a distribution from the Plan and that provides the form in which the amounts are to be paid (as provided for and available under the Plan) and the time of commencement for the payment of the amounts. Except as otherwise provided in this Trust Agreement, the Trustee shall make payments to the Plan participant or his or her beneficiaries in accordance with the Payment Schedule. The Sponsor shall provide the Trustee with all the information necessary to permit the Trustee to make distributions from the Trust and to withhold all taxes required by law from those distributions. As directed by the Sponsor, the Trustee shall make provision for the withholding of all taxes required by law. The Trustee or its agent shall prepare all tax returns, withholding statements and other tax materials. Trustee shall not be liable for payment of any tax assessed under any existing or future law against the assets of the Trust. With respect to any income tax on the earnings of the assets of the Trust, the taxes shall be paid by Sponsor. While a participant is employed by Sponsor or one of its affiliated companies, such taxes shall be borne by Sponsor; after the participant is no longer an employee of Sponsor or any of its affiliated companies, the amount of such taxes shall be deducted from the assets held in the Trust for the benefit of such participant. In the case of benefit distributions, which are taxable as income from wages, the Sponsor shall calculate and provide to Trustee an itemization of all required taxes required to be withheld from such distributions as wages. The Trustee shall deduct from each benefit distribution and send to Sponsor the tax amount calculated by Sponsor. The Sponsor will remit such taxes to the appropriate tax authority. 3.2 ENTITLEMENT TO BENEFITS. The entitlement of the Plan participant or his or her beneficiaries to benefits under the Plan shall be determined under the terms of the Plan, and any claim for Plan benefits shall be considered and reviewed under the procedures set out in the Plan. 3.3 PAYMENTS BY SPONSOR OR SUBSIDIARIES. The Sponsor may make payment of benefits directly to the Plan participant or his or her beneficiaries as they become due under the terms of the Plan. The Sponsor shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to the Plan participant or his or her beneficiaries. 3

ARTICLE 4 TRUSTEE RESPONSIBILITY WHEN SPONSOR IS INSOLVENT 4.1 CESSATION OF PAYMENTS ON SPONSOR INSOLVENCY. The Trustee shall cease payment of benefits to participants and beneficiaries under the Plan if the Sponsor is Insolvent. The Sponsor shall be considered "Insolvent" for purposes of this Trust Agreement if : (i) the Sponsor is unable to pay its debts as they become due; or (ii) the Sponsor is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 4.2 CLAIMS OF CREDITORS. At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Sponsor under federal and state law as set forth below. (a) The Board of Directors and the chief executive officer of the Sponsor shall have the duty to inform the Trustee in writing of the Sponsor's Insolvency. If a person claiming to be a creditor of the Sponsor alleges in writing to the

ARTICLE 4 TRUSTEE RESPONSIBILITY WHEN SPONSOR IS INSOLVENT 4.1 CESSATION OF PAYMENTS ON SPONSOR INSOLVENCY. The Trustee shall cease payment of benefits to participants and beneficiaries under the Plan if the Sponsor is Insolvent. The Sponsor shall be considered "Insolvent" for purposes of this Trust Agreement if : (i) the Sponsor is unable to pay its debts as they become due; or (ii) the Sponsor is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 4.2 CLAIMS OF CREDITORS. At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Sponsor under federal and state law as set forth below. (a) The Board of Directors and the chief executive officer of the Sponsor shall have the duty to inform the Trustee in writing of the Sponsor's Insolvency. If a person claiming to be a creditor of the Sponsor alleges in writing to the Trustee that the Sponsor has become Insolvent, the Trustee shall determine whether the Sponsor is Insolvent and, pending a determination, the Trustee shall discontinue payment of benefits to Plan participants and beneficiaries. (b) Unless the Trustee has actual knowledge of the Sponsor's Insolvency, or has received notice from the Sponsor or a person claiming to be a creditor alleging that the Sponsor is Insolvent, the Trustee shall have no duty to inquire whether the Sponsor is Insolvent. The Trustee may in all events rely on any evidence concerning the Sponsor's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Sponsor's solvency. (c) If at any time the Trustee has determined that the Sponsor is Insolvent, the Trustee shall discontinue payments to participants and beneficiaries of the Plan and shall hold the assets of the Trust for the benefit of the Sponsor's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of any participant or beneficiary of the Plan to pursue his or her rights as a general creditor of the Sponsor with respect to benefits due under the Plan or otherwise. (d) The Trustee shall resume the payment of benefits to the Plan participants and beneficiaries in accordance with the terms of this Trust Agreement only after the Trustee has determined that the Sponsor is not Insolvent (or is no longer Insolvent). (e) Except as expressly provided in this Trust Agreement, the Sponsor shall have no right or power to direct the Trustee to return to the Sponsor or to divert to others any of the Trust assets before all payments of benefits have been made to all participants and beneficiaries of the Plan (or to the Sponsor, in the case of the inability to locate a payee under the terms of a Plan) pursuant to the terms of the Plan. (f) If the Trustee makes payments from the Trust for the benefit of the general creditors of the Sponsor under this Section and assets remain in the Trust after a payment of assets to the general creditors of the Sponsor under this Section, each Plan participant's allocable deemed 4

