COST SHARING AGREEMENT
 
 

This Cost Sharing Agreement (hereinafter “Agreement”) is between PEMCO Mutual
Insurance Company (“PMIC”) and EvergreenBank (“Bank”), both Washington
corporations with principal offices in Seattle, Washington, and when signed by
both parties shall be deemed effective as of April 1, 2006.

1.   Purpose

The purpose of this Agreement is to define the billable services provided by or
through PMIC to Bank and to establish the payment and/or reimbursement
mechanisms for the costs associated with such services. This Agreement is not
intended to create a profit for PMIC, but rather to ensure that Bank is
equitably responsible for actual, reasonable costs and expenses incurred by or
through PMIC on Bank’s behalf.

2. Term and Termination

This Agreement shall remain in force for an initial term of one year
corresponding to calendar year 2006. Thereafter, upon each January 1 this
Agreement shall automatically renew for successive calendar year terms, subject
to mutually agreed-upon service and pricing modifications, until it is
terminated as provided below.

Termination for convenience. Either party may terminate this Agreement, or any
service hereunder, for any or no reason by providing the other party no less
than six months advance written notice. In such event, both parties shall make
good faith reasonable efforts to facilitate an orderly and mutually satisfactory
disengagement of the affected service(s).

Termination by mutual consent. This Agreement or any service hereunder may be
terminated at any time with the express consent of both parties.

Termination for cause. Either party may terminate this Agreement upon notice to
the other in the event the non-terminating party materially breaches its
obligations under this Agreement (including, without limiting the foregoing, all
financial obligations) and fails to cure such breach within 90 days after
receiving written notice thereof by the non-breaching party.

Termination for insolvency. Either party may terminate this Agreement upon
notice to the other in the event the non-terminating party becomes the subject
of bankruptcy, assignment for the benefit of creditors, or any similar
proceedings (whether voluntary or involuntary), or if the non-terminating party
otherwise ceases to do business as a going concern.

3.   Definition of Services

PMIC will provide such services as are listed and defined in Attachment A
hereto. The services and pricing are expected to generally remain stable over
the course of each annual term hereof; however, Attachment A may be modified at
any time with both parties’ written consent. Attachment A shall in any event be
reviewed and modified as necessary at least annually to ensure its accuracy,
completeness, and fairness to both parties.

Notwithstanding anything in this Agreement or Attachment A to the contrary, PMIC
reserves the right to discontinue any service hereunder upon 30 days advance
notice to Bank in the event that PMIC ceases to provide that service generally.
In such event, PMIC shall provide Bank a commercially reasonable level of
assistance to facilitate an orderly cessation of service and/or migration to
another service provider.

4.   Monthly Settlement

All charges allocable to Bank hereunder shall be invoiced on a monthly basis in
arrears as incurred, and shall be due and payable as invoiced. Both parties
shall exercise their best efforts to promptly resolve any settlement dispute(s).

5. Charges and Methodologies

To the extent practical, all cost calculations, allocation formulae, settlement
methodologies, and any other factors used to determine and apply the charges
hereunder shall be specified in Attachment A. Notwithstanding the foregoing, in
the event that both parties should expressly agree to subject to this Agreement
any costs or services of which the details are not adequately specified in
Attachment A, then the charges related thereto shall be determined and allocated
in accordance with customary insurance accounting practices and/or generally
accepted accounting principles, as applicable.

6.   Direct-Billed Charges

Third party charges for services that are subject to this Agreement shall be
billed to and paid directly by Bank to the extent that is practical.
Notwithstanding the foregoing, in the event PMIC pays any such charge on Bank’s
behalf, such expense shall be added to and payable as part of Bank’s next
subsequent monthly invoice.

7.   Books and Records

The books and records of each party, as they pertain to this Agreement, shall be
maintained in accordance with the uniform accounting instructions of the
National Association of Insurance Commissioners and/or generally accepted
accounting principles, and shall be made available for audit and review by the
other party upon reasonable notice and by the Office of the Insurance
Commissioner of the state of Washington upon demand.

