Document:

Employment Agreement: Heritage Financial Corporation and Donald J. Hinson

 Exhibit 10.3 

EMPLOYMENT AGREEMENT BY AND BETWEEN 
 HERITAGE FINANCIAL CORPORATION AND DONALD J. HINSON 

HERITAGE FINANCIAL CORPORATION 

EMPLOYMENT AGREEMENT 

This EMPLOYMENT AGREEMENT is made and entered into as of July 1, 2012, by and between
HERITAGE FINANCIAL CORPORATION and DONALD J. HINSON. As used in this Agreement, capitalized terms have the meanings set forth in
Section 21. 
 RECITALS 

A. Executive is currently employed by the Company. 
 B. Heritage Bank is a wholly-owned subsidiary of the Company. 
 C.
The Company desires to continue to employ Executive pursuant to the terms of this Agreement and Executive desires to continue to be employed by the Company pursuant to such terms. 

D. The Parties have made commitments to each other on a variety of important issues concerning Executive’s employment with
the Company, including the performance that will be expected of Executive, the compensation Executive will be paid, how long and under what circumstances Executive will remain employed, and the financial details relating to any decision that either
the Company or Executive may make to terminate this Agreement and Executive’s employment with the Company. 
 E. The
Parties desire to enter into this Agreement as of the Effective Date and, to the extent provided herein, to have this Agreement supersede all prior employment agreements between the Parties, whether or not in writing, and to have any such prior
employment agreements become null and void as of the Effective Date. 
 AGREEMENT 

In consideration of the foregoing and the mutual promises and covenants of the Parties set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby expressly covenant and agree as follows: 

1. Employment Period. The Company shall continue to employ Executive during the Employment Period and Executive
shall continue to remain in the employ of the Company and provide services to the Company during the Employment Period in accordance with the terms of this Agreement. The “Employment Period” shall be the period beginning on the
Effective Date and ending on June 30, 2014, unless sooner terminated as provided herein. The Employment Period shall be extended automatically for one additional year beginning on July 1, 2013 and on each July 1 thereafter
unless either Party notifies the other Party, by written notice delivered no later than 90 days prior to such July 1, that the Employment Period shall not be extended for an additional year. Notwithstanding any provision of this Agreement to
the contrary, if a Change in Control occurs during the Employment Period, this Agreement shall remain in effect for the two-year period immediately following the Change in Control and shall then terminate. 

 2. Duties. During the Employment Period, Executive shall devote
Executive’s full business time, energy and talent to serving as an Executive Vice President and Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of Heritage Bank, subject to the direction of the
Chief Executive Officer (“CEO”) of the Company and Heritage Bank, respectively. Executive shall have the duties that are commensurate with Executive’s position(s) and any other duties that may be assigned to Executive by the
CEO and Executive shall perform all such duties faithfully and efficiently. Executive shall have such powers as are inherent to the undertakings applicable to Executive’s position and necessary to carry out the duties required of Executive
hereunder. Executive shall perform the duties required by this Agreement at the Company’s principal headquarters, unless the nature of such duties requires otherwise. Notwithstanding the foregoing provisions of this Section 2,
during the Employment Period, Executive may devote reasonable time to activities other than those required under this Agreement, including activities of a charitable, educational, religious, or similar nature to the extent such activities do not, in
the judgment of the CEO or the Board, inhibit, prohibit, interfere with, or conflict with Executive’s duties under this Agreement or conflict in any material way with the business of the Company or an Affiliate; provided, however, that
Executive shall not serve on the board of directors of any business (other than the Company or an Affiliate) or hold any other position with any business without receiving the prior written consent of the Board. 

3. Compensation and Benefits. During the Employment Period, while Executive is employed by the Company, the Company
shall compensate Executive for Executive’s services as follows: 
 (a) Executive shall be paid a base salary at an
annual rate of Two Hundred and Forty-Four Thousand Dollars ($244,000) (the “Annual Base Salary”), which shall be payable in accordance with the normal payroll practices of the Company then in effect. Each year during the Employment
Period, Executive’s Annual Base Salary shall be reviewed by the Board to determine if any increase (but not decrease) is appropriate, with any such increase to be effective as of July 1 of the year of such adjustment. 

(b) Executive shall be eligible to receive performance-based annual incentive bonuses (each, the “Incentive
Bonus”) from the Company for each fiscal year ending during the Employment Period. Incentive Bonuses shall be established and determined in accordance with the Company’s annual cash incentive plan, as may be in effect from time to
time, or otherwise as determined by the Board. Any Incentive Bonus shall be paid to Executive no later than two and one-half months after the close of the year in which it is earned, provided that any Incentive Bonus shall not be considered
earned until the Board has made all determinations and taken all actions necessary to establish such Incentive Bonus. 

(c) Executive shall be eligible to participate, subject to the terms thereof, in all incentive plans of the Company as may be in
effect from time to time with respect to senior executives employed by the Company, on as favorable a basis as other similarly situated and performing executives (excluding participation in any non-qualified retirement or deferred

  
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compensation programs, unless specifically selected for participation by the Company). During the Employment Period, Executive and Executive’s dependents, as the case may be, shall be
eligible to participate, subject to the terms thereof, in all tax qualified retirement and similar benefit plans and all medical, dental, disability, group and executive life, accidental death and travel accident insurance, and other similar welfare
benefit plans of the Company as may be in effect from time to time with respect to senior executives employed by the Company, on as favorable a basis as other similarly situated and performing executives. 

(d) Executive shall be entitled to accrue paid vacation in accordance with and subject to the Company’s vacation programs and
policies as may be in effect from time to time. 
 (e) Executive shall be eligible to be reimbursed by the Company, on
terms that are substantially similar to those that apply to other similarly situated and performing executives employed by the Company, for reasonable out-of-pocket expenses for entertainment, travel, meals, lodging, and similar items that are
consistent with the Company’s expense reimbursement policy and that are actually incurred by Executive in the promotion of the Company’s business. 
 4. Rights upon Termination. This Agreement and Executive’s employment under this Agreement may be terminated for any of the reasons described in this Section 4.
Executive’s right to benefits, if any, for periods after the Termination Date shall be determined in accordance with this Section 4: 
 (a) Minimum Benefits. If the Termination Date occurs during the Employment Period for any reason, Executive shall be entitled to the Minimum Benefits, in addition to any other
benefits to which Executive may be entitled under the following provisions of this Section 4 or the express terms of any employee benefit plan or as required by law. Any benefits to be provided to Executive pursuant to this
Section 4(a) shall be provided within 30 days after the Termination Date; provided, however, that any benefits, incentives or awards payable as described in Section 4(f) shall be provided in accordance with the
terms of the applicable plan, program or arrangement. Except as may expressly be provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring Executive to be treated as employed by the Company or any
Affiliate following the Termination Date for purposes of any plan, program, or arrangement. 
 (b) Termination for
Cause, Death, Disability, Voluntary Resignation, or Non-Renewal. If the Termination Date occurs during the Employment Period and is a result of a Termination for Cause, Executive’s death or Disability, or a termination by Executive
other than for Good Reason, or if this Agreement expires due to notice of non-renewal by either Party as provided under Section 1 or at the end of a Covered Period, then, other than the Minimum Benefits, Executive shall have no right to
benefits under this Agreement (and the Company and its Affiliates shall have no obligation to provide any such benefits) for periods after the Termination Date. 

  
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 (c) Termination other than for Cause or Termination for Good Reason. If
Executive’s employment is subject to a Termination other than during a Covered Period, then, in addition to the Minimum Benefits, the Company shall provide Executive the following benefits: 

(i) On the first regularly-scheduled payroll date following the 45th day following the Termination Date, Executive shall
commence receiving the Severance Amount (less any amount described in Section 4(c)(ii)), with such amount to be paid in 24 substantially equal monthly installments, with each successive payment being due on the monthly anniversary of the
Termination Date. 
 (ii) To the extent any portion of the Severance Amount exceeds the “safe harbor”
amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), Executive shall receive such portion of the Severance Amount that exceeds the “safe harbor” amount in a single lump sum payment payable on the first
regularly-scheduled payroll date following the 45th day following the Termination Date. 
 (iii) Executive (and
Executive’s dependents, as may be applicable) shall be entitled to the benefits described in Section 4(e). 
 (iv) Any equity awards granted to Executive by the Company that are subject to vesting, performance, or target requirements shall be treated as having satisfied such vesting, performance, and target
requirements. 
 (d) Termination upon a Change in Control. If Executive’s employment is subject to a
Termination within a Covered Period, then, in addition to Minimum Benefits, the Company shall provide Executive the following benefits: 
 (i) On the 45th day following the Termination Date, the Company shall pay Executive a lump sum payment in an amount equal to the Severance Amount. 

(ii) Executive (and Executive’s dependents, as may be applicable) shall be entitled to the benefits provided in
Section 4(e). 
 (iii) Any equity awards granted to Executive by the Company that are subject to
vesting, performance, or target requirements shall be treated as having satisfied such vesting, performance, and target requirements. 
 (e) Medical and Dental Benefits. If Executive’s employment is subject to a Termination, then to the extent that Executive or any of Executive’s dependents may be covered
under the terms of any medical or dental plans of the Company (or an Affiliate) for active employees immediately prior to the Termination Date, then, provided Executive is eligible for and elects coverage under the health care continuation
rules of COBRA, the Company shall provide Executive and those dependents with coverage equivalent to the coverage in effect immediately prior to the Termination. For a period of 12 months (18 months for a Termination during a Covered Period),
Executive shall be required to pay the same amount as Executive would pay if Executive continued in employment with the Company during such period and thereafter Executive shall be responsible for the full cost of such continued coverage;
provided, however, that such coverage shall be provided only to the extent that it does not result in any additional tax or other penalty being imposed on the Company (or an Affiliate) or violate any

  
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nondiscrimination requirements then applicable with respect to the applicable plans. The coverages under this Section 4(e) may be procured directly by the Company (or an Affiliate, if
appropriate) apart from, and outside of the terms of the respective plans, provided that Executive and Executive’s dependents comply with all of the terms of the substitute medical or dental plans, and provided, further,
that the cost to the Company and its Affiliates shall not exceed the cost for continued COBRA coverage under the Company’s (or an Affiliate’s) plans, as set forth in the immediately preceding sentence. In the event Executive or any of
Executive’s dependents is or becomes eligible for coverage under the terms of any other medical and/or dental plan of a subsequent employer with plan benefits that are comparable to Company (or Affiliate) plan benefits, the Company’s and
its Affiliates’ obligations under this Section 4(e) shall cease with respect to the eligible Executive and/or dependent. Executive and Executive’s dependents must notify the Company of any subsequent employment and provide
information regarding medical and/or dental coverage available. 
 (f) Golden Parachute Payment Adjustment.

 (i) If the value of any payment or other benefit Executive would receive in connection with a Change in
Control (the “Benefit”) would (A) constitute a “parachute payment” within the meaning of Code Section 280G, and (B) but for this sentence, be subject to the Excise Tax, then the Benefit shall be reduced to
the Reduced Amount. The “Reduced Amount” shall be either (1) the largest portion of the Benefit that would result in no portion of the Benefit being subject to the Excise Tax or (2) the largest portion, up to and including
the total, of the Benefit, whichever amount, after taking into account all applicable federal, state, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s
receipt, on an after-tax basis, of the greater amount of the Benefit notwithstanding that all or some portion of the Benefit may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is
necessary so that the Benefit equals the Reduced Amount, reduction shall occur in the following order unless Executive elects in writing a different order (provided, however, that such election shall be subject to the Company’s
approval if made on or after the date on which the event that triggers the Benefit occurs and to the extent that such election does not violate Code Section 409A): reduction of cash payments; cancellation of accelerated vesting of stock awards;
reduction of employee benefits. In the event that accelerated vesting of stock awards is to be reduced, such accelerated vesting shall be cancelled in the reverse order of the grant date of Executive’s stock awards unless Executive elects in
writing a different order for cancellation. 
 (ii) The accounting firm engaged by the Company for general audit
purposes as of the day prior to the effective date of the Change in Control shall perform any calculations necessary in connection with this Section (i). If the accounting firm so engaged by the Company is serving as accountant or
auditor for the individual, entity, or group effecting the Change in Control, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder. 