interest in Trust assets following cessation of payments to the general creditors of the Sponsor shall equal the value of the aggregate assets of the Trust immediately following the date the Trustee last makes a payment for the benefit of the Sponsor's general creditors multiplied by a fraction, the numerator of which is the value of the participant's account on the date the Trustee deems the Sponsor to be Insolvent and ceases payments to the Plan participants and their beneficiaries less payments made to or on behalf of the participant under the Plan since that date (whether or not directly from the Trust) and the denominator of which is the value of all Plan participants' accounts on the date the Trustee deems the Sponsor to be Insolvent and ceases payments to Plan participants and their beneficiaries less the aggregate amount of payments made to or on behalf of all participants under the Plan since that date (whether or not from the Trust). 4.3 RECOMMENCEMENT OF PAYMENTS. If the Trustee discontinues payments from the Trust to the participant or his or her beneficiaries pursuant to Section 4.1 and subsequently resumes payments, the first

interest in Trust assets following cessation of payments to the general creditors of the Sponsor shall equal the value of the aggregate assets of the Trust immediately following the date the Trustee last makes a payment for the benefit of the Sponsor's general creditors multiplied by a fraction, the numerator of which is the value of the participant's account on the date the Trustee deems the Sponsor to be Insolvent and ceases payments to the Plan participants and their beneficiaries less payments made to or on behalf of the participant under the Plan since that date (whether or not directly from the Trust) and the denominator of which is the value of all Plan participants' accounts on the date the Trustee deems the Sponsor to be Insolvent and ceases payments to Plan participants and their beneficiaries less the aggregate amount of payments made to or on behalf of all participants under the Plan since that date (whether or not from the Trust). 4.3 RECOMMENCEMENT OF PAYMENTS. If the Trustee discontinues payments from the Trust to the participant or his or her beneficiaries pursuant to Section 4.1 and subsequently resumes payments, the first payments following the discontinuance shall include the aggregate amount of all payments which would have been made to the participant or his or her beneficiaries (together with the deemed earnings or losses on the payments under the terms of the Plan) in accordance with the Plan during the period of discontinuance, less the aggregate amount of payments, if any, made to the participant or his or her beneficiaries by the Sponsor or any of its subsidiaries in lieu of the payments provided for under this Trust Agreement during any period of discontinuance. Sponsor shall inform Trustee of any payments made by Sponsor during any period of discontinuance and shall instruct Trustee regarding the appropriate amount of the first payment due each Plan participant or beneficiary following a period of discontinuance. ARTICLE 5 PAYMENTS TO SPONSOR 5.1 PAYMENTS TO THE SPONSOR. Except as provided in this Trust Agreement or in the Plan, the Sponsor shall have no right or power to direct the Trustee to return to the Sponsor or to divert to others any of the Trust assets before all payments of benefits have been made to Plan participants and beneficiaries pursuant to the terms of the Plan. ARTICLE 6 INVESTMENT AUTHORITY 6.1 TRUSTEE AUTHORITY. All administrative rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with any Plan participant or beneficiary or the Sponsor. The Trustee shall have the following powers with respect to securities and other assets at any time held by it and constituting the Trust, those powers, subject to Section 6.2, to be exercised by it in its sole discretion: (a) To purchase or subscribe for and invest in any securities, but not including, any securities of the Trustee or any affiliate of the Trustee, and to retain those securities in the Trust. The term "securities" shall be deemed to include, but not be limited to, common and preferred stocks, mortgages, debentures, bonds, notes or other evidences of indebtedness, and other forms of 5

