Exhibit
4.2










THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ANY STATE SECURITIES LAWS, OR
THE LAWS OF ANY FOREIGN JURISDICTION.  NEITHER THIS WARRANT NOR THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE SOLD, OFFERED FOR
SALE, OR PLEDGED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
ACTIONS AS TO THE APPLICABLE SECURITIES UNDER SUCH ACT, STATE LAWS, OR LAWS OF
FOREIGN JURISDICTIONS OR AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY
SATISFACTORY TO THE ISSUER STATING THAT SUCH REGISTRATION OR OTHER ACTION IS NOT
REQUIRED.





No.
      W-0000
              WARRANT
      TO PURCHASE 00000SHARESIssue
      Date:  ____________
              OF
      COMMON STOCK





FORM OF


WARRANT


TO
PURCHASE SHARES OF COMMON STOCK





For value received, PACIFIC FINANCIAL
CORPORATION, a Washington corporation (the
“Company”), grants to _______________________________________
the “Holder”) the right, subject to the terms of this Warrant, to purchase at
any time during the period commencing on the “Issue Date” (as defined below),
and ending on the “Expiration Date” (as defined below), ______ fully paid and
non-assessable shares of Common Stock of the Company at the “Exercise Price” (as
defined below). This Warrant may be exercised in whole or in
part.  The number of shares that may be purchased is subject to
adjustment from time to time under the terms of this Warrant.





Definitions.  As used in this
Warrant, unless the context otherwise requires:





“Common Stock” means the Common
Stock, par value $1.00 per share, of the Company.





“Company” has the meaning
specified in the introductory paragraph.





"Exercise Amount" means the
number of Warrant Shares filled in on the attached Exercise Form delivered to
the Company by the Holder in connection with exercise of all or a portion of
this Warrant.


1





“Exercise Date” means any date
on which this Warrant is exercised in the manner indicated in Section
1.2.





“Exercise Price” means $6.50
per share (adjusted as necessary in accordance with
Section 6).





“Expiration Date” means 5:00
p.m. (Pacific time) on the fifth anniversary of the Issue Date.





“Holder” has the meaning
specified in the introductory paragraph.





“Issue Date” has the meaning
specified on the first page of this Warrant.





“Person” means an individual,
corporation, partnership, trust, joint venture or other form of business
entity.





“Securities Act” means the
Securities Act of 1933, as amended from time to time, and all rules and
regulations promulgated thereunder.





“Warrant Shares” means the
shares of Common Stock issued or issuable upon exercise of this Warrant,
adjusted as necessary in accordance with Section 6.





Section 1.              Duration and Exercise of
Warrant.





1.1           Exercise
Period.  Subject to the provisions hereof, this Warrant may be
exercised at any time during the period commencing on the Issue Date and ending
on the Expiration Date.  After the Expiration Date, this Warrant shall
become void and all rights to purchase Warrant Shares hereunder shall thereupon
cease.





1.2           Exercise.  This
Warrant may be exercised by the Holder, in whole or in part, by
(i) executing and delivering to the Secretary of the Company the attached
Exercise Form, (ii) surrendering this Warrant to the Secretary of the
Company, and (iii) paying in full the Exercise Price for the Exercise
Amount by cash, check, or wire transfer unless the Holder indicates in the
Exercise Form that such exercise is being “effected” pursuant to a “cashless
exercise” under Section 1.3 below.





1.3           Cashless
Exercise.  The Holder may satisfy its obligation to pay the
Exercise Price through a “cashless exercise,” in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:





X =
      Y [(A-B)/A]where:X =
      the number of Warrant Shares to be issued to the
Holder.Y =
      the number of Warrant Shares with respect to which this Warrant is being
      exercised.




2





A =
      the arithmetic average of the last reported trade price for the Company’s
      Common Stock reported for each Trading Day during the 30 calendar day
      period immediately prior to (but not including) the Exercise
      Date.B =
      the Exercise Price.





