Document:

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                                                                   Exhibit 10.13

                               GUARANTEE AGREEMENT

                            WSB Financial Group, Inc.

                            Dated as of July 27, 2005

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                                TABLE OF CONTENTS

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                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions and Interpretation..............................     1

                                   ARTICLE II
               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1. Powers and Duties of the Guarantee Trustee..................     4
SECTION 2.2. Certain Rights of the Guarantee Trustee.....................     5
SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.......     7
SECTION 2.4. Events of Default; Waiver...................................     7
SECTION 2.5. Events of Default; Notice...................................     8

                                   ARTICLE III
                              THE GUARANTEE TRUSTEE

SECTION 3.1. The Guarantee Trustee; Eligibility..........................     8
SECTION 3.2. Appointment, Removal and Resignation of the Guarantee
             Trustee.....................................................     9

                                   ARTICLE IV
                                    GUARANTEE

SECTION 4.1. Guarantee...................................................     9
SECTION 4.2. Waiver of Notice and Demand.................................    10
SECTION 4.3. Obligations Not Affected....................................    10
SECTION 4.4. Rights of Holders...........................................    11
SECTION 4.5. Guarantee of Payment........................................    11
SECTION 4.6. Subrogation.................................................    11
SECTION 4.7. Independent Obligations.....................................    12
SECTION 4.8. Enforcement.................................................    12
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                                TABLE OF CONTENTS
                                   (continued)

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                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1. Limitation of Transactions..................................    12
SECTION 5.2. Ranking.....................................................    13

                                   ARTICLE VI
                                   TERMINATION

SECTION 6.1. Termination.................................................    13

                                   ARTICLE VII
                                 INDEMNIFICATION

SECTION 7.1. Exculpation.................................................    14
SECTION 7.2. Indemnification.............................................    14
SECTION 7.3. Compensation; Reimbursement of Expenses.....................    15

                                  ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1. Successors and Assigns......................................    16
SECTION 8.2. Amendments..................................................    16
SECTION 8.3. Notices.....................................................    16
SECTION 8.4. Benefit.....................................................    17
SECTION 8.5. Governing Law...............................................    17
SECTION 8.6. Counterparts................................................    17
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                               GUARANTEE AGREEMENT

          This GUARANTEE AGREEMENT (the "Guarantee"), dated as of July 27, 2005,
is executed and delivered by WSB Financial Group, Inc., incorporated in
Washington (the "Guarantor"), and JPMorgan Chase Bank, National Association, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of WSB
Financial Group Trust I, a Delaware statutory trust (the "Issuer").

          WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of July 27, 2005, among the trustees named therein of
the Issuer, WSB Financial Group, Inc., as sponsor, and the Holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof securities, having an aggregate liquidation amount
of up to $8,000,000, designated the TP Securities (the "Capital Securities");
and

          WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1. Definitions and Interpretation.

          In this Guarantee, unless the context otherwise requires:

          (a) capitalized terms used in this Guarantee but not defined in the
     preamble above have the respective meanings assigned to them in this
     Section 1.1;

          (b) a term defined anywhere in this Guarantee has the same meaning
     throughout;

          (c) all references to "the Guarantee" or "this Guarantee" are to this
     Guarantee as modified, supplemented or amended from time to time;

          (d) all references in this Guarantee to Articles and Sections are to
     Articles and Sections of this Guarantee, unless otherwise specified;

          (e) terms defined in the Declaration as of the date of execution of
     this Guarantee have the same meanings when used in this Guarantee, unless
     otherwise defined in this Guarantee or unless the context otherwise
     requires; and

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          (f) a reference to the singular includes the plural and vice versa.

          "Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.

          "Corporate Trust Office" means the office of the Guarantee Trustee at
which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered.

          "Covered Person" means any Holder of Capital Securities.

          "Debentures" means the junior subordinated debentures of WSB Financial
Group, Inc., designated the Junior Subordinated Debt Securities due 2035, held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

          "Event of Default" has the meaning set forth in Section 2.4.

          "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the Redemption Price (as defined in
the Indenture) to the extent the Issuer has funds available in the Property
Account therefor at such time, with respect to any Capital Securities called for
redemption by the Issuer, (iii) the Special Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property Account
therefor at such time, with respect to Capital Securities called for redemption
upon the occurrence of a Special Event (as defined in the Indenture), and (iv)
upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer has funds available in the Property
Account therefor at such time, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
after satisfaction of liabilities to creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution").

          "Guarantee Trustee" means JPMorgan Chase Bank, National Association,
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee and thereafter means each
such Successor Guarantee Trustee.

          "Holder" means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

          "Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders,

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members, partners, employees, representatives, nominees, custodians or agents of
the Guarantee Trustee.

          "Indenture" means the Indenture, dated as of July 27, 2005, between
the Guarantor and JPMorgan Chase Bank, National Association, not in its
individual capacity but solely as trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued to the Institutional
Trustee of the Issuer.

          "Liquidation Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.

          "Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.

          "Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.

          "Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:

          (a) a statement that each officer signing the Officer's Certificate
     has read the covenant or condition and the definitions relating thereto;

          (b) a brief statement of the nature and scope of the examination or
     investigation undertaken by each officer in rendering the Officer's
     Certificate;

          (c) a statement that each such officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer to express an informed opinion as to whether or not such covenant
     or condition has been complied with; and

          (d) a statement as to whether, in the opinion of each such officer,
     such condition or covenant has been complied with.

          "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

          "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with
direct responsibility for the administration of any matters relating to this
Guarantee, including any vice president, any

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assistant vice president, any secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or other officer of the Corporate
Trust Office of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

          "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

          "Trust Securities" means the Common Securities and the Capital
Securities.

                                   ARTICLE II
               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1. Powers and Duties of the Guarantee Trustee.

          (a) This Guarantee shall be held by the Guarantee Trustee for the
     benefit of the Holders of the Capital Securities, and the Guarantee Trustee
     shall not transfer this Guarantee to any Person except a Holder of Capital
     Securities exercising his or her rights pursuant to Section 4.4(b) or to a
     Successor Guarantee Trustee on acceptance by such Successor Guarantee
     Trustee of its appointment to act as Successor Guarantee Trustee. The
     right, title and interest of the Guarantee Trustee shall automatically vest
     in any Successor Guarantee Trustee, and such vesting and cessation of title
     shall be effective whether or not conveyancing documents have been executed
     and delivered pursuant to the appointment of such Successor Guarantee
     Trustee.

          (b) If an Event of Default actually known to a Responsible Officer of
     the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
     shall enforce this Guarantee for the benefit of the Holders of the Capital
     Securities.