securities, including those issued by the Sponsor or sold by employees participating under the Plan; provided, however, that no stock, securities or evidence of indebtedness of said Sponsor or employees shall be acquired by or held unless the Trustee is so directed by the Sponsor. The Trustee is authorized to invest and reinvest all or a portion of the Trust in shares of any open-ended investment fund or company, including but not limited to, any fund or company which is managed by an affiliate of the Trustee or provides other services to such company and receives compensation for the services provided. (b) To sell, transfer and convey for cash or on credit, convert, redeem, exchange for other securities, or otherwise to dispose of any securities at any time held by it.

securities, including those issued by the Sponsor or sold by employees participating under the Plan; provided, however, that no stock, securities or evidence of indebtedness of said Sponsor or employees shall be acquired by or held unless the Trustee is so directed by the Sponsor. The Trustee is authorized to invest and reinvest all or a portion of the Trust in shares of any open-ended investment fund or company, including but not limited to, any fund or company which is managed by an affiliate of the Trustee or provides other services to such company and receives compensation for the services provided. (b) To sell, transfer and convey for cash or on credit, convert, redeem, exchange for other securities, or otherwise to dispose of any securities at any time held by it. (c) To exercise any conversion privilege and/or subscription right available in connection with any securities at any time held by it; to oppose or to consent to the reorganization, consolidation, merger, or readjustment of the finances of any corporation, company or association or to the sale, mortgage, pledge or lease of the property of any corporation, company or association, or to the sale, mortgage, pledge or lease of any of the securities which may at any time be held by it, and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payment of expenses, assessments or subscriptions, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities which it may so acquire. (d) To vote, personally or by general or limited proxy, any securities which may be held by it at any time and, similarly, to exercise, personally or by general or limited proxy, any right appurtenant to any securities held by it at any time. (e) To register any securities held by it hereunder in its own name or in the name of a nominee, or in any form permitting title to pass by delivery, providing the records of the Trustee shall clearly indicate the ownership of any asset of the Trust. (f) To make, execute and deliver any and all mortgages, contracts, consents, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of its powers. (g) To invest and reinvest all or any portion of the Trust in units of participation in one or more common, collective or commingled trust funds that may be established and maintained by the Trustee or other trustee. Any common, collective or commingled trust fund may be specifically designated for investment in guaranteed investment contracts. (h) To invest any part or all of the Trust (including idle cash balances) in certificates of deposit, demand or time deposits, savings accounts, money market accounts or similar investments of the Trustee or of any affiliate of the Trustee, which bear a reasonable rate of interest. 6.2 INVESTMENT OPTION. Under the terms of the Plan, the Daugherty Agreements and the Rusnak Agreements, and for so long as a participant remains employed by the Sponsor or an affiliate, the Trust account established for that participant will hold a certificate of deposit issued by 6

Umpqua Bank. That certificate shall accrue interest equal to Umpqua Bank's prime lending rate plus 1% as in effect from time to time and may mature no earlier than the participant's termination of employment. Effective with a participant's termination of employment with the Sponsor and its affiliates, the participant may elect to allow his certificate of deposit to mature. In this event the participant will be permitted to direct the investment of his Trust account. Such account will be credited with whatever earnings are generated by the investments selected by the participant. Alternatively, the participant may elect not to have the certificate of deposit mature in which case the rate and maturity of the certificate will be negotiated by the Sponsor and the participant. ARTICLE 7 DISPOSITION OF INCOME