For purposes of Rule 144 promulgated
under the Securities Act, it is intended, understood and acknowledged that under
applicable rules, regulations and interpretations in effect as of the Issue
Date, the Warrant Shares issued in a cashless exercise transaction will be
deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares will be deemed to have commenced, on the Issue Date.





1.4          Documentation.  Within
a reasonable period after exercise of this Warrant, the Company, at the
Company's expense, will deliver to the Holder (a) certificates for Warrant
Shares, if any, and (b) if not exercised in full, a new Warrant to purchase
remaining Warrant Shares.





1.5          Effective Date of
Exercise.  This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of completion of each of
the steps required to exercise this Warrant as provided in Section 1.2
above.  The person entitled to receive the Warrant Shares shall be
treated for all purposes as the holder of record of such shares as of the close
of business on the date the Holder is deemed to have exercised this
Warrant.





1.6          Securities Law
Compliance.  By delivering a notice of exercise, the Holder
represents and warrants and acknowledges, as the case may be, that:




1.6.1     Investment
Purpose.  Holder is acquiring Warrant Shares for Holder's own
account and not for the purpose of resale or further distribution in a manner
not permitted by the terms of state and federal securities laws, and no other
person will have a direct or indirect interest in Warrant Shares being
purchased.




1.6.2     Sophistication:  Adequate
Means; Acknowledgements.  Holder has such substantial knowledge
in financial and business matters in general, and in similar investments in
particular, that Holder is capable of evaluating the merits and risks of an
investment in the Warrant Shares.  Holder has adequate means of
providing for Holder's current needs and personal contingencies so that Holder
can afford a complete loss of the funds invested in the Warrant
Shares.  Holder has, to the extent Holder considers necessary, taken
advantage of the opportunity to ask questions of the Company's officers and
directors, and Holder acknowledges that the Company has made no representation
or warranty regarding an investment in the Warrant Shares or the Company's
current or future financial performance or condition.  Holder has
sought and received, to the extent deemed necessary or appropriate, professional
advice with respect to tax and investment aspects of an exercise of this
Warrant, including the appropriateness of exercise in light of Holder's
individual circumstances, and is not relying on the Company or its officers,
directors, or other agents and advisers for such advice and such advice has not
been provided.


3


1.6.3     Restricted Securities;
Legend.  Holder understands that, in reliance upon
representations contained herein, the Warrant Shares have not been and will not
in the foreseeable future be registered under the Securities Act or state
securities laws.  As a result, the Warrant Shares must be held for at
least as long as is required under holding periods applicable at the time of
exercise to sales made under Rule 144 of the Securities Act.  The
Company may note in its stock transfer records and/or place upon each
certificate representing the Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the Holder:




SALE OF
THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS OR THE SECURITIES LAWS OF ANY
FOREIGN JURISDICTION, AND THE SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, OR OTHERWISE DISPOSED OF UNLESS THE TRANSACTION IS REGISTERED UNDER THE
SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF FOREIGN
JURISDICTIONS OR AN EXEMPTION FROM REGISTRATION OR OTHER REQUIREMENTS IS
AVAILABLE AND THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT
REASONABLY SATISFACTORY TO IT.







1.7           Validity and Reservation of Warrant
Shares.  The Company covenants that all Warrant Shares issued
upon exercise of this Warrant will be validly issued, fully paid,
nonassessable.  The Company will have duly authorized and reserved for
issuance upon exercise of this Warrant a sufficient number of shares of Common
Stock or other shares of capital stock of the Company as are from time to time
issuable upon exercise of this Warrant.





Section 2.              Fractional
Shares.





No fractional Warrant Shares shall be
issued upon the exercise of this Warrant, and the number of Warrant Shares to be
issued shall be rounded down to the nearest whole number.





Section 3.              No Rights as
Shareholder.





The Holder shall not, solely by virtue
of being the Holder of this Warrant, have any of the rights of a shareholder of
the Company, either at law or equity, until this Warrant shall have been duly
exercised.





Section 4.              Loss of Warrant.