          (c) The Guarantee Trustee, before the occurrence of any Event of
     Default and after the curing or waiving of all Events of Default that may
     have occurred, shall undertake to perform only such duties as are
     specifically set forth in this Guarantee, and no implied covenants shall be
     read into this Guarantee against the Guarantee Trustee. In case an Event of
     Default has occurred (that has not been cured or waived pursuant to Section
     2.4(b)) and is actually known to a Responsible Officer of the Guarantee
     Trustee, the Guarantee Trustee shall exercise such of the rights and powers
     vested in it by this Guarantee, and use the same degree of care and skill
     in its exercise thereof, as a prudent person would exercise or use under
     the circumstances in the conduct of his or her own affairs.

          (d) No provision of this Guarantee shall be construed to relieve the
     Guarantee Trustee from liability for its own negligent action, its own
     negligent failure to act, or its own willful misconduct, except that:

               (i) prior to the occurrence of any Event of Default and after the
          curing or waiving of all Events of Default that may have occurred:

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                    (A) the duties and obligations of the Guarantee Trustee
               shall be determined solely by the express provisions of this
               Guarantee, and the Guarantee Trustee shall not be liable except
               for the performance of such duties and obligations as are
               specifically set forth in this Guarantee, and no implied
               covenants or obligations shall be read into this Guarantee
               against the Guarantee Trustee; and

                    (B) in the absence of bad faith on the part of the Guarantee
               Trustee, the Guarantee Trustee may conclusively rely, as to the
               truth of the statements and the correctness of the opinions
               expressed therein, upon any certificates or opinions furnished to
               the Guarantee Trustee and conforming to the requirements of this
               Guarantee; but in the case of any such certificates or opinions
               furnished to the Guarantee Trustee, the Guarantee Trustee shall
               be under a duty to examine the same to determine whether or not
               on their face they conform to the requirements of this Guarantee;

               (ii) the Guarantee Trustee shall not be liable for any error of
          judgment made in good faith by a Responsible Officer of the Guarantee
          Trustee, unless it shall be proved that such Responsible Officer of
          the Guarantee Trustee or the Guarantee Trustee was negligent in
          ascertaining the pertinent facts upon which such judgment was made;

               (iii) the Guarantee Trustee shall not be liable with respect to
          any action taken or omitted to be taken by it in good faith in
          accordance with the written direction of the Holders of not less than
          a Majority in liquidation amount of the Capital Securities relating to
          the time, method and place of conducting any proceeding for any remedy
          available to the Guarantee Trustee, or exercising any trust or power
          conferred upon the Guarantee Trustee under this Guarantee; and

               (iv) no provision of this Guarantee shall require the Guarantee
          Trustee to expend or risk its own funds or otherwise incur personal
          financial liability in the performance of any of its duties or in the
          exercise of any of its rights or powers, if the Guarantee Trustee
          shall have reasonable grounds for believing that the repayment of such
          funds is not reasonably assured to it under the terms of this
          Guarantee, or security and indemnity, reasonably satisfactory to the
          Guarantee Trustee, against such risk or liability is not reasonably
          assured to it.

SECTION 2.2. Certain Rights of the Guarantee Trustee.

          (a) Subject to the provisions of Section 2.1:

               (i) The Guarantee Trustee may conclusively rely, and shall be
          fully protected in acting or refraining from acting upon, any
          resolution, certificate, statement, instrument, opinion, report,
          notice, request, direction, consent, order, bond, debenture, note,
          other evidence of indebtedness or other paper or document believed by
          it to be genuine and to have been signed, sent or presented by the
          proper party or parties.

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               (ii) Any direction or act of the Guarantor contemplated by this
          Guarantee shall be sufficiently evidenced by an Officer's Certificate.

               (iii) Whenever, in the administration of this Guarantee, the
          Guarantee Trustee shall deem it desirable that a matter be proved or
          established before taking, suffering or omitting any action hereunder,
          the Guarantee Trustee (unless other evidence is herein specifically
          prescribed) may, in the absence of bad faith on its part, request and
          conclusively rely upon an Officer's Certificate of the Guarantor
          which, upon receipt of such request, shall be promptly delivered by
          the Guarantor.

               (iv) The Guarantee Trustee shall have no duty to see to any
          recording, filing or registration of any instrument or other writing
          (or any rerecording, refiling or reregistration thereof).

               (v) The Guarantee Trustee may consult with counsel of its
          selection, and the advice or opinion of such counsel with respect to
          legal matters shall be full and complete authorization and protection
          in respect of any action taken, suffered or omitted by it hereunder in
          good faith and in accordance with such advice or opinion. Such counsel
          may be counsel to the Guarantor or any of its Affiliates and may
          include any of its employees. The Guarantee Trustee shall have the
          right at any time to seek instructions concerning the administration
          of this Guarantee from any court of competent jurisdiction.

               (vi) The Guarantee Trustee shall be under no obligation to
          exercise any of the rights or powers vested in it by this Guarantee at
          the request or direction of any Holder, unless such Holder shall have
          provided to the Guarantee Trustee such security and indemnity,
          reasonably satisfactory to the Guarantee Trustee, against the costs,
          expenses (including attorneys' fees and expenses and the expenses of
          the Guarantee Trustee's agents, nominees or custodians) and
          liabilities that might be incurred by it in complying with such
          request or direction, including such reasonable advances as may be
          requested by the Guarantee Trustee; provided, however, that nothing
          contained in this Section 2.2(a)(vi) shall be taken to relieve the
          Guarantee Trustee, upon the occurrence of an Event of Default, of its
          obligation to exercise the rights and powers vested in it by this
          Guarantee.

               (vii) The Guarantee Trustee shall not be bound to make any
          investigation into the facts or matters stated in any resolution,
          certificate, statement, instrument, opinion, report, notice, request,
          direction, consent, order, bond, debenture, note, other evidence of
          indebtedness or other paper or document, but the Guarantee Trustee, in
          its discretion, may make such further inquiry or investigation into
          such facts or matters as it may see fit.

               (viii) The Guarantee Trustee may execute any of the trusts or
          powers hereunder or perform any duties hereunder either directly or by
          or through agents, nominees, custodians or attorneys, and the
          Guarantee Trustee shall not be

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          responsible for any misconduct or negligence on the part of any agent
          or attorney appointed with due care by it hereunder.

               (ix) Any action taken by the Guarantee Trustee or its agents
          hereunder shall bind the Holders of the Capital Securities, and the
          signature of the Guarantee Trustee or its agents alone shall be
          sufficient and effective to perform any such action. No third party
          shall be required to inquire as to the authority of the Guarantee
          Trustee to so act or as to its compliance with any of the terms and
          provisions of this Guarantee, both of which shall be conclusively
          evidenced by the Guarantee Trustee's or its agent's taking such
          action.