8.   Proprietary Rights

Bank retains exclusive rights of ownership to all work products produced solely
and exclusively for Bank by PMIC under this Agreement. PMIC retains exclusive
rights to ownership of all other work products produced hereunder, except to the
extent that such rights are owned by third parties. “Work product” shall include
all documents, presentation materials, files, input materials, output materials,
the media upon which they are located, and all software programs or packages
(together with any related documentation, source codes, object codes, upgrades,
revisions, modifications, and any other related materials) which are utilized or
developed in the performance of the services contracted for under this
Agreement.

9.   Confidentiality

Each party shall hold in trust and confidence all of the other party’s
Confidential Information to which it is exposed in connection with this
Agreement, and shall not disclose such information to third parties except as
may be authorized by the owner of such information or as required by law.
“Confidential Information” means all information not in the public domain that
belongs to or is the responsibility of each party to hold in confidence,
including but not limited to information about that party’s business affairs,
software and hardware systems and related documentation, existing or future
research and development, work products, customers, employees, agents,
contractors, and consultants, and information about or belonging to other
entities with whom that party conducts business. Each party’s Confidential
Information shall include, without limitation, all consumer nonpublic personal
information in that party’s possession in any form, whether individually
identifiable or anonymous information. In the event that either party discovers
an unauthorized disclosure of the other party’s Confidential Information, the
discovering party shall immediately notify the affected party and take such
remedial action(s) as may be required by law and/or prudent under the
circumstances. The provisions of this paragraph shall survive any termination of
this Agreement.

10.   Indemnity

It is the intention of the parties that PMIC is an independent contractor under
this Agreement. All employees of PMIC who provide services hereunder shall
remain employees of PMIC and not employees of Bank, regardless of whether their
employment compensation is a factor in determining the amount charged to Bank
for a service hereunder. Notwithstanding the foregoing, in the event that a
governmental authority determines that social security, withholding, or other
employment-related tax or assessment related to the services hereunder should
have been paid by Bank on behalf of PMIC, then PMIC agrees to indemnify and hold
harmless Bank against any such liability, including any interest and penalties
occasioned by such determination.

Bank agrees to defend, indemnify, and hold harmless PMIC against any and all
loss, liability, cost or expense (including without limitation reasonable
attorneys’ fees) arising from or related in any way whatsoever to the services
provided hereunder, except to the extent such liability is expressly assumed by
PMIC hereunder or is solely caused by PMIC’s gross negligence or willful
misconduct.

11.   General

  A.   Applicable Law. This Agreement shall be governed by and interpreted under
the laws of the State of Washington.

  B.   Severability. Any invalidity, in whole or in part, of any provision of
this Agreement shall not affect the validity of any other of its provisions.

  C.   Notices. Any notice or other communication hereunder shall be in writing.

  D.   Waiver. No term or provision hereof shall be deemed waived or breach
excused unless such waiver is in writing and signed by the party claimed to have
waived or consented.

  E.   Assignment. Neither party may assign, sell, transfer, or subcontract any
of its rights or obligations under this Agreement without the other party’s
prior written consent, which shall not be unreasonably withheld.

  F.   Modification. This Agreement may not be modified except by written
agreement of both parties.

      G. Force Majeure. Neither party shall be liable to the other for any delay
in its performance hereunder caused by circumstances beyond its reasonable
control.

12.   Entire Agreement

This Agreement, including Attachment A and any other attachments hereto and as
may be modified from time to time as provided herein, constitutes the entire
agreement between PMIC and Bank regarding the services and costs and other
subject matter referred to herein, and as of the effective date hereof
terminates, replaces, and supersedes all prior agreements and other
communications between the parties with respect to this subject matter,
regardless of whether in written, oral, or any other form.

