Exhibit 10.24

 

THE AMENDED AND RESTATED

PACIFIC NORTHWEST BANCORP

EMPLOYEE STOCK OWNERSHIP PLAN/

MONEY PURCHASE PENSION PLAN

 

As of April 1, 2002

 

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I Name and Purpose

 

ARTICLE II Definitions

 

A.

 

“Accrued Benefit”

 

B.

 

“Administrative Committee”

 

C.

 

“Anniversary Date”

 

D.

 

“Board”

 

E.

 

“Code”

 

F.

 

“Compensation”

 

G.

 

“Effective Date”

 

H.

 

“Eligibility Computation Period”

 

I.

 

“Employee”

 

J.

 

“Employer”

 

K.

 

“Employer Stock”

 

L.

 

“Enrollment Date”

 

M.

 

“ERISA”

 

N.

 

“Event of Forfeiture”

 

O.

 

“Fiscal Year”

 

P.

 

“Fund”

 

Q.

 

“Highly-Compensated Employee”

 

R.

 

“Hour of Service”

 

S.

 

“Investment Account” or “Pre-April 1, 2002 ESOP Investment Account”

 

T.

 

“Investment Committee”

 

U.

 

“Money Purchase Pension Plan Employer Contribution Account” or “Post-March 31,
2002 Money Purchase Pension Plan Employer Contribution Account”

 

V.

 

“One-Year Break in Service”

 

W.

 

“Participant”

 

X.

 

“Plan”

 

Y.

 

“Plan Year”

 

Z.

 

“Spouse”

 

AA.

 

“Stock Account” or “Pre-April 1, 2002 ESOP Employer Stock Account”

 

BB.

 

“Trust”

 

CC.

 

“Trustee”

 

DD.

 

“Valuation Date”

 

EE.

 

“Vesting Computation Period”

 

FF.

 

“Year of Service”

 

GG.

 

“Miscellaneous”

 

 

 

 

ARTICLE III Eligible Employees

 

ARTICLE IV Contributions

 

A.

 

Employer Contribution

 

B.

 

Date of Payment

 

C.

 

Participant Contributions

 

 

 

 

ARTICLE V Participant’s Accounts, Valuation, Maximum Contribution

 

A.

 

Participant’s Accounts

 

B.

 

Cash Dividends

 

C.

 

Trust Valuation

 

D.

 

Maximum Contributions

 

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1.

Annual Addition

 

 

2.

Excess Annual Addition

 

E.

 

Forfeitures and Reinstatement of Forfeitures

 

 

 

 

ARTICLE VI Nonforfeitable Accrued Benefit

 

A.

 

Allocations Not Vested

 

B.

 

Vesting Period.

 

C.

 

Amendment to Vesting Computation Period or Vesting Schedule

 

D.

 

Full Vesting

 

 

 

 

ARTICLE VII Distribution of Benefits

 

A.

 

Retirement Age and Options

 

 

1.

Employment After Normal Retirement Age

 

 

2.

Date of Retired Participant’s First Payment

 

 

3.

Deferral of Benefits

 

 

4.

Form of Payment

 

B.

 

Death

 

 

1.

Death Prior to Commencement of Benefits

 

 

2.

Explanation of Death Benefit

 

C.

 

Disability

 

D.

 

Termination of Employment

 

E.

 

Time of First Payment

 

F.

 

Distribution of Allocation Attributable to Last Year of Participation

 

G.

 

Distribution to Persons Under Disability

 

H.

 

No Reduction in Benefits by Reason of Increase in Social Security Benefits

 

I.

 

Provisions for Nontradeable Stock

 

J.

 

Diversification and Distribution of Investments in Pre-April 1, 2002 ESOP
Employer Stock Account

 

 

ARTICLE VIII Provision Against Anticipation

 

A.

 

No Alienation of Benefits

 

B.

 

Qualified Domestic Relations Orders

 

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ARTICLE IX Administrative Committee and Investment Committee Duties

 

A.

 

Appointment of Administrative Committee

 

B.

 

Administrative Committee Action

 

C.

 

Rights and Duties

 

D.

 

No Administrative Committee Investment Authority

 

E.

 

Information - Reporting and Disclosure

 

F.

 

Administrative Committee Allocation and Delegation of Responsibility

 

G.

 

Claims Procedure

 

H.

 

Investment Committee Authority

 

I.

 

Funding Policy

 

J.

 

Investment Committee Action

 

K.

 

Investment Committee Allocation and Delegation of Responsibilit

 

L.

 

Bonding

 

M.

 

Indemnification

 

N.

 

Standard of Care Imposed upon the Administrative Committee and the Investment
Committee

 

 

 

 

ARTICLE X Investment of Plan Assets

 

A.

 

Investments

 

 

1.

ESOP Accounts

 

 

2.

Money Purchase Pension Plan Employer Contribution Account

 

 

3.

Trustee’s Investment Procedures

 

B.

 

Employer Stock

 

C.

 

Voting and Tender of Employer Stock

 

D.

 

ESOP Employer Stock Accounts

 

 

 

 

ARTICLE XI Suits

 

ARTICLE XII Mergers and Consolidations

 

ARTICLE XIII Amendment and Termination of Plan and Trust

 

A.

 

Right to Amend and Terminate

 

B.

 

No Revesting

 

C.

 

Exclusive Benefit of Employees

 

D.

 

Termination

 

 

 

 

ARTICLE XIV Top Heavy Plans Defined and Other Definitions 2

 

A.

 

Top Heavy Plan

 

B.

 

Additional Definitions for Use in this Article and Article XV

 

C.

 

Top-Heavy Requirements Effective for Plan Years Beginning After December 31,
2001

 

 

 

 

ARTICLE XIX Additional Requirements Applicable to Top Heavy Plans

 

A.

 

Minimum Vesting Requirements

 

B.

 

Minimum Employer Contributions

 

 

1.

General Rule

 

 

2.

Exceptions

 

 

3.

Employee Participating in Defined Benefit Plan

 

 

4.

Specific Rules

 

 

 

 

ARTICLE XX Right to Discharge Employees

 

ARTICLE XXI Return of Contributions; Declaration of Trust Contingent on Internal
Revenue Service Approval

 

 

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ARTICLE XXII Direct Rollover Contributions

 

A.

 

Direct Rollover Contributions

 

B.

 

Definitions

 

 

1.

Eligible Rollover Distribution

 

 

2.

Eligible Retirement Plan

 

 

3.

Distributee

 

 

4.

Direct Rollover

 

 

 

 

ARTICLE XXIII Transfer of InterWest Bancorp, Inc. Stock From predecessor Pacific
Northwest Bank

Retirement Plan

 

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THE AMENDED AND RESTATED

PACIFIC NORTHWEST BANCORP

EMPLOYEE STOCK OWNERSHIP PLAN/MONEY PURCHASE PENSION PLAN

 

THIS AGREEMENT is made and entered into at Seattle, Washington, to be effective
as of the dates stated herein, by Pacific Northwest Bancorp, a Washington
corporation, having its principal place of business at Seattle, Washington, and
its affiliates listed in Schedule A, hereinafter called the “Employer.”

 

WHEREAS, the Employer established for the exclusive benefit of its Employees
eligible to participate, and their beneficiaries, an employee stock ownership
plan, effective as of January 1, 1988;

 

WHEREAS, this Plan was previously a money purchase plan that was effective
January 1, 1972;

 

WHEREAS, the Board of Directors of InterWest Bancorp, Inc. amended and restated
the Plan effective as of January 1, 1997 to rename the Plan the “InterWest
Bancorp, Inc. Employee Stock Ownership Plan and Trust”;

 

WHEREAS, the Board of Directors of InterWest Bancorp, Inc. amended and restated
the Plan effective January 1, 1999 to add the Predecessor Pacific Northwest
Bank, Pioneer National Bank (until January 19, 1999), and Kittitas Valley Bank,
N.A., as co-sponsors of the Plan; to change the Plan Enrollment Dates to the
first day of each calendar quarter; to change the definition of Compensation to
exclude Christmas bonuses and to clarify that executive deferred compensation is
excluded; to amend the categories of employees excluded from participating in
the Plan; to amend the provisions relating to the granting of past service for
eligibility and vesting purposes; to change the Plan Valuation Dates to June 30
and December 31; to change the Hours of Service equivalency method for salaried,
exempt employees; to change the Plan definition of disability; as soon as
administratively possible after August 1, 1999, to accept the transfer of
InterWest Bancorp stock (now Pacific Northwest Bancorp stock) from the
Predecessor Pacific Northwest Bank Retirement Plan; and to bring the Plan into
compliance with the Uniformed Services Employment and Reemployment Rights Act,
the Small Business Job Protection Act of 1996, and the Taxpayer Relief Act of
1997, effective as of the applicable Effective Dates stated herein;

 

WHEREAS, the Plan was amended effective September 1, 2000, to change the name of
the Plan to the Pacific Northwest Bancorp Employee Stock Ownership Plan and
Trust;

 

WHEREAS, the Plan was amended and restated effective July 1, 2001 to incorporate
prior amendments; bring the Plan into compliance with current law including the
Internal Revenue Service Restructuring and Reform Act of 1998; exclude W-2
temporary employees from participating in the Plan; eliminate the requirement
that an Employee must attain age 18 to be eligible for Employer contributions
effective October 1, 2001; clarify the provisions excluding individuals that the
Employer treats as leased employees or independent contractors; provide that the
forfeiture of the nonvested account balance of a Participant who has terminated
employment with the Employer occurs as of the date the Event of Forfeiture
occurs; add provisions to the Plan regarding the treatment of missing
Participants; provide that an eligible Employee is enrolled in the Plan on the
Enrollment Date following his completion of the eligibility provisions; update
the names of the Employers co-sponsoring the Plan; update the names of the Plan
Trustees; make other minor administrative changes and clarifications recommended
by management, and effective January 1, 2001, clarify provisions relating to the
Plan’s normal vesting schedule and top-heavy vesting schedule; and

 

WHEREAS, the Board of Directors of Pacific Northwest Bancorp now wishes to amend
and restate this Plan effective April 1, 2002, to operate as a money purchase
pension plan as to Post-March 31, 2002 contributions but remain an employee
stock ownership plan as to Pre-April 1, 2002 contributions; to permit
Participants to choose to invest in mutual funds selected by the Investment
Committee or to direct the Trustee to apply Participant accrued benefits to
purchase Employer stock; to permit Participants to sell Employer stock in their
Pre-April 1, 2002 ESOP Employer Stock Accounts and Post-March 31, 2002 Money
Purchase Pension Plan Employer Contribution Accounts on and after the dates
permitted in the Plan; to credit cash dividends to Participants’ Post–March 31,
2002 Money Purchase Pension Plan Employer Contribution Accounts and Pre-April 1,
2002 ESOP Investment Accounts to be invested among the Plan investment funds; to
appoint T. Rowe Price Trust Company as directed Trustee of the Plan; to
establish an Investment Committee with duties including the prudent selection
and monitoring of the Plan investment funds; and to make other administrative
changes and clarifications recommended by Management or required or permitted
under applicable law;

 

NOW, THEREFORE, it is agreed as follows:

 

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ARTICLE I

NAME AND PURPOSE

 

The Plan shall be known as The Amended and Restated Pacific Northwest Bancorp
Employee Stock Ownership Plan/Money Purchase Pension Plan (the “Plan”). 
Effective April 1, 2002, this Plan is an employee stock ownership plan as to
Pre-April 1, 2002 ESOP Accounts and is a money purchase pension plan as to
Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Accounts. 
Between September 1, 2000 and March 31, 2002, the Plan was known as the Amended
and Restated Pacific Northwest Bancorp Employee Stock Ownership Plan and Trust. 
Between January 1, 1999 and August 31, 2000, the Plan was known as the Amended
and Restated InterWest Bancorp, Inc. Employee Stock Ownership Plan and Trust. 
Prior to January 1, 1999, the Plan was known as the InterWest Savings Bank
Employee Stock Ownership Plan and Trust.  With respect to the Pre-April 1, 2002
ESOP Employer Stock Accounts, the Plan is designed to invest primarily in
Employer Stock.

 

ARTICLE II

DEFINITIONS

 

A.            “Accrued Benefit” means the balance at any time of a Participant’s
Pre-April 1, 2002 ESOP Employer Stock Account, Pre-April 1, 2002 ESOP Investment
Account, Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution
Account, and Frozen Employer Matching Contribution Account, if any.

 

B.            “Administrative Committee” means Administrative Committee
appointed by the Board.

 

C.            “Anniversary Date” means the last day of each Plan Year.

 

D.            “Board” means the Board of Directors of Pacific Northwest Bancorp.

 

E              “Code” means the Internal Revenue Code of 1986, as amended from
time to time.

 

F.             “Compensation” means an Employee’s salary or wages from the
Employer before any deferral of income pursuant to the Employer’s Salary
Deferral 401(k) Plan, and before any salary reductions to the Employer’s
Internal Revenue Code Section 125 flexible benefits plan and Code
Section 132(f)(4) transportation fringe benefit plan, if any, including bonuses
(except holiday bonuses), overtime pay, commissions, compensation on the basis
of a percentage of profits, and cash incentive payments, but excluding mileage
reimbursements, holiday bonuses, compensation deferred under an executive
deferred compensation plan maintained by the Employer, compensation from
exercise of stock options, Employer contributions hereunder pursuant to
Paragraph A of Article IV, Employer contributions pursuant to Paragraphs A and C
of Article IV of the Employer’s Salary Deferral 401(k) Plan, any noncash
compensation, any amounts paid to an Employee in connection with such Employee’s
relocation (such as reimbursement of moving expenses and closing costs) even if
such amounts are includable in the Employee’s gross income, and payments by the
Employer on account of medical, disability and life insurance.  This definition
of Compensation for Plan contribution purposes specifically excludes all noncash
remuneration.  By excluding all noncash remuneration, it differs from the
following definition of Compensation for purposes of Code Sections 415 and 416.

 

For purposes of the Code Section 415 limitations on contributions and benefits
(Article V, Paragraph E hereof) and the Code Section 416 top heavy requirements
(Articles XIV and XV hereof) Compensation means wages, salaries, fees for
professional service and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Employer maintaining the Plan to the extent that
the amounts are includable in gross income (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, reimbursements, and expense allowances), and effective January 1,
1998, any elective deferrals as defined in Code Section 402(g)(3) and Code
Section 132(f)(4) transportation fringe benefit plan salary reduction
contributions, and any amount which is contributed or deferred by the Employer
at the election of the Employee and which is not includable in the gross income
of the Employee by reason of Code Section 125 or 457.  Such compensation does
not include:

1.             Contributions to a plan of deferred compensation which are not
includable in the Employee’s gross income for the taxable year in which
contributed;

 

2.             Employer contributions to a simplified employee pension described
in Section 408(k) of the Code to the extent deductible by the Employee;

 

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3.             Distributions from a plan of deferred compensation regardless of
whether such amounts are includable in gross income when distributed (except
amounts paid to an Employee under an unfunded nonqualified plan of deferred
compensation will be considered as compensation for Code Sections 415 and 416 in
the year such amounts are includable in gross income);

 

4.             Amounts realized from the exercise of a nonqualified stock option
or when restricted property becomes freely transferable or is no longer subject
to a substantial risk of forfeiture;

 

5.             Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option;

 

6.             Other amounts which receive special tax benefits such as premiums
for group term life insurance (but only to the extent that the premiums are not
includable in gross income) or contributions made by an Employer (whether or not
under a salary reduction agreement) towards the purchase of an annuity contract
described in Section 403(b) of the Code (whether or not contributions are
excludable from gross income).