               (x) Whenever in the administration of this Guarantee the
          Guarantee Trustee shall deem it desirable to receive instructions with
          respect to enforcing any remedy or right or taking any other action
          hereunder, the Guarantee Trustee (A) may request instructions from the
          Holders of a Majority in liquidation amount of the Capital Securities,
          (B) may refrain from enforcing such remedy or right or taking such
          other action until such instructions are received and (C) shall be
          protected in conclusively relying on or acting in accordance with such
          instructions.

               (xi) The Guarantee Trustee shall not be liable for any action
          taken, suffered, or omitted to be taken by it in good faith and
          reasonably believed by it to be authorized or within the discretion or
          rights or powers conferred upon it by this Guarantee.

          (b) No provision of this Guarantee shall be deemed to impose any duty
     or obligation on the Guarantee Trustee to perform any act or acts or
     exercise any right, power, duty or obligation conferred or imposed on it,
     in any jurisdiction in which it shall be illegal or in which the Guarantee
     Trustee shall be unqualified or incompetent in accordance with applicable
     law to perform any such act or acts or to exercise any such right, power,
     duty or obligation. No permissive power or authority available to the
     Guarantee Trustee shall be construed to be a duty.

SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.

          The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4. Events of Default; Waiver.

          (a) An Event of Default under this Guarantee will occur upon the
     failure of the Guarantor to perform any of its payment or other obligations
     hereunder.

          (b) The Holders of a Majority in liquidation amount of the Capital
     Securities may, voting or consenting as a class, on behalf of the Holders
     of all of the Capital Securities, waive any past Event of Default and its
     consequences. Upon such waiver, any

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<PAGE>

     such Event of Default shall cease to exist, and shall be deemed to have
     been cured, for every purpose of this Guarantee, but no such waiver shall
     extend to any subsequent or other default or Event of Default or impair any
     right consequent thereon.

SECTION 2.5. Events of Default; Notice.

          (a) The Guarantee Trustee shall, within 90 days after the occurrence
     of an Event of Default, transmit by mail, first class postage prepaid, to
     the Holders of the Capital Securities, notices of all Events of Default
     actually known to a Responsible Officer of the Guarantee Trustee, unless
     such defaults have been cured before the giving of such notice; provided,
     however, that the Guarantee Trustee shall be protected in withholding such
     notice if and so long as a Responsible Officer of the Guarantee Trustee in
     good faith determines that the withholding of such notice is in the
     interests of the Holders of the Capital Securities.

          (b) The Guarantee Trustee shall not be charged with knowledge of any
     Event of Default unless the Guarantee Trustee shall have received written
     notice thereof from the Guarantor or a Holder of the Capital Securities, or
     a Responsible Officer of the Guarantee Trustee charged with the
     administration of this Guarantee shall have actual knowledge thereof.

                                   ARTICLE III
                              THE GUARANTEE TRUSTEE

SECTION 3.1. The Guarantee Trustee; Eligibility.

          (a) There shall at all times be a Guarantee Trustee which shall:

               (i) not be an Affiliate of the Guarantor; and

               (ii) be a corporation or national association organized and doing
          business under the laws of the United States of America or any state
          or territory thereof or of the District of Columbia, or Person
          authorized under such laws to exercise corporate trust powers, having
          a combined capital and surplus of at least Fifty Million U.S. Dollars
          ($50,000,000), and subject to supervision or examination by federal,
          state, territorial or District of Columbia authority. If such
          corporation or national association publishes reports of condition at
          least annually, pursuant to law or to the requirements of the
          supervising or examining authority referred to above, then, for the
          purposes of this Section 3.1(a)(ii), the combined capital and surplus
          of such corporation or national association shall be deemed to be its
          combined capital and surplus as set forth in its most recent report of
          condition so published.

          (b) If at any time the Guarantee Trustee shall cease to be eligible to
     so act under Section 3.1(a), the Guarantee Trustee shall immediately resign
     in the manner and with the effect set forth in Section 3.2(c).

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<PAGE>

          (c) If the Guarantee Trustee has or shall acquire any "conflicting
     interest' within the meaning of Section 310(b) of the Trust Indenture Act,
     the Guarantee Trustee shall either eliminate such interest or resign to the
     extent and in the manner provided by, and subject to, this Guarantee.

SECTION 3.2. Appointment, Removal and Resignation of the Guarantee Trustee.

          (a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed
     or removed without cause at any time by the Guarantor except during an
     Event of Default.

          (b) The Guarantee Trustee shall not be removed in accordance with
     Section 3.2(a) until a Successor Guarantee Trustee has been appointed and
     has accepted such appointment by written instrument executed by such
     Successor Guarantee Trustee and delivered to the Guarantor.

          (c) The Guarantee Trustee appointed to office shall hold office until
     a Successor Guarantee Trustee shall have been appointed or until its
     removal or resignation. The Guarantee Trustee may resign from office
     (without need for prior or subsequent accounting) by an instrument in
     writing executed by the Guarantee Trustee and delivered to the Guarantor,
     which resignation shall not take effect until a Successor Guarantee Trustee
     has been appointed and has accepted such appointment by an instrument in
     writing executed by such Successor Guarantee Trustee and delivered to the
     Guarantor and the resigning Guarantee Trustee.

          (d) If no Successor Guarantee Trustee shall have been appointed and
     accepted appointment as provided in this Section 3.2 within 60 days after
     delivery of an instrument of removal or resignation, the Guarantee Trustee
     resigning or being removed may petition any court of competent jurisdiction
     for appointment of a Successor Guarantee Trustee. Such court may thereupon,
     after prescribing such notice, if any, as it may deem proper, appoint a
     Successor Guarantee Trustee.

          (e) No Guarantee Trustee shall be liable for the acts or omissions to
     act of any Successor Guarantee Trustee.

          (f) Upon termination of this Guarantee or removal or resignation of
     the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay
     to the Guarantee Trustee all amounts owing to the Guarantee Trustee under
     Sections 7.2 and 7.3 accrued to the date of such termination, removal or
     resignation.

                                   ARTICLE IV
                                    GUARANTEE

SECTION 4.1. Guarantee.

          (a) The Guarantor irrevocably and unconditionally agrees to pay in
     full to the Holders the Guarantee Payments (without duplication of amounts
     theretofore paid by the Issuer), as and when due, regardless of any defense
     (except as defense of payment by the Issuer), right of set-off or
     counterclaim that the Issuer may have or assert. The

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<PAGE>

     Guarantor's obligation to make a Guarantee Payment may be satisfied by
     direct payment of the required amounts by the Guarantor to the Holders or
     by causing the Issuer to pay such amounts to the Holders.

          (b) The Guarantor hereby also agrees to assume any and all Obligations
     of the Issuer and in the event any such Obligation is not so assumed,
     subject to the terms and conditions hereof, the Guarantor hereby
     irrevocably and unconditionally guarantees to each Beneficiary the full
     payment, when and as due, of any and all Obligations to such Beneficiaries.
     This Guarantee is intended to be for the Beneficiaries who have received
     notice hereof.