Upon receipt by the Company of
satisfactory evidence of the loss, theft, destruction or mutilation of this
Warrant and either (in the case of loss, theft or destruction) reasonable
indemnification and a bond reasonably satisfactory to the Company if requested
by the Company or (in the case of mutilation) the surrender of this Warrant for
cancellation, the Company will execute and deliver to the Holder, without
charge, a new warrant of like denomination.





Section 5.              Certain
Adjustments.





5.1           Adjustment of Warrant
Shares.  The number, class and Exercise Price per share of
securities for which this Warrant may be exercised are subject to adjustment
from time to time upon the happening of certain events as hereinafter
provided:


4





(a)        Stock Splits or
Dividends.  If the outstanding shares of the Company’s Common
Stock are divided into a greater number of shares or if the Company shall effect
a stock dividend, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be proportionately increased and the Exercise
Price per share shall be proportionately reduced.  Conversely, if the
outstanding shares of Common Stock are combined into a smaller number of shares
of Common Stock, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be proportionately reduced and the Exercise Price
per share shall be proportionately increased.  The increases and
reductions provided for in this Section 6.1(a) shall be made with the intent
and, as nearly as practicable, the effect that neither the percentage of the
total equity of the Company obtainable on exercise of this Warrant nor the
aggregate price payable for such percentage shall be affected by any event
described in this Section 6.1(a).





(b)        Merger or Reorganization,
Etc.  In the event of any change in the Common Stock through
merger, consolidation, reclassification, reorganization, or other change in the
capital structure of the Company (not including the issuance of additional
shares of capital stock other than by stock dividend or stock split), then, the
Holder of this Warrant will have the right thereafter to receive upon the
exercise of this Warrant the kind and amount of shares of stock or other
securities or property to which it would have been entitled if, immediately
before the merger, consolidation, reclassification, reorganization,
recapitalization or other change in the capital structure, it had held the
number of shares of Common Stock obtainable upon the exercise of this
Warrant.  In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 6 with respect to the
rights of the Holder after the merger, consolidation, reclassification,
reorganization, recapitalization or other change to the end that the provisions
of this Section 6 (including adjustment of the Exercise Price then in
effect and the number of shares issuable upon exercise of this Warrant) shall be
applicable after that event as nearly equivalent as may be
practicable.





5.2           Notice of
Adjustment.  Whenever an event occurs requiring any adjustment
to be made pursuant to Section 6.1, the Company shall promptly file with its
Secretary at its principal office a certificate of its President or Chief
Financial Officer specifying such adjustment, setting forth in reasonable detail
the acts requiring such adjustment, and stating such other facts as shall be
necessary to show the manner and figures used to compute such
adjustment.  Such certificate shall be made available at all
reasonable times for inspection by the Holder.  Promptly (but in no
event more than 30 days) after each such adjustment, the Company shall give a
copy of such certificate by certified mail to the Holder.





Section 6.              Miscellaneous.





6.1           Binding Effect;
Assignment.  This Warrant shall inure to the benefit of and be
binding upon the Company and the Holder and their respective successors, heirs,
legal representatives and permitted assigns.  This Warrant and the
Warrant Shares (collectively, "Securities") may only be disposed of pursuant to
an effective registration statement under the Securities Act or pursuant to an
available exemption from or in a transaction not subject to the registration
requirements of the Securities Act, and in compliance with any applicable
federal and state securities laws.  In connection with any transfer of
Securities other than pursuant to an effective registration statement, transfer
may only be made with the prior written consent of the Company, which shall not
be unreasonably withheld, and the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
securities under the Securities Act, state securities laws or the laws of any
foreign jurisdiction.


5





6.2                      Notice.  All notices
required or permitted under this Warrant shall be given in writing and shall be
deemed effectively given (a) upon personal delivery to the party to be
notified, (b) three days after deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address for such party, or (c) one day after deposit
with a nationally recognized air courier service such as  Federal
Express.