 

For Plan Years beginning prior to January 1, 1994, Compensation in excess of
$200,000 (as adjusted pursuant to Code Section 415(d) in any Plan Year shall not
be considered for purposes of the Plan.

 

In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA ‘93 annual
compensation limit.  The OBRA ‘93 annual compensation limit for the 2002 Plan
Year is $200,000, and thereafter shall be as adjusted by the Commissioner for
increases in the cost of living in accordance with Code Section 401(a)(17)(B) of
the Internal Revenue Code.  The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in such calendar
year.  If a determination period consists of fewer than 12 months, the OBRA ‘93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.

 

For Plan Years beginning on or after January 1, 1994, any reference in this Plan
to the limitation under Code Section 401(a)(17) shall mean the OBRA ‘93 annual
compensation limit set forth in this provision.

 

G.            “Effective Date” means April 1, 2002, the effective date of the
amendment and restatement of this Plan, except as specifically provided herein,
and except that those provisions of this amended and restated Plan which comply
with requirements of (a) the Uniformed Services Employment and Reemployment
Rights Act to the extent applicable to reemployments initiated on or after
December 12, 1994 shall be effective December 12, 1994, (b) the Small Business
Job Protection Act of 1996 to the extent applicable to Plan Years beginning in
1997 shall be effective as of the first day of the 1997 Plan Year and to the
extent applicable to Plan Years beginning in 1998 shall be effective the first
day of the 1998 Plan Year, (c) the Taxpayer Relief Act of 1997 to the extent
applicable to Plan Years beginning in 1998 shall be effective as of the first
day of the 1998 Plan Year, (d) the Internal Revenue Service Restructuring and
Reform Act of 1998 shall be effective with respect to distributions made on or
after January 1, 2000, (e) the Community Renewal Tax Relief Act of 2000 shall be
effective January 1, 2001, and (f) the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall be effective January 1, 2002.  The Employer’s
plan was originally adopted effective January 1, 1972 as a money purchase plan
and was amended and restated as an Employee Stock Ownership Plan, effective
January 1, 1988.  Effective April 1, 2002, this Plan is amended and restated as
an employer stock ownership plan with respect to pre-April 1, 2002 contributions
and as a money purchase pension plan with respect to post-March 31, 2002
contributions.

 

H.            “Eligibility Computation Period” initially means the
12-consecutive-month period beginning with the date on which the Employee first
performs an Hour of Service for the Employer (the “Employment Commencement
Date”), or in the case of an Employee who has had a One-Year Break in Service,
the 12-consecutive-month period beginning with the first date on which the
Employee completes an Hour of Service following the last computation period in
which a One-Year Break in Service occurred (the “Reemployment Commencement
Date”).  After the initial Computation Period, the succeeding Eligibility
Computation Periods shall be the Plan Year which includes the first anniversary
of the Employment Commencement Date or Reemployment Commencement Date and each
succeeding Plan Year.

 

I.              “Employee” means any person in the service of the Employer
receiving a wage or salary.  A leased employee as defined in Code
Section 414(n)(2) shall be considered an Employee hereunder solely for

 

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purposes of Code Section 414(n)(3) unless (i) leased employees constitute less
than twenty percent (20%) of the Employer’s non-highly-compensated workforce as
defined in Code Section 414(n)(5)(c)(ii) and (ii) the leased employee is a
participant in a plan described in Code Section 414(n)(5)(B).  A leased employee
for purposes of Code Section 414(n)(3) means any person who is not an Employee
of the Employer and who provides services for the Employer pursuant to an
agreement between the Employer and a leasing organization, who has performed
such services for the Employer and related persons on a substantially full-time
basis for a period of at least one year, and whose services are performed under
the primary direction or control of the Employer.  Notwithstanding that a leased
employee is treated as an Employee hereunder solely for purposes of Code
Section 414(n)(3), such a leased employee shall not be considered an eligible
Employee or receive credit for service or share in Employer contributions under
this Plan.

 

Individuals classified by the Employer as independent contractors shall not be
Employees under this Plan, regardless of whether such classification is
controlling for federal employment tax purposes or under any other applicable
federal, state, or local law and regardless of whether such individual is
classified as an employee by a court or by any federal, state or local agency.

 

J.             “Employer” means Pacific Northwest Bancorp and its affiliates
listed in Schedule A.  Prior to September 1, 2000, Pacific Northwest Bancorp was
known as InterWest Bancorp, Inc.  Effective July 1, 2000, the affiliate then
known as Pacific Northwest Bank merged into InterWest Bank, and the affiliate
Pacific Northwest Bank ceased to exist as a separate entity at that time. 
Effective September 1, 2000, InterWest Bank changed its name to Pacific
Northwest Bank.  For purposes of this Plan, the term “Pacific Northwest Bank”
refers to the post-August 31, 2000 affiliate of Pacific Northwest Bancorp which
co-sponsors this Plan, and the term “Predecessor Pacific Northwest Bank” refers
to the affiliate which ceased to exist effective July 1, 2000.

 

K.            “Employer Stock” means common stock issued by Pacific Northwest
Bancorp.

 

L.            “Enrollment Date” means the date on which an Employee who has
complied with the eligibility requirements shall become eligible to participate
in the Plan.  The Enrollment Dates shall be the first day of each calendar
month.  Prior to April 1, 2002, the Enrollment Dates were the first day of any
calendar quarter (January 1, April 1, July 1, and October 1).

 

M.           “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

 

N.            “Event of Forfeiture” means with respect to a Participant who
terminates employment, either the incurring of five consecutive One-Year Breaks
in Service or a cash-out payment in full in a single lump sum of all of his
vested Accrued Benefit, subject to the reinstatement of forfeitures requirements
of the Plan.  A Participant who terminates employment with no vested Accrued
Benefit shall be deemed to have received a cash-out payment.

 

O.            “Fiscal Year” means January 1 to December 31.

 

P.            “Fund” means the trust fund established pursuant to this Plan and
the Trust Agreement in which all of the assets of the Plan are held.  The fund
shall be divided into a number of separate Plan investment funds selected from
time to time by the Investment Committee and communicated to Participants. 
Participants shall also be permitted to invest their Plan Accounts in shares of
Employer Stock.  Notwithstanding any provision of this Plan to the contrary, a
Participant’s Pre-April 1, 2002 ESOP Employer Stock Account shall not hold any
assets other than shares of Employer Stock and fractional shares thereof, but a
Participant may elect to sell such shares of Employer Stock and have the
proceeds invested in his Pre-April 1, 2002 ESOP Investment Account at the time
and in the manner provided in this Plan.

 

Q.            “Highly-Compensated Employee” means any Employee who during the
Plan Year or the preceding Plan Year is (i) a more than 5% owner (as defined by
Code Section 416(i)(1)), or (ii) an Employee who for the preceding Plan Year
receives Compensation in excess of $85,000 (or the amount in effect for the Plan
Year, as adjusted in accordance with Code Section 414(q)(1)).

 

“Compensation” means compensation within the meaning of Code Section 415(c)(3),
that is, compensation of the Participant from the employer for the applicable
Plan Year or preceding Plan Year, including elective or salary reduction
contributions to a cafeteria plan under Code Section 125, cash or deferred
arrangement under Code Section 401(k) or tax-sheltered annuity under Code
Section 403(b).  The “employer” for purposes of this Paragraph is the entity
employing the Employee and includes all other entities aggregated with such
employing entity under the aggregation requirements of Code Sections 414(b),
(c), (m), or (o).

 

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A former Employee shall be considered a Highly-Compensated Employee if he was a
Highly-Compensated Employee when he separated from service or if he was a
Highly-Compensated Employee at any time after attaining age 55.

 

R.            “Hour of Service” means

 

(a)           Each hour for which the Employee is directly or indirectly paid,
or entitled to payment, by the Employer for the performance of duties.  These
hours shall be credited to the Employee for the computation period or periods in
which the duties are performed.  Effective with respect to reemployments
initiated on or after December 12, 1994, an Employee in qualified military
service as defined in Code Section 414(u)(5) shall be credited with Hours of
Service at his customary rate; and

 

(b)           Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer on account of a period of time during which
no duties are performed (irrespective of whether the employment relationship was
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.  No more than
501 Hours of Service shall be credited under this subsection (b) for any single
continuous period (whether or not such period occurs in a single computation
period).  Hours under this subsection (b) shall be calculated and credited
pursuant to Section 2530.200b-2(b) and 2(c) of the Department of Labor
Regulations which are incorporated herein by this reference; and

 

(c)           Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.  The same Hours of
Service shall not be credited under subsection (a) or (b), as the case may be,
and under this subsection (c).  These hours shall be credited to the Employee
for the Eligibility or Vesting Computation Period or Periods to which the award
or agreement pertains rather than the computation period in which the award,
agreement, or payment is made.

 

Provided, for the purpose of determining whether an Employee has incurred a
One-Year Break in Service (i) Hours of Service described in subsection (b) shall
be credited without regard to the 501-hour limitation of subsection (b); (ii)
hours at the Employee’s customary rate shall be credited during any period the
Employee is on authorized leave of absence or temporary layoff, and (iii) in the
case of an Employee who is absent from work for any period by reason of
pregnancy, birth of a child, placement with the Employee of a child for
adoption, or caring for such child immediately following birth or placement,
Hours of Service (up to 501 hours) shall be credited equal to the Hours of
Service that otherwise would normally have been credited to the Employee but for
such absence (or if such hours cannot be determined, equal to 8 Hours of Service
per day of absence).  The hours credited under (iii) above shall be credited to
the applicable computation period in which the absence begins if such crediting
will prevent a One-Year Break in Service, or otherwise to the following
computation period.  No such credit shall be given unless the Employee provides
the Administrative Committee with timely information (including, if requested, a
written statement of a doctor or adoption official) to establish that the
absence is for reasons referred to in this paragraph and the number of days for
which there was such an absence.  Provided, further, there shall be no
duplication of credit under the Plan.

 

Hours of Service for any other trade or business that is along with the Employer
a member of a group of trades or businesses (whether or not incorporated) which
are under common control, as defined in Code Section 414(b) and (c), or an
affiliated service group as defined in Code Section 414(m) as modified by Code
Section 414(m)(5) and (6), shall be considered Hours of Service for the
Employer.

 

A salaried Employee who is exempt from state overtime law and who during a
calendar month would be entitled to credit for at least one Hour of Service
shall receive credit for 190 Hours of Service.  All other Employees shall be
credited with actual hours (i) for which they are paid or entitled to payment by
the Employer, and (ii) for purposes of determining whether a One-Year Break in
Service has occurred, at their regular rate during unpaid leave of absence.

 

S.            “Investment Account” or “Pre-April 1, 2002 ESOP Investment
Account” means an account created for each Participant who was a Participant in
the Plan before April 1, 2002, which includes (1) the sale proceeds of Employer
Stock that the Participant has elected to sell from his Pre-April 1, 2002 ESOP
Employer Stock Account at the time and in the manner permitted by this Plan,
(2) any cash or other assets held in the Participant’s ESOP Investment Account
prior to April 1, 2002, and (3) earnings (if any) on amounts in the
Participant’s Pre-April 1, 2002 ESOP Investment Account plus cash dividends
after March 31, 2002 on Employer Stock held in the Participant’s Pre-April 1,
2002 ESOP Employer Stock Account.  Such an Investment Account shall be invested
as provided in Article X, Paragraph A.1.

 

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T.            “Investment Committee” means the committee appointed by the Board
to select the investment funds available under this Plan and to perform other
duties pursuant to Article IX of this Plan.

 

U.            “Money Purchase Pension Plan Employer Contribution Account” or
“Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Account”
means an account created for each Participant who receives Employer
contributions pursuant to the terms of this Plan after March 31, 2002, which
account includes (1) Employer contributions made on behalf of each such
Participant after March 31, 2002, and (2) earnings on those post-March 31, 2002
Employer contributions plus any cash dividends on Employer Stock purchased with
each such Participant’s post-March 31, 2002 Employer contributions.

 

V.            “One-Year Break in Service” means the applicable Eligibility or
Vesting Computation Period during which an Employee completes fewer than 501
Hours of Service.

 

W.           “Participant” means an Employee who has satisfied the eligibility
requirements of Article III.  A Participant who terminates employment with the
Employer and receives an involuntary or voluntary cash-out shall no longer be
considered a Participant in this Plan or a Participant under ERISA.

 

X.            “Plan” means The Amended and Restated Employee Stock Ownership
Plan/Money Purchase Pension Plan set forth in this agreement and all subsequent
amendments thereto.

 

Y.            “Plan Year” means the twelve-month period on which the records of
the Plan are kept.  Each Plan Year shall begin on January 1 and end on December
31.

 

Z.            “Spouse” means the lawful husband or wife of the Participant.

 

AA.         “Stock Account” or “Pre-April 1, 2002 ESOP Employer Stock Account”
means an account created for each Participant in the Plan who was a Participant
before April 1, 2002, which holds (1) shares of Employer Stock that were
credited to such Participant’s Plan Accounts prior to April 1, 2002 and that
have not been sold at the Participant’s direction as permitted by this Plan, and
(2) shares of Employer Stock that are purchased from the Participant’s ESOP
Investment Account as directed by the Participant at a time and in the manner
permitted by this Plan.

 

BB.         “Trust” means the Trust Agreement entered into between the Employer
and the Trustee.

 

CC.         “Trustee ” means T. Rowe Price Trust Company and any successor
Trustee hereunder appointed by the Board.

 

DD.         “Valuation Date” means the date upon which the assets of the Trust
are valued.  Each day that the New York Stock Exchange is open shall be a
Valuation Date.

 

EE.          “Vesting Computation Period” means the Plan Year.

 

FF.          “Year of Service” means the applicable computation period during
which the Employee completes not fewer than 1,000 Hours of Service as defined in
Paragraph R.

 

GG.         “Miscellaneous.” Unless some other meaning and intent is apparent
from the context, the plurals shall mean the singular, and vice versa, and
masculine, feminine, and neuter words shall be used interchangeably.

 

ARTICLE III

ELIGIBLE EMPLOYEES

 

Employees shall be excluded from those eligible to participate if they are
included in a unit of Employees covered by a collective bargaining agreement
between employee representatives and one or more employers, if there is evidence
that retirement benefits were the subject of good faith bargaining and if the
collective bargaining agreement does not provide for participation by such
Employees.  Temporary Employees shall be excluded from those eligible to
participate.  A temporary Employee is a W-2 Employee who is employed to work
fewer than six months.  If such an Employee works six months or more, he shall
be credited with Hours of Service retroactively to his employment commencement
date on which he first completed an Hour of Service with the Employer. 
Notwithstanding any Plan provision to the contrary, any individual who is
classified as an independent contractor by the Employer, regardless of whether
such individual is classified as an employee by a court or by any federal, state
or local agency, shall not be eligible to participate in this Plan. 
Notwithstanding any Plan provision to the contrary, any individual who performs
services pursuant to an agreement between the Employer and a leasing
organization shall not be eligible to participate in this Plan.  Nonresident
aliens who receive no earned income from the Employer that constitutes income
from sources within the United States are excluded from participation.