Umpqua Bank. That certificate shall accrue interest equal to Umpqua Bank's prime lending rate plus 1% as in effect from time to time and may mature no earlier than the participant's termination of employment. Effective with a participant's termination of employment with the Sponsor and its affiliates, the participant may elect to allow his certificate of deposit to mature. In this event the participant will be permitted to direct the investment of his Trust account. Such account will be credited with whatever earnings are generated by the investments selected by the participant. Alternatively, the participant may elect not to have the certificate of deposit mature in which case the rate and maturity of the certificate will be negotiated by the Sponsor and the participant. ARTICLE 7 DISPOSITION OF INCOME 7.1 DISPOSITION OF INCOME. During the term of this Trust, all income received by the Trust shall be accumulated and reinvested, and ultimately distributed, as provided in this Trust Agreement and in the Plan. ARTICLE 8 ACCOUNTING BY TRUSTEE 8.1 ACCOUNTING BY TRUSTEE. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including any specific records as shall be agreed upon in writing between the Sponsor and the Trustee. Within ninety (90) days following the close of each calendar year and within ninety (90) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Sponsor a written account of its administration of the Trust during the year or during the period from the close of the last preceding year to the date of the removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of the purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of the year or as of the date of removal or resignation, as the case may be. The Sponsor may approve the accounting by written approval delivered to the Trustee. The Trustee shall deem failure by the Sponsor to approve or disapprove an accounting within 60 days after receipt of such accounting an approval of it. The assets of the Trust shall be valued at their fair market values on the date of valuation, as determined by the Trustee based upon such sources of information, as it may deem reliable. The Sponsor shall instruct the Trustee as to the value of assets for which the market value is not readily obtainable by the Trustee. If the Sponsor fails to provide such values, the Trustee may take whatever action it deems reasonable, including employment of attorneys, appraisers or other professionals, the expense of which will be an expense of the administration of the Trust. If the Sponsor directs the Trustee to perform separate recordkeeping with respect to assets of the Trust attributable to each Plan participant's proportionate interest in the Plan, the 7

proportionate interest shall be based on the amount of each contribution to the Trust that the Sponsor specifies in writing to the Trustee is attributable to the Plan account(s) of the Participant and for earnings or losses of the Trust credited or debited, as applicable, to the Plan account(s) and attributable to the performance of the investments of the Trust attributable to the Plan account(s) (either based on each the participant's proportionate interest in the entire Trust fund or in separate investment funds established under the Trust for participant investment direction). In such a case, the Trustee periodically shall deliver to the Sponsor a written account of its administration of the Trust setting forth the value of each participant's account(s) as of the beginning and end of the period. Trust assets attributable to a Plan participant's Plan account(s) shall be maintained merely as book entries under a single Trust account maintained hereunder, and no assets or funds shall be required to be paid to, held in or invested in any separate Trust account apart from any other assets or funds of the Trust.

proportionate interest shall be based on the amount of each contribution to the Trust that the Sponsor specifies in writing to the Trustee is attributable to the Plan account(s) of the Participant and for earnings or losses of the Trust credited or debited, as applicable, to the Plan account(s) and attributable to the performance of the investments of the Trust attributable to the Plan account(s) (either based on each the participant's proportionate interest in the entire Trust fund or in separate investment funds established under the Trust for participant investment direction). In such a case, the Trustee periodically shall deliver to the Sponsor a written account of its administration of the Trust setting forth the value of each participant's account(s) as of the beginning and end of the period. Trust assets attributable to a Plan participant's Plan account(s) shall be maintained merely as book entries under a single Trust account maintained hereunder, and no assets or funds shall be required to be paid to, held in or invested in any separate Trust account apart from any other assets or funds of the Trust. ARTICLE 9 RESPONSIBILITY OF THE TRUSTEE 9.1 PRUDENT PERSON. The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Sponsor which is contemplated by, and in conformity with, the terms of the Plan or this Trust and is given in writing by the Sponsor. In the event of a dispute between the Sponsor and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. 9.2 TRUSTEE INDEMNIFICATION. (a) If the Trustee undertakes or defends any litigation arising in connection with this Trust, the Trustee will be indemnified from the Trust against the Trustee's costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for the payments. (b) The Trustee will be indemnified from the Trust, to the fullest extent permitted under applicable law, for any and all liabilities of any kind incurred by the Trustee in connection with the Plan and Trust (i) relating to periods of time prior to the Trustee's becoming Trustee or (ii) relating to periods of time while the Trustee is Trustee, but not related to the Trustee's negligence, willful misconduct, or breach of its fiduciary duties. 9.3 LEGAL COUNSEL. The Trustee may consult with legal counsel (who may also be counsel for the Sponsor generally) with respect to any of its duties or obligations hereunder. 9.4 HIRING AGENTS. The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder and rely upon advice given by those professionals. 8