SECTION 4.2. Waiver of Notice and Demand.

          The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.

SECTION 4.3. Obligations Not Affected.

          The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

          (a) the release or waiver, by operation of law or otherwise, of the
     performance or observance by the Issuer of any express or implied
     agreement, covenant, term or condition relating to the Capital Securities
     to be performed or observed by the Issuer;

          (b) the extension of time for the payment by the Issuer of all or any
     portion of the Distributions, Redemption Price, Special Redemption Price,
     Liquidation Distribution or any other sums payable under the terms of the
     Capital Securities or the extension of time for the performance of any
     other obligation under, arising out of, or in connection with, the Capital
     Securities (other than an extension of time for the payment of the
     Distributions, Redemption Price, Special Redemption Price, Liquidation
     Distribution or other sums payable that results from the extension of any
     interest payment period on the Debentures or any extension of the maturity
     date of the Debentures permitted by the Indenture);

          (c) any failure, omission, delay or lack of diligence on the part of
     the Holders to enforce, assert or exercise any right, privilege, power or
     remedy conferred on the Holders pursuant to the terms of the Capital
     Securities, or any action on the part of the Issuer granting indulgence or
     extension of any kind;

          (d) the voluntary or involuntary liquidation, dissolution, sale of any
     collateral, receivership, insolvency, bankruptcy, assignment for the
     benefit of creditors, reorganization, arrangement, composition or
     readjustment of debt of, or other similar proceedings affecting, the Issuer
     or any of the assets of the Issuer;

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          (e) any invalidity of, or defect or deficiency in, the Capital
     Securities;

          (f) the settlement or compromise of any obligation guaranteed hereby
     or hereby incurred; or

          (g) any other circumstance whatsoever that might otherwise constitute
     a legal or equitable discharge or defense of a guarantor, it being the
     intent of this Section 4.3 that the obligations of the Guarantor hereunder
     shall be absolute and unconditional under any and all circumstances.

          There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 4.4. Rights of Holders.

          (a) The Holders of a Majority in liquidation amount of the Capital
     Securities have the right to direct the time, method and place of
     conducting any proceeding for any remedy available to the Guarantee Trustee
     in respect of this Guarantee or to direct the exercise of any trust or
     power conferred upon the Guarantee Trustee under this Guarantee; provided,
     however, that (subject to Sections 2.1 and 2.2) the Guarantee Trustee shall
     have the right to decline to follow any such direction if the Guarantee
     Trustee shall determine that the actions so directed would be unjustly
     prejudicial to the Holders not taking part in such direction or if the
     Guarantee Trustee being advised by legal counsel determines that the action
     or proceeding so directed may not lawfully be taken or if the Guarantee
     Trustee in good faith by its board of directors or trustees, executive
     committee or a trust committee of directors or trustees and/or Responsible
     Officers shall determine that the action or proceeding so directed would
     involve the Guarantee Trustee in personal liability.

          (b) Any Holder of Capital Securities may institute a legal proceeding
     directly against the Guarantor to enforce the Guarantee Trustee's rights
     under this Guarantee, without first instituting a legal proceeding against
     the Issuer, the Guarantee Trustee or any other Person. The Guarantor waives
     any right or remedy to require that any such action be brought first
     against the Issuer, the Guarantee Trustee or any other Person before so
     proceeding directly against the Guarantor.

SECTION 4.5. Guarantee of Payment.

          This Guarantee creates a guarantee of payment and not of collection.

SECTION 4.6. Subrogation.

          The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment, any

                                      -11-

<PAGE>

amounts are due and unpaid under this Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.

SECTION 4.7. Independent Obligations.

          The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8. Enforcement.

          A Beneficiary may enforce the Obligations of the Guarantor contained
in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.

          The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee.

                                    ARTICLE V
                    LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1. Limitation of Transactions.

          So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or (b) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank pari passu in all respects with or junior
in interest to the Debentures (other than (i) payments under this Guarantee,
(ii) repurchases, redemptions or other acquisitions of shares of capital stock
of the Guarantor (A) in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors, or consultants, (B) in connection with a dividend
reinvestment or stockholder stock purchase plan or (C) in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange,
reclassification, combination or

                                      -12-

<PAGE>

conversion of any class or series of the Guarantor's capital stock (or any
capital stock of a subsidiary of the Guarantor) for any class or series of the
Guarantor's capital stock or of any class or series of the Guarantor's
indebtedness for any class or series of the Guarantor's capital stock, (iv) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, (v) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (vi) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock).

SECTION 5.2. Ranking.

          This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.

          The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.

                                    ARTICLE VI
                                   TERMINATION

SECTION 6.1. Termination.

          This Guarantee shall terminate as to the Capital Securities (i) upon
full payment of the Redemption Price or the Special Redemption Price, as the
case may be, of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.

                                      -13-

<PAGE>

                                   ARTICLE VII
                                 INDEMNIFICATION

SECTION 7.1. Exculpation.

          (a) No Indemnified Person shall be liable, responsible or accountable
     in damages or otherwise to the Guarantor or any Covered Person for any
     loss, damage or claim incurred by reason of any act or omission of such
     Indemnified Person in good faith in accordance with this Guarantee and in a
     manner that such Indemnified Person reasonably believed to be within the
     scope of the authority conferred on such Indemnified Person by this
     Guarantee or by law, except that an Indemnified Person shall be liable for
     any such loss, damage or claim incurred by reason of such Indemnified
     Person's negligence or willful misconduct with respect to such acts or
     omissions.

          (b) An Indemnified Person shall be fully protected in relying in good
     faith upon the records of the Issuer or the Guarantor and upon such
     information, opinions, reports or statements presented to the Issuer or the
     Guarantor by any Person as to matters the Indemnified Person reasonably
     believes are within such other Person's professional or expert competence
     and who, if selected by such Indemnified Person, has been selected with
     reasonable care by such Indemnified Person, including information,
     opinions, reports or statements as to the value and amount of the assets,
     liabilities, profits, losses, or any other facts pertinent to the existence
     and amount of assets from which Distributions to Holders of Capital
     Securities might properly be paid.

SECTION 7.2. Indemnification.

          (a) The Guarantor agrees to indemnify each Indemnified Person for, and
     to hold each Indemnified Person harmless against, any and all loss,
     liability, damage, claim or expense incurred without negligence or willful
     misconduct on the part of the Indemnified Person, arising out of or in
     connection with the acceptance or administration of the trust or trusts
     hereunder, including but not limited to the costs and expenses (including
     reasonable legal fees and expenses) of the Indemnified Person defending
     itself against, or investigating, any claim or liability in connection with
     the exercise or performance of any of the Indemnified Person's powers or
     duties hereunder. The obligation to indemnify as set forth in this Section
     7.2 shall survive the resignation or removal of the Guarantee Trustee and
     the termination of this Guarantee.