      PEMCO Mutual Insurance Company   EvergreenBank
By: /s/ Steven A. Ricco
  By: /s/ Gerald O. Hatler
 
   
Name: Steven A. Ricco
  Name: Gerald O. Hatler
 
   
Title: Vice President & CFO
  Title: President & CEO
 
   
Date: 4/1/2006
  Date: 4/1/2006
 
   

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      ATTACHMENT A - SERVICES AND COST ALLOCATIONS

To the Cost Sharing Agreement between PEMCO Mutual Insurance Company
and EvergreenBank dated April 1, 2006

Period Covered:

January 1, 2006 — December 31, 2006

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HUMAN RESOURCES - Services and Allocations
 

Description of Services:

Specialty Functions/Administration

  •   Contracts with, and manages, 3rd party vendors (15+)

  •   and parking programs, service and attendance awards

  •   Helps administer HR policies and handbook

EEO, Legal, Compliance

  •   Provides regulatory reporting to 12+ agencies

  •   Handles unemployment and workers’ compensation claims/issues

  •   Ensures legal compliance on EEO, safety, benefit plans, and other
employment issues

  •   Trains supervisors and managers in employment and compliance issues

Compensation (Payroll and Benefits)

  •   Administers benefit programs such as medical/dental, 401(k), life,
long-term disability, and other programs such as tuition/education reimbursement
programs and deferred compensation plans; manages COBRA process

  •   Recommends benefits strategy to PFS Executive Committee annually prior to
open enrollment

  •   Conducts annual open enrollment process, processes monthly benefits
enrollment and benefits billing

  •   Coordinates benefits coverage, paid and unpaid leave, and return to work
issues with employees on leaves of absences

  •   Negotiates benefits contracts with vendors

  •   Administers wage and pay programs, compiles and analyzes pay and benefits
data

  •   Prepares personalized total compensation statement, every other year

  •   Manages paid time off programs

  •   Processes payroll data on biweekly payment schedule

  •   Manages transportation subsidies and commuter program

  •   Documentation/Records:

  •   prepares monthly wage and tax data for general ledger

  •   documents expense reporting

  •   creates ad hoc reports for earned time and sick time balances, overtime
and bonuses

  •   time recording for attendance records

  •   processes taxable fringes

Employment (Recruiting and Staffing)

  •   Creates ads for open positions

  •   Conducts initial screening interviews, administers applicant testing,
develops legal and effective interviewing techniques

  •   Checks and accesses references, credit and criminal backgrounds

  •   Manages PFS employee transfers

  •   Conducts exit interviews

  •   Recruits temporary services, manages contracted employees

  •   Trains supervisors and managers in interviewing

  •   Reports

  •   Reviews position responsibilities for accurate FLSA classification

  •   Reviews employees’ statuses (regular full-time, regular part-time,
temporary) for accurate classification

  •   Assists Security with employee safety issues

Training

  •   Conducts first day, 2 hour orientation and 90 day, 11/2 hour benefits
orientation

  •   Facilitates PDP training; assists facilitation of Legacy Leadership,
supervisory training,

  •   Trains managers to administer policies and procedures

Allocation Methodology:
The allocation model for Human Resources is:

Annual HR expense as benchmarked / PMIC HR staff = cost per HR Staff
(Total Bank headcount/100) x HR headcount benchmark = Bank HR Staff

Bank HR Staff x Cost per HR Staff = Bank annual HR expense
Bank annual HR expense/12 = monthly expense reimbursement (rounded)

Adjusted FTE is defined as follows:

HR expense as benchmarked = Ward benchmark for A.M. Best A+ insurance companies

HR headcount benchmark = BNA survey data at the third quartile

Notes:

•   Headcount is based on October 2005 data.

•   Expense reimbursement will be billed monthly and is subject to change only
with the occurrence of material event.

•   Bank direct vendor payments are not included.

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THE LEARNING CENTER (TLC) - Services and Allocations
 

Description of Services

TLC provides the following services within the scope of the monthly retainer
fee:

Basic Services

  •   Setting up classes (attendance records, supplies, etc.)