 

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Each Plan Participant on April 1, 2002 shall continue to participate in the Plan
as of that date, unless otherwise excluded by reason of the preceding
paragraph.  Each Employee who is not already a Plan Participant and who is not
excluded by reason of the preceding paragraph shall become eligible to
participate upon the later of (1) April 1, 2002, or (2) the date on which he
first performs an Hour of Service with the Employer, and shall be enrolled as a
Plan Participant as of the Enrollment Date following completion of such
requirements, provided the Employee has not separated from service before such
Enrollment Date.

 

In the case of a Participant who terminates employment and is rehired, he shall
become a Participant on the Enrollment Date following his re-employment
commencement date, which date shall be the date on which he completes one Hour
of Service after his termination of employment.

 

The Administrative Committee may request each eligible Employee to apply for
Plan participation in writing on a form to be supplied by the Administrative
Committee, agreeing to the terms of the Plan and giving such information as may
be required by the Administrative Committee, including beneficiary designation. 
An Employee shall not be precluded from Plan participation if he does not
complete such form.

 

ARTICLE IV

CONTRIBUTIONS

 

A.            Employer Contribution. As of each June 30 and December 31, the
Employer shall contribute to the Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Account of each Participant who is employed on that date
an amount equal to five percent (5%) of that Participant’s Compensation since
the last Employer contribution date.  The Employer may decide to make this five
percent (5%) of Compensation Employer contribution more frequently than
semi-annually.  In that case, Employer contributions will be based on a
Participant’s Compensation since the last Employer contribution date, and a
Participant will be required to be employed by the Employer through the date as
of which the contribution is allocated in order to receive those contributions. 
Compensation for purposes of this Employer contribution includes only
Compensation received while a Participant.  Employer contributions to
Participants’ Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Accounts shall be paid in cash.

 

Notwithstanding the foregoing, for the 2002 Plan Year only, the following
Employer contribution rules shall apply for Participants who are employed by the
Employer on March 31, 2002:

 

1.             As of March 31, 2002, the Employer shall contribute to the
Pre-April 1, 2002 ESOP Employer Stock Account of each Participant employed on
March 31, 2002 an amount equal to the greater of (a) five percent (5%) of the
Compensation that each Participant employed on March 31, 2002 received during
the first calendar quarter of 2002, or (b) that percentage of Compensation that
each Participant employed on March 31, 2002 received during the first calendar
quarter of 2002 which in total for all those Participants equals the amount
necessary to repay in full the balance of the principal and interest on the ESOP
loan, so that all remaining shares of Employer Stock in the ESOP suspense
account will be released and allocated to the Pre-April 1, 2002 ESOP Employer
Stock Accounts of Participants employed on March 31, 2002.

 

2.             If that March 31, 2002 Employer contribution on behalf of such a
Participant exceeds five percent (5%) of that Participant’s Compensation for the
first quarter of 2002, then such excess Employer contribution shall be treated
as a pre-funded or early Employer contribution and shall be applied towards the
five percent (5%) of Compensation Employer contribution for the period April 1,
2002 through December 31, 2002 that would otherwise be made for that Participant
by June 30, 2002 and by December 31, 2002.  Such pre-funded 2002 Employer
contribution shall be held in the Participant’s Pre-April 1, 2002 ESOP Accounts
instead of his Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account.

 

3.             If a Participant received a March 31, 2002 Employer contribution
which exceeded five percent (5%) of such Participant’s Compensation for the
first calendar quarter of 2002, and such Participant terminates employment with
the Employer during 2002, such Participant will be entitled to receive the
vested portion of that pre-funded 2002 Employer contribution, to the extent that
such contribution would not violate the applicable nondiscrimination tests and
other contribution limits that apply to this Plan.  Any amount of pre-funded
2002 Employer contributions that would violate those nondiscrimination tests or
contribution limits shall be forfeited.

 

Forfeitures from terminated Participants’ Plan Accounts shall be applied as set
forth in Article V, Paragraph E, of this Plan.

 

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The Board’s determination of any Employer contributions shall be binding on all
Participants, the Administrative Committee, the Investment Committee, and the
Trustee.  The Trustee shall have no right or duty to inquire into the amount of
the annual Employer contribution or the method used in determining the amount of
such contribution, but shall be accountable only for the funds actually received
by it.

 

Notwithstanding any provision of this Plan to the contrary, effective with
respect to reemployments initiated on or after December 12, 1994, Employer
contributions with respect to qualified military service shall be made in
accordance with Code Section 414(u).

 

This Plan is designed to qualify as a money purchase pension plan for purposes
of Internal Revenue Code Section 401(a) and as to Pre-April 1, 2002 ESOP
Accounts as an employee stock ownership plan as described in Code Section
4975(e)(7).

 

B.            Date of Payment. The Employer shall pay to the Trustee, within the
time provided by law for filing of the Employer’s income tax return (including
extensions), the amounts to be contributed pursuant to Paragraph A.

 

C.            Participant Contributions. Participants shall not be allowed to
make contributions under this Plan.

 

ARTICLE V

PARTICIPANT’S ACCOUNTS,

VALUATION, MAXIMUM CONTRIBUTION

 

A.            Participant’s Accounts. The Administrative Committee or its
delegate shall establish and maintain a separate Pre-April 1, 2002 ESOP Employer
Stock Account, a separate Pre-April 1, 2002 ESOP Investment Account, a separate
Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Account,
and a separate frozen Employer Matching Contribution Account, if applicable, for
each Participant which shall reflect the Participant’s Accrued Benefit.  The
Administrative Committee shall furnish each Participant who requests the same in
writing a statement reflecting, on the basis of the latest available
information, his Accrued Benefit and the nonforfeitable portion thereof, or if
no benefits are nonforfeitable, the earliest date on which benefits will be
nonforfeitable.  Only one such statement need be furnished a Participant each 12
months.  The Employer may appoint the Trustee or any qualified third party to
perform recordkeeping functions.

 

B.            Cash Dividends. For calendar quarters beginning on or after
April 1, 2002, cash dividends on shares of Employer Stock in a Participant’s
Pre-April 1, 2002 ESOP Employer Stock Account shall be credited to his Pre-April
1, 2002 ESOP Investment Account, and cash dividends on shares of Employer Stock
in a Participant’s Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account shall be credited to his Post-March 31, 2002 Money Purchase
Pension Plan Employer Contribution Account to be invested in the Plan investment
funds selected by the Participant.

 

C.            Trust Valuation. As of each Valuation Date, the Trustee shall (1)
determine the fair market value of each Plan investment fund in order to
determine the percentage of increase or decrease in such fair market value when
compared with the fair market value of such Plan investment fund as of the
immediately preceding Valuation Date and (2) adjust the Participants’ Accounts
accordingly.  The Employer, the Administrative Committee, the Investment
Committee, and the Trustee do not in any manner or to any extent whatever
warrant, guarantee or represent that the value of a Participant’s accounts shall
at any time exceed or equal the amount previously contributed thereto.  The fair
market value of Employer Stock allocated to Participants’ Accounts shall be
equal to the NASDAQ bid price on the applicable Valuation Date or if not
available, on the date preceding such date on which such bid price is available,
unless such fair market value is determined using the average sale price as
described in Article X, Paragraph B.  If there is no established market for
Employer Stock, the fair market value shall be as determined by independent
appraisal which shall be performed by an appraiser selected by the Investment
Committee and at such intervals and pursuant to such procedures as the
Investment Committee shall determine.

 

D.            Maximum Contributions.

 

1.            Annual Addition.  The term “annual addition” for any Plan Year
means the sum of:

 

(a)           The Employer’s contributions on a Participant’s behalf to the
Employer’s defined contribution plan(s) (any profit sharing, ESOP, and money
purchase pension plans) including (i)

 

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401(k) tax-deferred contributions and (ii) both contributions used to repay an
exempt loan under this Plan and other contributions allocated to the
Participant’s account;

 

(b)           The Participant’s voluntary nondeductible contributions, if any,
to the defined contribution plan(s) maintained by the Employer;

 

(c)           Any forfeitures allocated to the Participant’s accounts under the
Employer’s defined contribution plan(s);

 

(d)           Amounts allocated for a Plan Year beginning after March 31, 1984,
to a Code Section 415(l)(2) individual medical account that is part of a defined
benefit plan maintained by the Employer;

 

(e)           Amounts paid or accrued after December 31, 1985, in taxable years
ending after that date, for post-retirement benefits allocated to a separate
account in a Code Section 419(e) welfare benefit fund maintained by the
Employer.  These amounts will not be subject to the present limitations of Code
Section 415(c)(1)(B); and

 

(f)            Amounts allocated under a simplified employee pension plan
established pursuant to Code Section 408(k).

 

Notwithstanding any other provision hereof, the annual addition to a
Participant’s accounts for any Plan Year shall not exceed the lesser of $40,000,
as adjusted under Code Section 415(d), or (ii) 25% of the Participant’s
Compensation from the Employer for the Plan Year as defined for purposes of Code
Section 415 in Paragraph F of Article II.  Effective for limitation years
beginning after December 31, 2001, 25% shall be changed to 100% in (ii) above,
and such Compensation limit shall not apply to any contribution for medical
benefits after separation from service (within the meaning of Code Section
401(h) or 419A(f)(2)) which is otherwise treated as an annual addition.

 

The Compensation limitation referred to in the preceding paragraph shall not
apply to:  (i) any contributions for medical benefits (within the meaning of
Code Section 419A(f)(2) or 401(n)) which are made after separation from service
and which are otherwise treated as an Annual Addition; or (ii) any amount
otherwise treated as an Annual Addition under Code Section 415(1)(1) or
419A(d)(2).

 

2.             Excess Annual Addition. If, as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant’s Compensation, or
other facts and circumstances to which Code Regulation Section 1.415-6(b)(6)
shall be applicable, the annual addition for a Participant exceeds the
applicable limitations for the Plan Year, the annual addition shall be reduced
as follows:

 

(a)           The amount of such excess consisting of the Employee’s unmatched
tax-deferred income contributions to the Employer’s Salary Deferral 401(k) Plan
shall be paid to the Employee as soon as administratively feasible.

 

(b)           The amount of any remaining excess consisting of matched
tax-deferred contributions on behalf of an Employee and Employer matching
contributions on behalf of such Employee to the Employer’s Salary Deferral
401(k) Plan shall be reduced pro rata (currently one dollar of Employer matching
contributions for every one dollar of matched tax-deferred contributions).  Such
tax-deferred contributions shall be paid to the Employee as soon as
administratively feasible, and such Employer matching contributions shall be
allocated to a suspense account as forfeitures and applied as provided in (c)
below).

 

(c)           The amount of any remaining excess consisting of Employer
contributions to the Employer’s Salary Deferral 401(k) Plan shall be allocated
to a suspense account as forfeitures and held therein until the next succeeding
date on which forfeitures could be applied to reduce future Employer
contributions under such Plan.

 

(d)           The amount of any remaining excess consisting of Employer
contributions to this Plan shall be allocated to a suspense account as
forfeitures and held therein until the next succeeding date on which forfeitures
could be applied under this Plan.

 

The limitation year is the Plan Year.  Notwithstanding any other provisions, the
Employer shall not contribute any amount that would cause an allocation to the
suspense account as of the date the contribution is allocated.  If the
contribution is made prior to the date as of which it is to be allocated, then
such contribution shall not exceed an amount that would cause an allocation to
the suspense account if the date of contribution were an allocation date.  If an
allocation is made to such suspense account, it shall contain no investment
gains and losses or other income.  Amounts in the suspense account are allocated
as of each allocation date on which forfeitures may be allocated until the
account is exhausted.

 

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3.             For the purpose of this Paragraph E, the following rules shall
control:

 

(a)           The $40,000 maximum shall be deemed adjusted for any Plan Year to
conform to increases in the cost of living in accordance with regulations to be
adopted by the Secretary of Treasury.

 

(b)           All qualified defined benefit plans (whether terminated or not)
ever maintained by the Employer shall be treated as one defined benefit plan,
and all qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined contribution plan.

 

(c)           If the Employer is a member of a controlled group of corporations,
trades or businesses under common control (as defined by Code Section 1563(a) or
Code Section 414(b) and (c) as modified by Code Section 415(h)) or is a member
of an affiliated service group (as defined by Code Section 414(m)), all
Employees of such Employers shall be considered to be employed by a single
Employer.

 

E.             Forfeitures and Reinstatement of Forfeitures.  The nonvested
Accrued Benefit of each Participant with respect to whom an Event of Forfeiture
has occurred and who is not in the employ of the Employer on the date the Event
of Forfeiture occurs shall be forfeited as of the date that the Event of
Forfeiture occurs.  If a Participant terminates employment with the Employer,
incurs an Event of Forfeiture, is thereafter reemployed, and has not incurred
five consecutive One-Year Breaks in Service as of the Valuation Date coinciding
with or following the date of his reemployment, his forfeited Accrued Benefit
shall be reinstated as if that nonvested Accrued Benefit has not been forfeited,
provided the terminated Participant repays the amount of the vested Accrued
Benefit previously distributed, which was attributable to Employer Contributions
and earnings, back to the Plan Trustee to be credited to the Participant.  Such
a repayment must occur before the earlier of:  (1) the date five years after the
date on which the Participant is subsequently re-employed by the Employer; or
(2) the date the Participant would have incurred five consecutive one-year
Breaks in Service following the date of distribution had he not been
re-employed.  The reinstatement shall occur on the Valuation Date coinciding
with or following such Participant’s date of re-employment, by allocating the
required amount to the Participant’s Account first, from forfeitures occurring
on such Valuation Date, second, from Trust earnings allocated as of such
Valuation Date, and third, from extraordinary Employer contributions as
required.

 

Forfeitures shall be used first to reinstate previously forfeited account
balances as provided above.  Forfeitures shall then be utilized to reduce
Employer Contributions to this Plan.

 

Notwithstanding the above, in the event the distribution to a terminated
Participant is less than his Accrued Benefit, the Administrative Committee shall
establish a separate bookkeeping account for the Participant which shall be
known as the “Termination Account.”  At any relevant time, the Participant’s
vested portion of his Termination Account shall not be less than an amount (“X”)
determined by the following formula:

 

X = P(AB + (RxD)) - (RxD)

 

For purposes of applying the formula:  P is the vested percentage at the
relevant time; AB is the Termination Account balance at the relevant time; R is
the ratio of the account balance at the relevant time to the account balance
after distribution; and D is the amount distributed when the Employee terminated
employment.

