OUTSOURCING SERVICES AGREEMENT

This Oregon Pacific Bancorp Director Non-Employee Deferred Compensation Plan (the "Plan"), is hereby established on and as of the date of adoption of the Plan by the Board of Directors. The Plan, as structured, is designed to provide non-employee directors with the opportunity to defer payment of their directors' fees in accordance with the provisions of this Plan.  It is the intention of Oregon Pacific Bancorp and it is the understanding of the Directors participating in the Plan, that the Plan constitutes a nonqualified deferred compensation plan under the provisions of Section 409A of the Code and applicable regulations issued thereunder.

1.1      "ACCOUNT" shall mean the bookkeeping account established in accordance with Article II hereof, including the Interest Bearing Account, the Common Stock Account, and the Dividend Account.

1.2      ”BENEFICIARY" shall mean any person designated by a Participant in accordance with the Plan to receive payment of all or a portion of the remaining balance of the Participant's Account in the event of the death of the Participant prior to receipt by the Participant of the entire amount credited to the Participant's Account.

1.3      "CHANGE OF CONTROL" shall be deemed to have occurred in accordance with the requirements of Section 409A of the Code and applicable regulations issued thereunder, if a change in the ownership or the effective control of the Corporation occurs, or if there occurs a change in the ownership of a substantial portion of the assets of the Corporation.

1.4      "CODE" means the U. S. Internal Revenue Code of 1986, as amended.

1.5      "CORPORATION" shall mean Oregon Pacific Bancorp, a bank holding company and its corporate successors, including the surviving corporation resulting from any merger of Oregon Pacific Bancorp with any other corporation or corporations.

1.6      "COMMON STOCK" shall mean the common stock of Oregon Pacific Bancorp.

1.7      "DIRECTOR" shall mean (i) any non-employee member of the Board of Directors of the Corporation and (ii) any non-employee member of the Board of Directors of a Subsidiary.

1.8      "ELECTION AGREEMENT" shall mean the written election to defer Fees signed in writing by the Director and in the form provided by the Corporation.

1.91       "FEES" shall mean the fees earned as a Director.

1.10       "PARTICIPANT" shall mean any Director who has at any time elected to defer the receipt of Fees in accordance with the Plan.

1.11       "PLAN" shall mean this Director Deferred Compensation Plan, together with all amendments hereto.

1.12        "SUBSIDIARY" shall mean a corporation organized and existing under the laws of the United States or of any state of which more than 50% percent of the issued and outstanding stock is owned by the Corporation or by a Subsidiary of the Corporation, and which has been designated by the Board of Directors or the Chief Executive Officer of the Corporation as a Subsidiary eligible to participate in the Plan.

1.13       "YEAR" shall mean the calendar year.

2.1      ELIGIBILITY.  Any Director may elect to defer receipt of all or a specified portion of his or her Fees for any Year in accordance with Article II.

2.2      ELECTION TO DEFER.  A Director who desires to defer the payment of all or a portion of his or her Fees for any Year must complete and deliver an Election Agreement to the Corporation no later than the last day of the Year prior to the Year for which the Fees are earned by the Director; provided, however, that any Director hereafter elected to the Board of Directors of the Corporation or a Subsidiary who was not a Director on the preceding December 31 may make an election to defer payment of Fees for the Year in which he or she is elected to the Board of Directors by delivering the Election Agreement to the Corporation within 30 days of first becoming eligible to participate in the Plan.  A Director who timely delivers the Election Agreement to the Corporation shall be a Participant in the Plan upon the Corporation's acceptance of such Election Agreement.

2.3      AMOUNT DEFERRED; DATE OF DEFERRAL.  A Participant shall designate on the Election Agreement (a) the amount of his or her Fees that are to be deferred to the Plan for any Year, (b) the date on which the Participant's Fees shall be distributed, (c) whether the distribution of deferred Fees is to be paid in its entirety or whether such Fees shall be paid in installments, and (d) if in installments, the number of quarterly installments.  Deferrals shall be until the earlier to occur: (i) the date specified by the Participant which may be not later than the date on which the Participant would attain age 72, or (ii) the date of death of the Participant, at which time payment of the amount deferred shall be made in accordance with Section 2.8 or 2.11 of this Article.  A Participant may select not more than one date in each Election Agreement upon which distribution shall be made or when installments shall begin. Distribution dates shall be the first business day of a calendar quarter.

