CENTENNIAL BANCORP
NONSTATUTORY STOCK OPTION (WINNOWSKI-01/20/99)
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<TYPE>EX-10.19
<SEQUENCE>7
<FILENAME>0007.txt
<DESCRIPTION>NONSTATUTORY STOCK OPTION (WINNOWSKI-01/20/99)
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                       NONSTATUTORY STOCK OPTION AGREEMENT


         THIS AGREEMENT is made effective as of January 20, 1999 between
CENTENNIAL BANCORP, an Oregon corporation (the "Company"), and THADDEUS (TED) R.
WINNOWSKI (the "Optionee").

         Pursuant to the Company's Restated 1995 Stock Incentive Plan (the
"Plan"), the Company has granted Optionee a nonstatutory stock option to
purchase shares of the Company's Common Stock, without par value (the "Common
Stock"), in the amount indicated below.

         NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained in this Option Agreement, the parties agree as follows:

         1. GRANT. The Company grants to Optionee, upon the terms and conditions
set forth below, the right and option (the "Option") to purchase 21,000 shares
of Common Stock at an exercise price of $17.125 per share (the "Exercise
Price"), subject to the terms and conditions of the Plan, which are incorporated
herein by reference. In the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall govern. The Option is a Nonstatutory Stock Option
and is NOT intended to qualify as an Incentive Stock Option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Although the Option
was technically granted in May 1999, the Option was earned and is effective as
of January 20, 1999; therefore, the specified number of shares that may be
purchased upon exercise of the Option and the specified Exercise Price do not
reflect the 11-for-10 (10%) stock split effected by the Company in February
1999.

         2. TERM OF OPTION. Subject to reductions in the term of the Option as
provided in the Plan and this Option Agreement, the Option shall continue in
effect until 12 years from the date of this Option Agreement and may be
exercised during such term only in accordance with the provisions of the Plan
and this Option Agreement.

         3.       VESTING.

                  3.1 TIMING OF EXERCISE. The Option may be exercised in
accordance with the following schedule: (a) on the first anniversary of the date
hereof, one-third of the shares purchasable under the Option may be purchased,
in whole or in part, at any time thereafter until the Option expires; and (b)
continuing on each of the second and third anniversaries of the date hereof, an
additional one-third of the shares purchasable under the Option may be purchased
at any time thereafter until the Option expires.

                  3.2 SPECIAL VESTING PROVISIONS. Notwithstanding the foregoing,
in the event that Optionee's employment with the Company terminates on account
of (i) death;


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(ii) Disability; or (iii) termination of Optionee's Employment Agreement with
the Company, dated July 29, 1997 (the "Employment Agreement") by the Company
without Cause or by Optionee with Good Reason, Optionee shall have the right to
purchase all of the shares purchasable under the Option in accordance with
Section 4. Furthermore, in the event that the Company incurs a Change of
Control, Optionee shall have the right to purchase all of the shares purchasable
under the Option. Employment by a parent or subsidiary of the Company shall be
deemed to be employment by the Company. The definitions in the Employment
Agreement apply for purposes of this Section 3.2.

         4.       EXERCISE OF OPTION.

                  4.1 RIGHT TO EXERCISE. While Optionee is employed by the
Company, the Option is exercisable during its term in accordance with Section 3
and the applicable provisions of the Plan and this Option Agreement. In the
event that the Optionee's employment with the Company or a parent or subsidiary
of the Company terminates for any reason during the term of the Option, the
Option may be exercised at any time prior to the earlier of the expiration date
of the Option or the expiration of one year after the termination date, but only
to the extent that the Option was vested and exercisable under Section 3 at the
date of termination. In such event, to the extent that the Option was not
exercised within the applicable period, all further rights to purchase shares
pursuant to the Option shall cease and terminate at the expiration of such
period.

                  4.2 METHOD OF EXERCISE. The Option is exercisable by delivery
of an exercise notice, which notice shall state the election to exercise the
Option, the number of shares of Common Stock in respect of which the Option is
being exercised (the "Exercised Shares") and such other representations and
agreements as may be required by the Company pursuant to the provisions of the
Plan. In addition, Optionee agrees to execute, as a condition of Option
exercise, such agreements respecting the Exercised Shares as the Committee, in
its reasonable discretion, determines to be required under the terms of
agreements to which the Company is a party or otherwise advisable and in the
best interests of the Company. The exercise notice shall be signed by Optionee
and shall be delivered in person or by certified mail to the Chief Financial
Officer of the Company. The exercise notice shall be accompanied by payment of
the aggregate Exercise Price as to all the Exercised Shares. The Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
exercise notice accompanied by such aggregate Exercise Price. For income tax
purposes the Exercised Shares shall be considered transferred to Optionee on the
date the Option is exercised with respect to such Exercised Shares.

         5. CONDITIONS. The obligations of the Company under this Option
Agreement shall be subject to the approval of such state or federal authorities
or agencies as may have jurisdiction in the matter. The Company will use its
best efforts to take such steps as may be required by state or federal law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any national securities exchange on which the Common
Stock may then be listed, in connection with the


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issuance or sale of any shares acquired pursuant to this Option Agreement or the
listing of such shares on any such exchange. The Company shall not be obligated
to issue or deliver shares of Common Stock under this Option Agreement if, upon
advice of its legal counsel, such issuance or delivery would violate state or
federal securities laws.

         6.       METHOD OF PAYMENT.  Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election of
Optionee:

                  (a)      cash; or

                  (b)      check; or

                  (c) delivery of such documentation as the Committee and
                  Optionee's broker shall require to effect an exercise of the
                  Option and delivery to the Company of the sale or margin loan
                  proceeds required to pay the aggregate Exercise Price of the
                  Exercised Shares; or

                  (d) surrender of other shares of Common Stock which have a
                  Fair Market Value on the date of surrender equal to the
                  aggregate Exercise Price of the Exercised Shares.

No shares shall be issued until full payment has been made, and the Optionee
shall have none of the rights of a shareholder until shares are issued. Upon
notification of the amount due and prior to or concurrently with delivery of the
certificate representing the shares, the Optionee shall pay to the Company any
amounts necessary to satisfy applicable federal, state, and local withholding
tax requirements.

         7.       PROVISIONS RELATING TO TRANSFERABILITY.

                  7.1 RESTRICTIONS ON TRANSFER. With the consent of the
Committee, which consent may be withheld in its sole discretion, all or any
portion of the Option may be assigned or transferred to the Optionee's immediate
family (i.e., children, grandchildren, spouse, parents and siblings), to trusts
for the benefit of the Optionee's immediate family members, and pursuant to
qualified domestic relations orders. No consideration may be paid for any
permitted transfer of the Option and, after any permitted transfer, the Option
shall continue to be subject to the same terms and conditions as were applicable
to it immediately prior to its transfer, except that: (i) subsequent transfers
of the portion of the Option that has been transferred shall be prohibited
except by will or the laws of descent and distribution; (ii) for purposes of
Sections 3.2 and 4.1, the term "Optionee" shall refer to the original Optionee
and not the transferee; (iii) the events of termination of employment specified
in Sections 3.2 and 4.1 shall continue to be applied with respect to the
original Optionee, following which the Option shall be exercisable by the
transferee only to the extent, and for the period, specified in Section 4.1; and
(iv) the original Optionee shall remain subject to


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withholding taxes upon exercise of the Option by the transferee. Before
permitting any transfer, the Committee may require the transferee to agree in
writing to be bound by all other terms and conditions applicable to the Option
prior to its transfer. Except with the consent of the Committee, the Option
shall not be transferable otherwise than by will or the laws of descent and
distribution.

                  7.2 EXERCISE BY LEGAL REPRESENTATIVE OR SUCCESSOR. Whenever
the word "Optionee" is used in any provision of this Option Agreement under
circumstances when the provision should logically be construed to apply to the
Optionee's guardian, legal representative, executor, administrator, or the
person or persons to whom the Option may be transferred by testamentary
disposition or by the laws of descent and distribution, the word "Optionee"
shall be deemed to include such person or persons.

         8. ADJUSTMENT IN OPTION SHARES. In the event any change is made after
May 1999 to the Company's outstanding Common Stock by reason of any stock split,
stock dividend, combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without receipt of
consideration, then appropriate adjustments shall be made to (i) the total
number of Option Shares subject to this Option and (ii) the Exercise Price
payable per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder. Any such adjustment made by the
Committee shall be conclusive. In the event of the dissolution of the Company or
a merger, consolidation, plan of exchange or similar transaction affecting the
Company, in lieu of adjusting the Option as described above or in lieu of having
the Option continue unchanged, the Committee may, in its sole discretion,
provide a 30-day period immediately prior to such event during which the
Optionee shall have the right to exercise the Option in whole or in part without
any limitation on exercisability.

         9.       LEGENDS.  Certificates representing the shares subject to this
Option Agreement shall bear such legends as the Company shall deem appropriate
to reflect any restrictions on transfer imposed by federal or applicable state
securities laws.

         10.      EMPLOYMENT.  Nothing in the Plan or in this Option Agreement
shall (i) confer upon the Optionee any right with respect to employment with the
Company or any affiliate of the Company or (ii) interfere in any way with the
right of the Company or any affiliate of the Company to terminate the Optionee's
employment. In all matters with respect to Optionee's employment, the terms and
conditions of the Employment Agreement shall control.

         11.      THE PLAN.  The Option is subject to the terms and conditions
of the Plan.

         12.      DEFINITIONS.  Any capitalized term in this Option Agreement
which is not defined herein and which is defined in the Plan shall have the same
definition as in the Plan.


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         13.      GOVERNING LAW.  To the extent that federal laws (such as the
Code and the federal securities laws) do not otherwise control, the Plan and
this Option Agreement shall be construed in accordance with the laws of the
state of Oregon.

         14.      HEADINGS.  Headings contained in this Option Agreement are for
reference purposes and shall not affect the meaning or interpretation of this
Option Agreement.

         15. GENERAL. Optionee and the Company agree that the Option is granted
under and governed by the terms and conditions of the Plan and this Option
Agreement. Optionee has reviewed the Plan and this Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and fully understands all provisions of the Plan
and Option Agreement. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Committee upon any questions
relating to the Plan and Option Agreement.

         The parties have signed this Agreement on the dates specified below,
with this Agreement to take effect as of the date first specified above.


OPTIONEE:                                            CENTENNIAL BANCORP


 /s/ Thaddeus R. Winnowski                  By  /s/ Richard C. Williams
------------------------------------           --------------------------------
Thaddeus R. Winnowski                       Title  PRESIDENT & CHIEF EXECUTIVE
                                                   OFFICER
                                                   -----------------------------
Date:  10/20/99                             Date:  10-15-99
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