 

15

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ARTICLE VI

NONFORFEITABLE ACCRUED BENEFIT

 

A.            Allocations Not Vested. Allocations to Participants in accordance
with the provisions of Article V shall not vest any right or title to any part
of the assets of the Trust.

 

B.            Vesting Period. With respect to the Pre-April 1, 2002 ESOP
Employer Stock Account, the Pre-April 1, 2002 ESOP Investment Account, and the
Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Account of
a Participant who is credited with at least one Hour of Service on or after
January 1, 2001, such accounts shall vest in accordance with the following
schedule:

 

Completion of Less than 1 Year of Service        0%

Completion of 1 or More Years of Service       20%

Completion of 2 or More Years of Service       40%

Completion of 3 or More Years of Service       60%

Completion of 4 or More Years of Service       80%

Completion of 5 or More Years of Service       100%

 

With respect to the Pre-April 1, 2002 ESOP Employer Stock Account and the
Pre-April 1, 2002 ESOP Investment Account of a Participant who is not credited
with at least one Hour of Service on or after January 1, 2001, such accounts
shall vest in accordance with the Plan vesting schedule in effect at the time of
that Participant’s termination of employment or the last Hour of Service
credited to that Participant prior to January 1, 2001.

 

In crediting Years of Service to determine a Participant’s nonforfeitable
Accrued Benefit, the Administrative Committee shall apply the following rules
using the Vesting Computation Period for purposes of determining Years of
Service and One-Year Breaks in Service:

 

1.             Except as specifically hereinafter provided, all of an Employee’s
Years of Service with the Employer both prior to becoming a Participant and
thereafter shall be taken into account.  Employees will also receive credit for
service with another bank listed in Schedule B if Pacific Northwest Bancorp or
its predecessor InterWest Bancorp, Inc. acquired that bank through a merger,
acquisition, or similar transaction, provided that (1) the employee was employed
by the acquired bank immediately prior to the date of such merger, acquisition,
or similar transaction, and (2) immediately after such date, the Employee became
an Employee of Pacific Northwest Bancorp, its predecessor InterWest Bancorp,
Inc., or an employer listed in Schedule C.  The credit the Employee receives
will be equal to the Years of Service credit the Employee had earned under the
other bank’s qualified plan for vesting purposes as of the date of merger,
acquisition, or similar transaction, plus any Hours of Service with that bank in
the Plan Year in which the Employee becomes employed by the Employer.  Employees
of an acquired bank that did not sponsor any qualified plan that credited
vesting service shall receive credit for all Years of Service they would have
completed based on their actual Hours of Service.  Provided, however, that there
shall be no duplication of vesting credit for the Plan Year in which the
Employee becomes employed by the Employer.

 

2.  In the case of a Participant who terminates employment with the Employer and
has no nonforfeitable right to an Accrued Benefit derived from Employer
contributions, the Employer shall not give credit for Years of Service occurring
before a One-Year Break in Service if, on the date the Participant first
completes an Hour of Service following the date of termination, the number of
his consecutive One-Year Breaks in Service equals or exceeds the aggregate
number of Years of Service (whether or not consecutive) prior to the last such
break if the number of consecutive One-Year Breaks in Service is five or more. 
Years of Service before the break shall not include Years of Service not
required to be taken into account by reason of any other rule under this
Paragraph B.

 

3.             The Employer shall not give credit for Years of Service which are
not disregarded under subparagraph 2 until the Participant has completed a Year
of Service upon his return during the Vesting Computation Period.

 

4.  The nonforfeitable percentage of a Participant’s Accrued Benefit derived
from Employer contributions made prior to five consecutive One-Year Breaks in
Service shall be determined without regard to Years of Service occurring after
such five consecutive One-Year Breaks in Service.  Separate accounting shall be
maintained for the pre-break Accrued Benefit.

 

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5.             Years of Service during Plan Years commencing before the
Participant attains age 18 shall be disregarded.  Effective October 1, 2001,
this subparagraph 5. shall no longer apply, and Years of Service during Plan
Years commencing before the Participant attains age 18 shall be counted for
purposes of determining the nonforfeitable percentage of such Participant’s
Accrued Benefit.

 

Notwithstanding any provision of this Plan to the contrary, an employee of
National Bank of Tukwila on September 30, 1999 who remained employed by National
Bank of Tukwila or directly transferred to employment with InterWest Bancorp,
Inc. or one of its affiliates co-sponsoring the Plan on October 1, 1999, shall
receive credit for vesting purposes for his Hours of Service and Years of
Service with National Bank of Tukwila, including Hours of Service and Years of
Service prior to October 1, 1999, based on service with National Bank of Tukwila
during the applicable Vesting Computation Period(s) in accordance with the terms
of this Plan.

 

C.            Amendment to Vesting Computation Period or Vesting Schedule.The
Board may amend the Plan to provide for a different Vesting Computation Period
so long as the new Vesting Computation Period, as amended, begins prior to the
last day of the preceding Vesting Computation Period.  No Plan amendment shall
reduce a Participant’s nonforfeitable Accrued Benefit.  If the Plan vesting
schedule is amended or the Plan is amended in any way that directly or
indirectly affects the computation of a Participant’s nonforfeitable percentage,
or if a different vesting schedule is applicable because a previously Top-Heavy
Plan is no longer Top-Heavy, each Participant with at least three (3) Years of
Service with the Employer may elect, within a reasonable period after the
adoption of the amendment, to have his nonforfeitable Accrued Benefit (accrued
before and after the amendment) computed under the Plan without regard to such
amendment.  The period during which the election may be made shall commence with
the date the amendment is adopted and shall end on the later of:

 

1.             Sixty (60) days after the amendment is adopted;

2.             Sixty (60) days after the amendment becomes effective; or

3.             Sixty (60) days after the Participant is issued written notice of
the amendment by the Employer or Administrative Committee.

 

D.            Full Vesting. If a Participant dies, becomes permanently and
totally disabled, or attains normal retirement age and such event occurs while
the Participant is still employed by the Employer, the full amount credited to
the Participant’s Pre-April 1, 2002 ESOP Employer Stock Account, Pre-April 1,
2002 ESOP Investment Account, Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Account pursuant to Article V and frozen Employer Matching
Contribution Account pursuant to Article XXIII shall become fully vested and
nonforfeitable.

 

ARTICLE VII

DISTRIBUTION OF BENEFITS

 

A.            Retirement Age and Options. The normal retirement age shall be the
later of the Participant’s attainment of age 65 or the Participant’s fifth
anniversary of Plan participation, and each Participant or former Participant
shall be entitled to retire upon the first day of the month coinciding with or
following the date the Participant or former Participant attains normal
retirement age, which day shall be his Normal Retirement Date.

 

1.             Employment After Normal Retirement Age. If a Participant
continues in the employ of the Employer beyond his Normal Retirement Date, he
shall, pursuant to the terms of this Plan, continue to share in Employer
contributions, forfeitures, and increases and decreases in value, including fees
and expenses until actual retirement.

 

a.             Election to Receive Benefits While Still Employed. A Participant
who has attained normal retirement age (or who has attained age 70-1/2, even if
he has not yet completed five years of Plan participation) may elect in writing
to receive his Accrued Benefit prior to his actual retirement date in accordance
with procedures established by the Administrative Committee; such a Participant
shall continue to share in Employer contributions, forfeitures, and increases
and decreases in value, including fees and expenses, until actual retirement.

 

b.             Required Receipt of Benefits. Distribution of benefits shall
commence to a Participant upon the later of his attaining age 70-1/2 or
termination of employment.  The required distribution shall commence no later
than April 1 of the calendar year following the calendar year in which the later
event

 

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occurs.  Provided, however, that in the case of a Participant who is a more than
five percent (5%) owner of the Employer, the required distribution shall
commence no later than April 1 of the calendar year following the calendar year
in which occurs the earlier of the Participant’s retirement or attainment of age
70-1/2.  A Participant who is still employed by the Employer and to whom this
subparagraph b applies shall continue until actual retirement to share in
Employer contributions, forfeitures, and increases and decreases in value,
including fees and expenses.

 

A Participant who is not a more than 5% owner of the Employer who commenced
required distributions prior to 1997 and did not retire from employment with the
Employer before January 1, 1997 may elect (subject to any applicable Qualified
Domestic Relations Order) to cease receiving distributions until the date
required by this subparagraph b.

 

2.             Date of Retired Participant’s First Payment. A Participant who
retires hereunder shall begin receiving his benefits as soon as is reasonably
possible after his retirement date but no later than the date sixty (60) days
after the close of the Plan Year in which the Participant retires, unless he
elects to defer payment pursuant to subparagraph (3) below.

 

3.             Deferral of Benefits. A Participant who retires hereunder or
terminates employment with a nonforfeitable Accrued Benefit in excess of $5,000
shall not be required to receive a distribution without his written consent.  A
Participant may elect to defer the commencement of his Plan benefits to a later
date, but not later than April 1 of the calendar year following the calendar
year in which he attains age 70-1/2.  Such a Participant must make this election
in writing on a form provided by the Administrative Committee.  Such election
shall include the current amount of the Participant’s nonforfeitable Accrued
Benefit, the form of payment of the benefit, and the date on which payment shall
commence.  The Participant may change such election prior to the commencement of
his deferred benefits, provided payments commence no later than the date
required above.  Such reasonable time shall be determined by the Administrative
Committee and uniformly applied.

 

Failure of a Participant to consent to a distribution while a nonforfeitable
Accrued Benefit in excess of $5,000 at the time of termination or retirement is
immediately distributable shall be deemed an election to defer commencement of
payment.

 

4.             Form of Payment.

 

a.             Pre-April 1, 2002 ESOP Accounts. If a Participant’s vested Plan
benefits are more than $5,000 at the time of retirement or termination of
employment and a Plan distribution is to be made to him, the Participant’s
nonforfeitable Pre-April 1, 2002 ESOP Employer Stock Account shall be
distributed to him in whole shares of Employer Stock, as long as that Employer
Stock remains readily tradable on an established market, and any fractional
shares of Employer Stock will be distributed to him in cash.  In the event that
the Employer Stock ceases to be readily tradable on an established market, the
proceeds from the sale of the whole shares in the Participant’s nonforfeitable
Pre-April 1, 2002 ESOP Employer Stock Account and any fractional shares shall be
distributed to the Participant in a lump sum cash payment.  That Participant’s
nonforfeitable Pre-April 1, 2002 ESOP Investment Account shall be distributed to
him in a lump-sum cash payment, unless the Participant elects to receive that
nonforfeitable Pre-April 1, 2002 ESOP Investment Account in whole shares of
Employer Stock, with any fractional share value distributed to him in cash.

 

b.             Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account. Within the election period, a Participant who is eligible
to receive benefits under this paragraph may elect, in writing on a form
provided by the Administrative Committee (and, if married, with his Spouse’s
consent), his choice from the following options for distribution of his
nonforfeitable Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account:

 

i.              A nontransferable annuity contract which will be an annuity for
the life of the Participant, with a survivor annuity for the life of his Spouse
which is 50% of the amount payable during the joint lives of the Participant and
his Spouse (a qualified joint and survivor annuity); or

 

ii.             A nontransferable annuity contract which will be a monthly
straight life annuity for the life of the Participant; or

 

iii.            A single payment equal to the Participant’s nonforfeitable
Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Account.

 

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If a Participant’s nonforfeitable Post-March 31, 2002 Money Purchase Pension
Plan Employer Contribution Account is distributed to him in the form of an
annuity contract pursuant to options i. or ii. above, the Employer Stock in his
Post-March 31, 2002 Money Purchase Pension Plan Employer Contribution Account
shall be sold by the Trustee and the proceeds applied toward the purchase of
such annuity contract.

 

If a Participant’s nonforfeitable Post-March 31, 2002 Money Purchase Pension
Plan Employer Contribution Account is distributed to him in the form of a single
sum payment pursuant to option iii. above, such Participant shall receive the
vested portion of that account, if any, that is invested in Employer Stock in
whole shares of Employer Stock, as long as such Employer Stock remains readily
tradable on an established market.  In the event that such Employer Stock ceases
to be readily tradable on an established market, the proceeds from the sale of
that Employer Stock shall be distributed to the Participant in a lump sum cash
payment.  Any fractional share value shall be distributed to the Participant in
a lump-sum cash payment.

 

All annuity contracts described in this Article VII shall have a value equal to
the Participant’s nonforfeitable Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Account as of the date such contract(s) are purchased.

 

Within a period of no less than 30 days and no more than 90 days before the
annuity starting date, the Spouse of a married Participant must consent in
writing to the election of a form of benefit other than i. above and acknowledge
the effect of that consent.  The consent shall be witnessed by a Plan
representative or a notary public.  Within a period no less than 30 days and no
more than 90 days before the annuity starting date, the Administrative Committee
shall furnish such a married Participant a written explanation in nontechnical
language of the terms and conditions of a qualified joint and survivor annuity
under i. above, the right to elect some other form of benefit, and the rights of
his Spouse.  Prior to the annuity starting date, such a married Participant may
request the Administrative Committee to furnish him a written explanation of the
specific amount of the particular joint and survivor annuity he will receive and
the financial effect of his election of some other form of benefit.  The
Participant and his Spouse may change their election as provided herein at any
time prior to the annuity starting date.  The Spouse may revoke a consent to a
form of benefit other than i. above at any time prior to the annuity starting
date.  If an annuity is to be the form of benefit, the Administrative Committee
shall instruct the Trustee to purchase a nontransferable annuity contract from
an insurance company authorized to do business in the State of Washington and to
distribute the annuity to the Participant.

 

Notwithstanding the foregoing, the annuity starting date for a distribution of a
Participant’s nonforfeitable Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Account in a form of annuity other than a qualified joint
and survivor annuity may be less than 30 days after receipt of the written
explanation described in the preceding paragraph, provided:  (a) the Participant
has been provided with information that clearly indicates that the Participant
has at least 30 days to consider whether to waive the qualified joint and
survivor annuity and elect (with spousal consent) a form of distribution other
than a qualified joint and survivor annuity; (b) the Participant is permitted to
revoke any affirmative distribution election at least until the annuity starting
date or, if later, at any time prior to the expiration of the 7-day period that
begins the day after the explanation of the qualified joint and survivor annuity
is provided to the Participant; and (c) the annuity starting date is a date
after the date that the written explanation was provided to the Participant.

 

Notwithstanding the foregoing, the Administrative Committee may provide a
Participant who has elected an annuity form of payment the written explanation
described above after the annuity starting date, in which case the election
period shall not end before the 30th day after the date on which such
explanation is provided, unless the Participant waives the remainder of the
30-day election period, subject to the right to revoke the election within 7
days after the written explanation is given.

 

A Participant may change his election any time prior to the annuity starting
date.

 

The annuity starting date means the first day of the first period for which an
amount is payable hereunder in the form of an annuity or in the case of a
benefit not payable in the form of an annuity, the first date on which all
events have occurred which entitle the Participant to the benefit.  Except as
provided above, the election period is the 90-day period ending on the annuity
starting date.

 

The Participant’s nonforfeitable Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Account shall be valued in accordance with procedures
adopted by the Administrative Committee from time to time and uniformly applied.