  •   Enterprise-level training (new employee training, legal updates, wellness
activity, for any number of employees participating

Specialty Functions/Administration

  •   Contracting with, and managing, 3rd party vendors that supply equipment,
tools, and services

  •   Curriculum Development

  •   Performance and Training Consulting

  •   Research

  •   Coaching and Mentoring

  •   Facilitating

  •   Customization/specialization for specific development needs

  •   Systems and tools such as Performance Assessments, Professional
Development Planning, 360 Assessments, Competency identification and assessment
* (see below)

  •   Administration of accredited external courses – CPCU, etc.

  •   Administration of external learning offerings — below

  •   Need and gap analysis consulting

  •   Survey administration

Internal Learning Offerings

  •   New Employee Orientation

  •   The Supervisory Series

  •   Performance Management

  •   Career Focus

  •   CPR Refresher

  •   Customer Relations

  •   Customer Relations Refresher

  •   Learning About Behavior Styles

  •   Resolving Conflict

  •   Netspeed Series (Multiple classes)

  •   Transition Management

  •   Feedback Skills

  •   Presentation Skills

  •   Privacy/Compliance e-learning

  •   Whale Done

  •   Computer Classes

  •   Other classes as mutually agreed

Notes:

  •   Bank direct vendor payments are not included.

The following services will be billed as a direct charge back to Bank (by
business unit where applicable):

External Learning Offerings

  •   Bob Pike

  •   Skillsoft

  •   Books 24/7

  •   Contract Certification

  •   Leadership That Shapes the Future

  •   Satellite Video Conferences

  •   Advanced/Specialized Computing & Programming Classes – on request

  •   Fierce Conversations

  •   Katie Insurance School

  •   Computer Classes

* Directly charged back to user

  •   Others as mutually agreed to

Allocation Methodology:

Bank will be charged a flat retainer of $1,000.00 per month plus any applicable
direct bill charge back.

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SHARED SERVICES DEPARTMENT - Services and Allocations
 

Description of Services:

      Mail Services- — - — - — - Handling of all incoming and outgoing mail,
receiving and delivery of packages, center messenger service, miscellaneous
projects such as processing of agent mail, Visa reports, proof of mail, and bank
statements.

      Print Management — - — Management of outsourced print services and leased
copy machines

     
Forms Management — -
  Inventory and version management of standard forms
 
   
Reception — - — - — - — - -
  General lobby reception services and ad hoc clerical assistance

Allocation Methodology:

The above services will be billed at a fixed monthly rate of $1,700.00 which
reflects actual cost experience over the 18 month period ending September 30,
2005.

Notes:

•   Bank direct vendor payments and direct postage are not included.

•   Projects such as ad hoc proof reading, document editing, preparing mail
labels, etc. are Word Processing special project tasks and are charged for at
the Word Processing hourly rate specified below.

Photocopying Services and Pricing

      File copying . . . . . . . . . . . . . . . . . . . . . . . . . . . .     .
. . . . . . . . . . . . . . . .   $0.30 per sheet Full color copying . . . . . .
. . . . . . . . . . . . . . . . . . .     . . . . . . . . . . . . . . .    
(more than 2 colors excluding black on a page, 8 1/2 x 11)   $0.99 per sheet
Full color copying . . . . . . . . . . . . . . . . . . . . . . . . .     . . . .
. . . . . . . . . . .     (more than 2 colors excluding black on a page, 11 x
17)   $1.50 per sheet Accent color copying . . . . . . . . . . . . . . . . . . .
. . . . .     . . . . . . . . . . . . . .     (one color plus black on a page, 8
1/2 x 11 or 8 1/2 x 14, 1- or 2-sided)   $0.25 per sheet B&W copying . . . . . .
. . . . . . . . . . . . . . . . . . . . . .     . . . . . . . . . . . . . . . .
    (8 1/2 x 11, 8 1/2 x 14, 1- or 2-sided)   $0.07 per sheet B & W copying . .
. . . . . . . . . . . . . . . . . . . . . . . . .     . . . . . . . . . . . . .
. . .     (11 x 17, 1- or 2-sided)   $0.12 per sheet Sales training manuals . .
. . . . . . . . . . . . . . . . . . . . .    
. . . . . . . . (Includes copy, tabs, and bindery costs. Does
not include binder.)
 
