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    GUARANTEE
      AGREEMENT

     

    CB
      Financial Corporation

     

    Dated
      as
      of July 12, 2005

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      	
               

            
	 	 	Page

    

     

    ARTICLE
      I

     

    DEFINITIONS
      AND INTERPRETATION

     

    
      	
              SECTION
                1.1.

            	
              Definitions
                and Interpretation

            	
              1

            

    

     

    POWERS,
      DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

     

    
      	
              SECTION
                2.1.

            	
              Powers
                and Duties of the Guarantee Trustee

            	
              4

            
	 	 	 
	
              SECTION
                2.2.

            	
              Certain
                Rights of the Guarantee Trustee

            	
              5

            
	 	 	 
	
              SECTION
                2.3.

            	
              Not
                Responsible for Recitals or Issuance of Guarantee

            	
              7

            
	 	 	 
	
              SECTION
                2.4.

            	
              Events
                of Default; Waiver

            	
              7

            
	 	 	 
	
              SECTION
                2.5.

            	
              Events
                of Default; Notice

            	
              8

            

    

     

    ARTICLE
      III

     

    THE
      GUARANTEE TRUSTEE

     

    
      	
              SECTION
                3.1.

            	
              The
                Guarantee Trustee; Eligibility

            	
              8

            
	 	 	 
	
              SECTION
                3.2.

            	
              Appointment,
                Removal and Resignation of the Guarantee Trustee

            	
              9

            

    

     

    ARTICLE
      IV

     

    GUARANTEE

     

    
      	
              SECTION
                4.1.

            	
              Guarantee

            	
              9

            
	 	 	 
	
              SECTION
                4.2.

            	
              Waiver
                of Notice and Demand

            	
              10

            
	 	 	 
	
              SECTION
                4.3.

            	
              Obligations
                Not Affected

            	
              10

            
	 	 	 
	
              SECTION
                4.4.

            	
              Rights
                of Holders

            	
              11

            
	 	 	 
	
              SECTION
                4.5.

            	
              Guarantee
                of Payment

            	
              11

            
	 	 	 
	
              SECTION
                4.6.

            	
              Subrogation

            	
              11

            
	 	 	 
	
              SECTION
                4.7.

            	
              Independent
                Obligations

            	
              12

            
	 	 	 
	
              SECTION
                4.8.

            	
              Enforcement

            	
              12

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

    
       

      TABLE
        OF CONTENTS

      (continued)

      
        	
                 

              
	 	 	Page

      

       

    

    ARTICLE
      V

     

    LIMITATION
      OF TRANSACTIONS; SUBORDINATION

     

    
      	
              SECTION
                5.1

            	
              Limitation
                of Transactions

            	
              12

            
	 	 	 
	
              SECTION
                5.2.

            	
              Ranking

            	
              13

            

    

    ARTICLE
      VI

     

    TERMINATION

     

    
      	
              SECTION
                6.1. 

            	
              Termination

            	
              13

            

    

    ARTICLE
      VII

     

    INDEMNIFICATION

     

    
      	
              SECTION
                7.1.

            	
              Exculpation

            	
              14

            
	 	 	 
	
              SECTION
                7.2.

            	
              Indemnification

            	
              14

            
	 	 	 
	
              SECTION
                7.3.

            	
              Compensation;
                Reimbursement of Expenses

            	
              15

            

    

     

    ARTICLE
      VIII

     

    MISCELLANEOUS

     

    
      	
              SECTION
                8.1.

            	
              Successors
                and Assigns

            	
              16

            
	 	 	 
	
              SECTION
                8.2.

            	
              Amendments

            	
              16

            
	 	 	 
	
              SECTION
                8.3.

            	
              Notices

            	
              16

            
	 	 	 
	
              SECTION
                8.4.

            	
              Benefit

            	
              17

            
	 	 	 
	
              SECTION
                8.5.

            	
              Governing
                Law

            	
              17

            
	 	 	 
	
              SECTION
                8.6.

            	
              Counterparts

            	
              17

            

    

    
 

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

    
       

    

    

    GUARANTEE
      AGREEMENT

     

    This
      GUARANTEE AGREEMENT (the "Guarantee"), dated as of July 12, 2005, is executed
      and delivered by CB Financial Corporation, incorporated in North Carolina (the
      "Guarantor"), and U.S. Bank National Association, as trustee (the "Guarantee
      Trustee"), for the benefit of the Holders (as defined herein) from time to
      time
      of the Capital Securities (as defined herein) of CB Financial Capital Trust
      I, a
      Connecticut statutory trust (the "Issuer").