 

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In the event a Participant’s benefits are to commence and he has made no
election of the form of payment prior to the annuity starting date, distribution
of such Participant’s Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account shall be made pursuant to option i. above if he is married
and option ii. above if he is not married.

 

B.            Death. Each Participant shall designate a beneficiary or
beneficiaries on a form to be furnished by the Administrative Committee.  The
beneficiary of a married Participant shall be his spouse, unless the spouse
consents in writing to the designation of some other beneficiary and
acknowledges the effect of the consent.  The consent shall be witnessed by a
Plan representative or a notary public.  Such designation shall be filed with
the Administrative Committee and may be changed by the Participant from time to
time by filing a new designation in writing (together with the Spouse’s consent
where required).  The designation last filed with the Administrative Committee
shall control.

 

If any Participant shall fail to designate a beneficiary or if the person or
persons designated predecease the Participant and there is no successor, the
Participant’s beneficiary shall be the following in the order named:

 

a.             Surviving spouse at date of death,

 

b.             Then living issue, per stirpes (lawful issue and adopted),

 

c.             Then living parents, in equal shares,

 

d.             Brothers and sisters, in equal shares, provided that if any
brother or sister is not then living, his or her share shall be distributed to
his or her then living issue, per stirpes, and

 

e.             Estate of the Participant.

 

1.             Death Prior to Commencement of Benefits.

 

a.             Pre-April 1, 2002 ESOP Accounts. The Participant’s beneficiary
shall receive the Participant’s nonforfeitable Pre-April 1, 2002 ESOP Employer
Stock Account and the Participant’s nonforfeitable Pre-April 1, 2002 ESOP
Investment Account in a single payment.  Such payment shall be made in the form
described in Paragraph A.4.a of this Article.  If the Participant’s beneficiary
is someone other than his Spouse, the beneficiary must receive this payment by
December 31 of the calendar year in which the fifth anniversary of the
Participant’s death occurs.  If the Participant’s beneficiary is his Spouse, the
Participant’s Spouse may elect to postpone this payment until the later of
(i) December 31 of the calendar year in which the fifth anniversary of the
Participant’s death occurs, or (ii) December 31 of the calendar year in which
the Participant would have attained age 70-1/2.

 

b.             Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account. A Participant’s beneficiary may elect to receive the
Participant’s Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account in a form of payment provided in Paragraph A.4.b.(ii) or
(iii) of this Article, that is, a straight life annuity for the life of the
Participant’s beneficiary or a single payment.  The beneficiary may select the
date payment of the Participant’s nonforfeitable Post-March 31, 2002 Money
Purchase Pension Plan Employer Contribution Account shall commence, subject to
the following rules:

 

i.              A beneficiary may elect to have the payment commence on any date
that is a reasonable time after the Participant’s death.

 

ii.             All payments to the beneficiary shall be completed by December
31 of the calendar year in which the fifth anniversary of the Participant’s
death occurs, except that such payments may extend beyond that five-year period
under the following circumstances:

 

(a)           If the Participant’s beneficiary is not the Participant’s Spouse,
that beneficiary may elect to receive a single life annuity contract for the
beneficiary’s life commencing not later than December 31 of the calendar year
immediately following the calendar year in which the Participant died; or

 

(b)           If the Participant’s beneficiary is his Spouse, his Spouse may
elect a single payment or a single life annuity contract that commences not
later than the later of (i) December 31 of the calendar year in which the
Participant would have attained age 70-1/2, or (ii) December 31 of the calendar
year in which the fifth anniversary of the Participant’s death occurs.

 

The beneficiary’s selection of the date of payment shall be in writing on a form
furnished by the Administrative Committee.  If the beneficiary is the
Participant’s Spouse and the Spouse elects to postpone

 

20

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payment of the Participant’s Accrued Benefit, the Spouse shall designate a
beneficiary or beneficiaries in accordance with the provisions of this Paragraph
B as if the Spouse was the Participant.  If such Spouse dies before payments
commence hereunder, the provisions of this Paragraph B shall be applied as if
the Spouse was the Participant.

 

If the Participant’s beneficiary fails to make a written election as to the time
of payment before December 31 of the calendar year in which the fifth
anniversary of the Participant’s death occurs, and the Participant did not
designate his Spouse as beneficiary, the Administrative Committee shall direct
the Trustee to pay the benefit in a single sum to the Participant’s beneficiary
not later than such December 31.  If the Participant’s Spouse as designated
beneficiary fails to make a written election as to the form and time of payment
before the later of (i) December 31 after the Participant would have attained
age 70-1/2 or (ii) December 31 of the calendar year in which the fifth
anniversary of the death of the Participant occurs, the Administrative Committee
shall direct the Trustee to distribute the Participant’s Accrued Benefit in a
single sum on or before the later of December 31 of the calendar year in which
the Participant would have attained age 70-1/2 or December 31 of the calendar
year in which the fifth anniversary of the death of the Participant occurs.

 

A payment hereunder shall be valued in accordance with the terms of this Plan
and the procedures adopted by the Administrative Committee from time to time and
uniformly applied.

 

The number of shares of Employer Stock in the Participant’s Pre-April 1, 2002
ESOP Employer Stock Account and a Participant’s Post-March 31, 2002 Money
Purchase Pension Plan Employer Contribution Account will be determined on the
Valuation Date immediately preceding the distribution, unless the value is
determined using the average sale price as described in Article X, Paragraph B. 
The beneficiary will receive the proceeds from the liquidation of the
Participant’s Pre-April 1, 2002 ESOP Investment Account and from the portion of
a Participant’s Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account that is not invested in Employer Stock.  Payments shall be
in the form described in Paragraph A(4) of this Article.

 

2.             Explanation of Death Benefit.

 

This subparagraph 2. shall apply with respect to a Participant’s Post-March 31,
2002 Money Purchase Pension Plan Employer Contribution Account.  The
Administrative Committee shall provide to each Participant, at the time(s)
described below, a written explanation of (a) the death benefit provided by the
Plan to the Participant’s Spouse attributable to the Participant’s Post-March
31, 2002 Money Purchase Pension Plan Employer Contribution Account, (b) the
Participant’s right to designate a beneficiary other than his Spouse to receive
that death benefit, provided he obtains the Spouse’s written consent witnessed
by a notary public or Plan representative, and (c) the Participant’s and
Spouse’s right to revoke that designation or consent, and the effect of such a
revocation.  Such notice shall be provided to a Participant both at the time he
wishes to elect a beneficiary other than his Spouse and during whichever of the
following applicable periods ends last:

 

i.              The period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;

 

ii.             A reasonable period after the individual becomes a Participant;
or

 

iii.            A reasonable period after separation from service, in case of a
Participant who separates from service before attaining age 35; or

 

iv.            A reasonable period following the date on which the Participant
first becomes entitled to a vested Accrued Benefit.

 

For purposes of applying the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii), (iii) and (iv) is the end of the
two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date.  In the case of a Participant who
separates from service before the Plan Year in which age 35 is attained, notice
shall be provided within the two-year period beginning one year prior to
separation and ending one year after separation.  If such a Participant
thereafter returns to employment with the Employer, the applicable period for
such Participant shall be redetermined.

 

Any beneficiary designation made prior to the first day of the Plan Year in
which the Participant attains age 35 and which designates a beneficiary other
than the Participant’s Spouse is invalid on and after that date, unless the
Participant completes another beneficiary designation form, again obtains his
Spouse’s

 

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written consent to the designation of a beneficiary other than his Spouse, and
the Spouse’s consent is witnessed by a notary public or a Plan representative.

 

C.            Disability. Disability means that a Participant, by reason of
mental or physical disability, is incapable of performing the duties of his
customary position with the Employer for an indefinite period which, in the
opinion of the Administrative Committee, is expected to be of a long continual
duration.  In the event of disability said Participant’s nonforfeitable Accrued
Benefit shall be distributed to him if he so elects in the same manner as if he
had attained full retirement age as provided in Paragraph A above.  Such benefit
will be valued in accordance with Paragraph A(4) above.  Disability shall be
established to the satisfaction of the Administrative Committee.  If the
Participant shall disagree with the Administrative Committee’s findings,
disability shall be established by the certificate of a physician, selected by
the Participant and approved by the Administrative Committee, or if the
physician selected by the Participant shall not be approved by the
Administrative Committee, then by a majority of three physicians, one selected
by the Participant (or his Spouse, child, parent, or legal representative in the
event of his inability to select a physician), one by the Administrative
Committee, and the third by the two physicians selected by the Participant and
the Administrative Committee.

 

D.            Termination of Employment. In the event a Participant terminates
employment with a nonforfeitable Accrued Benefit of not more than $5,000, the
Participant shall be paid such Accrued Benefit in accordance with Paragraph A(4)
of this Article as soon as is reasonably possible after the date he terminates
employment.  A Participant whose nonforfeitable Accrued Benefit at termination
of employment is zero shall be deemed to be cashed out.  If a Participant
terminated employment prior to January 1, 1998 and did not receive a
distribution, he shall be paid his nonforfeitable Accrued Benefit in accordance
with Paragraph A(4) of this Article as soon as administratively possible
following the January 1, 1998 effective date of this $5,000 cashout amendment if
his nonforfeitable Accrued Benefit is not more than $5,000 both on the Valuation
Date coinciding with or preceding his termination of employment and the
Valuation Date coinciding with or preceding his distribution.  If the
Participant’s nonforfeitable Accrued Benefit exceeds $5,000 at the time it first
becomes available for distribution, such benefit shall be paid as provided in
Paragraph A(4) of this Article within 60 days after the close of the Plan Year
in which the Participant attains Normal Retirement Age unless the Participant
consents to an earlier distribution or elects to defer receipt of the
distribution pursuant to Article VII, Paragraph A(3).

 

If, at the time a Participant terminates employment, the Participant has
completed 1,000 Hours of Service in the Plan Year, the vesting percentage used
to compute his distribution shall reflect an additional Year of Service.

 

The Administrative Committee shall file such reports with the Secretary of Labor
and Treasury and provide such information to a terminated Plan Participant as is
required by law and regulations.

 

Anything in this Article VII, Paragraph D to the contrary notwithstanding, the
forfeitable portion of a Participant’s account shall be subject to the
forfeiture provisions of Article V, Paragraph E.

 

In the event that a terminated Participant’s current address and whereabouts are
unknown and the Administrative Committee has made a good faith effort to locate
the missing Participant, then if the Participant cannot be located after that
good faith effort, the nonforfeitable Accrued Benefit of the missing Participant
shall be forfeited, subject to reinstatement of such benefit (unadjusted for
gains or losses subsequent to the forfeiture) if the missing Participant is
later found or makes a claim for Plan benefits.

 

E.             Time of First Payment. Upon death, attainment of normal
retirement age by a Participant who has separated from service with the
Employer, retirement, termination of employment with a vested Accrued Benefit of
not more than $5,000 or receipt by the Administrative Committee of a disabled
Participant’s election to receive disability benefits, distribution of an
affected Participant’s nonforfeitable Accrued Benefit shall commence as soon as
is reasonably possible, but in no event shall distribution commence later than
sixty (60) days following the Plan Year during which such aforementioned event
occurs, provided that if a Participant or beneficiary is entitled to elect to
defer receipt of such a distribution pursuant to the provisions of Paragraphs
A(3) or B of Article VII and he makes such an election, commencement of benefits
shall be deferred to the date elected by the Participant or beneficiary.

 

F.             Distribution of Allocation Attributable to Last Year of
Participation. The amount, if any, allocated to the Participant’s Plan Accounts
for the Plan Year in which an event described in Paragraph E occurs shall be
paid no later than sixty days after the end of the Plan Year, unless the
Participant or beneficiary

 

22

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elects to defer the commencement of benefits in accordance with Paragraph A(3)
or B of Article VII, or fails to consent to the distribution as required by this
Article.

 

G.            Distribution to Persons Under Disability. Distributions to minors
or incompetents may be made by the Trustee either (1) directly to the minor, (2)
to the legal guardians of the minor or incompetent, or (3) to the parent of the
minor.  The Trustee shall not be required to see to the application of any such
distribution so made to any of said persons, but his or their receipts therefor
shall be a full discharge of the Trustee.

 

H.            No Reduction in Benefits by Reason of Increase in Social Security
Benefits. Notwithstanding any other provision of the Plan, in the case of a
Participant who is receiving benefits under the Plan, or in the case of a
Participant who has terminated employment with the Employer and who has a
nonforfeitable Accrued Benefit, such benefits will not be decreased by reason of
any increase in the benefit levels payable under Title II of the Social Security
Act.

 

I.              Provisions for Nontradeable Stock. If at any time Employer Stock
shall cease to be readily tradeable, the following provisions shall apply with
respect to a Participant’s Pre-April 1, 2002 ESOP Employer Stock Account:

 

1.             If Employer Stock is not readily tradeable on an established
market at the time of a distribution, the Participant shall have the right to
receive a distribution from his Pre-April 1, 2002 ESOP Employer Stock Account in
cash, by making demand in the same manner and time as described in Paragraph A.4
above.

 

2.             If Employer Stock ceases to be readily tradeable after
distribution, a Participant who received such stock from his Pre-April 1, 2002
ESOP Employer Stock Account shall promptly be granted an option to put the stock
to the Employer if allowed by law, or otherwise to a third party with
substantial net worth.  Such put option shall be exercisable during a 60-day
period after notice is given to the Participant of the availability of the put.

 

3.             With respect to any transaction between a disqualified person as
defined under ERISA and the Plan, fair market value shall be determined as of
the date of the transaction.

 

J.             Diversification and Distribution of Investments in Pre-April 1,
2002 ESOP Employer Stock Account. Upon the later of (a) the date a Participant
reaches age fifty-five (55), or (b) the date the Participant completes at least
ten (10) years of participation in the Plan, the Participant may elect to
receive a distribution of part of the Employer Stock in his Pre-April 1, 2002
ESOP Employer Stock Account.  Such a Participant has the right to elect to
receive a distribution of a percentage of the Employer Stock in his Pre-April 1,
2002 ESOP Employer Stock Account over a six-year election period beginning with
the Plan Year in which he meets these requirements.  During the first five years
of that election period, that Participant may sell an aggregate total of up to
25% of the Employer Stock in his Pre–April 1, 2002 ESOP Employer Stock Account
and receive a distribution of the proceeds in cash.  This election can be
incremental or all at once, as long as by the end of the first five years in the
election period, no more than 25% of the Employer Stock held in that
Participant’s Pre-April 1, 2002 ESOP Employer Stock Account has been sold and
distributed as described below.

 

In the sixth and last year of the election period, the aggregate total of the
Employer Stock that may be sold and distributed to that Participant increases to
50%.  This means if that Participant sold and received a distribution of the
proceeds of 25% of his Employer Stock holdings in his Pre-April 1, 2002 ESOP
Employer Stock Account in the first five years of his election period, then he
would be allowed to sell and receive a distribution of the proceeds of an
additional 25% of those Employer Stock holdings in his Pre-April 1, 2002 ESOP
Employer Stock Account in the sixth year of his election period.