$60.00 per manual
 
   
Bindery time . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
 
$60.00 per hour
 
   
Folding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
 
$15.00 per setup
 
   
Plotter printing . . . . . . . . . . . . . . . . . . . . . . . . . .
.
 
$2.00 per page

Notes: Rates are 100% of market price.

Fleet Services: Pool cars are only available for emergency use.

      When used, the charge will be: $5.00 per hour based on a 12-hour day (7 am
- 7 pm) seven days a week

 
   
Desktop Publishing: $54.00 per hour
 

 
   
Design Services: $62.00 per hour
 

 
   
Writing Services: $58.00 per hour
 

 
   
Word Processing: $42.00 per hour
 

 
   
Notes:
 

  •   All services will be billed for in minimum 15-minute increments.

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FINANCE - Services and Allocations
 

Description of Services:
Purchasing:

  •   Fleet handling in coordination with Shared Services Dept.

  •   Purchase order processing

  •   Vendor management

  •   Requests For Proposal

  •   Requests For Information

  •   Vendor research

  •   Cell phone handling

Allocation Methodology:

$10.00 per purchase order

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CORPORATE LEGAL - Services and Allocations
 

Description of Services:
In General: Deliver an array of in-house legal services to Bank, including:

Advice and Counsel

  •   Provide legal assistance to upper management regarding day-to-day business
operations

  •   Assist Bank in developing situational strategic options;

  •   Support the board(s) of directors of Bank (and subsidiaries, if
applicable)

Compliance

  •   Maintain ongoing rapport with regulators

  •   Provide legal assistance during regulatory examinations and external
audits

  •   Assist in complaint responses to regulators

  •   Provide legal assistance on privacy policies and information security
programs

  •   Provide research, clarify laws, regulations, and information as requested

Contracts

  •   Provide targeted support (including coordination with Contracts
Management) on contract reviews

Corporate Filings

  •   Ongoing regulatory compliance activities, including review and/or filing
of state and federal reports

Intellectual Property

  •   Register copyright and trademark filings, or coordinate the same with
outside counsel

Corporate Governance

  •   Preparation and filing of amendments to bylaws, charter documents, board
resolutions and minutes

  •   Legal assistance for board meetings, board committee meetings and annual
shareholder meetings

  •   Maintaining Bank’s articles of incorporation, bylaws, corporate minute
books, and associated records

  •   Support corporate policy development and implementation

  •   Contact with regulators and law enforcement

  •   Liaison to third party stock transfer agent and other regulatory vendors

  •   Administration of stock option plan

Litigation

  •   Provide advice and supervision of outside law firms on pending or
threatened litigation (excluding claims litigation for insurance companies and
certain other services)

Lobbyists and Trade Associations

  •   Review pending legislation and changes to legislation

  •   Support corporate lobbyist and government affairs activities

Other Services as Agreed
Specific additional services as may be provided pursuant to mutual determination
by Bank and Corporate Legal, including:

  •   Non-insurance claims-related legal support, advising management on the
meaning of statutes, regulations, court opinions, and administrative rulings,
and preparation or review of corporate policies, forms, agreements, and
contracts.

Allocation Methodology:

The Corporate Legal pricing model is based on estimates of billable time. The
model does not account for any major unplanned projects (such as an
acquisition), for which PMIC reserves the right to make appropriate adjustments.
The basic allocation formula is:

Allocable Costs x estimate of hour allocations

Bank will be billed 9.9% of the current estimate of hour allocations.

Notes:

•   Bank direct vendor payments are not included.