9.5 TRUSTEE POWERS. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise in this Trust Agreement; provided, however, that if an insurance policy is ever held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against the policy. 9.6 LIMITATION ON POWERS. The Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of IRS Regulations Section 301.7701-2. ARTICLE 10 FEES AND EXPENSES OF THE TRUSTEE

9.5 TRUSTEE POWERS. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise in this Trust Agreement; provided, however, that if an insurance policy is ever held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against the policy. 9.6 LIMITATION ON POWERS. The Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of IRS Regulations Section 301.7701-2. ARTICLE 10 FEES AND EXPENSES OF THE TRUSTEE 10.1 TRUSTEE EXPENSES AND FEES. All expenses of administering the Plan and the Trust and all Trustee's fees and expenses with respect to which the Trustee is entitled to compensation or reimbursement shall be paid from the Trust and charged against each Plan participant's interest in the Trust, pro rata based upon the relative value of each participant's interest in the Trust as of the Trust valuation date next preceding the applicable payment or charge. ARTICLE 11 RESIGNATION AND REMOVAL OF THE TRUSTEE 11.1 TRUSTEE RESIGNATION. The Trustee may resign at any time by written notice to the Sponsor. 11.2 TRUSTEE REMOVAL. The Trustee may be removed by the Sponsor at any time upon written notice to the Trustee. 11.3 TRANSFER OF ASSETS. Upon resignation or removal of the Trustee and appointment of a successor trustee, all assets shall promptly be transferred to the successor Trustee. 11.4 APPOINTMENT OF SUCCESSOR. If the Trustee resigns or is removed, a successor shall be appointed, in accordance with the following Section, by the effective date of resignation or removal. If no appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. 9

ARTICLE 12 AMENDMENT OR TERMINATION 12.1 AMENDMENT. This Trust Agreement may be amended by a written instrument executed by the Trustee and the Sponsor. No amendment shall conflict with the terms of the Plan or shall make the Trust revocable after it has become irrevocable in accordance herewith. 12.2 TERMINATION. The Trust shall not terminate until the date on which all Plan participants and beneficiaries no longer are entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust, any assets remaining in the Trust shall be returned to the Sponsor. ARTICLE 13 MISCELLANEOUS 13.1 VALIDITY OF PROVISIONS. Any provision of this Trust Agreement prohibited by law shall be

ARTICLE 12 AMENDMENT OR TERMINATION 12.1 AMENDMENT. This Trust Agreement may be amended by a written instrument executed by the Trustee and the Sponsor. No amendment shall conflict with the terms of the Plan or shall make the Trust revocable after it has become irrevocable in accordance herewith. 12.2 TERMINATION. The Trust shall not terminate until the date on which all Plan participants and beneficiaries no longer are entitled to benefits pursuant to the terms of the Plan. Upon termination of the Trust, any assets remaining in the Trust shall be returned to the Sponsor. ARTICLE 13 MISCELLANEOUS 13.1 VALIDITY OF PROVISIONS. Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any the prohibition, without invalidating the remaining provisions of this Trust Agreement. 13.2 NO ASSIGNMENT OF BENEFITS. Benefits payable to a Plan participant or beneficiary under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 13.3 GOVERNING LAW. This Trust Agreement shall be governed by and construed in accordance with the laws of the State of California. 13.4 SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Sponsor and the Trustee and their respective successors and assigns. 13.5 TRUSTEE'S SUCCESSORS. Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger reorganization or consolidation to which the Trustee may be a party, or any corporation to which all or substantially all of the trust business of the Trustee may be transferred, shall be the successor of the Trustee hereunder without the execution or filing of any instrument or the performance of any act. 10

IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the parties hereto, effective as of _____________, 2004.
ATTEST/WITNESS: ________________________ Print Name: UMPQUA HOLDINGS CORPORATION By:_________________________________ Print Name:_________________________ Date:_______________________________ WELLS FARGO BANK, N.A., TRUSTEE By: ________________________________ Print Name:_________________________ Date:_______________________________ By: ________________________________ Print Name: ________________________

IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the parties hereto, effective as of _____________, 2004.
ATTEST/WITNESS: ________________________ Print Name: UMPQUA HOLDINGS CORPORATION By:_________________________________ Print Name:_________________________ Date:_______________________________ WELLS FARGO BANK, N.A., TRUSTEE By: ________________________________ Print Name:_________________________ Date:_______________________________ By: ________________________________ Print Name: ________________________ Date: ______________________________