 

If that Participant wants to take advantage of this special diversification
election period for a Plan Year, he must make an election within 90 days
following the end of that Plan Year.  Within 180 days after the end of the
applicable Plan Year, the portion of his Pre-April 1, 2002 ESOP Employer Stock
Account to which the election applies will, at his election, either
be (a) distributed to him in cash, or (b) directly transferred to an individual
retirement account (IRA) or another eligible retirement plan on his behalf.

 

23

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ARTICLE VIII

PROVISION AGAINST ANTICIPATION

 

A.            No Alienation of Benefits. Until distribution pursuant to the
terms hereof and except as hereinafter provided in this Article VIII, no
Participant shall have the right or power to alienate, anticipate, commute,
pledge, encumber, or assign any of the benefits, proceeds, or avails of the
funds set aside for him under the terms of this Plan, and no such benefits,
proceeds, or avails shall be subject to seizure by any creditor of the eligible
Employee under any writ or proceedings at law or in equity.

 

B.            Qualified Domestic Relations Orders. Notwithstanding any other
Plan provision, the following procedures shall apply when any domestic relations
order (entered on or after January 1, 1985) is received by the Plan with respect
to a Participant.

 

1.            The Administrative Committee shall promptly notify the
Participant, and (a) each person named in the order as entitled to payment of
Plan benefits, and (b) any other person entitled to any portion of the
Participant’s Plan benefits (persons referred to in (a) and (b) are hereafter
alternate payees) of the receipt of such order and of the Administrative
Committee’s procedures for determining the qualified status of the order.  The
Administrative Committee shall permit each alternate payee to designate a
representative for receipt of copies of notices.

 

2.            Immediately upon receipt of such order, the Administrative
Committee shall direct the Trustee to segregate in a separate account the
amounts which are in pay status and which are payable to the alternate payee
under the order.

 

3.            The Administrative Committee shall meet promptly after receipt of
the order and determine whether the order is a Qualified Domestic Relations
Order.  The Administrative Committee shall promptly notify the Participant and
each alternate payee of its decision.  A Qualified Domestic Relations Order is
any judgment, decree or order (including approval of a property settlement
agreement) that:

 

a.             Relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child or other dependent of
a Participant;

 

b.            Is made pursuant to a State domestic relations law (including a
community property law);

 

c.             Creates or recognizes the existence of an alternate payee’s right
to receive all or a portion of a Participant’s Plan benefits;

 

d.            Clearly specifies (i) the name and last known mailing address, if
any, of the Participant, and the name and mailing address of each alternate
payee covered by the order; (ii) the amount or percentage of the Participant’s
benefits to be paid by the Plan to each alternate payee, or the manner in which
the amount or percentage is to be determined; (iii) the number of payments or
period to which the order applies; and (iv) the plan to which the order applies;

 

e.             Does not require the Plan to provide any form of benefit not
otherwise provided by the Plan or any increased benefits, and does not require
the payment of benefits to an alternate payee which are required to be paid to
another alternate payee under another order previously determined to be a
Qualified Domestic Relations Order.  Notwithstanding any other provision of this
Plan to the contrary, the time of payment in the Qualified Domestic Relations
Order shall govern the time of payment under this Plan, even if prior to the
earliest retirement age as defined in Code Section 414(p)(4)(B).

 

4.            The Administrative Committee’s decision shall be final unless the
Participant or an alternate payee gives written notice of appeal within 60 days
after receipt of the Administrative Committee’s decision.

 

5.            If within 18 months an order is finally determined to be a
Qualified Domestic Relations Order, the segregated amounts plus interest (if
any) shall be paid to the persons entitled thereto, and thereafter the alternate
payee shall receive payments pursuant to the terms of the order.  Amounts
subject to the order which are not in pay status shall be transferred to a
separate account in the name of the alternate payee and thereafter held for such
payee’s benefit pursuant to the terms of the order.  If within 18 months the
order is determined not to be a Qualified Domestic Relations Order, or if the
issue has not been finally determined, the Administrative Committee shall pay
the segregated amounts to the person who would have been entitled thereto if
there had been no order.  Any determination that an order is qualified after the
close of the 18 month period shall be applied prospectively only.

 

6.            The Administrative Committee’s procedures shall generally conform
to the Plan’s claims procedures.

 

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ARTICLE IX

ADMINISTRATIVE COMMITTEE AND INVESTMENT COMMITTEE DUTIES

 

A.            Appointment of Administrative Committee. The Board of Directors of
Pacific Northwest Bancorp shall appoint an Administrative Committee of not fewer
than two (2) persons (herein referred to as the “Administrative Committee”). 
The Administrative Committee shall perform administrative duties set forth in
part hereinafter and serve for such terms as the Board of Directors may
designate or until a successor has been appointed or until removal by the Board
of Directors.  The Board of Directors shall advise the Trustee in writing of the
names of the members of the Administrative Committee and any changes thereafter
made in the membership of the Administrative Committee.  Vacancies due to
resignation, death, removal, or other causes shall be filled by the Board of
Directors.  Members shall serve without compensation for service.  All
reasonable expenses of the Administrative Committee shall be paid by the
Employer.  The number of Administrative Committee members may be changed by the
Board of Directors at any time.

 

B.            Administrative Committee Action. The Administrative Committee
shall choose a secretary who shall keep minutes of the Administrative
Committee’s proceedings and all data, records, and documents pertaining to the
Administrative Committee’s administration of the Plan.  The Administrative
Committee shall act by a majority of its members at the time in office, and such
action may be taken either by a vote at a meeting or in writing without a
meeting.  The Administrative Committee may by such majority action authorize its
secretary or any one or more of its members to execute any document or documents
on behalf of the Administrative Committee, in which event the Administrative
Committee shall notify the Trustee in writing of such action and the name or
names of those so designated.  The Trustee thereafter shall accept and rely
conclusively upon any direction or document executed by such secretary, member,
or members as representing action by the Administrative Committee until the
Administrative Committee shall file with the Trustee a written revocation of
such designation.  A member of the Administrative Committee who is also a
Participant hereunder shall not vote or act upon any matter relating solely to
himself.

 

C.            Rights and Duties. The Administrative Committee shall be the Plan
Administrator and named fiduciary of the Plan, and shall have the power and
authority in its sole, absolute, and uncontrolled discretion to control and
manage the operation and administration of the Plan and shall have all powers
necessary to accomplish those purposes.  Any decision, of fact or law, that is
not arbitrary or capricious, or an abuse of discretion, must be upheld by a
court of law.  The responsibility and authority of the Administrative Committee
shall include but shall not be limited to the following:

 

1.             Determining all questions relating to the eligibility of
Employees to participate;

 

2.             Computing and certifying to the Trustee the amount and kind of
benefit payable to Participants, Spouses and beneficiaries;

 

3.             Authorizing all disbursements by the Trustee from the Trust;

 

4.             Establishing and reducing to writing and distributing to any
Participant as beneficiary a claims procedure, and administering that procedure,
including the processing and determination of all appeals thereunder;

 

5.             Maintaining all necessary records for the administration of the
Plan other than those which the Trustee has specifically agreed to maintain
pursuant to this Plan and Trust Agreement;

 

6.             Interpretation of the provisions of the Plan and publication of
such rules for the regulation of the Plan as in the Administrative Committee’s
sole, absolute and uncontrolled discretion are deemed necessary and advisable
and which are not inconsistent with the terms of the Plan or ERISA.

 

D.            No Administrative Committee Investment Authority. The
Administrative Committee shall have no authority or discretion with respect to
the management and control of the investments of the Trust, all of which
authority and discretion is hereby specifically allocated to the Investment
Committee to be carried out in accordance with the terms of this Plan.

 

E.             Information - Reporting and Disclosure. To enable the
Administrative Committee to perform its functions, the Employer shall supply
full and timely information to the Administrative Committee on all matters
relating to the compensation of all Participants, their continuous regular
employment, their retirement, death, or the cause for termination of employment,
and such other pertinent facts as the Administrative Committee may require, and
the Administrative Committee shall furnish the Trustee such information as may
be pertinent to the Trustee’s administration of the Plan.  The Administrative
Committee as

 

25

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plan administrator shall have the responsibility of complying with the reporting
and disclosure requirements of ERISA to the extent applicable.

 

F.             Administrative Committee Allocation and Delegation of
Responsibility.  The Administrative Committee may by written rule promulgated
under Paragraph C above allocate fiduciary responsibilities among Administrative
Committee members and may delegate to persons other than Administrative
Committee members the authority to carry out fiduciary responsibilities under
the Plan, provided that no such responsibility shall be allocated or delegated
to the Trustee without its written consent.

 

In the event that a responsibility is allocated to an Administrative Committee
member, no other Administrative Committee member shall be liable for any act or
omission of the person to whom the responsibility is allocated except as may be
otherwise required by law.  If a responsibility is delegated to a person other
than an Administrative Committee member, the Administrative Committee shall not
be responsible or liable for an act or omission of such person in carrying out
such responsibility except as may otherwise be required by law.

 

G.            Claims Procedure.  The Administrative Committee shall establish a
claims procedure which shall be reduced to writing and provided to any
Participant or beneficiary whose claim for benefits under the Plan has been
denied.  The procedure shall provide for adequate notice in writing to any such
Participant or beneficiary and the notice shall set forth the specific reasons
for denial of benefits written in a manner calculated to be understood by the
Participant or beneficiary.  The procedure shall afford a reasonable opportunity
to the Participant or beneficiary for a full and fair review by the
Administrative Committee of the decision denying the claim.  The Trustee shall
have no responsibility for establishing such a procedure or assuring that it is
carried out.

 

H.            Investment Committee Authority.  The Board shall appoint an
Investment Committee of four or more members to prudently select the Plan
investment funds available to Participants in this Plan.  The Investment
Committee shall be a named fiduciary with the power (1) to prudently select
separate Plan investment funds to be communicated to Participants, who shall
have the right to allocate assets in their Plan Accounts among the Plan
investment funds at the times and in the manner permitted by the Investment
Committee; (2) to prudently monitor the investment performance of those Plan
investment funds; and (3) with respect to Participants who do not allocate
assets in their Pre-April 1, 2002 ESOP Investment Account and their Post-March
31, 2002 Money Purchase Pension Plan Employer Contribution Account among the
Plan investment funds, to prudently select the Plan investment fund(s) in which
such assets shall be invested.  The Investment Committee shall also have the
authority to follow Participants’ directions as to the purchase and sale of
Employer Stock.

 

The Investment Committee shall not be liable for any loss or for any breach of
fiduciary responsibility which results from a Participant’s exercise of control
over all or part of the investments of his Plan Accounts.  Where a Participant
is directing the investment of all or part of his Accounts, the Investment
Committee shall have no responsibility to maintain diversification of the
self-directed portion of such Accounts.  The Investment Committee also shall
have no responsibility to diversify the investment of the Participants’
Pre–April 1, 2002 ESOP Employer Stock Accounts.

 

The Board shall advise the Trustee in writing of the names of the members of the
Investment Committee and any changes thereafter made in the membership of the
Investment Committee.  Vacancies due to resignation, death, removal, or other
causes shall be filled by the Board.  Members shall serve without compensation
for service.  All reasonable expenses of the Investment Committee shall be paid
by the Employer.  The number of Investment Committee members may be changed by
the Board at any time.

 

No Plan amendment affecting the Investment Committee’s duties shall become
effective without the prior approval of the Investment Committee,
notwithstanding any language in Article XIII to the contrary.

 

I.              Funding Policy.  The Investment Committee shall be responsible
for establishing and carrying out a funding policy for the Employer’s Plan.  In
establishing such a policy, the short-term and long-term liquidity needs of the
Plan shall be determined to the extent possible by considering among other
factors the anticipated retirement date of Participants, turnover and
contributions to be made by the Employer.  The funding policy and method so
established shall be communicated to the Trustee.

 

J.             Investment Committee Action.  The Investment Committee shall
choose a secretary who shall keep minutes of the Investment Committee’s
proceedings and all data, records, and documents pertaining to the Investment
Committee’s duties under the Plan.  The Investment Committee shall act by a
majority of its

 

26

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members at the time in office, and such action may be taken either by a vote at
a meeting or in writing without a meeting.  The Investment Committee may by such
majority action authorize its secretary or any one or more of its members to
execute any document or documents on behalf of the Investment Committee, in
which event the Investment Committee shall notify the Trustee in writing of such
action and the name or names of those so designated.  The Trustee thereafter
shall accept and rely conclusively upon any direction or document executed by
such secretary, member, or members as representing action by the Investment
Committee until the Investment Committee shall file with the Trustee a written
revocation of such designation.  A member of the Investment Committee who is
also a Participant hereunder shall not vote or act upon any matter relating
solely to himself.

 

K.            Investment Committee Allocation and Delegation of Responsibility. 
The Investment Committee may by written rule above allocate fiduciary
responsibilities among Investment Committee members and may delegate to persons
other than Investment Committee members the authority to carry out fiduciary
responsibilities under the Plan, provided that no such responsibility shall be
allocated or delegated to the Trustee without its written consent.

 

In the event that a responsibility is allocated to an Investment Committee
member, no other Investment Committee member shall be liable for any act or
omission of the person to whom the responsibility is allocated except as may be
otherwise required by law.  If a responsibility is delegated to a person other
than an Investment Committee member, the Investment Committee shall not be
responsible or liable for an act or omission of such person in carrying out such
responsibility except as may otherwise be required by law.

 

L.            Bonding.  Where required by law, each fiduciary of the Plan and
every person handling Plan funds shall be bonded.  It shall be the obligation of
the Administrative Committee to assure compliance with applicable bonding
requirements as to Administrative Committee members.  It shall be the obligation
of the Investment Committee to assure compliance with the applicable bonding
requirements as to the Investment Committee members.  The Trustee shall not be
responsible for assuring compliance with the bonding requirements.

 

M.           Indemnification.  The Employer does hereby indemnify and hold
harmless each Administrative Committee member and each Investment Committee
member from any loss, claim, or suit arising out of the performance of
obligations imposed hereunder and not arising from said Administrative Committee
member’s or Investment Committee member’s willful neglect or misconduct or gross
negligence.

 

N.            Standard of Care Imposed upon the Administrative Committee and the
Investment Committee.  The Administrative Committee and the Investment Committee
shall each discharge its duties with respect to the Plan solely in the interest
of the Participants and beneficiaries and (1) for the exclusive purpose of
providing benefits to Participants and their beneficiaries and defraying
reasonable expenses of the Plan; (2) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims; and (3) in accordance with the
Plan provisions.  In addition, the Investment Committee shall discharge its
duties with respect to the Post-March 31, 2002 Money Purchase Pension Plan
Employer Contribution Accounts and Pre-April 1, 2002 ESOP Investment Accounts by
diversifying the investments of such Accounts so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do
so.  Provided, however, that where a Participant is directing the investment of
all or part of such Accounts, the Administrative Committee and Investment
Committee shall have no responsibility to maintain diversification of the
Participant-directed portion of such Accounts.  The Administrative Committee and
the Investment Committee shall not be liable for any loss or for any breach of
fiduciary responsibility which results from a Participant’s exercise of control
over all or part of the investment of his Plan Accounts.