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REAL ESTATE - Services and Allocations
 

Description of Services:

      Housekeeping $60.00 / hour

 
     

  •   Special Tenant requested cleaning

  •   Conference room Set-up

  •   Emergency cleaning         Facility Services $60.00 / hour —

  •   Work Order requests

  •   Damage repair

  •   Equipment installations

  •   Equipment repair

  •   Special services (lock change, custom lighting, security support, etc.)  
      Professional Services $70.00 / hour —

  •   Space programming

  •   Space design

  •   Leasing and property consultation

  •   Project management         Notes:

  •   The above services are not provided under PMIC’s real estate lease(s) with
Bank (if any). However, for mutual convenience, charges for the above will be
billed as additional items on Bank’s “rent” invoice.         Physical Security —

  •   Access controls and alarm

  •   Emergency radio communication         Safety Program —

  •   Provide first aid kits, AEDs, sickroom and related supplies

  •   Insure MSDS and hazardous materials and blood borne pathogen regulatory
compliance

  •   Provide emergency First Aid response, CPR, earthquake preparedness, Bomb
Search, and evacuation support

  •   Provide First Aid, AED, and related training to appropriate staff

  •   Establish and maintain Safety Committee structure and regulatory
compliance

  •   Provide Emergency Food, Water for extended emergencies

  •   Provide Search and Rescue equipment and handling in the event of regional
disaster impacts to facility

  •   Conduct routine safety sweeps and evaluations for proactive accident
prevention

  •   Conduct Accident Investigations to determine cause and remedy

  •   Provide Safety Awareness and Education programs

Enterprise Contingency Planning

  •   Establish and maintain corporate contingency planning structure

  •   Provide and maintain EOC

  •   Consultation, coordination, and guidance to Contingency Teams

  •   Act in recovery coordinator role during emergencies

  •   Provide PFS Enterprise contingency exercises and drills

  •   Provide contingency planning awareness and education programs

Other Security

  •   Emergency PA communications

  •   Investigations

  •   Workplace violence prevention program

  •   Liaison with law enforcement authorities

  •   Investigative criminal background checks

  •   Emergency response to security-related threats to persons or property at
PFS company sites

  •   Protection of persons and property at PFS company sites

Security Allocation Methodology:

Total allocable costs are:

Actual physical security costs

- less 30% of the Guardsmark billing (which goes to “building”)

- less direct customer reimbursements

Bank will be charged its portion of these allocable costs based on Bank’s
proportion of FTEs at properties occupied or remotely viewed by PMIC Real
Estate.

Other charges:

  •   $27 per hour for SAS 70 support, CISP, or other special projects

Notes:

•   Bank direct vendor payments are not included.

•   The above allocations do not include actual emergency response. Security
response and recovery expenses resulting from an actual emergency will be
charged separately based on actual cost.

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TELECOM - Services and Allocations
 

Description of Services:

Coordination and Management of Voice Dial Tone Service

  •   New, deleted or changed voice lines

  •   Provision of voice mail services

  •   Long distance related to remote access lines

  •   Remote user access services related to voice telecom

Business Management of Voice Telecom Service

  •   Invoice processing and control of vendor provided telecom services

  •   Invoice processing and control of PMIC/Affiliate voice telecom billings

  •   Administering equipment and all other contractual obligations regarding
voice telecom

  •   Administer implemented Policies and Procedures

Coordination of Technical Voice Telecom Services

  •   Coordination, oversight and approval of all equipment maintenance,
upgrading, installation, consultation, and other technical activity performed by
third parties (including but not limited to PCCS, Inc.) relating to voice
telecom

Allocation Methodology:

Telecom pricing consists of the following rates:

              Home Office   Remote Office
Long distance
Nortel desk phone
Rockwell
Line
New phone MAC
Move phone MAC
Software MAC
  $0.06 per minute
$29.00 / unit per month
$22.00 / unit per month
$12.00 / line per month
$150.00 per MAC
$100.00 per MAC
$25.00 per MAC   $0.06 per minute
$49.00 / unit per month
$13.00 / unit per month
$44.00 / line per month
$150.00 per MAC
$100.00 per MAC
$25.00 per MAC

Notes:

  •   The above charges shall remain stable through March 31, 2006; beginning
April 1, 2006, they are subject to change upon 30 days notice.

  •   Both parties recognize and agree that the above may be revised during the
term to reflect mutually agreed-to arrangements relating to Telecom services
provided by PCCS, Inc.

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