11

EXHIBIT 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 I, Raymond P. Davis, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Umpqua Holdings Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e)) and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual

EXHIBIT 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 I, Raymond P. Davis, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Umpqua Holdings Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e)) and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 9, 2004 /s/ Raymond P. Davis ------------------------------------Raymond P. Davis President and Chief Executive Officer

EXHIBIT 31.2

EXHIBIT 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 I, Daniel A. Sullivan, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Umpqua Holdings Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e)) and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is likely to materially affect the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: November 9, 2004 /s/ Daniel A. Sullivan ---------------------------Daniel A. Sullivan Executive Vice President Chief Financial Officer Principal Accounting Officer

EXHIBIT 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 This certification is given by the undersigned Chief Executive Officer and Chief Financial Officer of Umpqua Holdings Corporation (the "registrant") pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Each of the undersigned hereby certifies, with respect to the registrant's quarterly report on Form 10-Q for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the registrant
/s/ Raymond P. Davis ----------------------------Raymond P. Davis President and Chief Executive Officer Umpqua Holdings Corporation /s/ Daniel A. Sullivan ----------------------------Daniel A. Sullivan Executive Vice President and Chief Financial Officer Umpqua Holdings Corporation November 9, 2004

EXHIBIT 99.1 RISK FACTORS The following summarizes certain risks which management believes are specific to our business. This should not be viewed as including all risks. MERGER WITH HUMBOLDT BANCORP On July 9, 2004, Humboldt Bancorp merged with and into Umpqua Holdings and on July 10, 2004, Humboldt Bank merged with and into Umpqua Bank. The merger is expected to generate after-tax cost savings and expense reductions of approximately 23% of Humboldt's projected 2004 non-interest expense when fully phased-in. The expense reductions are intended to be achieved by eliminating duplicative technology, operations, outside services, redundant staff, facility consolidations and purchasing efficiencies. The combined company may fail to realize some or all or the anticipated cost savings and other benefits of the transaction. See Management's Discussion and Analysis of Financial Condition and Results of Operations - "Non-interest Expense." UMPQUA IS PURSUING AN AGGRESSIVE GROWTH STRATEGY WHICH MAY PLACE HEAVY DEMANDS ON ITS MANAGEMENT RESOURCES. Umpqua is a dynamic organization that is one of the fastest-growing community financial services organizations in the United States. We merged with VRB Bancorp in December 2000, increasing our assets from approximately

EXHIBIT 99.1 RISK FACTORS The following summarizes certain risks which management believes are specific to our business. This should not be viewed as including all risks. MERGER WITH HUMBOLDT BANCORP On July 9, 2004, Humboldt Bancorp merged with and into Umpqua Holdings and on July 10, 2004, Humboldt Bank merged with and into Umpqua Bank. The merger is expected to generate after-tax cost savings and expense reductions of approximately 23% of Humboldt's projected 2004 non-interest expense when fully phased-in. The expense reductions are intended to be achieved by eliminating duplicative technology, operations, outside services, redundant staff, facility consolidations and purchasing efficiencies. The combined company may fail to realize some or all or the anticipated cost savings and other benefits of the transaction. See Management's Discussion and Analysis of Financial Condition and Results of Operations - "Non-interest Expense." UMPQUA IS PURSUING AN AGGRESSIVE GROWTH STRATEGY WHICH MAY PLACE HEAVY DEMANDS ON ITS MANAGEMENT RESOURCES. Umpqua is a dynamic organization that is one of the fastest-growing community financial services organizations in the United States. We merged with VRB Bancorp in December 2000, increasing our assets from approximately $435 million to $785 million; acquired Linn-Benton Bank and merged with Independent Financial Network, Inc. in December 2001, to add approximately $550 million in assets; and merged with Centennial Bancorp in November 2002 to add approximately $800 million in assets. In July 2004, we merged with Humboldt Bancorp and we continue to explore other merger and acquisition opportunities. We expect that a substantial amount of management's attention and effort will be directed at deriving the benefits and efficiencies expected from past and future mergers. We have announced our intent to open new stores in Oregon, Washington and California, to continue our growth strategy. If we pursue our strategy too aggressively, or if factors beyond management's control divert attention away from our integration plans, management may become over-taxed and we might be unable to realize some or all of the anticipated benefits. Moreover, the combined Company is dependent on the efforts of key personnel to achieve the synergies associated with our acquisitions. The loss of one or more of our key persons could have a material adverse effect upon our ability to achieve the anticipated benefits. THE REMODELING OF OUR BRANCHES MAY NOT BE COMPLETED SMOOTHLY OR WITHIN BUDGET, WHICH COULD RESULT IN REDUCED EARNINGS. Umpqua Bank has transformed itself from a traditional community bank into a community-oriented financial services retailer through a series of mergers and acquisitions in the past few years. In pursuing this strategy, we have remodeled many of the bank branches to resemble retail stores that include distinct physical areas or boutiques such as a "serious about service center," an "investment opportunity center" and "a computer cafe." Remodeling involves significant expenses, disrupts banking activities during the remodeling period, and presents a new look and feel to the banking services and products being offered. There is a risk that remodeling costs will exceed forecasted budgets and that there may be delays in completing the remodels, which could cause confusion and disruption in the business of those branches. INVOLVEMENT IN NON-BANK BUSINESSES MAY INVOLVE UNIQUE RISKS.