  
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 (iii) The accounting firm engaged to make the determinations under this
Section (i) shall provide its calculations, together with detailed supporting documentation, to Executive and the Company within 15 calendar days after the date on which Executive’s right to a Benefit is triggered (if requested at
that time by Executive or the Company) or such other time as requested by Executive or the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Benefit, it shall furnish Executive and the Company with an opinion
reasonably acceptable to Executive that no Excise Tax will be imposed with respect to such Benefit. Any good faith determinations of the accounting firm made hereunder shall be final, binding, and conclusive upon Executive and the Company, except as
set forth below. 
 (iv) If, notwithstanding any reduction described in this Section (i), the IRS
determines that Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then Executive shall be obligated to pay back to the Company, within 30 days after a final IRS determination, or, in the
event Executive challenges the final IRS determination, within 30 days after a final judicial determination, a portion of the payment equal to the Repayment Amount. The “Repayment Amount” with respect to the payment of benefits
shall be the smallest amount, if any, required to be paid to the Company so that Executive’s net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes
imposed on such payment) are maximized. The Repayment Amount with respect to the payment of benefits shall be $0 if a Repayment Amount of more than $0 would not result in Executive’s net after-tax proceeds with respect to the payment of such
benefits being maximized. If the Excise Tax is not eliminated pursuant to this Section (i), Executive shall pay the Excise Tax. 
 (v) Notwithstanding any other provision of this Section (i), if (A) there is a reduction in the payment of benefits as described in this Section (i), (B) the IRS later
determines that Executive is liable for the Excise Tax, the payment of which would result in the maximization of Executive’s net after-tax proceeds (calculated as if Executive’s benefits had not previously been reduced), and
(C) Executive pays the Excise Tax, then the Company shall pay to Executive those benefits that were reduced pursuant to Section (i) contemporaneously or as soon as administratively possible after Executive pays the Excise Tax so
that Executive’s net after-tax proceeds with respect to the payment of benefits is maximized. 
 (g) Other
Benefits. 
 (i) Executive’s rights following a termination of employment with the Company and its
Affiliates for any reason with respect to any benefits, incentives, or awards provided to Executive pursuant to the terms of any plan, program, or arrangement sponsored or maintained by the Company or its Affiliates, whether tax-qualified or not,
which are not specifically addressed herein, shall be subject to the terms of such plan, program, or arrangement and this Agreement shall have no effect upon such terms except as specifically provided herein. 

  
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 (ii) Except as specifically provided herein, the Company and its Affiliates
shall have no further obligations to Executive under this Agreement following Executive’s termination of employment for any reason. 
 (h) Removal from any Boards and Positions. Upon Executive’s termination of employment for any reason under this Agreement, Executive shall be deemed to resign (i) if a
member, from the Board and the board of directors of any Affiliate and any other board to which Executive has been appointed or nominated by or on behalf of the Company or an Affiliate, (ii) from each position with the Company and any
Affiliate, including as an officer of the Company or an Affiliate and (iii) as a fiduciary of any employee benefit plan of the Company and any Affiliate. 
 (i) Regulatory Suspension and Termination. 

(i) If Executive is suspended or temporarily prohibited from participating in the conduct of the affairs of the Company or
an Affiliate by a notice served under Section 8(e) or 8(g) of the FDIA, or pursuant to Section 30.12.040 of the Revised Code of Washington, all obligations of the Company and its Affiliates under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings; if the charges in such notice are dismissed, the Company may in its discretion (A) pay Executive all or part of the compensation withheld while its and its Affiliates’ obligations
under this Agreement were suspended and (B) reinstate in whole or in part any of its and its Affiliates’ obligations that were suspended, all in accordance with Code Section 409A. 

(ii) If Executive is removed or permanently prohibited from participating in the conduct of the affairs of the Company or
an Affiliate by an order issued under Section 8(e) or 8(g) of the FDIA, or pursuant to Section 30.12.040 of the Revised Code of Washington, all obligations of the Company and its Affiliates under this Agreement shall terminate as of the
effective date of the order, provided that this Section 4(i) shall not affect any vested rights of the Parties. 
 (iii) If the Company is in default as defined in Section 3(x) of the FDIA, all obligations of the Company under this Agreement shall terminate as of the date of default, provided that this
Section 4(i) shall not affect any vested rights of the Parties. 
 (iv) All obligations of the
Company under this Agreement shall be terminated, except to the extent determined by the FDIC that continuation of this Agreement is necessary for the continued operation of the institution, at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Company under the authority contained in Section 13(c) of the FDIA, or when the Company is determined by the FDIC to be in an unsafe or unsound condition, provided that this Section 4(i)
shall not affect any vested rights of the Parties. 
 (v) Any payments made to Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA. 

  
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 (j) Clawback. Notwithstanding any provision of this Agreement to the
contrary, if any Severance Restrictions require the recapture or “clawback” of any Severance Amount paid to Executive under this Agreement, Executive shall repay to the Company the aggregate amount of any such payments, with such repayment
to occur no later than 30 days following Executive’s receipt of a written notice from the Company indicating that payments received by Executive under this Agreement are subject to recapture or clawback pursuant to the Severance Restrictions.

 5. Release. Notwithstanding any provision of this Agreement to the contrary, no benefits owed to Executive
under Section 4(c), 4(d) or 4(e) (other than the Minimum Benefits) shall be provided to Executive unless Executive executes (without subsequent revocation) and delivers to the Company a Release within 21 days (or such longer period to
the extent required by applicable law) following the Termination Date. 
 6. Restrictive Covenants. Executive
acknowledges that Executive has been and will continue to be provided intimate knowledge of the business practices, trade secrets, and other confidential and proprietary information of the Company and its Affiliates (including the Confidential
Information), which, if exploited by Executive, would seriously, adversely, and irreparably affect the interests of the Company and its Affiliates and the ability of each to continue its business. 

(a) Confidential Information. Executive acknowledges that, during the course of Executive’s employment with the
Company and its Affiliates, Executive may produce and have access to Confidential Information. Executive shall not directly or indirectly use, disclose, copy, or make lists of Confidential Information for the benefit of anyone other than the
Company, either during or after Executive’s employment with the Company and its Affiliates, except to the extent that such information is or thereafter becomes lawfully available from public sources, or such disclosure is authorized in writing
by the Company, required by law, or otherwise as reasonably necessary or appropriate in connection with the performance by Executive of Executive’s duties hereunder. If Executive receives a subpoena or other court order or is otherwise required
by law to provide information to a governmental authority or other person concerning the activities of the Company or its Affiliates, or Executive’s activities in connection with the business of the Company or its Affiliates, Executive shall
immediately notify the Company of such subpoena, court order, or other requirement and deliver forthwith to the Company a copy thereof and any attachments and non-privileged correspondence related thereto. Executive shall take reasonable precautions
to protect against the inadvertent disclosure of Confidential Information. Executive shall abide by the Company’s and its Affiliates’ policies, as in effect from time to time, respecting avoidance of interests conflicting with those of the
Company and its Affiliates. In this regard, Executive shall not directly or indirectly render services to any person or entity where Executive’s service would involve the use or disclosure of Confidential Information. Executive shall not use
any Confidential Information to guide Executive in searching publications or other publicly available information, selecting a series of items of knowledge from unconnected sources, and fitting them together to claim that Executive did not violate
any terms set forth in this Agreement. 

  
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 (b) Documents and Property.  

(i) All records, files, documents, and other materials or copies thereof relating to the business of the Company or its
Affiliates that Executive prepares, receives, or uses, shall be and remain the sole property of the Company and, other than in connection with the performance by Executive of Executive’s duties hereunder, shall not be removed from the premises
of the Company or its Affiliates without the Company’s prior written consent, and shall be immediately returned to the Company upon Executive’s termination of employment for any reason, together with all copies (including copies or
recordings in electronic form), abstracts, notes, or reproductions of any kind made from or about the records, files, documents, or other materials. Executive shall disclose to the Company all computer and internet user identifications and passwords
used by Executive in the course of Executive’s performance of Executive’s duties hereunder or necessary for accessing information on the Company’s or its Affiliates’ computer systems upon Executive’s termination of
employment for any reason. 
 (ii) Executive acknowledges that Executive’s access to and permission to use
the Company’s and its Affiliates’ computer systems, networks, and equipment, and all Company and Affiliate information contained therein, is restricted to legitimate business purposes on behalf of the Company. Any other access to or use of
such systems, network, equipment, and information is without authorization and is prohibited. The restrictions contained in this Section 6(b) extend to any personal computers or other electronic devices of Executive that are used for
business purposes relating to the Company or its Affiliates (including smart phones, PDAs, digital tablets, or other portable electronic devices). Executive shall not transfer any Company or Affiliate information to any personal computer or other
electronic device that is not otherwise used for any business purpose relating to the Company or an Affiliate. Upon the termination of Executive’s employment with the Company for any reason, Executive’s authorization to access and
permission to use the Company’s and its Affiliates’ computer systems, networks, and equipment, and any Company and Affiliate information contained therein, shall cease. 

(c) Non-Competition and Non-Solicitation. The primary service area of the Company’s and its Affiliates’
businesses in which Executive will actively participate extends separately to the Restricted Area. Therefore, as an essential ingredient of and in consideration of this Agreement and Executive’s employment with the Company and its Affiliates,
Executive shall not, during Executive’s employment or during the Restricted Period, whether the termination of Executive’s employment occurs during the Employment Period or thereafter, directly or indirectly do any of the following (all of
which are collectively referred to in this Agreement as the “Restrictive Covenant”): 
 (i)
Engage or invest in, own, manage, operate, finance, control, participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner connected with, serve as a director, officer, or consultant to, lend
Executive’s name or any similar name to, lend Executive’s credit to, or render services or advice to, any person, firm, partnership, corporation, or trust that 

  
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owns, operates, or is in the process of forming a Competitor with an office located, or to be located at an address identified in a filing with any regulatory authority, within the Restricted
Area; provided, however, that the ownership by Executive of shares of the capital stock of any institution, which shares are listed on a securities exchange and that do not represent more than 1% of the institution’s outstanding
capital stock, shall not violate any terms of this Agreement. For purposes of clarification and not limitation or expansion, it is the parties intent that the foregoing is not intended to limit Executive from performing services outside of the
Restricted Area for a person or entity solely because the person or entity has a location within the Restricted Area, unless Executive’s services are directed towards activities on behalf of such person or entity within the Restricted Area;

 (ii) (A) Induce or attempt to induce an employee of the Company or its Affiliates (limited to all
officer-level employees, Executive’s direct reports, or members of Executive’s department or area of responsibility) to leave the employ of the Company or its Affiliates; (B) in any way interfere with the relationship between the
Company or its Affiliates and any management-level employee of the Company or its Affiliates; or (C) induce or attempt to induce any customer, supplier, licensee, or other business relation of the Company or its Affiliates to cease doing
business with the Company or its Affiliates or in any way interfere with the relationship between the Company or its Affiliates and their respective customers, suppliers, licensees, or other business relations. 

(iii) Solicit the business of any person or entity known to Executive to be a customer of the Company or its Affiliates,
where Executive, or any person reporting to Executive, had accessed Confidential Information of, had an ongoing business relationship with, or had made Substantial Business Efforts with respect to, such person or entity, with respect to products,
activities, or services that compete in whole or in part with the products, activities, or services of the Company or its Affiliates. 
 (iv) Serve as the agent, broker, or representative of, or otherwise assist, any person or entity in obtaining services or products from any Competitor within the Restricted Area, with respect to products,
activities, or services that compete in whole or in part with the products, activities, or services of the Company or its Affiliates. 
 (v) Accept employment, provide services to, or act in any other such capacity for or with any Competitor, if in such employment or capacity Executive would, because of Executive’s knowledge of the
Company’s Confidential Information or trade secrets, inevitably use and/or disclose Company’s Confidential Information or trade secrets in Executive’s work or service for such Competitor. For purposes of clarification and not
limitation or expansion, it is the parties intent that the foregoing is not intended to limit Executive from performing services outside of the Restricted Area for a person or entity solely because the person or entity has a location within the
Restricted, unless Executive’s services are directed towards activities on behalf of such person or entity within the Restricted Area. 
 (d) Works Made for Hire Provisions. The Parties acknowledge that all work performed by Executive for the Company or its Affiliates shall be deemed a work made for

  
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hire. The Company shall at all times own and have exclusive right, title, and interest in and to all Confidential Information and Inventions, and the Company shall retain the exclusive
right to license, sell, transfer, and otherwise use and dispose of the same. All enhancements of the technology of the Company or its Affiliates that are developed by Executive shall be the exclusive property of the Company. Executive hereby assigns
to the Company any right, title, and interest in and to all Inventions that Executive may have, by law or equity, without additional consideration of any kind whatsoever from the Company or its Affiliates. Executive shall execute and deliver any
instruments or documents and do all other things (including the giving of testimony) requested by the Company (both during and after the termination of Executive’s employment with the Company) in order to vest more fully in the Company or its
Affiliates all ownership rights in the Inventions (including obtaining patent, copyright, or trademark protection therefore in the United States and/or foreign countries). To the extent required by applicable state statute, this
Section 6(d) shall not apply to an Invention for which no equipment, supplies, facility, or trade secret information of the Company or its Affiliates was used and that was developed entirely on Executive’s own time, unless the
Invention (i) relates to the business of the Company or an Affiliate or to the Company’s or an Affiliate’s actual or demonstrably anticipated research or development or (ii) results from any work performed by Executive for the
Company or an Affiliate. 
 (e) Remedies for Breach of Restrictive Covenants. Executive has reviewed
the provisions of this Agreement with legal counsel, or has been given adequate opportunity to seek such counsel, and Executive acknowledges that the covenants contained in this Section 6 are reasonable with respect to their duration,
geographical area, and scope. Executive further acknowledges that the restrictions contained in this Section 6 are reasonable and necessary for the protection of the legitimate business interests of the Company and its Affiliates, that
they create no undue hardships, that any violation of these restrictions would cause substantial injury to the Company and its Affiliates and such interests, and that such restrictions were a material inducement to the Company to enter into this
Agreement. In the event of any violation or threatened violation of the restrictions contained in this Section 6, the Company and the Affiliates, in addition to and not in limitation of, any other rights, remedies, or damages available
under this Agreement or otherwise at law or in equity, (i) shall be entitled to preliminary and permanent injunctive relief to prevent or restrain any such violation by Executive and all persons directly or indirectly acting for or with
Executive, as the case may be, without any requirement that the Company or an Affiliate post bond and (ii) shall be relieved of any obligation to pay or provide any amounts or benefits pursuant to this Agreement. If Executive violates the
Restrictive Covenant and the Company brings legal action for injunctive or other relief, the Company shall not, as a result of the time involved in obtaining such relief, be deprived of the benefit of the full period of the Restrictive Covenant;
accordingly, the Restrictive Covenant shall be deemed to have the duration specified herein computed from the date the relief is granted but reduced by the time between the period when the Restricted Period began to run and the date of the first
violation of the Restrictive Covenant by Executive. 
 (f) Other Agreements. In the event of the existence
of another agreement between the Parties that (i) is in effect during the Restricted Period, and (ii) contains restrictive covenants that conflict with any of the provisions of Section 6, then the more restrictive of such
provisions from the two agreements shall control for the period during which both agreements would otherwise be in effect. 

  
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 7. No Set-Off; No Mitigation. Except as provided herein, the
Company’s obligation to provide benefits under this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including any set-off, counterclaim, recoupment, defense, or other right the Company
may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not Executive obtains other employment. 
 8. Notices. Notices and all
other communications under this Agreement shall be in writing and shall be deemed given when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: if to the Company, Heritage Financial
Corporation; Attention: Director of Human Resources; 201 Fifth Avenue S.W.; Olympia, Washington 98501; and if to Executive, to Executive’s most recent address in the Company’s records; or, in each respective case, to such other address as
either Party may furnish to the other in writing, except that notices of changes of address shall be effective only upon receipt. 
 9. Applicable Law. All questions concerning the construction, validity, and interpretation of this Agreement and the performance of the obligations imposed by this Agreement shall be
governed by the internal laws of the State of Washington applicable to agreements made and wholly to be performed in such state without regard to conflicts of law provisions of any jurisdiction. 

10. Mandatory Arbitration. Except as provided in Section 6(e), if any dispute or controversy arises
under or in connection with this Agreement, and such dispute or controversy cannot be settled through negotiation, the Parties shall first try in good faith to settle the dispute or controversy by mediation administered by the American Arbitration
Association under its Commercial Mediation Procedures. If such mediation is not successful, the dispute or controversy shall be settled exclusively by arbitration in accordance with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding the foregoing, the Company may resort to the Superior Court of Thurston County, Washington for injunctive and such other relief as may be
available in the event that the Employee engages in conduct, after termination of this Agreement, that amounts to a violation of the Washington Trade Secrets Act or amounts to unlawful interference with the business expectations of the Company or
its Affiliates. The FDIC may appear at any arbitration hearing but any decision made thereunder shall not be binding on the FDIC. 
 11. Entire Agreement. This Agreement constitutes the entire agreement between the Parties concerning the subject matter hereof, and supersedes all prior negotiations, undertakings,
agreements, and arrangements with respect thereto, whether written or oral. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision
shall not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect. The various covenants and provisions of this Agreement are intended to be severable and to
constitute independent and distinct binding obligations. Without limiting the generality of the foregoing, if the scope of any covenant contained in this Agreement is too broad to permit enforcement to its full extent, such covenant shall be
enforced to the maximum extent permitted by law, and such scope may be judicially modified accordingly. 

  
 12 

 12. Withholding of Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city and other taxes as may be required pursuant to any law, governmental regulation, or ruling. 
 13. No Assignment. Executive’s rights to receive benefits under this Agreement shall not be assignable or transferable whether by pledge, creation of a security interest, or
otherwise, other than a transfer by will or by the laws of descent or distribution. In the event of any attempted assignment or transfer contrary to this Section 13, the Company and its Affiliates shall have no liability to pay any
amount so attempted to be assigned or transferred. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees, and
legatees. 
 14. Successors. This Agreement shall be binding upon and inure to the benefit of the Company,
its successors, and assigns. 
 15. Legal Fees. In the event that either Party commences mediation,
arbitration, or litigation to enforce or protect such Party’s rights in accordance with and under this Agreement, the prevailing Party in any such action shall be entitled to recover reasonable attorneys’ fees and costs (including the
costs of experts, evidence, and counsel) and other costs relating to such action, in addition to all other entitled relief, including damages and injunctive relief. 
 16. Amendment. This Agreement may not be amended or modified except by written agreement signed by the Parties. 

17. Code Section 409A. 
 (a) To the extent any provision of this Agreement or action by the Company would subject Executive to liability for interest or additional taxes under Code Section 409A, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by the Company. It is intended that this Agreement will comply with Code Section 409A, and this Agreement shall be administered accordingly and interpreted and construed on a
basis consistent with such intent. Notwithstanding any provision of this Agreement to the contrary, no termination or similar payments or benefits shall be payable hereunder on account of Executive’s termination of employment unless such
termination constitutes a “separation from service” within the meaning of Code Section 409A. For purposes of Code Section 409A, all installment payments of deferred compensation made hereunder, or pursuant to another plan or
arrangement, shall be deemed to be separate payments. To the extent any reimbursements or in-kind benefit payments under this Agreement are subject to Code Section 409A, such reimbursements and in-kind benefit payments shall be made in
accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv). This Agreement may be amended to the extent necessary (including retroactively) by the Company to avoid the application of taxes or interest under Code Section 409A, while
maintaining to the maximum extent practicable the original intent of this Agreement. This Section 17 shall not be construed as a guarantee of any particular tax effect for Executive’s benefits under this Agreement and the Company
does not guarantee that any such benefits will satisfy the provisions of Code Section 409A. 

  
 13 

 (b) Notwithstanding any provision of this Agreement to the contrary, if Executive is
determined to be a Specified Employee as of the Termination Date, then, to the extent required pursuant to Code Section 409A, payments due under this Agreement that are deemed to be deferred compensation shall be subject to a six-month delay
following the Termination Date; and all delayed payments shall be accumulated and paid in a lump-sum payment as of the first day of the seventh month following the Termination Date (or, if earlier, as of Executive’s death), with all such
delayed payments being credited with interest (compounded monthly) for this period of delay equal to the prime rate in effect on the first day of such six-month period (based on the prime rate as reflected in the Wall Street Journal). Any
portion of the benefits hereunder that were not otherwise due to be paid during the six-month period following the Termination Date shall be paid to Executive in accordance with the payment schedule established herein. 

18. Deferral of Nondeductible Compensation. If Executive’s aggregate compensation (including benefits that are deemed
remuneration for purposes of Code Section 162(m)) from the Company and the Affiliates for any calendar year exceeds the maximum amount of compensation deductible by the Company or any Affiliate in any calendar year under Code
Section 162(m) (for purposes of this paragraph, the “maximum allowable amount”), then any such amount in excess of the maximum allowable amount shall be mandatorily deferred with interest thereon at 4% per annum to a calendar
year such that the amount to be paid to Executive in such calendar year, including deferred amounts and interest thereon, does not exceed the maximum allowable amount. Subject to the foregoing, deferred amounts, including interest thereon, shall be
payable at the earliest time permissible, in accordance with Code Section 409A. 
 19. Scope of Company and Affiliate
Obligations. Although the Company and its Affiliates may have jointly obligated themselves to Executive under certain provisions of this Agreement, in no event shall Executive be entitled to more than what is explicitly provided for
hereunder, such that no duplicative payments shall be provided under this Agreement. 
 20. Construction.
In this Agreement, unless otherwise stated, the following uses apply: (a) references to a statute shall refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as
amended, or its successors, as in effect at the relevant time; (b) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including,
“ and the words “to,” “until,” and “ending on” (and the like) mean “to, but excluding”; (c) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to
a regulatory body that succeeds to the functions of the agency, authority, or instrumentality; (d) indications of time of day shall be based upon the time applicable to the location of the principal headquarters of the Company; (e) the
words “include,” “includes,” and “including” (and the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation,” (and the like)
respectively; (f) all references to preambles, recitals, sections, and exhibits are to preambles, recitals, sections, and exhibits in or to this Agreement; (g) the words “hereof,” “herein,” “hereto,”
“hereby,” “hereunder,” (and the like) refer to this Agreement as a whole (including exhibits); (h) any reference to a document or set of 

  
 14 

 
documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals,
substitutions, or replacements thereof; (i) all words used shall be construed to be of such gender or number as the circumstances and context require; (j) the captions and headings of preambles, recitals, sections, and exhibits appearing
in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its provisions and
(k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same Agreement. 
 21. Definitions. As used in this Agreement, the terms defined in
this Section 21 have the meanings set forth below. 
 (a) “1934 Act” means the Securities Exchange
Act of 1934. 
 (b) “Affiliate” means each Business Entity that, directly or indirectly, is controlled by,
controls, or is under common control with, the Company, where “control” means (i) the ownership of 51% or more of the Voting Securities or other voting or equity interests of any Business Entity, or (ii) the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of such Business Entity. 
 (c)
“Agreement” means this employment agreement, made and entered into as of the Effective Date, by and between the Parties. 
 (d) “Annual Base Salary” has the meaning set forth in Section 3(a). 
 (e) “Average Incentive Bonus” means the average of Incentive Bonuses determined for the immediately preceding three completed fiscal year performance periods of the Company; provided,
however, that if an Incentive Bonus has not yet been determined for a previously completed fiscal year performance period as of the Termination Date, then Target Bonus shall be used with respect to such fiscal year for purposes of calculating
the Average Incentive Bonus. For purposes of calculating the Average Incentive Bonus, fiscal years for which no bonus was determined to have been earned shall be included in the calculation of the three-year average. 

(f) “Base Compensation” means the amount equal to the sum of (i) the greater of Executive’s then-current
Annual Base Salary or Executive’s Annual Base Salary as of the date one day prior to the Change in Control, and (ii) the Average Incentive Bonus. 
 (g) “Benefit” has the meaning set forth in Section 4(f)(i). 
 (h) “Board” means the Board of Directors of the Company. 
 (i)
“Business Entity” means any corporation, partnership, limited liability company, joint venture, association, partnership, business trust or other business entity. 

  
 15 

 (j) “Change in Control” means the first to occur of the following:

 (i) The acquisition in one or more transactions by any “person” (for purposes of this definition, as
such term is used for purposes of Section 13(d) or 14(d) of the 1934 Act) of “beneficial ownership” (for purposes of this definition, within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 50% or more of the combined
voting power of the Company’s then outstanding Voting Securities; provided, however, that for purposes of this definition, the Voting Securities acquired directly from the Company by any person shall be excluded from the
determination of such person’s beneficial ownership of Voting Securities (but such Voting Securities shall be included in the calculation of the total number of Voting Securities then outstanding); or 

(ii) During any 12-month period, the individuals who are members of the Incumbent Board cease for any reason to constitute
more than 50% of the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or 

(iii) The consummation of a merger or consolidation involving the Company if the Company’s shareholders immediately
before such merger or consolidation do not own, directly or indirectly immediately following such merger or consolidation, more than 50% of the combined voting power of the outstanding voting securities of the corporation resulting from such merger
or consolidation in substantially the same proportion as their ownership of the Voting Securities immediately before such merger or consolidation; or 
 (iv) The consummation of a complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or substantially all of the assets of the Company; or 

(v) Acceptance by the Company’s shareholders of shares in a share exchange if the Company’s shareholders
immediately before such share exchange do not own, directly or indirectly immediately following such share exchange, more than 50% of the combined voting power of the outstanding voting securities of the corporation resulting from such share
exchange in substantially the same proportion as their ownership of the Voting Securities outstanding immediately before such share exchange. 
 Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because 50% or more of the then outstanding Voting Securities is acquired by (A) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the Company or any of its Affiliates, or (B) any corporation that, immediately prior to such acquisition, is owned directly or indirectly by the Company’s
shareholders in the same proportion as their ownership of stock in the Company immediately prior to such acquisition. 

  
 16 

 Moreover, notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person (the “Subject Person”) acquires beneficial ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the proportional number of shares beneficially owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as
a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the beneficial owner of any additional Voting Securities that increases the percentage of the then
outstanding Voting Securities beneficially owned by the Subject Person, then a Change in Control shall be deemed to have occurred. 
 Notwithstanding anything in this Change in Control definition to the contrary, in the event that any amount or benefit under this Agreement constitutes deferred compensation and the settlement of or
distribution of such amount or benefit is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a “change in control event” under
Code Section 409A. 
 (k) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.

 (l) “Code” means the Internal Revenue Code of 1986. 

(m) “Company” means Heritage Financial Corporation. 

(n) “Competitor” means a bank, savings bank, savings and loan association, credit union, or similar financial
institution. 
 (o) “Confidential Information” means confidential or proprietary, non-public information
concerning the Company or its Affiliates, including research, development, designs, formulae, processes, specifications, technologies, marketing materials, financial and other information concerning customers and prospective customers, customer
lists, records, data, computer programs, source codes, object codes, database structures, trade secrets, proprietary business information, pricing and profitability information and policies, strategic planning, commitments, plans, procedures,
litigation, pending litigation, and other information not generally available to the public. 
 (p) “Covered
Period” means the period beginning six months prior to a Change in Control and ending on the date that is 24 months after the Change in Control. 
 (q) “Disability” means that (i) Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Executive is, by reason of any medically determinable 

  
 17 

 
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident or health plan covering employees of the Company. 
 (r)
“Effective Date” means July 1, 2012. 
 (s) “Employment Period” has the meaning set forth in
Section 1. 
 (t) “Excise Tax” means the excise tax imposed under Code Section 4999.

 (u) “Executive” means Donald J. Hinson. 

(v) “FDIA” means the Federal Deposit Insurance Act. 

(w) “FDIC” means the Federal Deposit Insurance Corporation. 

(x) “Good Reason” means the occurrence of any one of the following events, unless Executive agrees in writing that such
event shall not constitute Good Reason: 
 (i) A material and adverse change in the nature, scope, or status of
Executive’s position, authorities, or duties from those in effect in accordance with Section 2 immediately following the Effective Date, or if applicable and greater, immediately prior to the Covered Period; 

(ii) A material reduction in Executive’s Annual Base Salary or target Incentive Bonus opportunity, or a material
reduction in Executive’s aggregate benefits or other compensation plans in effect immediately following the Effective Date, or if applicable and greater, immediately prior to the Covered Period; 

(iii) A relocation of Executive’s primary place of employment of more than 35 miles from Executive’s primary
place of employment immediately following the Effective Date, or if applicable, prior to the Covered Period, or a requirement that Executive engage in travel that is materially greater than prior to the Covered Period; 

(iv) The failure by an acquirer to assume this Agreement at the time of a Change in Control; or 

(v) A material breach by the Company of this Agreement. 

Notwithstanding any provision of this Good Reason definition to the contrary, (A) prior to Executive’s
Termination for Good Reason, Executive must give the Company written notice of the existence of any condition set forth in a clause immediately above within 90 days of its initial existence and the Company shall have 30 days from the date of such
notice in which to cure the condition giving rise to Good Reason, if curable, and if, during such 30-day period, the Company cures the condition giving rise to Good Reason, such condition shall not constitute Good Reason and (B) any Termination
for Good Reason must occur within six months of the initial existence of the condition constituting Good Reason. 

  
 18 

 (y) “Heritage Board” means the Board of Directors of Heritage Bank.

 (z) “Incentive Bonus” has the meaning set forth in Section 3(b), and for purposes of determining
a Severance Amount, the term shall include any amounts required to be deferred pursuant Section 18 or subject to Executive’s elective deferrals under a deferred compensation plan of the Company and shall specifically exclude Company
contributions under a deferred compensation plan of the Company. 
 (aa) “Incumbent Board” means the members of
the Board as of the Effective Date. 
 (bb) “Inventions” means all systems, procedures, techniques, manuals,
databases, plans, lists, inventions, trade secrets, copyrights, patents, trademarks, discoveries, innovations, concepts, ideas, and software conceived, compiled, or developed by Executive in the course of Executive’s employment with the Company
or its Affiliates and/or comprised, in whole or part, of Confidential Information. Notwithstanding the foregoing sentence, Inventions shall not include: (i) any inventions independently developed by Executive and not derived, in whole or part,
from any Confidential Information or (ii) any invention made by Executive prior to Executive’s exposure to any Confidential Information. 
 (cc) “IRS” means the United States Internal Revenue Service. 

(dd) “Minimum Benefits” means, as applicable, the following: 

(i) Executive’s earned but unpaid Annual Base Salary for the period ending on the Termination Date; 

(ii) Executive’s earned but unpaid Incentive Bonus, if any, for any completed fiscal year preceding the Termination
Date; provided, however, that Executive shall not be entitled to any Incentive Bonus in the event of a Termination for Cause; 
 (iii) Executive’s accrued but unpaid vacation pay for the period ending on the Termination Date; 
 (iv) Executive’s unreimbursed business expenses and all other items earned and owed to Executive by the Company through and including the Termination Date, provided that all required
submissions for expense reimbursement are made in accordance with the Company’s expense reimbursement policy and within 15 days following the Termination Date; and 

(v) The benefits, incentives, and awards described in Section 4(g)(i). 

(ee) “Parties” means the Company and Executive. 

(ff) “Reduced Amount” has the meaning set forth in Section 4(f)(i). 

  
 19 

 (gg) “Release” means a general release and waiver substantially in the form
attached hereto as Exhibit A. 
 (hh) “Repayment Amount” has the meaning set forth in
Section 4(f)(i). 
 (ii) “Restricted Area” means the area that encompasses a 25-mile radius from
each banking or other office location of the Company and its Affiliates; provided, however, that in the event of a Change in Control, the Restricted Area shall be determined as of the date immediately preceding the Change in Control.

 (jj) “Restricted Period” means a period of 12 months with respect Sections 6(c)(i), 6(c)(v) and a period of
24 months with respect to Sections 6(c)(ii), 6(c)(iii), and 6(c)(iv) immediately following the termination of Executive’s employment for any reason, whether such termination occurs during the Employment Period or thereafter; provided,
however, that with respect to any termination that occurs during a Covered Period the Restricted Period, in all cases, shall be a period of 12 months. 
 (kk) “Restrictive Covenant” has the meaning set forth in Section 6(c). 
 (ll) “Severance Amount” means 
 (i) For any
Termination that occurs during the Employment Period and not during a Covered Period, an amount equal to 100% of Executive’s Base Compensation as of the respective Termination; or 

(ii) For any Termination that occurs during a Covered Period, an amount equal to 200% of Executive’s Base
Compensation as of the respective Termination. 
 (mm) “Severance Restrictions” means any applicable statute,
law, regulation, or regulatory interpretation or other guidance, including FIL-66-2010 and any related or successor FDIC guidance, that would require the Company or any Affiliate to seek or demand repayment or return of any payments made to
Executive for any reason, including the Company, an Affiliate or their successors later obtaining information indicating that Executive has committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions,
or offenses outlined under 12 C.F.R. 359.4(a)(4). 
 (nn) “Specified Employee” means any person who is a
“key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company based upon the 12-month period ending on each December 31st (such 12-month period is referred to below
as the “identification period”). If Executive is determined to be a key employee, Executive shall be treated as a Specified Employee for purposes of this Agreement during the 12-month period that begins on the April 1 following the
close of the identification period. For purposes of determining whether Executive is a key employee, “compensation” means Executive’s W-2 compensation as reported by the Company for a particular calendar year. 

(oo) “Subject Person” has the meaning set forth in Section 21(i). 

  
 20 

 (pp) “Substantial Business Efforts” means marketing, promotional,
purchasing, sales, or solicitation activities undertaken on behalf of the Company or an Affiliate, which include (i) in person and voice communications and (ii) either or both of (A) delivery of a quote, bid, proposal, or request for
any of the foregoing or (B) visits to the site of the actual or potential business development and other similar meetings or visits (conducted alone or with other employees of the Company or an Affiliate), where such activities would enjoy a
reasonable prospect of success in the absence of any breach of this Agreement. 
 (qq) “Target Bonus” means the
target Incentive Bonus for the applicable fiscal year performance period, if one is used, and if not, the Target Bonus shall be determined based upon the mid-point between the maximum Incentive Bonus and the threshold Incentive Bonus for the
applicable fiscal year performance period, with the threshold bonus based upon the first level of performance for which some amount of Incentive Bonus would be payable. 
 (rr) “Termination” means a termination of Executive’s employment with the Company and all Affiliates during the Employment Period either: 

(i) By the Company, other than (A) a Termination for Cause or (B) a termination as a result of Executive’s
death or Disability; or 
 (ii) By Executive for Good Reason. 

(ss) “Termination Date” means the date of termination (whether or not such termination constitutes a
“Termination”) of Executive’s employment with the Company and all Affiliates. 
 (tt) “Termination for
Cause” means a termination of Executive’s employment by the Company as a result of any of the following (in each case as determined by the Board): 
 (i) Executive’s willful and continuing failure to perform Executive’s obligations hereunder, which failure is not remedied within five business days after receipt of written notice of such
failure from the Company; 
 (ii) Executive’s conviction of, or plea of nolo contendere to, a crime
of embezzlement or fraud or any felony under the laws of the United States or any state thereof; 
 (iii)
Executive’s breach of fiduciary responsibility; 
 (iv) An act of dishonesty by Executive that is materially
injurious to the Company or an Affiliate; 
 (v) Executive’s engagement in one or more unsafe or unsound
banking practices that have a material adverse effect on the Company or an Affiliate; 
 (vi) Executive’s
removal or permanent suspension from banking pursuant to Section 8(e) of the FDIA or any other applicable state or federal law; 

  
 21 

 (vii) A material breach by Executive of this Agreement; 

(viii) An act or omission by Executive that leads to a material harm (financial or reputational) to the Company or an
Affiliate in the community; or 
 (ix) A material breach of Company policies as may be in effect from time to
time. 
 Further, a Termination for Cause shall be deemed to have occurred if, after the termination of
Executive’s employment with the Company and any Affiliate, facts and circumstances arising during the course of such employment are discovered that would have warranted a Termination for Cause. 

Further, with respect to subsections (i), (vii), (viii), and (ix), Executive shall be entitled to at least 30 days’
prior written notice of the Company’s intention to terminate Executive’s employment in a Termination for Cause, which notice shall specify the grounds for the Termination for Cause; and Executive shall be provided a reasonable opportunity
to cure any conduct or act, if curable, alleged as grounds for the Termination for Cause, and a reasonable opportunity to present to the Board Executive’s position regarding any dispute relating to the existence of any grounds for Termination
for Cause. 
 Further, all rights Executive has or may have under this Agreement shall be suspended automatically
during (A) the pendency of any investigation (such suspension not exceeding 60 days) by the Board or its designee, or (B) any negotiations (without regard to such 60 day limitation) between the Board or its designee and Executive regarding
any actual or alleged act or omission by Executive of the type that would warrant a Termination for Cause and any such suspension shall not give rise to a claim of Good Reason by Executive. 

(uu) “Voting Securities” means any securities that ordinarily possess the power to vote in the election of directors
without the happening of any precondition or contingency. 
 22. Survival. The provisions of
Section 6 shall survive the termination of this Agreement. 
 [Signature page follows] 

  
 22 

 IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its name and on its behalf, and Executive acknowledges understanding and acceptance of, and agrees to, the terms of this Agreement, all as of the Effective Date. 

 

			
	HERITAGE FINANCIAL CORPORATION
		
	By:	 	     /s/ Brian L. Vance

		 	Brian L. Vance
		 	Chief Executive Officer
	
	EXECUTIVE
		
	By:	 	     /s/ Donald J. Hinson

		 	Donald J. Hinson

  
 23 

 EXHIBIT A 

AGREEMENT AND RELEASE AND WAIVER

 This AGREEMENT AND RELEASE
(“Agreement”) is made and entered into by and between HERITAGE FINANCIAL CORPORATION (the “Company”) and
[                    ] (“Executive”). 
 WHEREAS, Executive and the Company desire to settle fully and amicably all issues between them, including any issues arising out of Executive’s employment with
the Company and the termination of that employment; and 
 WHEREAS, Executive and the
Company are parties to that certain Employment Agreement, made and entered into as of [                    ], as amended (the “Employment
Agreement”). 
 NOW, THEREFORE, for and in consideration of the
mutual promises contained herein, and for other good and sufficient consideration, receipt of which is hereby acknowledged, Executive and the Company (collectively, the “Parties” and, individually, each a “Party”),
intending to be legally bound, hereby agree as follows: 
 1. Termination of Employment. Executive’s employment with
the Company shall terminate effective as of the close of business on [                    ] (the “Termination Date”). 

2. Compensation and Benefits. Subject to the terms of this Agreement, the Company shall compensate Executive under this Agreement
as follows (collectively, the “Severance Payments”): 
 (a) Severance Amount.
[                    ]. 

(b) Accrued Salary and Vacation. Executive shall be entitled to a lump sum payment in an amount equal to Executive’s earned
but unpaid annual base salary and vacation pay for the period ending on the Termination Date, with such payment to be made on the first payroll date following the Termination Date. 

(c) COBRA Benefits.
[                    ]. 

(d) Executive Acknowledgement. Executive acknowledges that, subject to fulfillment of all obligations provided for herein,
Executive has been fully compensated by the Company, including under all applicable laws, and that nothing further is owed to Executive with respect to wages, bonuses, severance, other compensation, or benefits. Executive further acknowledges that
the Severance Payments (other than (b) above) are consideration for Executive’s promises contained in this Agreement, and that the Severance Payments are above and beyond any wages, bonuses, severance, other compensation, or benefits to
which Executive is entitled from the Company under the terms of Executive’s employment or under any other contract or law that Executive would be entitled to absent execution of this Agreement. 

(e) Withholding. The Severance Payments shall be treated as wages and subject to all taxes and other payroll deductions required
by law. 

  
 A-1

 3. Termination of Benefits. Except as provided in Section 2 above or as
may be required by law, Executive’s participation in all employee benefit (pension and welfare) and compensation plans of the Company shall cease as of the Termination Date. Nothing contained herein shall limit or otherwise impair
Executive’s right to receive pension or similar benefit payments that are vested as of the Termination Date under any applicable tax-qualified pension or other plans, pursuant to the terms of the applicable plan. 

4. Release of Claims and Waiver of Rights. Executive, on Executive’s own behalf and that of Executive’s heirs,
executors, attorneys, administrators, successors, and assigns, fully releases and discharges the Company, its predecessors, successors, parents, subsidiaries, affiliates, and assigns, and its and their directors, officers, trustees, employees, and
agents, both in their individual and official capacities, and the current and former trustees and administrators of each retirement and other benefit plan applicable to the employees and former employees of the Company, both in their official and
individual capacities (the “Releasees”) from all liability, claims, demands, and actions Executive now has, may have had, or may ever have, whether currently known or unknown, as of or prior to Executive’s execution of this
Agreement (the “Release”), including liability claims, demands, and actions: 
 (a) Arising from or relating to
Executive’s employment or other association with the Company, or the termination of such employment, 
 (b) Relating to
wages, bonuses, other compensation, or benefits, 
 (c) Relating to any employment or change in control contract, 

(d) Relating to any employment law, including 
  

	 	(i)	The United States and State of Washington Constitutions, 

  

	 	(ii)	The Civil Rights Act of 1964, 

  

	 	(iii)	The Civil Rights Act of 1991, 

  

	 	(iv)	The Equal Pay Act, 

  

	 	(v)	The Employee Retirement Income Security Act of 1974, 

  

	 	(vi)	The Age Discrimination in Employment Act (the “ADEA”), 

  

	 	(vii)	The Americans with Disabilities Act, 

  

	 	(viii)	Executive Order 11246, and 

  

	 	(ix)	Any other federal, state, or local statute, ordinance, or regulation relating to employment, 

(e) Relating to any right of payment for disability, 
 (f) Relating to any statutory or contractual right of payment, and 

  
 A-2

 (g) For relief on the basis of any alleged tort or breach of contract under the common law
of the State of Washington or any other state, including defamation, intentional or negligent infliction of emotional distress, breach of the covenant of good faith and fair dealing, promissory estoppel, and negligence. 

Executive acknowledges that Executive is aware that statutes exist that render null and void releases and discharges of any claims,
rights, demands, liabilities, actions, and causes of action that are unknown to the releasing or discharging party at the time of execution of the release and discharge. Executive waives, surrenders, and shall forego any protection to which
Executive would otherwise be entitled by virtue of the existence of any such statutes in any jurisdiction, including the State of Washington. 
 5. Exclusions from General Release. Excluded from the Release are any claims or rights that cannot be waived by law, as well as Executive’s right to file a charge with an administrative agency
or participate in any agency investigation. Executive is, however, waiving the right to recover any money in connection with a charge or investigation. Executive is also waiving the right to recover any money in connection with a charge filed by any
other individual or by the Equal Employment Opportunity Commission or any other federal or state agency. 
 6. Covenant Not
to Sue. 
 (a) A “covenant not to sue” is a legal term that means Executive promises not to file a lawsuit in
court. It is different from the release of claims and waiver of rights contained in Section 4 above. Besides waiving and releasing the claims covered by Section 4 above, Executive shall never sue the Releasees in any forum
for any reason covered by the Release. Notwithstanding this covenant not to sue, Executive may bring a claim against the Company to enforce this Agreement, to challenge the validity of this Agreement under the ADEA or for any claim that arises after
execution of this Agreement. If Executive sues any of the Releasees in violation of this Agreement, Executive shall be liable to them for their reasonable attorneys’ fees and costs (including the costs of experts, evidence, and counsel) and
other litigation costs incurred in defending against Executive’s suit. In addition, if Executive sues any of the Releasees in violation of this Agreement, the Company can require Executive to return all but a sum of $100 of the Severance
Payments, which sum is, by itself, adequate consideration for the promises and covenants in this Agreement. In that event, the Company shall have no obligation to make any further Severance Payments. 

(b) If Executive has previously filed any lawsuit against any of the Releasees, Executive shall immediately take all necessary steps and
execute all necessary documents to withdraw or dismiss such lawsuit to the extent Executive’s agreement to withdraw, dismiss, or not file a lawsuit would not be a violation of any applicable law or regulation. 

7. Representations by Executive. Executive warrants that Executive is legally competent to execute this Agreement and that
Executive has not relied on any statements or explanations made by the Company or its attorneys. Executive acknowledges that Executive has been afforded the opportunity to be advised by legal counsel regarding the terms of this Agreement,
including the Release. Executive acknowledges that Executive has been offered at least 21 days to consider this Agreement. After being so advised, and without coercion of any kind, Executive freely, knowingly, and voluntarily enters into this
Agreement. Executive acknowledges that Executive may revoke this Agreement within seven days after 

  
 A-3

 
Executive has signed this Agreement and acknowledges understanding that this Agreement shall not become effective or enforceable until seven days after Executive has signed this Agreement (the
“Effective Date”), as evidenced by the date set forth below Executive’s signature on the signature page hereto. Any revocation must be in writing and directed to
[                    ]. If sent by mail, any revocation must be postmarked within the seven-day period described above and sent by certified mail,
return receipt requested. 
 8. Restrictive Covenants. Section 6 of the Employment Agreement (entitled
“Restrictive Covenants”), shall continue in full force and effect as if fully restated herein. 
 9.
Non-Disparagement. Executive shall not engage in any disparagement or vilification of the Releasees, and shall refrain from making any false, negative, critical, or disparaging statements, implied or expressed, concerning the Releasees,
including regarding management style, methods of doing business, the quality of products and services, role in the community, or treatment of employees. Executive shall do nothing that would damage the Company’s business reputation or goodwill.

 10. Company Property. 
 (a) Executive shall return to the Company all information, property, and supplies belonging to the Company or any of its affiliates, including any confidential or proprietary information, Company autos,
keys (for equipment or facilities), laptop computers and related equipment, cellular phones, smart phones or PDAs (including SIM cards), security cards, corporate credit cards, and the originals and all copies of all files, materials, and documents
(whether in tangible or electronic form) containing confidential or proprietary information or relating to the business of the Company or any of its affiliates. 
 (b) Executive shall not, at any time on or after the Termination Date, directly or indirectly use, access, or in any way alter or modify any of the databases, e-mail systems, software, computer systems,
or hardware or other electronic, computerized, or technological systems of the Company or any of its affiliates. Executive acknowledges that any such conduct by Executive would be illegal and would subject Executive to legal action by the Company,
including claims for damages and/or appropriate injunctive relief. 
 11. No Admissions. The Company denies that the
Company or any of its affiliates, or any of their employees or agents, has taken any improper action against Executive, and this Agreement shall not be admissible in any proceeding as evidence of improper action by the Company or any of its
affiliates or any of their employees or agents. 
 12. Confidentiality of Agreement. Executive shall keep the existence
and the terms of this Agreement confidential, except for Executive’s immediate family members and Executive’s legal and tax advisors in connection with services related hereto and except as may be required by law or in connection with the
preparation of tax returns. 
 13. Non-Waiver. The Company’s waiver of a breach of this Agreement by Executive shall
not be construed or operate as a waiver of any subsequent breach by Executive of the same or of any other provision of this Agreement. 
 14. Applicable Law; Mandatory Arbitration and Equitable Relief. All questions concerning the construction, validity, and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement shall be governed by Sections 9 and 10 of the Employment Agreement as if restated herein in their entirety. 

  
 A-4

 15. Legal Fees. In the event that either Party commences mediation, arbitration, or
litigation to enforce or protect such Party’s rights under this Agreement, the prevailing Party in any such action shall be entitled to recover reasonable attorneys’ fees and costs (including the costs of experts, evidence, and counsel)
and other costs relating to such action, in addition to all other entitled relief, including damages and injunctive relief. 

16. Entire Agreement. This Agreement sets forth the entire agreement of the Parties regarding the subject matter hereof, and shall
be final and binding as to all claims that have been or could have been advanced on behalf of Executive pursuant to any claim arising out of or related in any way to Executive’s employment with the Company and the termination of that
employment. 
 17. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same Agreement. 
 18. Successors. This
Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns. 
 19. Enforcement.
The provisions of this Agreement shall be regarded as divisible and separable and if any provision should be declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remaining provisions shall
not be affected thereby. If the scope of any restriction or requirement contained in this Agreement is too broad to permit enforcement of such restriction or requirement to its full extent, then such restriction or requirement shall be enforced to
the maximum extent permitted by law, and Executive hereby consents that any court of competent jurisdiction may so modify such scope in any proceeding brought to enforce such restriction or requirement. In addition, Executive stipulates that breach
by Executive of restrictions and requirements under this Agreement will cause irreparable damage to the Releasees in the case of Executive’s breach and that the Company would not have entered into this Agreement without Executive binding
Executive to these restrictions and requirements. In the event of Executive’s breach of this Agreement, in addition to any other remedies the Company may have, and without bond and without prejudice to any other rights and remedies that the
Company may have for Executive’s breach of this Agreement, the Company shall be relieved of any obligation to provide Severance Payments and shall be entitled to an injunction to prevent or restrain any such violation by Executive and all
persons directly or indirectly acting for or with Executive. Executive stipulates that the restrictive period for which the Company is entitled to an injunction shall be extended in for a period that equals the time period during which Executive is
or has been in violation of the restrictions contained herein. 
 20. Construction. In this Agreement, unless otherwise
stated, the following uses apply: (a) references to a statute shall refer to the statute and any amendments and any successor statutes, and to all regulations promulgated under or implementing the statute, as amended, or its successors, as in
effect at the relevant time; (b) in computing periods from a specified date to a later specified date, the words “from” and “commencing on” (and the like) mean “from and including, “ and the words “to,”
“until,” and “ending on” (and the like) mean “to, but excluding”; 

  
 A-5

 
(c) references to a governmental or quasi-governmental agency, authority, or instrumentality shall also refer to a regulatory body that succeeds to the functions of the agency, authority, or
instrumentality; (d) indications of time of day shall be based upon the time applicable to the location of the principal headquarters of the Company; (e) the words “include,” “includes,” and “including” (and
the like) mean “include, without limitation,” “includes, without limitation,” and “including, without limitation,” (and the like) respectively; (f) all references to preambles, recitals, sections, and exhibits are
to preambles, recitals, sections, and exhibits in or to this Agreement; (g) the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder,” (and the like) refer to this Agreement as a whole
(including exhibits); (h) any reference to a document or set of documents, and the rights and obligations of the parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions,
renewals, substitutions, or replacements thereof; (i) all words used shall be construed to be of such gender or number as the circumstances and context require; (j) the captions and headings of preambles, recitals, sections, and exhibits
appearing in or attached to this Agreement have been inserted solely for convenience of reference and shall not be considered a part of this Agreement, nor shall any of them affect the meaning or interpretation of this Agreement or any of its
provisions; and (k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP. 

21. Future Cooperation. In connection with any and all claims, disputes, negotiations, governmental, internal or other
investigations, lawsuits, or administrative proceedings (the “Legal Matters”) involving the Company or any affiliate, or any of their current or former officers, employees or board members (collectively, the “Disputing
Parties” and, individually, each a “Disputing Party”), Executive shall make himself reasonably available, upon reasonable notice from the Company and without the necessity of subpoena, to provide information and documents,
provide declarations and statements regarding a Disputing Party, meet with attorneys and other representatives of a Disputing Party, prepare for and give depositions and testimony, and otherwise cooperate in the investigation, defense, and
prosecution of any and all such Legal Matters, as may, in the good faith and judgment of the Company, be reasonably requested. The Company shall consult with Executive and make reasonable efforts to schedule such assistance so as not to materially
disrupt Executive’s business and personal affairs. The Company shall reimburse all reasonable expenses incurred by Executive in connection with such assistance, including travel, meals, rental car, and hotel expenses, if any; provided
such expenses are approved in advance by the Company and are documented in a manner consistent with expense reporting policies of the Company as may be in effect from time to time. 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the dates set
forth below their respective signatures below. 
  

									
	HERITAGE FINANCIAL CORPORATION	  		  	EXECUTIVE
				
	By:	 	  
	  		  	  

		 	 [Name]

[Title]
	  		  		  	[Name]
					
	Date:	 	  
	  		  	Date:	  	  

  
 A-6Heritage Financial Corporation Deferred Compensation Plan

 Exhibit 10.4 

HERITAGE FINANCIAL CORPORATION 
 DEFERRED COMPENSATION PLAN 
 (as Amended and Restated August 29,
2012) 
 Purpose. The purpose of the Heritage Financial Corporation Deferred Compensation Plan is to enable directors
and selected key officers of HERITAGE FINANCIAL CORPORATION and its affiliates to elect to defer all or a portion of the fees and compensation payable in cash by the Company or an affiliate on account of service as a director or employee. The
Plan is intended to serve as a means of maximizing the effectiveness and flexibility of the compensation arrangements of Participants and as an aid in attracting and retaining individuals of outstanding abilities and specialized skills for service
with the Company and/or an affiliate. The Plan shall be an unfunded plan for tax purposes and for purposes of Title I of ERISA, and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly
compensated employees. This Plan was originally adopted effective July 1, 2012, and is hereby amended and restated in its entirety August 29, 2012. 
 Terms. As used in the Plan, capitalized terms have the meanings set forth in Section 16. 
 Effective Date. The Plan is effective as of July 1, 2012. 
 Plan
Administration. The Plan shall be administered by the Committee. The Committee has the sole authority to select the individuals, from among those eligible, who may participate under the Plan, and to establish all other participation
requirements. The Committee is authorized to interpret the Plan and may from time to time adopt such rules, regulations, forms and agreements, not inconsistent with the provisions of the Plan, as it deems advisable to carry out the Plan. Any
decision made by the Committee under the Plan shall be in its sole discretion and final and binding on the Participants involved and all other individuals. 
 Eligibility and Participation 
 Eligibility. Any director or key
officer of the Company or an affiliate may be designated by the Committee to participate in the Plan; provided, however, that employees eligible for designation shall be limited to a select group of management or highly compensated employees
within the meaning of Section 201(2) of ERISA. 
 Participation. Any eligible director or key officer shall
be a “Participant” as of the date designated by the Committee, and his or her status as a Participant shall continue until the date on which all payments due under the terms of the Plan have been made. 

Election to Defer Income 
 In General. To the extent permitted by the Committee, for any particular Plan Year or particular Participant, a Participant may be given the opportunity to make an irrevocable election
(“Election”) to defer receipt of all or a portion of the fees or compensation otherwise payable to the Participant in cash (“Income”). Income with respect to which an Election has been made (and has not been
revoked) shall be referred to hereinafter as “Deferred Income.” 

  
 1 

 Timing of Elections. An Election to defer receipt of Income under the Plan
shall be properly filed with the Company based upon deadlines established by the Committee, as may be reflected in the applicable Election, but in no event later than the following, as applicable: 

The last business day of the calendar year preceding the year in which the Income is earned, or such earlier time as established by
the Committee; 
 30 days after the respective Participant first becomes eligible to participate in the Plan;
provided that Income with respect to which the Election is made only relates to services performed after the date of the Election; and provided, further, that
if the Participant was eligible to participate in any account balance plans sponsored by the Company or an affiliate (as contemplated in the plan aggregation rules under Code Section 409A prior to becoming eligible to participate in the Plan,
the initial deferral election under the Plan shall not be effective until the calendar year following the calendar year in which the Participant became eligible to participate in the Plan; or 

Six months prior to the end of an applicable performance period; provided that such Election is
with respect to compensation that qualifies as “performance-based compensation” as defined under Code Section 409A. 
 Unless
otherwise provided by the Committee, all Elections shall continue in effect until the Participant delivers to the Company a written modification of an Election or a written revocation of an Election. Absent revocation of an Election, the Election
shall automatically apply to each subsequent calendar year. 
 Manner of Election. Elections shall be made in
writing in accordance with Code Section 409A and with such rules and procedures as the Committee may prescribe; provided, however, that each Election to defer shall specify the amount to be deferred, expressed either as a fixed dollar
amount or a percentage of Income, and the time and manner of payment. 
 Modification of Election. Modifications to
existing Elections that change the timing or method of payment shall be subject to the following: 
 The revised Election
may not take effect until at least 12 months after the date it is filed with the Committee; and 
 The revised Election
relating to a specified payment time or fixed payment schedule shall be made not later than 12 months prior to the first scheduled payment date reflected in the most recent Election; and 

To the extent required under Code Section 409A, the revised payment date shall be not sooner than the five-year anniversary of
the previously scheduled payment date. 

  
 2 

 Revocation of Election. In the case of an Unforeseeable Financial Emergency,
the Participant’s Election, if any, shall be cancelled for the remainder of the calendar year, as permitted under Code Section 409A. 
 Company Contributions 
 The Company and/or any affiliate shall have the
right, in its sole discretion, at any time, for any reason, to make contributions to the Plan on behalf of any Participant (“Company Contributions”). Company Contributions shall be made pursuant to a written notice that sets forth
the terms and conditions of the award (“Participation Agreement”). 
 Company Contributions may take the form
of a single contribution, a series of contributions, matching contributions, or any combination thereof and may be determined on the basis of criteria determined by the Committee. 

The Committee reserves the right to subject any or all Company Contributions to restrictions and other terms or conditions, in its sole
discretion. 
 Receipt of a Company Contribution shall not entitle the Participant to any future Company Contribution and shall
not entitle any other Participant or eligible employee or director to a Company Contribution. 
 Record and Crediting of
Deferred Amounts 
 Deferred Income Account. The Company shall credit the amount of any Deferred Income to a
memorandum account on the Company’s or applicable affiliate’s books and records/financial statements for the benefit of the Participant (“Deferred Income Account”) no later than the last day of the calendar quarter in
which such Income would otherwise have been paid to the Participant. As of each December 31 and until such time as the Participant’s Deferred Income Account is fully distributed, the Participant’s Deferred Income Account shall be
credited with a notional rate of return based upon the rate determined by the Committee (the “Interest Rate”). The Interest Rate for the Deferred Income Account as of the Effective Date shall be the Moody’s Seasoned Aaa
Corporate Bond Yield as of January 1 of the applicable Plan Year, subject to change from time to time by the Committee. 

Company Contribution Account. The Company shall credit the amount of any Company Contributions to a memorandum account on
the Company’s or applicable affiliate’s books and records/financial statements for the benefit of the Participant (“Company Contribution Account”) as may be 

  
 3 

 
provided by the Committee at the time of such award. As of each December 31 and until such time as the Participant’s Company Contribution Account is fully distributed, the
Participant’s Company Contribution Account shall be credited with the Interest Rate. As of the Effective Date, the Interest Rate for the Company Contribution Account, which may or may not be the same notional rate of return used for purposes of
the Deferred Income Account, shall be the Moody’s Seasoned Aaa Corporate Bond Yield as of January 1 of the applicable Plan Year, subject to change from time to time by the Committee. 

Value and Statement of Account. The Company shall provide each Participant with a statement of the activity in, and value
of, the Participant’s Plan Account, including the amount of Deferred Income, Company Contributions and any income or loss attributable to the respective Plan Account, determined as of the Valuation Date, or more frequently as may be determined
by the Committee. 
 Payment of Plan Account 
 In General. No withdrawals or payments shall be made from the Plan Accounts except as provided in this Section 9. 

Payment Events. Subject to Section 9(c) and Section 15(l), a Deferred Income Account shall be
payable in either a single payment or up to 10 annual installments commencing on the first day of the month following the occurrence of a Payment Event, as shall be reflected in the most recently applicable Election. All rules applicable to the
distribution of a Company Contribution Account shall be specified in the applicable Participation Agreement. In the event an Election or Participation Agreement has not provided specific rules with respect to the distribution of the Plan Account,
such distribution shall be made in accordance with this Section 9. A “Payment Event” shall be the earliest of the following to occur: 
 The Participant’s Separation from Service; 
 The
Participant’s death or Disability; or 
 A date certain, as may be specified in the Election. 

Manner of Payment. A Participant may make an Election, consistent with Section 6, to receive a distribution of
the Participant’s Deferred Income Account in either a single payment or in up to 10 annual installments; if the Participant elects more than one installment payment, the amount of each installment payment shall be a fraction of the value of the
Participant’s Plan 

  
 4 

 
Account, determined as of the Valuation Date preceding the date of the installment payment, the numerator of which is one and the denominator of which is the total number of installments
elected minus the number of installments previously paid. If no Election is made in accordance with this Section 9(c), distribution of the Participant’s Deferred Income Account shall be made in a single payment on the
first day of the month following the occurrence of a Payment Event. 
 Hardship Distributions. The
Committee, whether or not a Payment Event has occurred, may accelerate payment of amounts credited to a Participant’s Deferred Income Account (and, if permitted by the Committee, the Company Contribution Account) if requested by the Participant
and if the requirements of this Section 9(d) are met. Such acceleration may occur only in the event of an Unforeseeable Financial Emergency, and the amount of any distribution shall be limited to the amount deemed reasonably necessary to
satisfy such Unforeseeable Financial Emergency. As provided in Section 6(e), upon payment of a benefit to a Participant due to an Unforeseeable Financial Emergency, such Participant’s Election, if any, for the remainder of the
calendar year shall be cancelled. 
 Death or Disability of Participant. In the event that a Participant shall die
or become Disabled at any time prior to complete distribution of all amounts payable to the Participant under the provisions of the Plan, (i) the unpaid balance of the Participant’s Deferred Income Account shall be paid to the Participant
or the Participant’s Beneficiary or Beneficiaries in a lump sum within 90 days, unless another form of payment is provided in the Participant’s most recent Election and has been in place for at least 12 months and (ii) the unpaid
balance of the Participant’s Company Contribution Account shall be paid to the Participant or the Participant’s beneficiary as provided in the applicable Participation Agreement. 

Tax Withholding. The Company may withhold any taxes that are required to be withheld from the benefits provided under the
Plan. The Company’s sole liability regarding taxes shall be to forward any amounts withheld to the appropriate taxing authorities and to satisfy all applicable reporting requirements. 

Limited Cashout. Notwithstanding any provision of the Plan or any Election or Participation Agreement to the contrary, if a
Participant’s Plan Accounts have a combined balance at the time of the Participant’s Separation from Service (along with any other nonqualified deferred compensation that must be aggregated with the Plan pursuant to Code Section 409A)
that is not greater than the applicable dollar limit under Code Section 402(g)(1)(B) ($17,000 for calendar year 2012), the Participant’s balance in his or her Plan Account, and all other plans aggregated pursuant to Code Section 409A,
may, in the Company’s discretion, be 

  
 5 

 
distributed in a single lump sum prior to two and one-half months following the end of the calendar year in which the Separation from Service occurs. Upon the date of payment pursuant to this
Section, the Participant shall have no further interest under the Plan or any similar deferred compensation arrangements with the Company (as provided in the plan aggregation rules under Code Section 409A). 

Effect of Change in Control. In the event of a Change in Control, (a) the entire unpaid balance of each Deferred Income
Account shall be distributed in a single lump sum to the Participant as of the effective date thereof and (b) the entire unpaid balance of the Participant’s Company Contribution Account shall continue to be distributed to the Participant
as provided in the applicable Participation Agreement. 
 Beneficiaries 

Automatic Beneficiary. Unless a Participant has designated a Beneficiary in accordance with the provisions of
Section 11(b), the Beneficiary shall be deemed to be the person or persons in the first of the following classes in which there are any survivors of such Participant or former Participant: 

Spouse at the time of the Participant’s death, 
 Issue, per stirpes, 
 Parents, or 

Executor or administrator of the Participant’s estate. 

Designated Beneficiary or Beneficiaries. A Participant may sign a document prescribed by the Committee designating a
“Beneficiary” or “Beneficiaries” to receive any benefit payable under the Plan and shall provide such document to the Committee. In the event a Participant dies at a time when a designation is on file that does not
dispose of the total benefit distributable under the Plan, then the portion of such benefit distributable on behalf of said Participant, the disposition of which was not determined by the deceased’s designation, shall be distributed to a
Beneficiary determined under Section 11(a). Any ambiguity in a Beneficiary designation shall be resolved by the Committee. 
 Unsecured Obligations 
 Unsecured Obligations. The obligation
of the Company to make payments under the Plan shall be a general obligation of the Company, and such payments shall be made from general assets and property of the Company. In the event that the Participant is employed by an affiliate of the
Company, the obligation to the Participant under the Plan shall be that of such affiliate and not 

  
 6 

 
the Company; accordingly, in such circumstances, references to the Company herein may be references to such affiliate. Where the obligation to make payments under the Plan is that of an affiliate
of the Company, the Company shall not be a guarantor of such obligation, nor shall any other affiliate of the Company be such a guarantor. Where the Participant is employed by the Company or an affiliate and one or more other affiliates of the
Company, the obligation to make payments under the Plan with respect to such Participant shall be allocated in a manner consistent with the allocation of the compensation expense among the Company and the affiliates for such Participant. The
Participant’s relationship to the Company under the Plan shall be that of a general unsecured creditor only and neither the Plan nor any agreement entered into hereunder or action taken pursuant hereto shall create or be construed to create a
trust or fiduciary relationship of any kind. The Company may establish an irrevocable grantor trust for purposes of holding and investing the Plan Account balances but such establishment shall not create any rights in or against any amount so held.

 Investments. In its sole discretion, the Company may acquire insurance policies, annuities or other financial
vehicles for the purpose of providing future assets of the Company to meet its anticipated liabilities under the Plan. Such policies, annuities or other investments shall at all times be and remain unrestricted general property and assets of the
Company or property of a trust. Participants and Beneficiaries shall have no rights, other than as general unsecured creditors, with respect to such policies, annuities or other acquired assets. 

Claims Administration 
 Claims Procedure. A Participant or Beneficiary (“claimant”) who has not received benefits under the Plan that he or she believes should be distributed shall make a claim for such benefits
as set forth below. 
 Initiation – Written Claim. The claimant may initiate
a claim by submitting to the Company a written claim for benefits. If such a claim relates to the contents of a notice received by the claimant, the claim shall be made within 60 days after such notice was received by the claimant; all other claims
shall be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim shall state with particularity the determination desired by the claimant. 

Timing of Company Response. The Company shall respond to such claimant within 90 days (45 days for a claim based
on Disability) after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 90 days (45 days for a claim based on
Disability) by notifying the claimant in writing, prior to the end of the initial 90-day period (45-day period for a claim based on Disability), that an additional period is required. The notice of extension shall set forth the special circumstances
and the date by which the Company expects to render its decision. 

  
 7 

 Notice of Decision. If the Company denies part or all of the claim,
the Company shall notify the claimant in writing of such denial. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: (i) the specific reasons for the denial;
(ii) a reference to the specific provisions of the Plan on which the denial is based; (iii) a description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;
(iv) an explanation of the Plan’s review procedures and the time limits applicable to such procedures; and (v) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse
benefit determination on review. 
 Review Procedure. If the Company denies part or all of the claim, the claimant
shall have the opportunity for a full and fair review by the Company of the denial as set forth below. 

Initiation – Written Request. To initiate the review, the claimant shall file with the
Company a written request for review within 60 days (180 days for a claim based on Disability) after receiving the Company’s notice of denial. 
 Additional Submissions – Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other
information relating to the claim. The Company shall provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to
the claimant’s claim for benefits. 
 Considerations on Review. In considering the review, the
Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. 

Timing of Company Response. The Company shall respond in writing to such claimant within 60 days (45 days for a
claim based on Disability) after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company may extend the response period by an additional 60 days (45 days
for a claim based on Disability) by notifying the claimant in writing, prior to the end of the initial 60-day period (45-day period for a claim based on Disability), that an additional period is required. The notice of extension shall set forth the
special circumstances and the date by which the Company expects to render its decision. 
 Notice of
Decision. The Company shall notify the claimant in writing of its decision on review. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: (i) the
specific reasons for the denial; (ii) a reference to the specific provisions of the Plan on which the denial is based; (iii) a statement that the claimant is entitled to receive, upon request and free of

  
 8 

 
charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and
(iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA. 

Designation. The Company may designate any other person of its choosing to make any determination otherwise required under this
Section. 
 Legal Action. A claimant’s compliance with the foregoing provisions of this Section is a mandatory
prerequisite to a claimant’s right to commence any legal action with respect to any claim for benefits under the Plan. 

Amendment and Termination 
 Amendment. The Committee may at any time amend the Plan in whole or in part; provided, however, that no amendment shall decrease any amount then credited to a Plan Account.

 Company’s Right to Terminate. Although the Company anticipates that it will continue the Plan for an
indefinite period of time, there is no guarantee that the Company will continue the Plan or will not terminate the Plan at some time in the future. Accordingly, to the maximum extent permitted pursuant to Code Section 409A, the Company reserves
the right to discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with respect to any or all of the Participants by action of the Board. Upon the termination of the Plan, each Plan Account shall remain in the Plan until
the Participant becomes eligible for the benefits provided under the Plan in accordance with the terms of the Plan unless otherwise permitted by Code Section 409A. The termination of the Plan shall not adversely affect any Participant or
Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination. Notwithstanding the foregoing provisions of this Section 14(b), if the Board determines that it is permissible to distribute
a Plan Account by reason of Plan termination without violating the prohibition on acceleration of payments under Code Section 409A, the Board may elect to distribute a Plan Account following termination of the Plan, in which case the date of
the Plan termination will be treated as the date of the Participant’s Separation from Service. Upon the termination of the Plan and a permitted distribution, each Participant shall receive the balance of his or her Plan Account in the form of a
lump sum payment. 

  
 9 

 Miscellaneous 

Non-Assignability. No right to receive payments under the provisions of the Plan shall be transferable or assignable by a
Participant, except by will or the laws of descent and distribution, and during his or her lifetime payment may only be received by the Participant or his or her legal representative or guardian. 

Incapacity. If the Committee determines that any Participant or other person entitled to payments under the Plan is
incompetent by reason of physical or mental disability and is consequently unable to give a valid receipt for payments made hereunder, or is a minor, the Committee may order the payments becoming due to such person to be made to another person for
the Participant’s benefit, without responsibility on the part of the Committee to follow the application of amounts so paid. Payments made pursuant to this Section shall completely discharge the Company with respect to such payments.

 Independence of Plan. Except as otherwise expressly provided herein, the Plan shall be independent of, and in
addition to, any other benefit agreement or plan of the Company or any rights that may exist from time to time thereunder. 

No Employment Rights Created. The Plan shall not be deemed to constitute a contract conferring upon any Participant the
right to remain employed by the Company or any affiliate for any period of time. 
 Responsibility for Legal
Effect. Neither the Company, its affiliates or the Board or Committee, nor any officer, member, director, employee, delegate or agent of any of them, makes any representations or warranties, express or implied, or assumes any
responsibility concerning the legal, tax, or other implications or effects of the Plan. Without limiting the generality of the foregoing, neither the Company nor its affiliates shall have any liability for the tax liability that a Participant may
incur resulting from participation in the Plan or the payment of benefits hereunder. 
 Limitation of Sponsor
Liability. Any right or authority exercisable by the Company, pursuant to any provision of the Plan, shall be exercised in the Company’s capacity as sponsor of the Plan, or on behalf of the Company in such capacity, and not in a
fiduciary capacity, and may be exercised without the approval or consent of any person in a fiduciary capacity. Neither the Company, nor any of its respective officers, members, directors, employees, agents or delegates, shall have any liability to
any party for its exercise of any such right or authority. 

  
 10 

 Successors. The terms and conditions of the Plan shall inure to the benefit of
and bind the Company, and its successors, the Participants, their Beneficiaries and the heirs and personal representatives of the Participants and their Beneficiaries. 
 Governing Law. All questions concerning the construction, validity and interpretation of the Plan and the performance of the obligations imposed by the Plan shall be governed by the internal
laws of the State of Washington applicable to agreements made and wholly to be performed in such state without regard to conflicts of laws. 
 Construction. In the Plan, unless otherwise stated, the following uses apply: (a) references to a statute refer to the statute and any amendments and any successor statutes, and to all
regulations promulgated under or implementing the statute, as amended, or its successors, as in effect at the relevant time; (b) in computing periods from a specified date to a later specified date, the words “from” and
“commencing on” (and the like) mean “from and including,” and the words “to,” “until” and “ending on” (and the like) mean “to, but excluding”; (c) references to a governmental or
quasi-governmental agency, authority or instrumentality also refer to a regulatory body that succeeds to the functions of the agency, authority or instrumentality; (d) indications of time of day are based upon the time applicable to the
location of the principal headquarters of the Company; (e) the words “include,” “includes” and “including” (and the like) mean “include, without limitation,” “includes, without limitation” and
“including, without limitation,” (and the like) respectively; (f) all references to articles, sections and exhibits (and the like) are to articles, sections and exhibits (and the like) in the Plan; (g) the words
“hereof,” “herein,” “hereto,” “hereby,” “hereunder,” (and the like) refer to the Plan as a whole; (h) any reference to a document or set of documents, and the rights and obligations of the
parties under any such documents, means such document or documents as amended from time to time, and all modifications, extensions, renewals, substitutions or replacements thereof; (i) all words used shall be construed to be of such gender or
number as the circumstances and context require; (j) the captions and headings appearing in the Plan have been inserted solely for convenience of reference and shall not be considered a part of the Plan, nor shall any of them affect the meaning
or interpretation of the Plan and (k) all accounting terms not specifically defined herein shall be construed in accordance with GAAP. 
 Severability. In the event that any provision or term of the Plan, or any agreement or instrument required hereunder, is determined by a judicial, quasi-judicial or administrative body to be
void or not enforceable for any reason, all 

  
 11 

 
other provisions or terms of the Plan or such agreement or instrument shall remain in full force and effect and shall be enforceable as if such void or nonenforceable provision, term, agreement
or instrument had never been a part of the Plan, except as to the extent the Committee determines such result would have been contrary to the intent of the Company in establishing and maintaining the Plan. 

Indemnification. The Company shall indemnify, defend, and hold harmless any employee, officer or director of the Company
for all acts taken or omitted in carrying out the responsibilities of the Company, Board or Committee under the terms of the Plan or other responsibilities imposed upon such individual by law. This indemnification for all such acts taken or omitted
is intentionally broad, but shall not provide indemnification for any civil penalty that may be imposed by law, nor shall it provide indemnification for embezzlement or diversion of Plan funds for the benefit of any such individual. The Company
shall indemnify any such individual for expenses of defending an action by a Participant, Beneficiary, service provider, government entity or other person, including all legal fees and other costs of such defense. The Company shall also reimburse
any such individual for any monetary recovery in a successful action against such individual in any federal or state court or arbitration. In addition, if a claim is settled out of court with the concurrence of the Company, the Company shall
indemnify any such individual for any monetary liability under any such settlement, and the expenses thereof. Such indemnification shall not be provided to any person who is not a present or former employee, officer or director of the Company.

 Compliance with Section 409A. 
 To the extent any provision of the Plan or action by the Company would subject a Participant to liability for interest or additional taxes under Code Section 409A, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Company. It is intended that the Plan comply with Code Section 409A, and the Plan shall be administered accordingly and interpreted and construed on a basis consistent with such
intent. Notwithstanding any provision of the Plan to the contrary, no termination or similar payments or benefits shall be payable hereunder on account of a Participant’s termination of employment unless such termination constitutes a
“separation from service” within the meaning of Code Section 409A. The Plan may be amended to the extent necessary (including retroactively) by the Company to avoid the application of taxes or interest under Code Section 409A,
while maintaining to the maximum extent practicable the original intent of the Plan. This Section 15(l). shall not be construed as a guarantee of any particular tax effect for benefits under the Plan and the Company does not guarantee that
any such benefits will satisfy the provisions of Code Section 409A or any other Code provision. Distributions made to a Participant under the Plan in error shall be returned to the Company and shall not create a legally binding right to such
distributions. 

  
 12 

 If, as of the effective date of the Participant’s Separation from Service, the
Participant is a Specified Employee, then, to the extent required pursuant to Code Section 409A, payment of any portion of the Participant’s Plan Account that would otherwise have been paid to the Participant during the six-month period
following the Participant’s Separation from Service (the “Delayed Payments”) shall be delayed until the date that is six months and one day following Participant’s Separation from Service or, if earlier, the date of the
Participant’s death (the “Delayed Payment Date”). As of the Delayed Payment Date, the Delayed Payments plus interest at the Interest Rate then in effect, for the period of delay, shall be paid to the Participant in a single lump sum.
Any portion of the Plan Account that was not otherwise due to be paid during the six-month period following the Participant’s Separation from Service shall be paid to the Participant in accordance with the respective payment schedule set forth
under the Plan or the Participation Agreement. 
 Definitions 

“Annual Base Salary” means the respective Participant’s rate of annual base salary then in effect. 

“Beneficiary” has the meaning set forth in Section 11(b). 

“Board” means the Board of Directors of the Company. 

If the Participant is subject to an employment agreement (or other similar agreement) with the Company or an affiliate that provides a
definition of termination for “cause” (or the like), then, for purposes of the Plan, the term “Cause” has the meaning set forth in such agreement; and in the absence of such a definition, “Cause” means:

 (i) Participant’s willful and continuing failure to perform Participant’s duties, which failure is not
remedied within five business days after receipt of written notice of such failure from the Company; 
 (ii)
Participant’s conviction of, or plea of nolo contendere to, a crime of embezzlement or fraud or any felony under the laws of the United States or any state thereof; 

(iii) Participant’s breach of fiduciary responsibility; 
 (iv) An act of dishonesty by the Participant that is materially injurious to the Company or an Affiliate; 
 (v) Participant’s engagement in one or more unsafe or unsound banking practices that have a material adverse effect on the Company or an Affiliate; 

  
 13 

 (vi) Participant removal or permanent suspension from banking pursuant to Section 8(e)
of the FDIA or any other applicable state or federal law; 
 (vii) An act or omission by the Participant that leads to a
material harm (financial or reputational) to the Company or an Affiliate in the community; or 
 (viii) A material breach of
Company policies as may be in effect from time to time 
 The determination of whether the Participant’s employment was terminated for
Cause shall be made by the Company in its sole discretion. 
 Further, notwithstanding any definition of termination for “cause” (or
the like) in an employment agreement (or other similar agreement) between the Participant and the Company or an affiliate, “Cause” for purposes of the Plan shall in all events include the Participant’s violation of any applicable
confidentiality or other restrictive covenant agreement between the Participant and the Company or an affiliate. 
 Further, the Participant
shall be deemed to have terminated for Cause if, after the Participant’s Separation from Service, facts and circumstances arising during the course of the Participant’s service with the Company are discovered that would have constituted a
termination for Cause. 
 Further, all rights a Participant has or may have under the Plan shall be suspended automatically during the pendency
of any investigation by the Company or during any negotiations between the Company and the Participant regarding any actual or alleged act or omission by the Participant of the type described in the applicable definition of “Cause.”

 “Change in Control” means the first to occur of the following: 

The acquisition in one or more transactions by any “person” (for purposes of this definition, as such term is used for
purposes of Section 13(d) or 14(d) of the 1934 Act) of “beneficial ownership” (for purposes of this definition, within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (the “1934 Act”) of 50%
or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, that for purposes of this definition, the Voting Securities acquired directly from the Company by any person shall be
excluded from the determination of such person’s beneficial ownership of Voting Securities (but such Voting Securities shall be included in the calculation of the total number of Voting Securities then outstanding); or 

During any 12-month period, the individuals who are members of the Incumbent Board cease for any reason to constitute more than 50% of
the Board; provided, however, that if the election, or nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes
of the Plan, be considered as a member of the Incumbent Board, but excluding for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board; or 

  
 14 

 The consummation of a merger or consolidation involving the Company if the Company’s
shareholders immediately before such merger or consolidation do not own, directly or indirectly immediately following such merger or consolidation, more than 50% of the combined voting power of the outstanding voting securities of the corporation
resulting from such merger or consolidation in substantially the same proportion as their ownership of the Voting Securities immediately before such merger or consolidation; or 

The consummation of a complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company; or 
 Acceptance by the Company’s shareholders of shares in a share
exchange if the Company’s shareholders immediately before such share exchange do not own, directly or indirectly immediately following such share exchange, more than 50% of the combined voting power of the outstanding voting securities of the
corporation resulting from such share exchange in substantially the same proportion as their ownership of the Voting Securities outstanding immediately before such share exchange. 
 Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because 50% or more of the then outstanding Voting Securities is acquired by (A) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the Company or any of its affiliates, or (B) any corporation that, immediately prior to such acquisition, is owned directly or indirectly by the Company’s
shareholders in the same proportion as their ownership of stock in the Company immediately prior to such acquisition. 
 Moreover,
notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person (the “Subject Person”) acquires beneficial ownership of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company that, by reducing the number of Voting Securities outstanding, increases the proportional number of shares beneficially owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the beneficial owner of any additional
Voting Securities that increases the percentage of the then outstanding Voting Securities beneficially owned by the Subject Person, then a Change in Control shall be deemed to have occurred. 
 Notwithstanding anything in this Change in Control definition to the contrary, in the event that any amount or benefit under the Plan constitutes deferred compensation and the settlement of or
distribution of such amount or benefit is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a “change in control event” under
Code Section 409A. 
 “Code” means the Internal Revenue Code of 1986. 

“Committee” means the Compensation Committee of the Board. 

“Company” means Heritage Financial Corporation. 

  
 15 

 “Company Contributions” has the meaning set forth in
Section 7(a). 
 “Company Contribution Account” has the meaning set forth in
Section 8(b). 
 “Deferred Income” has the meaning set forth in Section 6(a).

 “Deferred Income Account” has the meaning set forth in Section 8(a). 

“Delayed Payment Date” has the meaning set forth in Section 15(l). 

“Delayed Payments” has the meaning set forth in Section 15(l). 

“Disability” or “Disabled” means (i) the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Participant is, by reason
of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the Company. 
 “Effective Date” means
July 1, 2012. 
 “Election” has the meaning set forth in Section 6(a). 

“ERISA” means the Employee Retirement Income Security Act of 1974. 

If the Participant is subject to an employment agreement (or other similar agreement) with the Company or an affiliate that provides a
definition of termination for “good reason” (or the like), then, for purposes of the Plan, the term “Good Reason” has the meaning set forth in such agreement; and in the absence of such a definition, “Good
Reason” means the occurrence of any one of the following events, unless the Participant agrees in writing that such event shall not constitute Good Reason: 
 A material and adverse change in the nature, scope, or status of the Participant’s position, authorities, or duties from those in effect immediately following the date the Participant is selected to
participate in the Plan; 
 A material reduction in the Participant’s Annual Base Salary or target annual bonus
opportunity, or a material reduction in the Participant’s aggregate benefits or other compensation plans in effect immediately following the date the Participant is selected to participate in the Plan; 

  
 16 

 A relocation of the Participant’s primary place of employment of more than 35 miles
from the Participant’s primary place of employment immediately following the date the Participant is selected to participate in the Plan; 
 The failure by an acquirer to assume this Agreement at the time of a Change in Control; or 

Notwithstanding any provision of this Good Reason definition to the contrary, (A) prior to the Participant’s Separation from Service for Good
Reason, the Participant must give the Company written notice of the existence of any condition set forth in a clause immediately above within 90 days of its initial existence and the Company shall have 30 days from the date of such notice in which
to cure the condition giving rise to Good Reason, if curable, and if, during such 30-day period, the Company cures the condition giving rise to Good Reason, such condition shall not constitute Good Reason and (B) any Separation from Service for
Good Reason must occur within six months of the initial existence of the condition constituting Good Reason. 

“Income” has the meaning set forth in Section 6(a). 

“Incumbent Board” means the members of the Board as of the Effective Date. 

“Interest Rate” has the meaning set forth in Section 8(a). 

“Participant” has the meaning set forth in Section 5(b). 

“Participation Agreement” has the meaning set forth in Section 7(a). 

“Payment Event” has the meaning set forth in Section 9(b). 

“Plan” means the Heritage Financial Corporation Deferred Compensation Plan. 

“Plan Account” means the Company Contribution Account together with the Deferred Income Account. 

“Plan Year” means the calendar year, unless otherwise specified in a Participation Agreement. 

“Separation from Service” means the termination of the Participant’s employment or service with the Company and its
affiliates for reasons other than 

  
 17 

 
death. Whether a Separation from Service occurs shall be determined in accordance with Code Section 409A based on whether the facts and circumstances indicate that the Company and the
Participant reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or as an independent contractor) will
permanently decrease to no more than 49% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 12-month period (or the full period of services to the Company if the
Participant has been providing services to the Company less than 12 months). For periods during which the Participant is on a paid bona fide leave of absence (as defined in Treasury Regulation Section 1.409A-1(h)(1)(i)) and has not otherwise
terminated employment, the Participant shall be treated as providing bona fide services at a level equal to the level of services that the Participant would have been required to perform to receive the compensation paid with respect to such leave of
absence. Periods during which the Participant is on an unpaid bona fide leave of absence (as defined in Treasury Regulation Section 1.409A-1(h)(1)(i)) and has not otherwise terminated employment are disregarded for purposes of this definition
(including for purposes of determining the applicable 12-month period). 
 “Specified Employee” means any
Participant who is a “key employee” (as defined in Code Section 416(i) without regard to paragraph (5) thereof), as determined by the Company based upon the 12-month period ending on each December 31st (such 12-month period
is referred to below as the “identification period”). All Participants who are determined to be key employees during the identification period shall be treated as Specified Employees for purposes of the Plan during the 12-month period that
begins on April 1st following the close of such identification period. For purposes of determining whether an individual is a key employee, “compensation” shall mean such individual’s W-2 compensation as reported by the Company
for a particular calendar year. 
 “Subject Person” has the meaning set forth in Section (e).

 “Unforeseeable Financial Emergency” means a severe financial hardship to the Participant resulting from
(i) an illness or accident of the Participant, the Participant’s spouse, the Participant’s beneficiary or the Participant’s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and
(d)(1)(B)); (ii) loss of the Participant’s property due to casualty; or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the
Committee and in accordance with Code Section 409A. 
 “Valuation Date” means each December 31.

 “Voting Securities” means any Company securities that ordinarily possess the power to vote in the election
of directors without the happening of any precondition or contingency. 

  
 18

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