2.4      ACCOUNT.  The Corporation shall maintain an Account of the Fees deferred by each Participant.  A Participant shall designate on the Election Agreement whether to have the Account valued on the basis of Oregon Pacific Bancorp Common Stock in accordance with Section 2.5 of this Article, or whether the Participant is to receive interest in accordance with Section 2.6 of this Article.  The Corporation may, if necessary or desirable, establish separate Accounts for a Participant to properly account for amounts deferred under the different alternatives and Years; all such Accounts are collectively referred to herein as the Account.  The Account based on Oregon Pacific Bancorp Common Stock shall be known as the "Common Stock Account", and the interest bearing account shall be known as the "Interest Bearing Account." A Participant may defer a portion of his or her Fees into each type of Account. Each Account shall reflect all investment income and gains from investments as credits, and all losses and transaction costs as debits. The Account shall not be debited for federal, state or local income or other taxes attributable to net investment income or gains.

2.5      COMMON STOCK ACCOUNT.  If a Participant elects to have all or a portion of his or her Fees deferred into the Common Stock Account, the Corporation shall credit to the Common Stock Account that number of whole shares of Common Stock that could be purchased with an amount equal to the amount deferred in accordance with the following procedure:

2.5.1      Beginning with fees earned in the Year 2007, crediting to the Common Stock Account shall occur on March 31, June 30, September 30 and December 31.

2.5.2      Crediting to the Common Stock Account shall be at a price per share equal to a weighted average, consisting of the average of the most recent aggregate sales of no less than 1% of the Corporation’s issued and outstanding stock determined as of crediting date.

2.5.3      There shall be no credits in the Common Stock Account for fractional shares of Common Stock. Any cash deferral amount not credited to the Common Stock Account because such amount is insufficient to purchase a whole share of Common Stock shall be credited to the Dividend Account described in Section 2.5.4.

2.5.4      The Corporation shall establish a Dividend Account to which it shall credit (I) fractional deferral amounts as described in Section 2.5.3, and (ii) “hypothetical dividends” on shares of Common Stock which have been credited to a Participant’s Common Stock Account, in an amount equal to actual cash dividends paid on shares of the Corporation’s Common Stock from time to time. On the last day of each quarter all sums in the Dividend Account shall be credited to the Participant’s Common Stock Account at the price determined under Section 2.5.2.

2.6      INTEREST BEARING ACCOUNT.  If a Participant elects to have all or a portion of his or her Fees deferred into the Interest Bearing Account, there shall be added to the Account on the first day of each month the dollar amount of such Fees payable for such period plus all interest payable on such Interest Bearing Account for such period as follows:  A Participant's Interest Bearing Account will be credited with interest on the average daily balance in the Interest Bearing Account during each month at a rate equal to the effective annual yield of the average of the Moody's Average Corporate Bond Yield Index for the preceding month, as published by Moody's Investor Service, Inc. or any successor publisher thereto, or, if such index is no longer published, a substantially similar index selected by the Board.

2.7      STATUS OF ACCOUNT. Neither Participant, nor Participant’s heirs, beneficiaries, creditors, successors, assigns, probate estate or legal representative, shall have any right, title or interest in any Account established under the Plan, nor in the values, benefits or proceeds of the Account. The Account and all cash, values, benefits, holdings, funds and proceeds of the Account shall be and remain part of the general assets of Bancorp. Nothing in the Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Bank or Bancorp and Participant, Participant’s beneficiaries or any other person. Nothing in the Agreement shall give rise to a duty or obligation on the part of the Bank or Bancorp toward Participant or Participant’s heirs, beneficiaries, creditors, successors, assigns, probate estate or legal representatives.

2.8      PAYMENT OF ACCOUNT; PERIOD OF DEFERRAL.  The amount of a Participant's Account shall be paid to the Participant in a single payment and/or in a number of substantially equal consecutive quarterly installments (not to exceed 40) payable March 31, June 30, September 30 and December 31, as elected by the Participant in the Election Agreement.  Distributions from the Interest Bearing Account shall be in cash. Distributions from the Common Stock Account shall be in shares of Common Stock issued by the Corporation.  The amount of any Account remaining after payment of an installment shall continue to be valued in accordance with Section 2.5 of this Article or bear interest in accordance with Section 2.6 of this Article.  Full payment or the first quarterly installment, as the case may be, shall be made as soon as administratively possible after (i) the date specified in Section 2.3 of this Article, or (ii) the date of the Participant's death. The election as to the time for and method of payment of the amount of the Account relating to Fees deferred for a particular Year shall be made on the Election Agreement(s) and may not thereafter be altered except as provided in Section 11 of this Article.

In the event that a Participant elects to receive installment payments under this Section 2.8:

(a)    The amount of the distribution of shares from the Common Stock Account shall be valued based on a price pe