          (b) Promptly after receipt by an Indemnified Person under this Section
     7.2 of notice of the commencement of any action, such Indemnified Person
     will, if a claim in respect thereof is to be made against the Guarantor
     under this Section 7.2, notify the Guarantor in writing of the commencement
     thereof; but the failure so to notify the Guarantor (i) will not relieve
     the Guarantor from liability under paragraph (a) above unless and to the
     extent that the Guarantor did not otherwise learn of such action and such
     failure results in the forfeiture by the Guarantor of substantial rights
     and defenses and (ii) will not, in any event, relieve the Guarantor from
     any obligations to any Indemnified Person other than the indemnification
     obligation provided in paragraph (a) above. The Guarantor shall be entitled
     to appoint counsel of the Guarantor's choice at the Guarantor's

                                      -14-

<PAGE>

     expense to represent the Indemnified Person in any action for which
     indemnification is sought (in which case the Guarantor shall not thereafter
     be responsible for the fees and expenses of any separate counsel retained
     by the Indemnified Person or Persons except as set forth below); provided,
     however, that such counsel shall be satisfactory to the Indemnified Person.
     Notwithstanding the Guarantor's election to appoint counsel to represent
     the Indemnified Person in any action, the Indemnified Person shall have the
     right to employ separate counsel (including local counsel), and the
     Guarantor shall bear the reasonable fees, costs and expenses of such
     separate counsel (and local counsel), if (i) the use of counsel chosen by
     the Guarantor to represent the Indemnified Person would present such
     counsel with a conflict of interest, (ii) the actual or potential
     defendants in, or targets of, any such action include both the Indemnified
     Person and the Guarantor and the Indemnified Person shall have reasonably
     concluded that there may be legal defenses available to it and/or other
     Indemnified Persons which are different from or additional to those
     available to the Guarantor, (iii) the Guarantor shall not have employed
     counsel satisfactory to the Indemnified Person to represent the Indemnified
     Person within a reasonable time after notice of the institution of such
     action or (iv) the Guarantor shall authorize the Indemnified Person to
     employ separate counsel at the expense of the Guarantor. The Guarantor will
     not, without the prior written consent of the Indemnified Persons, settle
     or compromise or consent to the entry of any judgment with respect to any
     pending or threatened claim, action, suit or proceeding in respect of which
     indemnification or contribution may be sought hereunder (whether or not the
     Indemnified Persons are actual or potential parties to such claim or
     action) unless such settlement, compromise or consent includes an
     unconditional release of each Indemnified Person from all liability arising
     out of such claim, action, suit or proceeding.

SECTION 7.3. Compensation; Reimbursement of Expenses.

          Other than as provided in the Fee Agreement of even date herewith
between Cohen Bros. & Company, the Guarantee Trustee and Delaware Trustee (as
defined in the Declaration), the Guarantor agrees:

          (a) to pay to the Guarantee Trustee from time to time such
     compensation for all services rendered by it hereunder as the parties shall
     agree to from time to time (which compensation shall not be limited by any
     provision of law in regard to the compensation of a trustee of an express
     trust); and

          (b) except as otherwise expressly provided herein, to reimburse the
     Guarantee Trustee upon request for all reasonable expenses, disbursements
     and advances incurred or made by it in accordance with any provision of
     this Guarantee (including the reasonable compensation and the expenses and
     disbursements of its agents and counsel), except any such expense,
     disbursement or advance as may be attributable to its negligence or willful
     misconduct.

          The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.

                                      -15-

<PAGE>

                                   ARTICLE VIII
                                  MISCELLANEOUS

SECTION 8.1. Successors and Assigns.

          All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets or capital stock to another entity, in each
case to the extent permitted under the Indenture, the Guarantor may not assign
its rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of not less than a Majority in liquidation amount of the
Capital Securities.

SECTION 8.2. Amendments.

          Except with respect to any changes that do not adversely affect the
rights of Holders of the Capital Securities in any material respect (in which
case no consent of Holders will be required), this Guarantee may be amended only
with the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities. The provisions of the Declaration
with respect to amendments thereof shall apply equally with respect to
amendments of the Guarantee.

SECTION 8.3. Notices.

          All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:

          (a) If given to the Guarantee Trustee, at the Guarantee Trustee's
     mailing address set forth below (or such other address as the Guarantee
     Trustee may give notice of to the Holders of the Capital Securities):

               JPMorgan Chase Bank, National Association
               600 Travis Street, 50th Floor
               Houston, Texas 77002
               Attention: Worldwide Securities Services
               WSB Financial Group Trust I
               Telecopy: (713) 216-2101
               Telephone: (713) 216-4181

          (b) If given to the Guarantor, at the Guarantor's mailing address set
     forth below (or such other address as the Guarantor may give notice of to
     the Holders of the Capital Securities and to the Guarantee Trustee):

                                      -16-

<PAGE>

               WSB Financial Group, Inc.
               190 Pacific Avenue
               Bremerton, Washington 98337
               Attention: Mark Freeman
               Telecopy: (360) 405-1206
               Telephone: (360) 405-1200

          (c) If given to any Holder of the Capital Securities, at the address
     set forth on the books and records of the Issuer.

          All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

SECTION 8.4. Benefit.

          This Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 2.1(a), is not separately transferable from
the Capital Securities.

SECTION 8.5. Governing Law.

          THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

SECTION 8.6. Counterparts.

          This Guarantee may contain more than one counterpart of the signature
page and this Guarantee may be executed by the affixing of the signature of the
Guarantor and the Guarantee Trustee to any of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.

                                      -17-

<PAGE>

          THIS GUARANTEE is executed as of the day and year first above written.

                                        WSB FINANCIAL GROUP, INC.,
                                        AS GUARANTOR

                                        By: /s/ Mark D. Freeman
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title: SVP & CFO
                                               ---------------------------------

                                        JPMORGAN CHASE BANK, NATIONAL
                                        ASSOCIATION, AS GUARANTEE TRUSTEE

                                        By: /s/ Shelly A. Sterling
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title: Authorized Officer
                                               ---------------------------------

                                      -18-<PAGE>

                                                                   EXHIBIT 10.14

                              EMPLOYMENT AGREEMENT

                                DAVID K. JOHNSON

     THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 21st day of August,
2006, by and between WSB FINANCIAL GROUP, INC. and WESTSOUND BANK (hereinafter
jointly referred to as "Westsound") and DAVID K. JOHNSON ("Johnson") and will
become effective upon execution. Westsound and Johnson are sometimes
collectively referred to herein as "the Parties."