     

    WHEREAS,
      pursuant to an Amended and Restated Declaration of Trust (the "Declaration"),
      dated as of July 12, 2005, among the trustees named therein of the Issuer,
      CB
      Financial Corporation, as sponsor, and the Holders from time to time of
      undivided beneficial interests in the assets of the Issuer, the Issuer is
      issuing on the date hereof securities, having an aggregate liquidation amount
      of
      up to $5,000,000, designated the TP Securities (the "Capital Securities");
      and

     

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

     

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

     

    ARTICLE
      I

    DEFINITIONS
      AND INTERPRETATION

     

     

    
      	SECTION 1.1. 	
              Definitions
                and Interpretation.

            

    

     

     

    In
      this
      Guarantee, unless the context otherwise requires:

     

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

       

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

       

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

       

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

       

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

       

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

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    "Covered
      Person" means any Holder of Capital Securities.

     

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

     

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

     

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

     

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

     

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

     

    "Indemnified
      Person" means the Guarantee Trustee (including in its individual capacity),
      any
      Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
      members, partners, employees, representatives, nominees, custodians or agents
      of
      the Guarantee Trustee.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    "Indenture"
      means the Indenture, dated as of July 12, 2005, between the Guarantor and U.S.
      Bank National Association, not in its individual capacity but solely as trustee,
      and any indenture supplemental thereto pursuant to which the Debentures are
      to
      be issued to the Institutional Trustee of the Issuer.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    ARTICLE
      II

    POWERS,
      DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

     

    
       

      
        	SECTION 2.1. 	
                
                  Powers
                    and Duties of the Guarantee Trustee.

                

              

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    
      
        	SECTION 2.2. 	
                
                  Certain
                    Rights of the Guarantee Trustee.

                

              

      

    

     

    (a)  Subject
      to the provisions of Section 2.1:

     

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

     

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

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (viii)  The
      Guarantee Trustee may execute any of the trusts or powers hereunder or perform
      any duties hereunder either directly or by or through agents, nominees,
      custodians or attorneys, and the Guarantee Trustee shall not be responsible
      for
      any misconduct or negligence on the part of any agent or attorney appointed
      with
      due care by it hereunder.

     

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

     

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

     

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

     

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

     

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

                

              

      

       

    

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

     

    
      
        	SECTION 2.4.	
                
                  Events
                    of Default; Waiver.

                

              

      

    

     

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

     

    (b)  The
      Holders of a Majority in liquidation amount of the Capital Securities may,
      voting or consenting as a class, on behalf of the Holders of all of the Capital
      Securities, waive any past Event of Default and its consequences. Upon such
      waiver, any such Event of Default shall cease to exist, and shall be deemed
      to
      have been cured, for every purpose of this Guarantee, but no such waiver shall
      extend to any subsequent or other default or Event of Default or impair any
      right consequent thereon.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
       

      
        	SECTION 2.5. 	
                
                  Events
                    of Default; Notice.

                

              

      

       

    

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

     

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

     

    ARTICLE
      III  

     

    THE
      GUARANTEE TRUSTEE

    
       

      
        	SECTION 3.1.	
                
                  The
                    Guarantee Trustee; Eligibility.

                

              

      

       

    

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

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

                

              

      

       

    

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

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
      IV

    GUARANTEE

     

    
      
        	SECTION 4.1. 	
                
                  Guarantee.

                

              

      

       

    

    (a)  The
      Guarantor irrevocably and unconditionally agrees to pay in full to the Holders
      the Guarantee Payments (without duplication of amounts theretofore paid by
      the
      Issuer), as and when due, regardless of any defense (except for defense of
      payment by the Issuer), right of set-off or counterclaim that the Issuer may
      have or assert. The Guarantor's obligation to make a Guarantee Payment may
      be
      satisfied by direct payment of the required amounts by the Guarantor to the
      Holders or by causing the Issuer to pay such amounts to the
      Holders.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

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

    
       

      
        	SECTION 4.2. 	
                
                  Waiver
                    of Notice and Demand.

                

              

      

    

     

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

    
       

      
        	SECTION 4.3.  	
                
                  Obligations
                    Not Affected.

                

              

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

    
       

      
        	SECTION 4.4. 	
                
                  Rights
                    of Holders.

                

              

      

       

    

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

     

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

     

    
      	SECTION 4.5. 	
              Guarantee
                of Payment.

            

    

     

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

     

    
      
        	SECTION 4.6.  	
                
                  Subrogation.