We have a licensed retail broker-dealer subsidiary, Strand, Atkinson, Williams & York, Inc. Retail brokerage operations present special risks not borne by community banks. For example, the brokerage industry is subject to fluctuations in the stock market that may have a significant adverse impact on transaction fees, customer activity and investment portfolio gains and losses. Likewise, additional or modified regulations may affect our banking, investment banking and brokerage operations. A decline in fees and commissions or losses suffered in the investment portfolio could adversely affect the subsidiary's contribution to the income of the holding company, and might increase the subsidiary's capital needs. Strand Atkinson is subject to claim arbitration risk arising from customers who claim their investments were not suitable or that their portfolios were too actively traded. These

We have a licensed retail broker-dealer subsidiary, Strand, Atkinson, Williams & York, Inc. Retail brokerage operations present special risks not borne by community banks. For example, the brokerage industry is subject to fluctuations in the stock market that may have a significant adverse impact on transaction fees, customer activity and investment portfolio gains and losses. Likewise, additional or modified regulations may affect our banking, investment banking and brokerage operations. A decline in fees and commissions or losses suffered in the investment portfolio could adversely affect the subsidiary's contribution to the income of the holding company, and might increase the subsidiary's capital needs. Strand Atkinson is subject to claim arbitration risk arising from customers who claim their investments were not suitable or that their portfolios were too actively traded. These risks increase when the market, as a whole, declines. The risks associated with retail brokerage may not be supported by the income generated by those operations. As we continue to grow, we may acquire other financial services companies whose successful integration is not assured and may present additional management challenges and new risks to us. See Management's Discussion and Analysis of Financial Condition and Results of Operations - "Non-interest Income." THE MAJORITY OF UMPQUA BANK'S ASSETS ARE LOANS, WHICH IF NOT PAID WOULD RESULT IN LOSSES TO THE COMPANY. Umpqua Bank, like other lenders, is subject to credit risk, which is the risk of losing principal and/or interest due to borrowers' failure to repay loans in accordance with their terms. Although we have established underwriting and documentation criteria and most loans are secured by collateral, a downturn in the economy or the real estate market in our market areas or a rapid increase in interest rates could have a negative effect on collateral values and borrowers' ability to repay. To the extent loans are not serviced by borrowers, the loans are placed on nonaccrual, thereby reducing interest income. To the extent loan charge-offs exceed expectations, additional amounts must be added to the allowance for credit losses, which reduces income. Although management believes that our allowance for loan losses and reserve for unfunded commitments at September 30, 2004 is adequate, no assurance can be given that an additional provision for credit losses will not be required. See Management's Discussion and Analysis of Financial Condition and Results of Operations "Allowance for Loan Losses and Unfunded Commitments," Provision for Loan Losses" and "Asset Quality." A RAPID CHANGE IN INTEREST RATES COULD MAKE IT DIFFICULT TO MAINTAIN OUR CURRENT INTEREST INCOME SPREAD AND COULD RESULT IN REDUCED EARNINGS. Our earnings are largely derived from net interest income, which is interest income and fees earned on loans and investments, less interest paid on deposits and other borrowings. Interest rates are highly sensitive to many factors that are beyond the control of our management, including general economic conditions and the policies of various governmental and regulatory authorities. As interest rates change, net interest income is affected. With fixed rate assets (such as fixed rate loans) and liabilities (such as certificates of deposit), the effect on net interest income depends on the maturity of the asset or liability. Although we strive to minimize interest rate risk through asset/liability management policies, from time to time maturities are not balanced. For example, the rapid drop in short term interest rates during 2002 made it difficult to reduce interest expense as rapidly as interest income fell on loans contractually tied to prime rate. More recently, in mid-2003, the rapid increase in long-term home mortgage rates caused a reduction in refinance activity and the sale of some previously "locked" loans at a loss. Any rapid increase in interest rates in the future could result in interest expense increasing faster than interest income because of fixed rate loans and longer-term investments. Further, substantially higher interest rates generally reduce loan demand and may result in lower loan totals. An unanticipated rapid decrease or increase in interest rates could have an adverse effect on the spreads between the interest rates earned on assets and the rates of interest paid on liabilities, and therefore on the level of net interest income. See Management's Discussion and Analysis of Financial Condition and Results of Operations - "Asset/Liability Management."