                                    RECITALS

     WHEREAS, Johnson currently serves as the President and Chief Executive
Officer of Westsound; and

     WHEREAS, the Parties now wish to formalize Johnson's employment with
Westsound;

     NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:

     1. Term. Johnson's term of employment ("Term") under this Agreement shall
commence on the date of execution of this Agreement and continue until
terminated as provided in the Termination provision of this Agreement.

     2. Duties. Johnson is engaged as President and Chief Executive Officer of
Westsound Bank and WSB Financial Group, Inc., and is responsible for the overall
operation and conduct of Westsound's business, in accordance with the laws of
the State of Washington and the federal government and pursuant to the general
guidelines and directions as established from time to time by the Board of
Directors of Westsound (the "Board"). Subject to any required approval by the
shareholders of Westsound, the Board of Directors of Westsound Bank and WSB
Financial Group, Inc. shall appoint or nominate and recommend Johnson for
election as a member of their respective Boards of Directors and, if so
appointed or elected, Johnson shall serve in that capacity as long as he is
employed as the President and Chief Executive Officer of Westsound Bank and WSB
Financial Group, Inc.

     3. Exclusive Services and Best Efforts. Johnson shall render services
solely on behalf of Westsound, and in no event shall he render services directly
to a customer of Westsound for the individual gain of Johnson, without
Westsound's prior written consent. Johnson shall devote his full time, attention
and energies, during regular business hours, to the business of Westsound.
Johnson further agrees that he shall perform any and all duties to the best of
his abilities. In addition to any other responsibilities which Westsound may
from time to time require him to perform, Johnson shall:

          (a) Use his diligent efforts to promote the business and further the
goals of Westsound;

          (b) Conduct his business and regulate his habits so as to maintain and
increase the goodwill and reputation of both Westsound and its business and to
abide by all codes of ethics and other professional duties which are binding
upon or applicable to general good business practices;

                                                      KELLER ROHRBACK L.L.P.
                                                            SUITE 3200
                                                         1201 THIRD AVENUE
                                                  SEATTLE, WASHINGTON 98101-3052
                                                          (206) 623-1900

<PAGE>

          (c) Not render to others, during his employment with Westsound,
services of any kind or promote, participate or engage in any other business
activity which would interfere with the performance of his duties under this
Agreement, including, without limitation, providing consulting services or
otherwise engaging in business with any person or entity which directly or
indirectly competes with Westsound, unless he first obtains Westsound's prior
written consent to engage in such outside activities.

     Although Johnson is required to devote his entire time, attention and
energies to the business of Westsound and cannot, during the term of this
Agreement, be engaged in any other business activity which interferes with his
duties hereunder, whether or not such business activity is pursued for gain,
profit or other pecuniary advantage, this shall not be construed as preventing
Johnson from investing his assets in such manner as will not require any
services on his part in the operation of the affairs of the companies in which
such investments are made, or in making other investments which do not interfere
with his duties under this Agreement.

     4. Compensation. Westsound shall pay Johnson, as compensation for his
full-time services during the Term of Employment, the following:

          (a) Base Compensation. Johnson will receive a monthly salary, the
amount of which will be set annually by the Board ("Base Compensation"), payable
in accordance with Westsound's regular payroll schedule. Base Compensation will
be reviewed annually by the Compensation Committee. Johnson will receive no
additional compensation for serving as a member of the Board of Directors of
Westsound or WSB Financial Group, Inc.

          (b) Bonus. Johnson shall receive an annual bonus set by the
Compensation Committee ("Bonus"). In determining the amount of the Bonus, if
any, the Compensation Committee shall consider earnings, asset quality, factors
affecting shareholder value and such other factors as the Compensation Committee
shall deem appropriate.

          (c) Benefit Plans. During the Term, Johnson shall be entitled to
participate in any and all employee benefit plans, including, but not be limited
to, 401(k) Plan, Stock Option Plan, and employee welfare and health benefit
plans which may be established by Westsound from time to time for the benefit of
all executives of Westsound. Johnson shall be required to comply with the
conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans as they may be amended from time to time.

     5. Business Expenses. Westsound will pay or reimburse Johnson for
reasonable and necessary business expenses incurred by Johnson, which are
directly related to the performance of his duties of employment, including
travel, professional memberships and professional development, subject to
documentation by Johnson and approval of the Chairman of the Audit Committee.
Westsound will pay Johnson's current monthly club membership dues at the Kitsap
Golf and Country Club.

     6. Automobile. Westsound will provide Johnson the use of a bank-owned
vehicle for use incident to his duties as President and Chief Executive Officer
of Westsound. Johnson shall reimburse Westsound from time to time for personal
use of the automobile pursuant to the rules and regulations of the Internal
Revenue Code.

                                                      KELLER ROHRBACK L.L.P.
                                                            SUITE 3200
                                                         1201 THIRD AVENUE
                                                  SEATTLE, WASHINGTON 98101-3052
                                                          (206) 623-1900

                                      -2-

<PAGE>

     7. Working Facilities. Johnson shall be furnished with such working
facilities as are reasonably required by Johnson to perform his duties as
President and Chief Executive Officer of Westsound, which working facilities
shall include, but not be limited to, an office and secretarial and staff
support.

     8. Termination. This Agreement may be terminated by Westsound upon written
notice to Johnson, and by Johnson upon 90 days written notice to Westsound. If
Johnson resigns from Westsound, he will receive only his compensation, benefits
earned and expenses reimbursable through the date this Agreement is terminated.
If Johnson's employment is terminated by Westsound, he shall receive the
compensation provided hereafter.

          (a) Termination Without Cause. If Johnson's employment is terminated
by Westsound, except for cause as provided in paragraph 8(b), Johnson shall
receive a severance benefit equal to his Base Compensation plus Bonus before
salary deferrals over the twelve (12) months prior to termination. Such payment
shall, at the option of Westsound, be made in a lump sum or in accordance with
Westsound's regular payroll schedule.

          (b) Termination for Cause. The compensation payable on termination as
provided in paragraph 8(a) shall not be payable in the event Johnson's
employment is terminated for cause. Termination shall be determined to be for
cause only in the event: (i) Johnson is convicted of a felony or crime involving
moral turpitude, or charged with a felony or crime involving moral turpitude if
the Board, in its sole discretion, determines that the adverse
publicity/notoriety stemming from such charge will make it difficult for Johnson
to perform his duties and/or Westsound to carry on its normal business
activities; or (ii) Johnson fails or refuses, after written request, to comply
with any material policies adopted by the Board; (iii) Johnson is terminated for
fraud, embezzlement, or willful misconduct (including, but not limited to,
violation of Westsound's anti-discrimination and harassment policies); or (iv)
Johnson is removed from office by the Board in order to comply with a
requirement, request or recommendation from the Supervisor of Banking for the
State of Washington or the Federal Deposit Insurance Corporation ("FDIC").

          (c) Death or Disability. This Agreement will terminate immediately
upon Johnson's death. If Johnson is unable to perform his duties and obligations
under this Agreement for an aggregate period of ninety (90) days as a result of
a physical or mental disability and cannot continue to perform his duties with
reasonable accommodation, the Board may terminate this Agreement. If termination
occurs due to Johnson's death, his estate will be entitled to receive the
compensation, benefits earned, and expenses reimbursable through the date this
Agreement is terminated. If termination occurs due to Johnson's disability, he
shall continue to receive his Salary until payments under Westsound's long-term
disability plan commence, or in the event Westsound has no long-term disability
plan on the date of disability, Johnson's salary shall continue for a period of
six (6) months.

     9. Change of Control. If there is a Change of Control of Westsound as
hereinafter defined, all Johnson's stock options shall become fully vested upon
the effective date of the Change of Control. If Johnson leaves the employment of
Westsound, whether voluntarily or involuntarily, within twelve (12) months after
such Change of Control, Johnson shall receive an amount equal to two (2) times
his Base Compensation plus Bonus before salary deferrals over the twelve (12)
month period prior to the Change of Control, reduced by any amount received

                                                      KELLER ROHRBACK L.L.P.
                                                            SUITE 3200
                                                         1201 THIRD AVENUE
                                                  SEATTLE, WASHINGTON 98101-3052
                                                          (206) 623-1900

                                      -3-

<PAGE>

under paragraph 8. "Change of Control" as used herein will be deemed to have
occurred when there is:

          (a) Any individual, corporation (other than Westsound or an affiliated
entity), partnership, trust, association, pool, syndicate or any other entity or
any group of persons acting in concert becomes the beneficial owner, as that
concept is defined in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of securities of Westsound
possessing fifty percent (50%) or more of the voting power for the election of
Directors of Westsound;

          (b) There shall be consummated any consolidation, merger or other
business combination involving Westsound or the securities of Westsound in which
holders of voting securities of Westsound immediately prior to such consummation
own, as a group, immediately after such consummation, voting securities of
Westsound (or, if Westsound does not survive such transaction, voting securities
of the corporation surviving such transaction) having less than sixty percent
(60%) of the total voting power in an election of Directors of Westsound (or
such other surviving corporation);

          (c) There shall be consummated any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of Westsound (on a consolidated basis) to a
party which is not controlled by or under common control with Westsound.

     10. Federal Regulatory Provisions.

          (a) If Johnson is suspended and/or temporarily prohibited from
participating in the conduct of Westsound's affairs by a notice served under
section 8 (e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. 1818
(e)(3) and (g)(1)) Westsound's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, Westsound may in its discretion (i) pay
Johnson all or part of the compensation withheld while its obligations under
this Agreement were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.

          (b) If Johnson is removed and/or permanently prohibited from
participating in the conduct of Westsound's affairs by an order issued under
section 8 (e)(4) or (g)(1) of the U.S.C. 1818 (e)(4) or (g)(1)), all obligations
of Westsound under this Agreement shall terminate as of the effective date of
the order, but vested rights of the Parties shall not be affected.

          (c) If Westsound is in default (as defined in section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph (c) shall not affect any
vested rights of the Parties.

          (d) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary to the
continued operation of Westsound:

               (i) By the Director of the Federal Deposit Insurance Corporation
     ("Director") or his or her designee, at the time the Federal Deposit
     Insurance Corporation enters into an agreement to provide assistance to or
     on behalf of Westsound under the authority contained in 13(c) of the
     Federal Deposit Insurance Act; or

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               (ii) By the Director or his or her designee, at the time the
     Director or his or her designee approves a supervisory merger to resolve
     problems related to operation of Westsound or when Westsound is determined
     by the Director to be in an unsafe or unsound condition.

     11. Confidentiality. Johnson acknowledges that he will have access to
certain proprietary and confidential information of Westsound and its clients.
Johnson will not, after signing this Agreement, including during and after its
Term, use for his own purposes or disclose to any other person or entity any
confidential information concerning Westsound or its business operations or
customers, unless: (i) Westsound consents to the use or disclosure of said
confidential information, (ii) the use or disclosure is consistent with
Johnson's duties under this Agreement, or (iii) disclosure is required by law or
court order.

     12. Competition Restriction. During the Term and for the period for which
Johnson receives compensation under paragraph 8(a), and for twenty-four (24)
months after termination of his employment, if Johnson receives compensation
under paragraph 8(a) or 9, he shall not become or serve as an officer, director,
founder or employee of any financial institution with its main office in Kitsap,
Jefferson, Mason or Clallam Counties, or any other financial institution which,
in the judgment of the Board, is in substantial competition with Westsound,
unless Johnson has first obtained the Board's written consent. In the event
Johnson breaches this condition, which breach is not corrected within fifteen
(15) days of notice to Johnson of such breach, Johnson shall forfeit all right
to receive all benefits or other payments remaining unpaid on the date of any
such breach, and shall refund any payments received pursuant to paragraph 8(a)
or 9 hereof, and all unexercised stock options which will be forfeited.

     13. No Solicitation. During the Term and for the period for which Johnson
receives compensation under paragraph 8(a), and for twenty-four (24) months
after termination of his employment, if Johnson receives compensation under
paragraph 8(a) or 9, he will not, directly or indirectly, solicit or attempt to
solicit: (i) any employees of Westsound to leave their employment, or (ii) any
customers of Westsound to remove their business from Westsound to participate in
any manner in a competing business ("Competing Business"). "Competing Business"
means any financial institution or trust company that competes with or will
compete with Westsound in Kitsap, Jefferson, Mason or Clallam Counties, or any
start-up or other financial institution or trust company in Kitsap, Jefferson,
Mason or Clallam Counties.

     14. Return of Bank Property. If and when Johnson ceases, for any reason, to
be employed by Westsound, Johnson must return to Westsound all keys, pass cards,
identification cards and any other property of Westsound. At the same time,
Johnson also must return to Westsound all originals and copies (whether in hard
copy, electronic or other form) of any documents, drawings, notes, memoranda,
designs, devices, diskettes, tapes, manuals, and specifications which constitute
proprietary information or material of Westsound. The obligations in this
paragraph include the return of documents and other materials which may be in
Johnson's desk at work, in Johnson's car or place of residence, or in any other
location under Johnson's control.

     15. Enforcement of Confidentiality and Non-Competition Covenants. Westsound
and Johnson stipulate that, in light of all of the facts and circumstances of
the relationship between them, the covenants referred to in paragraphs 10, 12,
13, and 14 above, including, without

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limitation, their scope, duration and geographic extent, are fair and reasonably
necessary for the protection of Westsound's confidential information, goodwill
and other protectable interests. If a court of competent jurisdiction should
decline to enforce any of those covenants and agreements, Johnson and Westsound
request the court to reform these provisions to restrict Johnson's use of
confidential information and Johnson's ability to compete with Westsound, to the
maximum extent, in time, scope of activities, and geography, as the court finds
enforceable.

     Johnson acknowledges that Westsound will suffer immediate and irreparable
harm that will not be compensable by damages alone, if Johnson repudiates or
breaches any of the provisions in paragraphs 10, 12, 13, and 14 above or
threatens or attempts to do so. For this reason, under these circumstances,
Westsound, in addition to and without limitation of any other rights, remedies
or damages available to it at law or in equity, will be entitled to obtain
temporary, preliminary and permanent injunctions in order to prevent or restrain
the breach, and Westsound will not be required to post a bond as a condition for
the granting of this relief.

     16. Adequate Consideration. Johnson specifically acknowledges the receipt
of adequate consideration for the covenants contained in paragraphs 10, 12, 13,
and 14 above and that Westsound is entitled to require him to comply with these
paragraphs. These paragraphs will survive termination of this Agreement. Johnson
represents that if his employment is terminated, whether voluntarily or
involuntarily, he has the experience and capabilities sufficient to enable him
to obtain employment in areas which do not violate this Agreement and that
Westsound's enforcement of a remedy by way of injunction will not prevent
Johnson from earning a livelihood.

     17. No Employee Contract Rights. Nothing contained in this Agreement shall
be construed to abrogate, limit or affect the powers, rights and privileges of
the Board to remove Johnson as President or Chief Executive Officer of
Westsound, with or without the cause.

     18. Regulatory Agencies. The Parties fully acknowledge and recognize that
Westsound and Johnson (insofar as he conducts Westsound's business) are
regulated and governed by the Division of Banks for the State of Washington and
the FDIC. In the event the Division of Banks, the FDIC or any other governmental
agency with authority to regulate Westsound objects to, and requires
modification of, any of the terms of this Agreement, the Parties agree that they
shall abide by and modify the terms of this Agreement to comply with any and all
requirements of that governmental agency.

     19. Dispute Resolution. The Parties agree to attempt to resolve all
disputes arising out of this Agreement by mediation. Any party desiring
mediation may begin the process by giving the other party a written Request to
Mediate, describing the issues involved and inviting the other party to join
with the calling party to name a mutually agreeable mediator and a timeframe for
the mediation meeting. The Parties and mediator may adopt any procedural format
that seems appropriate for the particular dispute. The contents of all
discussions during the mediation shall be confidential and non-discoverable in
subsequent arbitration or litigation, if any. If the Parties can, through the
mediation process, resolve the dispute(s), the agreement reached by the Parties
shall be reduced to writing, signed by the Parties, and the dispute shall be at
an end.

     If the result of the mediation is a recognition that the dispute cannot be
successfully mediated, or if either party believes mediation would be
unproductive or too slow, then either

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party may seek to resolve the dispute in accordance with the procedures
established by Judicial Arbitration and Mediation Services, Inc.

     The award rendered by the arbitrator (whether through Judicial Arbitration
and Mediation Services, Inc. or otherwise) shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction thereof.

     The arbitrator shall allocate the costs charged by Judicial Arbitration and
Mediation Services, Inc., or other arbitrator as the case may be, for the
arbitration between the Parties in a manner which the arbitrator considers
equitable. It is agreed that the arbitrator shall award to the prevailing or
substantially prevailing party all fees incurred by such party with regard to
such arbitration, including reasonable legal and accounting fees. If the
arbitrator determines that there is no prevailing or substantially prevailing
party, the legal and accounting fees shall be the responsibility of each party.

     20. Governing Law. All proceedings will be held at a place designated by
the arbitrator in Kitsap County, Washington. The arbitrator, in rendering a
decision as to any state law claims, will apply Washington law.

     21. Exception to Arbitration. Notwithstanding the above, if Johnson
violates paragraphs 10, 12, 13, and 14 above, Westsound will have the right to
initiate the court proceedings described in paragraph 15 above, in lieu of an
arbitration proceeding. Westsound may initiate these proceedings wherever
appropriate within Washington state, but Johnson will consent to venue and
jurisdiction in Kitsap County, Washington.

     22. Internal Revenue Code Section 280G. If any severance benefit paid to
Johnson constitutes an "excess parachute payment" under Section 280G of the
United States Internal Revenue Code, said severance benefit or pay shall be
reduced by the amount of the tax deduction disallowed to Employer as result of
such excess parachute payment.

     23. Execution of Release. Any payment to Johnson under paragraph 8 and/or 9
hereof shall be conditioned upon receipt by Westsound of an executed release of
all claims against Westsound, satisfactory to Westsound and its counsel.

     24. Notice. Any notice to be delivered under this Agreement shall be given
in writing and delivered personally or by certified mail, postage prepaid,
addressed to Westsound or to Johnson at their last known address.

     25. Independent Legal Counsel. Johnson acknowledges that he has had the
opportunity to review and consult with his own personal legal counsel regarding
this Agreement.

     26. Non-Waiver. No delay or failure by either party to exercise any right
under this Agreement, and no partial single exercise of that right, shall
constitute a waiver of that or any other right.

     27. Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions shall continue to be fully effective.

     28. Entire Agreement. This Agreement represents the entire agreement of the
Parties. This Agreement supersedes any prior oral or written agreement between
the Parties on the

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subject matter hereof. This Agreement may be superseded by another written
agreement entered into between Johnson and Westsound on mutually agreeable
terms, provided such agreement expressly by its terms supersedes this Agreement.
The offer by Westsound to enter into any such agreement, or the entering into
such agreement, shall not be considered to have terminated this Agreement,
triggering the payment of benefits under paragraph 8 hereof.

     29. Binding Effect. It is agreed that all covenants, terms and conditions
of this Agreement shall extend, apply to and firmly bind the heirs, executors,
administrators, assigns and successors in interest of the respective parties
hereto as fully as the respective parties themselves are bound. It is
specifically understood that in the event of Johnson's death prior to the full
payment of any benefit to which he is entitled under this Agreement, such
payment(s) shall be made to his spouse and/or heirs as the case may be.

     IN WITNESS WHEREOF, the Parties have signed this Agreement on the day and
year first above written.

WESTSOUND BANK

By: /s/ Louis J. Weir                   /s/ David K. Johnson
    ---------------------------------   ----------------------------------------
Title: Chairman of the Board            DAVID K. JOHNSON

WSB FINANCIAL GROUP, INC.

By: /s/ Louis J. Weir
    ---------------------------------
Title: Chairman of the Board

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