                

              

      

       

    

    The
      Guarantor shall be subrogated to all (if any) rights of the Holders of Capital
      Securities against the Issuer in respect of any amounts paid to such Holders
      by
      the Guarantor under this Guarantee; provided,
      however,
      that
      the Guarantor shall not (except to the extent required by applicable provisions
      of law) be entitled to enforce or exercise any right that it may acquire by
      way
      of subrogation or any indemnity, reimbursement or other agreement, in all cases
      as a result of payment under this Guarantee, if, after giving effect to any
      such
      payment, any amounts are due and unpaid under this Guarantee. If any amount
      shall be paid to the Guarantor in violation of the preceding sentence, the
      Guarantor agrees to hold such amount in trust for the Holders and to pay over
      such amount to the Holders.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    
       

      
        	SECTION 4.7. 	
                
                  Independent
                    Obligations.

                

              

      

       

    

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

     

    
      
        	SECTION 4.8.  	
                
                  Enforcement.

                

              

      

       

    

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

     

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

     

    ARTICLE
      V

    LIMITATION
      OF TRANSACTIONS; SUBORDINATION

    
       

      
        	SECTION 5.1. 	
                
                  Limitation
                    of Transactions.

                

              

      

       

    

    So
      long
      as any Capital Securities remain outstanding, if (a) there shall have occurred
      and be continuing an Event of Default or (b) the Guarantor shall have selected
      an Extension Period as provided in the eclaration and such period, or any
      extension thereof, shall have commenced and be continuing, then the Guarantor
      may not (x) declare or pay any dividends or distributions on, or redeem,
      purchase, acquire, or make a liquidation payment with respect to, any of the
      Guarantor's capital stock or (y) make any payment of principal of or interest
      or
      premium, if any, on or repay, repurchase or redeem any debt securities of the
      Guarantor that rank pari
      passu
      in all
      respects with or junior in interest to the Debentures (other than (i) payments
      under this Guarantee, (ii) repurchases, redemptions or other acquisitions of
      shares of capital stock of the Guarantor (A) in connection with any employment
      contract, benefit plan or other similar arrangement with or for the benefit
      of
      one or more employees, officers, directors, or consultants, (B) in connection
      with a dividend reinvestment or stockholder stock purchase plan or (C) in
      connection with the issuance of capital stock of the Guarantor (or securities
      convertible into or exercisable for such capital stock), as consideration in
      an
      acquisition transaction entered into prior to the occurrence of the Event of
      Default or the applicable Extension Period, (iii) as a result of any exchange,
      reclassification, combination or conversion of any class or series of the
      Guarantor's capital stock (or any capital stock of a subsidiary of the
      Guarantor) for any class or series of the Guarantor's capital stock or of any
      class or series of the Guarantor's indebtedness for any class or series of
      the
      Guarantor's capital stock, (iv) the purchase of fractional interests in shares
      of the Guarantor's capital stock pursuant to the conversion or exchange
      provisions of such capital stock or the security being converted or exchanged,
      (v) any declaration of a dividend in connection with any stockholder's rights
      plan, or the issuance of rights, stock or other property under any stockholder's
      rights plan, or the redemption or repurchase of rights pursuant thereto, or
      (vi)
      any dividend in the form of stock, warrants, options or other rights where
      the
      dividend stock or the stock issuable upon exercise of such warrants, options
      or
      other rights is the same stock as that on which the dividend is being paid
      or
      ranks pari
      passu
      with or
      junior to such stock).

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    
       

      
        	SECTION 5.2. 	
                
                  Ranking.

                

              

      

    

     

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

     

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

     

    ARTICLE
      VI

    TERMINATION

    
       

      
        	SECTION 6.1. 	
                
                  Termination.

                

              

      

       

    

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

     

    ARTICLE
      VII

    INDEMNIFICATION

    
       

      
        	SECTION 7.1. 	
                
                  Exculpation.

                

              

      

       

    

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

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

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

    
       

      
        	SECTION 7.2. 	
                
                  Indemnification.