If to the
Company:





Pacific
Financial Corporation


1101 S.
Boone St.


PO Box
1826


Aberdeen,
WA 98520


Attn:  President





If to the
Holder:





To the
address set forth on the signature page to the stock purchase agreement executed
in connection with acquisition of this Warrant.





or such
other address as such party may designate by 10 days’ advance written notice to
the other party.





6.3           Governing Law.  The
validity, interpretation and performance of this warrant shall be governed by
the laws of the State of Washington, exclusive of conflicts of law
rules.





6.4           Saturdays, Sundays and
Holidays.  If the Expiration Date falls on a Saturday, Sunday
or legal holiday, the Expiration Date shall automatically be extended until 5:00
p.m. Pacific Time on the next business day.





6.5           Headings.  The
headings herein are for convenience only and shall not control or affect the
meaning or construction of this Warrant.





PACIFIC
      FINANCIAL CORPORATIONBy:President




6


EXERCISE
FORM





(To Be
Executed by the Warrant Holder


to
Exercise the Warrant)





To:           PACIFIC
FINANCIAL CORPORATION





1.
            The
      undersigned hereby irrevocably elects to exercise the right represented by
      Warrant No. W-0000 to
      purchase _________ shares of Common Stock (the "Exercise Amount")
      provided for in the Warrant as follows [check
  one]:





 ̈           Exercise
for Cash:  Pursuant to Section 1.2 of the Warrant, the Holder hereby
elects to exercise the Warrant for cash and tenders payment herewith (or has
made a wire transfer) to the order of Pacific Financial Corporation in the
amount of $____________ (the Exercise Amount times the Exercise
Price).





 ̈           Net
(or Cashless) Exercise:  Pursuant to Section 1.3 of the Warrant, the
Holder hereby elects to exercise the Warrant on a net or "cashless" exercise
basis.





2.
            The
      undersigned requests that certificates for such shares of Common Stock be
      issued and delivered as follows:





Name:Address:Deliver
      to:Address:





If the
number of shares of Common Stock to be issued upon this exercise is not all the
shares that may be purchased pursuant to the Warrant, the undersigned requests
that a new warrant evidencing the right to purchase the balance of such shares
be registered in the name of, and be delivered to, the undersigned at the
foregoing address.





3.
            In
      connection with the exercise of the Warrant, the undersigned hereby
      represents and warrants to you as
follows:





(a)
            Purchase Entirely for
      Own Account.  The Common Stock will be acquired for
      investment for the undersigned’s own
account.





(b)
            Restricted
      Securities.  The undersigned understands the Common Stock
      may not be sold, transferred, or otherwise disposed of without
      registration under the Securities Act or an exemption therefrom and, in
      the absence of an effective registration statement covering the Common
      Stock or an available exemption from registration under the Securities
      Act, the Common Stock must be held
indefinitely.







(c)
            Investment
      Experience.  The undersigned is experienced in evaluating
      and investing in similar companies, can bear the economic risk of an
      investment in the Common Stock, and has enough knowledge and experience in
      financial and business matters to evaluate the merits and risks of an
      investment in the Common Stock.





(d)
            Investor
      Qualifications.  The undersigned is an Accredited
      Investor as defined in Rule 501 promulgated under the Securities
      Act.





(e)
            Opportunity to Review
      Documents and Ask Questions.  The Company has made
      available to the undersigned all documents and information requested by
      the undersigned relating to an investment in the Company.  In
      addition, the undersigned has had adequate opportunity to ask questions
      and to receive answers from the management of the Company covering the
      terms and conditions of the offering and the Company’s business,
      management, and financial affairs.





4.
            The
      undersigned understands, agrees, and recognizes
  that:





(a)
            No
      federal, state or foreign governmental agency has made any finding or
      determination as to the fairness of the investment or any recommendation
      or endorsement of the Common Stock.





(b)
            All
      certificates evidencing the Common Stock will bear a legend substantially
      similar to the legend set forth in the Warrant regarding resale
      restrictions.





5.
            The
      undersigned is a resident or domicile of the state of
      ________________________.





Dated:  __________________,
_______.





[HOLDER]By:Name:Title: