SECOND AMENDMENT TO TERMS OF EMPLOYMENT AND SEVERANCE AGREEMENT

Exhibit 10.10

SECOND AMENDMENT

TO

TERMS OF EMPLOYMENT AND SEVERANCE AGREEMENT

This Second Amendment (the “ Amendment ”) is dated effective June 1, 2007 and further amends the Terms of Employment and Severance Agreement by and between Umpqua Holdings Corporation (“ Umpqua ”) and Daniel A. Sullivan (“ Officer ”) dated as of September 15, 2003 and as amended by that certain Amendment to Terms of Employment and Severance Agreement dated January 5, 2005 (the “ Employment Agreement ”).

RECITALS

A. The Employment Agreement provides that Officer shall be employed as Executive Vice President of Umpqua and perform such duties as designated by Umpqua’s Chief Executive Officer or Board of Directors.

B. Officer has also served as Umpqua’s Chief Financial Officer.

C. Officer and Umpqua desire to amend the Employment Agreement to reflect changes in Officer’s compensation and duties.

AGREEMENT

The parties agree as follows:

1. AMENDMENT TO DURATION OF AGREEMENT . Section 1 of the Employment Agreement is amended to provide that the Agreement shall expire on September 15, 2009.

2. AMENDMENT TO POSITION . Section 4.1 of the Employment Agreement is amended to read as follows:

“4.1 Position . Officer shall be employed as Executive Vice President of Strategic Initiatives, and will perform such duties as may be designated by his direct supervisor (the “Supervisor”) or by Umpqua’s Chief Executive Officer.”

3. AMENDMENT TO BASE SALARY . Effective June 1, 2007, the “Base Salary” set forth in Section 5 of the Employment Agreement is amended from $16,332 per month ($195,984 on annualized basis) to $16,666.67 per month ($200,000 on an annualized basis).

4. SEVERANCE BENEFIT . Section 9 of the Employment Agreement is replaced in its entirety with the following:

“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 the greater of: (i) $212,436, (ii) nine months Base Salary, based on Officer’s Base Salary immediately prior to termination or (iii) two weeks salary for every year of employment with Umpqua (the “Severance Benefit”). Subject to Section 12.3 below, the Severance Benefit shall be paid in equal installments over nine months, 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 A and the revocation

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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 violation of any material term of this Agreement or in violation of any material term of the Separation Agreement. Officer shall not be required to mitigate the amount of any payments 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.”

5. CHANGE IN CONTROL . Section 10 of the Employment Agreement is replaced in its entirety with the following:

“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, Termination For Good Reason, or Officer’s resignation within 30 days after reassignment to a position that is not substantially equivalent, instead of receiving the Severance Benefit set forth in Section 9 above, Officer shall be entitled to receive the greater of: (i) $812,768 or (ii) two years Base Salary, based on Officer’s Base Salary immediately prior to the termination of employment as well as 200% of the bonus Officer received in the previous year (the aforementioned amount are referred to as the “Change in Control Benefit”). Receipt of the Change in Control Benefit is conditioned on Officer having executed the Separation Agreement in substantially the form attached hereto as Exhibit A and the revocation period having expired without Officer having revoked the Separation Agreement. 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 not being in violation of any material term of this Agreement, including but not limited to the provisions of Sections 13 through 16, or of the Separation Agreement.”

6. GOOD REASON . Officer and Umpqua agree that the changes contemplated by this Amendment including without limitation the change in Base Salary ($200,000) and position have been accepted by Officer and shall not constitute “Good Reason” for Officer’s resignation of employment under Sections 6.3 and 7.2 of the Employment Agreement.

7. ADVICE OF COUNSEL . Officer acknowledges that, in executing this Amendment, 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 Amendment. This Amendment shall not be construed against any party by reason of the drafting or preparation hereof.

8. EFFECT OF AMENDMENT . Except as specifically set forth herein, the Employment Agreement as previously executed shall continue in full force and effect as written.

9. DEFINED TERMS . Capitalized terms not otherwise defined in this Amendment have the meanings set forth in the Employment Agreement.

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10. SEPARATION AGREEMENT . The form of Separation Agreement attached hereto as Exhibit A is made part of the Employment Agreement.

“UMPQUA”

Umpqua Holdings Corporation

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EXHIBIT A

EMPLOYMENT SEPARATION AGREEMENT AND RELEASE OF CLAIMS

This is a confidential agreement (this “Separation Agreement”) between you,                      , and us, Umpqua Holdings Corporation. This Separation Agreement is dated for reference purposes              , 20      , which is the date we delivered this Separation Agreement to you for your consideration. For purposes of this Separation 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 Separation Agreement, we will pay you the Severance Benefit specified in Section 9 or the Change in Control Benefit specified in Section 10, as appropriate, of the Agreement between you and Umpqua dated                      (the “Employment Agreement”) on the dates provided therein (or on such other date or dates as may be mutually agreed upon by you and Umpqua or our successor). Such provisions of the Employment Agreement are incorporated herein by reference. You acknowledge that we are not obligated to make these payments to you unless you comply with the noncompetition provision in Section 14 of the Employment Agreement, which is incorporated herein by reference and otherwise comply with the material terms of the Employment Agreement and of this Separation 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). Continuation of group health coverage after the Separation Date is entirely at your expense, as provided under COBRA.

4. Termination of Benefits. Except as provided in Section 3 above, your participation in all employee benefit pla