                

              

      

    

     

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

     

    (b)  Promptly
      after receipt by an Indemnified Person under this Section 7.2 of notice of
      the
      commencement of any action, such Indemnified Person will, if a claim in respect
      thereof is to be made against the Guarantor under this Section 7.2, notify
      the
      Guarantor in writing of the commencement thereof; but the failure so to notify
      the Guarantor (i) will not relieve the Guarantor from liability under paragraph
      (a) above unless and to the extent that the Guarantor did not otherwise learn
      of
      such action and such failure results in the forfeiture by the Guarantor of
      substantial rights and defenses and (ii) will not, in any event, relieve the
      Guarantor from any obligations to any Indemnified Person other than the
      indemnification obligation provided in paragraph (a) above. The Guarantor shall
      be entitled to appoint counsel of the Guarantor's choice at the Guarantor's
      expense to represent the Indemnified Person in any action for which
      indemnification is sought (in which case the Guarantor shall not thereafter
      be
      responsible for the fees and expenses of any separate counsel retained by the
      Indemnified Person or Persons except as set forth below); provided,
      however,
      that
      such counsel shall be satisfactory to the Indemnified Person. Notwithstanding
      the Guarantor's election to appoint counsel to represent the Indemnified Person
      in any action, the Indemnified Person shall have the right to employ separate
      counsel (including local counsel), and the Guarantor shall bear the reasonable
      fees, costs and expenses of such separate counsel (and local counsel), if (i)
      the use of counsel chosen by the Guarantor to represent the Indemnified Person
      would present such counsel with a conflict of interest, (ii) the actual or
      potential defendants in, or targets of, any such action include both the
      Indemnified Person and the Guarantor and the Indemnified Person shall have
      reasonably concluded that there may be legal defenses available to it and/or
      other Indemnified Persons which are different from or additional to those
      available to the Guarantor, (iii) the Guarantor shall not have employed counsel
      satisfactory to the Indemnified Person to represent the Indemnified Person
      within a reasonable time after notice of the institution of such action or
      (iv)
      the Guarantor shall authorize the Indemnified Person to employ separate counsel
      at the expense of the Guarantor. The Guarantor will not, without the prior
      written consent of the Indemnified Persons, settle or compromise or consent
      to
      the entry of any judgment with respect to any pending or threatened claim,
      action, suit or proceeding in respect of which indemnification or contribution
      may be sought hereunder (whether or not the Indemnified Persons are actual
      or
      potential parties to such claim or action) unless such settlement, compromise
      or
      consent includes an unconditional release of each Indemnified Person from all
      liability arising out of such claim, action, suit or proceeding.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    
      
        	SECTION 7.3. 	
                
                  Compensation;
                    Reimbursement of Expenses.

                

              

      

    

     

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

     

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

     

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

     

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

     

    ARTICLE
      VIII

    MISCELLANEOUS

    
       

      
        	SECTION 8.1.	
                
                  Successors
                    and Assigns.

                

              

      

       

    

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

    
       

      
        	SECTION 8.2. 	
                
                  Amendments.

                

              

      

       

    

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

    
       

      
        	SECTION 8.3.  	
                
                  Notices.

                

              

      

    

     

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

     

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

     

    U.S.
      Bank
      National Association

    225
      Asylum Street, 23rd Floor

    Hartford,
      CT 06103

    Attention:
      Corporate Trust Services 

    CB
      Financial Capital Trust I

    

    With
      a
      copy to: 

    U.S.
      Bank
      National Association

    One
      Federal Street, 3rd Floor

    Boston,
      MA 02110

    Attention:
      Corporate Trust Services 

    CB
      Financial Capital Trust I

    Telecopy:
      (617) 603-6683

    Telephone:
      (617) 603-6549

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

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

     

    CB
      Financial Corporation

    3710
      Nash
      Street

    Wilson,
      NC 27896-1120

    Attention:
      Norman B. Osborn

    Telecopy:
      (252) 243-9726

    Telephone:
      (252) 243-5588

    

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

     

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

     

    
       

      
        	SECTION 8.4. 	
                
                  Benefit.

                

              

      

    

     

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

    
       

      
        	SECTION 8.5.  	
                
                  Governing
                    Law.

                

              

      

       

    

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

    
       

      
        	SECTION 8.6.	
                
                  Counterparts.

                

              

      

       

    

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

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	 	 
	 	
              CB
                Financial Corporation,

              as Guarantor

            
	 
 	 
 	 
 
	 	By:  	/s/
              Norman B. Osborn
	 	
              
Norman
              B. Osborn
	 	President
              and CEO

    

     

    
      
        	 	 	 
	 	
                U.S.
                  BANK NATIONAL ASSOCIATION, 

                as Guarantee Trustee

              
	 
 	 
 	 
 
	 	By:  	
                /s/
                  Paul
                  Allen

              
	 	
                
Name:
                Paul Allen
	 	Title:
                Vice
                President

      

    
      
        
        

      

      -17-Exhibit 10.1

                              EMPLOYMENT AGREEMENT
                               CAROL KOBUKE NELSON

      THIS  EMPLOYMENT  AGREEMENT  ("Agreement")  is made this 12th day of July,
2005, by and between CASCADE FINANCIAL CORPORATION and CASCADE BANK (hereinafter
jointly  referred to as "Cascade")  and CAROL KOBUKE NELSON  ("Nelson") and will
become effective upon execution.  Cascade and Nelson are sometimes  collectively
referred to herein as "the Parties."