 

ARTICLE X

INVESTMENT OF PLAN ASSETS

 

A.            Investments.  Participants’ Plan Accounts shall be invested as
follows:

 

1.             ESOP Accounts.  A Participant’s Pre-April 1, 2002 ESOP Employer
Stock Account will remain invested in Pacific Northwest Bancorp common stock,
unless on or after July 1, 2002 (or an earlier date determined by the Plan
Administrative Committee in its discretion and communicated to Plan
Participants), the Participant directs the Plan Trustee to sell all or a portion
of the Employer Stock in his

 

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Pre-April 1, 2002 ESOP Employer Stock Account and to allocate the sales proceeds
to his Pre-April 1, 2002 ESOP Investment Account to be invested as the
Participant directs among the permitted Plan investment funds selected by the
Investment Committee.  A Participant may later elect to apply assets in his
Pre-April 1, 2002 ESOP Investment Account to purchase shares of Employer Stock
on the open market, and that Employer Stock will be allocated to his
Pre-April 1, 2002 ESOP Employer Stock Account.

 

A Participant’s Pre-April 1, 2002 ESOP Investment Account shall include (a) the
sales proceeds of Employer Stock the Participant has elected to sell from his
Pre-April 1, 2002 ESOP Employer Stock Account, and (b) any cash or other assets
previously held in that ESOP Investment Account, and (c) earnings on amounts in
that ESOP Investment Account plus cash dividends after March 31, 2002 on
Employer Stock held in that Participant’s Pre-April 1, 2002 ESOP Employer Stock
Account.

 

2.             Money Purchase Pension Plan Employer Contribution Account.  A
Participant may direct the Trustee to invest his Post-March 31, 2002 Money
Purchase Pension Plan Employer Contribution Account among the permitted Plan
investment funds selected by the Investment Committee, and in shares of Employer
Stock purchased on the open market.

 

A Participant’s Post-March 31, 2002 Money Purchase Pension Plan Employer
Contribution Account includes (a) Employer contributions made on the
Participant’s behalf after March 31, 2002, and (b) earnings on those Post-March
31, 2002 Employer contributions on the Participant’s behalf plus any cash
dividends on Employer Stock purchased with the Participant’s Post–March 31, 2002
Employer contributions.

 

3.             Trustee’s Investment Procedures.  The Trustee will provide
Participants with a description of the Plan investment fund options. 
Participants will be able to transfer amounts among the Plan investment funds
and to purchase and sell shares of Employer Stock at the times and in the manner
permitted by the Investment Committee.

 

With respect to the assets in the Post-March 31, 2002 Money Purchase Pension
Plan Employer Contribution Accounts and Pre-April 1, 2002 ESOP Investment
Accounts of Participants who do not allocate the assets in such Accounts among
the Plan investment funds or in Employer Stock, such assets shall be invested in
the Plan investment fund(s) selected by the Investment Committee.

 

With respect to the Plan investment funds, the Trustee in following the
Participants’ directions (or the Investment Committee’s directions if the
Participant does not provide any investment directions) is hereby granted full
power and authority to invest and reinvest the principal and income of the trust
fund in any manner that it deems advisable.  Without limiting the generality of
the foregoing, the Investment Committee may invest in regulated investment
companies, common stock, collective investment funds (the terms of which are
incorporated herein by reference), real estate, government, municipal or
corporation bonds, debentures or notes, or any other form of income-producing
property, whether real, personal, or mixed, including corporate stock of the
Employer for the benefit of the Plan.

 

B.            Employer Stock.  Employer Stock that is purchased or sold in
accordance with Participants’ directions with respect to assets in Participants’
Plan Accounts shall be purchased and sold on the open market.  Employer Stock
will be allocated to Participants’ Plan Accounts based on the price at which
purchases of such Employer Stock are made.

 

Notwithstanding the foregoing, the Investment Committee may impose restrictions
on the trading of Employer Stock to maintain an orderly market.  If Plan
Participants choose to sell a large amount of Employer Stock, the sale of those
shares may be spread over a period of days.  If that occurs, affected
Participants’ Plan accounts would not be updated until the sale was completed,
and the sale price would be based on the average sale price over the trading
period.  The Investment Committee will establish guidelines as to when the
Trustee should contact an Investment Committee member as to whether to spread a
trade over a period of time.

 

C.            Voting and Tender of Employer Stock.  Each Participant may direct
the Trustee as to the manner in which Employer Stock allocated to the
Participant’s Plan Accounts is to be voted at meetings of shareholders, in
accordance with procedures acceptable to the Trustee and established in
accordance with applicable regulations under ERISA 404(c).  Each Participant may
likewise direct the Trustee whether to tender the shares of Employer Stock
allocated to the Participant’s Plan Accounts in response to a tender offer, in
accordance with procedures acceptable to the Trustee and established in
accordance with applicable regulations under ERISA 404(c).  The Trustee shall
vote such stock as provided in the Plan’s Trust Agreement.  Distribution of
proxy solicitation materials to Participants with Employer Stock in their Plan
Accounts shall be made by the Employer and the Trustee pursuant to such
procedures as they shall agree upon.  Participants’

 

28

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individual voting directions and instructions as to whether to tender Employer
Stock shall be kept confidential.  Information relating to the purchase,
holding, and sale of Employer Stock, and the exercise of voting, tender and
similar rights with respect to Employer Stock by Participants and their
beneficiaries shall be maintained in accordance with procedures acceptable to
the Trustee that are designed to safeguard the confidentiality of that
information, except to the extent necessary to comply with federal laws or state
laws not preempted by ERISA.

 

For purposes of exercising voting rights and/or responding to a tender offer,
each Participant shall be a named fiduciary under ERISA with respect to the
shares of Employer Stock credited to his Plan Accounts.

 

D.            ESOP Employer Stock Accounts.  Except as otherwise directed by
Plan Participants in accordance with Paragraph A.1. above, the portion of the
Plan Trust held in Participants’ Pre-April 1, 2002 ESOP Employer Stock Accounts
shall be primarily invested in Employer Stock and up to 100% of such Accounts
may be so invested.

 

ARTICLE XI

SUITS

 

If any person or party to this agreement shall request the Trustee to bring any
action at law or suit in equity to determine any of the provisions or rights
arising out of this agreement, the Trustee shall not be obligated to bring such
suit unless the Trustee is fully indemnified for all costs of such action,
including a reasonable sum for attorneys’ fees.

 

ARTICLE XII

MERGERS AND CONSOLIDATIONS

 

In the case of any merger or consolidation with any other plan or a transfer of
assets or liabilities to any other plan, each Participant shall be entitled to
receive a benefit immediately after such a merger, consolidation or transfer,
which is equal to the benefit he would have been entitled to immediately before
if the Plan had been terminated.

 

ARTICLE XIII

AMENDMENT AND TERMINATION OF PLAN AND TRUST.

 

A.            Right to Amend and Terminate.  Pacific Northwest Bancorp
represents that the Plan is intended to be a continuing and permanent program
for Participants, but its Board reserves the right to terminate the Plan at any
time.  The Board may modify, alter, or amend this Plan and the Trust in whole or
in part, provided that no such modification, alteration, or amendment shall
enlarge the duties or liabilities of the Trustee without its consent, nor reduce
the Participant’s Accrued Benefit hereunder, except to the extent permitted by
Code Section 412(c)(8).  For purposes of this Article, a Plan amendment which
has the effect of (1) eliminating or reducing an early retirement benefit or
retirement-type subsidy, or (2) eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing the Accrued Benefit.  In the case of a retirement-type
subsidy, the preceding sentence shall apply only with respect to a Participant
who satisfies (either before or after the amendment) the preamendment conditions
for the subsidy.

 

Subject to the provisions set forth above, effective April 1, 1998, the Board
delegates to the Investment Committee the right to make administrative
amendments to the Plan and Trust.  An amendment will be considered an
administrative amendment properly within the delegated authority of the
Investment Committee if the amendment is required by a change in the law, or is
of an administrative nature which does not make major Plan design changes,
affect Plan eligibility, or change the benefit or contribution formulas.  Any
such amendment shall be effective as of the date established by the Trustee. 
Any amendment adopted by the Investment Committee pursuant to this delegated
authority shall be reported to the Board within two and one-half (2-1/2) months
after the close of the Plan Year of adoption, or the due date of Pacific
Northwest Bancorp’s tax return (including extensions), if later.

 

B.            No Revesting.  No termination, modification, alteration, or
amendment shall have the effect of revesting in the Employer any part of the
principal or income of the Trust, except as otherwise permitted by the Plan.

 

29

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C.            Exclusive Benefit of Employees.  At no time during the existence
of this Plan and the Trust or at its termination may any part of the Trust
corpus or income be used for or directed to purposes other than for the
exclusive benefit of the Participants hereof or their beneficiaries.

 

D.            Termination.

 

1.            This Plan and the Trust shall terminate upon the occurrence of any
of the following:

 

a.            Written notice of Pacific Northwest Bancorp to the Trustee;

 

b.            Complete discontinuance of contributions by Pacific Northwest
Bancorp;

 

c.            The dissolution or merger of Pacific Northwest Bancorp unless a
successor to the business agrees to continue the Plan and the Trust by executing
an appropriate agreement, in which event such successor shall succeed to all the
rights, powers and duties of Pacific Northwest Bancorp.

 

2.            In the event that Pacific Northwest Bancorp is taken over by a
successor who agrees to continue the Plan, the employment of any Employee who is
continued in the employ of such successor shall not be deemed to have been
terminated or severed for any purpose hereunder.

 

3.            Notwithstanding any provision hereof to the contrary, upon
termination or partial termination of the Plan and the Trust, or upon complete
discontinuance of contributions to the Plan, all affected Participants’ Accounts
shall be considered as fully vested and nonforfeitable, all unallocated assets
of the Trust, including but not limited to Employer contributions and
unallocated Trust assets and earnings thereon, shall be allocated to the
accounts of all Participants as of the next Valuation Date (or if the Plan is
being terminated immediately, then on the date of such Plan termination as if it
were the next Valuation Date) in accordance with the provisions of the Plan
hereof; and shall be applied for the benefit of each such Participant either by
a lump-sum distribution, or by the continuance of the Trust and the payments of
benefits thereunder in the manner provided in the Plan.  The Trustee, in
consultation with the Administrative Committee, shall decide whether a partial
termination of the Plan has occurred.

 

After the Plan’s initial qualification by the Internal Revenue Service, there
will be no reversion of assets to the Employer under any circumstances.  All
Participants shall be treated in a manner consistent with the terms of this Plan
and provisions of the Code and applicable regulations, as may be amended from
time to time.

 

Even if the Plan ceases to be an ESOP, any Employer Stock acquired with the
proceeds of an Acquisition Loan will be subject to a put option if it is not
publicly traded when distributed, or if subject to a trading limitation when
distributed.  The put must be exercisable at least during a 15-month period
which begins on the date the security subject to the put option is distributed
by the Plan.  The price at which the put option will be exercisable will be the
value of the security as of the date of exercise or as of the most recent
Valuation Date.  If the transaction takes place between the Plan and a
disqualified person, value will be determined as of the date of transaction.

 

ARTICLE XIV

TOP HEAVY PLANS DEFINED AND OTHER DEFINITIONS

 

A.            Top Heavy Plan. The Plan is Top Heavy and subject to the
requirements of this Article and Article XV if for a Plan Year, as of the
Determination Date, the Accrued Benefits of Key Employees in the Plan aggregated
with the Accrued Benefits of Key Employees in all qualified plans maintained by
the Employer and each member of the Controlled Group exceed 60% of the Accrued
Benefits of all employees (excluding Non-Key Employees who were Key Employees in
a prior plan year) in all qualified plans maintained by the Employer and all
members of the Controlled Group which are in the Required Aggregation Group (the
Top Heavy Test).  Provided, the foregoing shall not apply and the Plan shall not
be Top Heavy if the Plan is Permissively Aggregated and as a result the Top
Heavy Test results in a percentage of 60% or less.

 

30

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B.            Additional Definitions for Use in this Article and Article XV.

 

1.             Accrued Benefits.  Accrued Benefits means:

 

a.             for each defined contribution plan, the employee’s account
balances as of the valuation date coinciding with the Determination Date,
adjusted for contributions required to be made under Code Section 412, and to be
allocated as of a date not later than the Determination Date, although not yet
contributed; and

 

b.            for each defined benefit plan, the present value as of the
valuation date coinciding with the Determination Date of the employee’s accrued
benefits determined pursuant to the plan’s provisions.

 

In computing a. and b., all benefits attributable to employer contributions and
all benefits attributable to employee contributions (excluding deductible
Employee contributions, if any) are to be taken into consideration.  All such
benefits of individuals who have not performed services for the Employer or a
member of the Controlled Group maintaining this Plan any time during the
five-year period ending on the Determination Date are not taken into
consideration.  All distributions made in the plan year including the
Determination Date and in the four preceding plan years are to be added back,
including distributions from a terminated plan of a member of the Controlled
Group, and excluding amounts which were rolled over or transferred to a plan of
a member of the Controlled Group under circumstances which require such amounts
to be considered part of the accrued benefit under the recipient plan. 
Rollovers and transfers to this Plan or a plan of a member of the Controlled
Group initiated by an employee and made after December 31, 1983, are not to be
taken into consideration in computing a. and b. above.  Such rollovers and
transfers on or prior to such date are to be considered.  No accrued benefits of
a Non-key Employee with respect to this Plan (or any plan aggregated under
subparagraph 7 or 8 below) for a Plan Year shall be taken into consideration if
the Non-key Employee was a Key Employee with respect to such plan for any prior
Plan Year.

 

2.             Controlled Group.  Controlled Group means all employers required
to be aggregated under Code Section 414(b), (c) or (m).

 

3.             Determination Date.  Determination Date means the last day of the
plan year preceding the plan year in question or, in the first plan year, the
last day thereof.  Where plans other than this Plan are in question, the
Determination Date for each plan shall be the last date of the plan year that
falls within the same calendar year.

 

4.             Key Employee.  Key Employee means any employee or former employee
of an employer (including the beneficiary of any such deceased person) who at
any time during the plan year or any of the four preceding plan years is or was:

 

a.             an officer receiving annual Compensation greater than 50% of the
dollar limit in effect under Code Section 415(b)(1)(A) for any such plan year. 
The number of officers of all members of the Controlled Group required to be
taken into account shall be limited as follows:

 

(i)            if the aggregate number of employees of all employers in the
Controlled Group is less than 30, then no more than three individuals shall be
considered Key Employees by reason of being officers;

 

(ii)           if the number exceeds 30 but is less than 500, no more than 10%
shall be considered Key Employees; and

 

(iii)          if the number exceeds 500, no more than 50 shall be considered
Key Employees.

 

b.            one of the ten employees (i) receiving annual Compensation greater
than the dollar limit in effect under Code Section 415(c)(1)(A) for any such
plan year and (ii) owning the largest interest of the employer; provided if two
employees own the same interest in the employer, the employee receiving greater
annual Compensation, shall be treated as having a larger interest;

 

c.             an employee owning more than 5% of the employer;

 

d.            an employee receiving annual Compensation in excess of $150,000
and owning more than one percent of the employer.

 

In determining ownership of an employer, the rules of Code Section 318 shall be
applied substituting 5% for 50% in subparagraph (c) of Code Section 318(a)(2). 
In the case of an unincorporated employer, ownership shall be determined in
accordance with regulations promulgated by the Secretary of the Treasury.  Code
Section 414(b), (c) and (m) shall not apply for purposes of determining
ownership of an employer.

 

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5.             Minimum Benefit Accrual.  Minimum Benefit Accrual means a benefit
payable in the form of a life annuity at normal retirement age under a defined
benefit plan which equals not less than the lesser of (1) 20% of average
compensation or (2) 2% of average compensation times Years of Service.  Average
compensation means the average of the employee’s compensation for the five
consecutive years when the employee had the highest aggregate compensation. 
Years of Service prior to January 1, 1984 are not taken into account.  A Year of
Service is disregarded if the Plan is not Top Heavy for the Plan Year ending
during the Year of Service.  Compensation in years following the last Plan Year
in which the Plan is top heavy is not taken into account.

 

6.             Non-key Employee.  Non-key Employee means any employee who is not
a Key Employee.

 

7.             Permissively Aggregated.  Permissively Aggregated means:

 

a.             the Required Aggregation Group; and

 

b.            such additional plans which may be aggregated without violating
the requirements of Code Sections 410 and 401(a)(4).

 

8.             Required Aggregation Group.  Required Aggregation Group means:

 

a.             all qualified plans of the employer and each member of the
Controlled Group in which a Key Employee is a participant; and

 

b.            each other qualified plan which must be considered along with the
plans in a. in order for the Plan to meet the requirements of Code Sections
410(b) and 401(a)(4).

 

9.             Super Top Heavy Plan.  A Super Top Heavy Plan is this Plan with
90% substituted for 60% in the Top Heavy Test.

 

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C.            Top-Heavy Requirements Effective for Plan Years Beginning After
December 31, 2001.

 

1.            Effective Date.  Notwithstanding any provision of this Plan to the
contrary, this Paragraph C shall apply for purposes of determining whether the
Plan is a top-heavy plan under Code Section 416(g) for Plan Years beginning
after December 31, 2001.

 

2.            Determination of Top-Heavy Status.

 

a.  Key Employee.  Key Employee means any Employee or former Employee (including
any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Employer having annual Compensation
greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual Compensation of more than
$150,000.  For this purpose, annual Compensation means Compensation within the
meaning of Code Section 415(c)(3).  The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the applicable
regulations and other guidance of general applicability issued thereunder.

 

b.  Determination of Amounts.  This subparagraph b. shall apply for purposes of
determining the amounts of account balances of Employees as of the determination
date.

 

i.  Distributions During Year Ending on the Determination Date.  The amounts of
account balances of an Employee as of the determination date shall be increased
by the distributions made with respect to the Employee under the Plan and any
Plan aggregated with the Plan under Code Section 416(g)(2) during the one-year
period ending on the determination date.  The preceding sentence shall also
apply to distributions under a terminated plan which, had it not been
terminated, would have been aggregated with the Plan under Code Section
416(g)(2)(A)(i).  In the case of a distribution made for a reason other than
separation from service, death, or disability, this provision shall be applied
by substituting “five-year period” for “one-year period.”

 

ii.  Employees Not Performing Services During Year Ending on the Determination
Date.  The accounts of any individual who has not performed services for the
Employer during the one-year period ending on the determination date shall not
be taken into account.

 

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ARTICLE XIX
ADDITIONAL REQUIREMENTS

APPLICABLE TO TOP HEAVY PLANS

 

                A.            Minimum Vesting Requirements. For each Plan Year
that the Plan is subject to the provisions of this Article, a Participant’s
nonforfeitable Accrued Benefit in his Employer Contribution Account, shall be
determined in accordance with the following schedule:

 

Years of Service

 

Nonforfeitable Percentage

 

Less than 1

 

0

%

1

 

20

%

2

 

40

%

3

 

60

%

4

 

80

%

5

 

100

%

 

B.            Minimum Employer Contributions.

 

1.            General Rule.  Except as provided in subparagraphs 2. and 3.
hereof, for each Plan Year that the Plan is subject to the provisions of this
Article, each Non-key Employee Participant shall receive an allocation, without
regard to any Social Security contribution, to his Employer Contribution Account
of the lesser of:

 

a.             three percent of his Compensation (as defined in Article II,
Paragraph F), or

 

b.            the highest percentage of Compensation (as defined in Article II,
Paragraph F) allocated to the account of a Key Employee.  This subparagraph b.
shall not apply and the required contribution shall be 3% if exclusion of the
Plan from the Required Aggregation Group would cause a defined benefit plan in
the Required Aggregation Group to fail to meet the requirements of Code Section
401(a)(4) or 410.

 

In applying this subparagraph 1., failure of a Participant to complete a Year of
Service, make mandatory contributions, if required, or receive Compensation
sufficient to justify an allocation during the Plan Year shall not render such
Participant ineligible to receive a minimum employer contribution under this
Paragraph B.

 

Employer matching contributions made to the Employer’s Salary Deferral 401(k)
Plan shall be taken into account for purposes of satisfying the minimum
contribution requirements of Code Section 416(c)(2) and the Plan.  The preceding
sentence shall apply with respect to Employer matching contributions under the
Employer’s Salary Deferral 401(k) Plan or, if the Plan provides that the minimum
contribution requirement shall be met in another plan, such other plan. 
Employer matching contributions that are used to satisfy the minimum
contribution requirements shall be treated as Employer matching contributions
for purposes of the actual contribution percentage test and other requirements
of Code Section 401(m).

 

2.           Exceptions. Subparagraph 1. does not apply with respect to a
Participant who

 

a.             terminates employment with the Employer and all members of the
Controlled Group prior to the last day of the plan year, or

 

b.            is a participant in another defined contribution plan which is in
the Required Aggregation Group and receives an allocation to his employer
contribution account in such plan equal to the above (for the plan year ending
on or before the Determination Date), or

 

c.             is a participant in a defined benefit plan which is in the
Required Aggregation Group and receives thereunder for the plan year the Minimum
Benefit Accrual for the plan year ending on or before the Determination Date.

 

3.            Employee Participating in Defined Benefit Plan. For each Non-Key
Employee Participant who is also a participant in a defined benefit plan which
is in the Required Aggregation Group and which does not provide the Minimum
Benefit Accrual for the plan year ending on or before the Determination Date,
subparagraph 1. shall be applied substituting 5% of compensation for
subparagraphs 1.a. and b.

 

34

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4.            Specific Rules. In determining the Minimum Employer Contribution
hereunder, the following rules shall govern:

 

a.             Compensation in excess of $200,000 (as adjusted pursuant to Code
Section 416(d)(2)) shall not be considered.

 

b.            The Non-key Employee’s account will receive the Minimum Employer
Contribution notwithstanding a waiver of the minimum funding requirements of
Code Section 412.

 

c.             Tax-deferred contributions by Non-key Employees to a qualified
plan shall be disregarded; tax-deferred contributions by Key Employees shall be
taken into account in determining the minimum required employer contribution
hereunder.

 

ARTICLE XX

RIGHT TO DISCHARGE EMPLOYEES

 

Neither the establishment of the Plan and the Trust nor any modification
thereof, nor the creation of any funds or accounts nor the payment of any
benefit, shall be construed as giving any Participant, or any other person
whomsoever, any legal or equitable right against the Employer, the Trustee, the
Administrative Committee, or the Investment Committee unless the same shall be
specifically provided for in this agreement or conferred by affirmative action
of the Administrative Committee or the Employer in accordance with the terms and
provisions of this agreement or as giving any Employee or Participant the right
to be retained in the service of the Employer, and all Employees shall remain
subject to discharge by the Employer to the same extent as if this Plan and
Trust had never been adopted.

 

ARTICLE XXI
RETURN OF CONTRIBUTIONS;

DECLARATION OF TRUST CONTINGENT

ON INTERNAL REVENUE SERVICE APPROVAL

 

Contributions made hereto are conditioned on deductibility by the Employer under
Section 404 of the Code, and such contributions may not be made under a mistake
of fact.

 

Contributions may be returned to the Employer in the amount involved, within one
year of the mistaken payment of the contribution, the date of denial of
qualification, or disallowance of a deduction, as the case may be.

 

This Plan and the Trust shall be contingent upon a favorable Internal Revenue
Service ruling as to the initial acceptability under Section 401(a) of the
Internal Revenue Code, as amended, and exemption from income taxation under
Section 501(a) of the Internal Revenue Code.  In the event that the Commissioner
of Internal Revenue determines that the Plan is not initially qualified under
the Internal Revenue Code, and if the Employer does not effect an amendment
which will cure the defect, then this Plan and Trust will thereupon terminate
and be of no further force or effect, and the Trustee shall forthwith return to
the Employer the current value of all contributions made incident to that
initial qualification by the Employer (plus income, less any fees or expenses
allocable thereto) within one year after the date the initial qualification is
denied, but only if the application for the qualification is made by the time
prescribed by law for filing the Employer’s return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of the Treasury may
prescribe.

 

ARTICLE XXII

DIRECT ROLLOVER CONTRIBUTIONS

 

A.            Direct Rollover Contributions. Paragraph B of this Article applies
to distributions made on or after January 1, 1993.  Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a distributee’s
election under this Article, a distributee may elect, at the time and in the
manner prescribed by the Administrative Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.

 

B.            Definitions.

 

1.             Eligible Rollover Distribution. An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: 
any distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life

 

35

--------------------------------------------------------------------------------

 

expectancies) of the distributee and the distributee’s designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and the
portion of any distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with respect to
employer securities), and effective with respect to distributions made on or
after January 1, 2000, hardship withdrawals, unless such a distribution is made
after a permissible distribution event (other than a hardship withdrawal) occurs
under Code Section 401(k)(2)(B).  Effective with respect to distributions made
after December 31, 2001, any amount that is distributed on account of hardship
shall not be an eligible rollover distribution and the distributee may not elect
to have any portion of such a distribution paid directly to an eligible
retirement plan.

 

2.             Eligible Retirement Plan. An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the distributee’s eligible
rollover distribution.  However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.

 

Effective with respect to distributions made from this Plan after December 31,
2001, an eligible retirement plan shall also mean an annuity contract described
in Code Section 403(b) and an eligible plan under Code Section 457(b) which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees
to separately account for amounts transferred into such plan from this plan. 
The definition of eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse who is the
alternate payee under a qualified domestic relation order, as defined in Code
Section 414(p).

 

3.             Distributee. A distributee includes an Employee or former
Employee.  In addition, the Employee’s or former Employee’s surviving spouse and
the Employee’s or former Employee’s spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.

 

4.             Direct Rollover. A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.

 

ARTICLE XXIII
TRANSFER OF INTERWEST BANCORP, INC.

STOCK FROM PREDECESSOR PACIFIC NORTHWEST BANK RETIREMENT PLAN

 

Notwithstanding any provision of this Plan to the contrary, as soon as
administratively possible after August 1, 1999, the InterWest Bancorp, Inc.
stock (now Pacific Northwest Bancorp stock) that was held in the Predecessor
Pacific Northwest Bank Retirement Plan (the “Predecessor PNB Plan”) was
transferred to this Plan on behalf of Predecessor PNB Plan participants whose
Predecessor PNB Plan Accounts held such stock.  Such transferred InterWest
Bancorp, Inc. stock (now Pacific Northwest Bank stock) shall be held in separate
frozen Employer Matching Contribution Accounts in this Plan for the benefit of
such Participants, and such accounts shall continue to vest in accordance with
the following schedule, which is the former Predecessor PNB Retirement Plan
vesting schedule for such former Predecessor PNB Plan participants:

 

36

--------------------------------------------------------------------------------

 

Completion of Less than 1 Year of Service 0%

Completion of 1 or More Years of Service 20%

Completion of 2 or More Years of Service 40%

Completion of 3 or More Years of Service 60%

Completion of 4 or More Years of Service 80%

Completion of 5 or More Years of Service 100%

 

A Participant’s frozen Employer Matching Contribution Account shall become fully
vested and nonforfeitable upon the Participant’s attainment of age 65, death or
permanent and total disability, if such Participant remains employed by the
Employer at the time that event occurs.

 

When such a Participant retires, terminates employment, becomes permanently and
totally disabled, or dies, his frozen Employer Matching Contribution Account
will be valued and distributed in the same manner as his Pre-April 1, 2002 ESOP
Accounts.

 

Effective as of July 1, 2002 (or an earlier date that may be determined by the
Plan Administrative Committee and communicated to affected Participants), such
Participants may direct the Plan Trustee to sell all or a portion of the
Employer Stock in their frozen Employer Matching Contribution Accounts, and to
allocate the sales proceeds to that account to be invested as they directed
among the permitted Plan investment funds selected by the Investment Committee.

 

IN WITNESS WHEREOF, the parties hereto have caused this Plan and Trust to be
executed this 12th day of August, 2002.

 

 

 

 

PACIFIC NORTHWEST BANCORP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By

 /s/ Patrick M. Fahey

 

 

 

 

 

Its

President and Chief Executive Officer

 

 

37

--------------------------------------------------------------------------------

SCHEDULE A

 

PACIFIC NORTHWEST BANCORP

AFFILIATES CO-SPONSORING

THE PACIFIC NORTHWEST BANCORP

EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

 

Pacific Northwest Bank (formerly InterWest Bank)

 

Pacific Northwest Financial Services (formerly InterWest Financial Services)

 

Pacific Northwest Insurance Agency (formerly InterWest Agency)

 

38

--------------------------------------------------------------------------------

 

 

SCHEDULE B

 

PACIFIC NORTHWEST BANCORP

AFFILIATES OR FORMER

AFFILIATES FOR WHICH

PAST SERVICE CREDIT IS GRANTED

 

 

 

 

Name of Affiliate or Former Affiliate

 

Type of Credit Granted

 

 

 

Central Washington Bank/

 

Vesting

North Central Washington Bank

 

 

 

 

 

Pacific Northwest Bank

 

Vesting

(referred to as the Predecessor

 

 

Pacific Northwest Bank in this

 

 

Plan)

 

 

 

 

 

Pioneer National Bank

 

Vesting

 

 

 

Kittitas Valley Bank, N.A.

 

Vesting

 

 

 

First National Bank of

 

Vesting

Port Orchard

 

 

39

--------------------------------------------------------------------------------

 

SCHEDULE C

 

 

Pacific Northwest Bank or its predecessor InterWest Bank

 

Pacific Northwest Financial Services or it predecessor InterWest Financial
Services

 

Pacific Northwest Insurance Agency or its predecessor InterWest Agency

 

The Predecessor Pacific Northwest Bank

 

Pioneer National Bank until January 19, 1999, when that bank merged into the
Predecessor Pacific Northwest Bank

 

Kittitas Valley Bank, N.A.

 

40

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