THE VOLATILITY OF OUR MORTGAGE BANKING BUSINESS CAN ADVERSELY AFFECT EARNINGS. Changes in interest rates greatly affect the mortgage banking business. One of the principal risks in this area is prepayment of mortgages and their effect on mortgage servicing rights ("MSR"). We can mitigate this risk by purchasing financial instruments, such as fixed rate investment securities and interest rate contracts, which tend to

THE VOLATILITY OF OUR MORTGAGE BANKING BUSINESS CAN ADVERSELY AFFECT EARNINGS. Changes in interest rates greatly affect the mortgage banking business. One of the principal risks in this area is prepayment of mortgages and their effect on mortgage servicing rights ("MSR"). We can mitigate this risk by purchasing financial instruments, such as fixed rate investment securities and interest rate contracts, which tend to increase in value when long-term interest rates decline. The success of this strategy, however, depends on management's judgments regarding the amount, type and mix of MSR risk management instruments that we believe are appropriate to manage the changes in the fair value of our MSR asset. If these decisions and strategies are not successful, our net income could be adversely affected. See Management's Discussion and Analysis of Financial Condition and Results of Operations - "Mortgage Servicing Rights." OUR BANKING AND BROKERAGE OPERATIONS ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATIONS, WHICH HAS INCREASED AND CAN BE EXPECTED TO BECOME MORE BURDENSOME, INCREASE OUR COSTS AND/OR MAKE US LESS COMPETITIVE. We and our subsidiaries are subject to extensive regulation under federal and state laws. These laws and regulations are intended primarily to protect customers, depositors and the deposit insurance fund, rather than shareholders. Umpqua Bank is a state chartered commercial bank subject to regulations and supervision by the Administrator of the Division of Finance and Corporate Securities of the State of Oregon, the Washington Department of Financial Institutions, the California Department of Financial Institutions and by the Federal Deposit Insurance Corporation, which insures bank deposits. Strand, Atkinson, Williams & York, Inc. is subject to extensive regulation by the SEC and the National Association of Securities Dealers, Inc. We are subject to regulation and supervision by the Board of Governors of the Federal Reserve System, the SEC and the Nasdaq. Federal and state regulations place banks at a competitive disadvantage compared to less regulated competitors such as finance companies, credit unions, mortgage banking companies and leasing companies. Although we have been able to compete effectively in our market area in the past, there can be no assurance that we will be able to continue to do so. Further, future changes in federal and state banking regulations could adversely affect our operating results and ability to continue to compete effectively. THE FINANCIAL SERVICES INDUSTRY IS HIGHLY COMPETITIVE. We face significant competition in attracting and retaining deposits and making loans as well as in providing other financial services throughout our market area. We face pricing competition for loans and deposits. We also face competition with respect to customer convenience, product lines, accessibility of service and service capabilities. Our most direct competition comes from other banks, brokerages, mortgage companies and savings institutions. We also face competition from credit unions, government-sponsored enterprises, mutual fund companies, insurance companies and other non-bank businesses.