                                    RECITALS

      WHEREAS,  Nelson  currently  serves as the President  and Chief  Executive
Officer of Cascade  under the terms of an Employment  Agreement  last amended on
January 27, 2004; and

      WHEREAS,  the Parties wish to replace that Employment  Agreement with this
Agreement;

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

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

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

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

            (a) Use her diligent efforts to promote the business and further the
goals of Cascade;

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

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

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

      4.  Compensation.  Cascade  shall  pay  Nelson,  as  compensation  for her
full-time services during the Term of Employment, the following:

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

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

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

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

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      6. Automobile.  Nelson shall provide her own automobile, and Cascade shall
provide her an automobile allowance of $700 per month for use of such automobile
incident to her duties as President and Chief Executive Officer of Cascade.  The
automobile allowance may be increased from time to time as deemed appropriate by
the Board.

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

      8.  Termination.  This Agreement may be terminated by Cascade upon written
notice to Nelson,  and by Nelson  upon 90 days  written  notice to  Cascade.  If
Nelson resigns from Cascade, except for Good Reason as defined in paragraph 8(a)
or Retirement as defined in paragraph 8(d) hereafter,  she will receive only her
compensation,  benefits earned and expenses  reimbursable  through the date this
Agreement is terminated.  If Nelson's  employment is terminated by Cascade or by
Nelson for Good Reason, she shall receive the compensation provided hereafter.

            (a)  Termination   Without   Cause/For  Good  Reason.   If  Nelson's
employment is  terminated by Cascade,  except for cause as provided in paragraph
8(b),  or by Nelson for Good Reason,  Nelson shall  receive a severance  benefit
equal to two (2) times her Base  Compensation plus Bonus before salary deferrals
over the twelve (12) months  preceding the month of termination,  less statutory
payroll  deductions.  Such payment shall, at the option of Cascade, be made in a
lump sum or in accordance with Cascade's regular payroll schedule.  For purposes
of this  Agreement,  "Good  Reason"  means  any  one or  more of the  following:
Reduction  of  Nelson's  Base  Compensation  during  the term of this  Agreement
without  Nelson's  consent  (other  than as part of an overall  program  applied
uniformly to all members of senior  management of the Bank);  the  assignment to
Nelson without her consent of any duties  materially  inconsistent with Nelson's
position  as of the date of this  Agreement;  or a  relocation  or  transfer  of
Nelson's principal place of employment that would require Nelson to commute on a
regular basis more than 30 miles each way from  Cascade's  main office as of the
date of this Agreement.

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

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

      (d)  Retirement.  If Nelson  retires  from  Cascade  after  attaining  age
fifty-seven  (57),  she will receive as a severance  benefit:  (1) payment in an
amount equal to two (2) times her Base  Compensation  plus Bonus  before  salary
deferrals over the twelve (12) months prior to her retirement, with such amounts
payable in twenty-four (24) consecutive,  equal monthly  installments,  with the
first such payment due on the first day of the first month following retirement;
(2) vesting of all stock options;  and (3) the following health benefit coverage
for her and her spouse:

            (i) Cascade  will pay all  premiums  for  benefits to Nelson and her
      spouse under and subject to the term of the  Consolidated  Omnibus  Budget
      Reconciliation Act ("COBRA");

            (ii) Upon  expiration of any applicable  COBRA coverage  period,  if
      Nelson  and/or her spouse are not then  entitled  to enroll for  Medicare,
      Cascade shall provide at its expense an individual health insurance policy
      for  Nelson  and her  spouse  which will  provide  them with  health  care
      benefits as nearly  equivalent  as possible  to those  provided  Nelson by
      Cascade prior to Nelson's retirement.

            (iii) Upon  reaching an age when Nelson and her spouse are  entitled
      to receive  Medicare,  but in no event after  Nelson  reaches age 65, this
      benefit shall terminate.

If Nelson receives  benefits under this paragraph,  she foregoes any entitlement
to receive any other  benefits  under any other  provisions  of this  Agreement,
including any right to receive a "Change of Control" payment.

      9.  Change of  Control.  If there is a Change of  Control  of  Cascade  as
hereinafter  defined,  all Nelson's stock options shall become fully vested upon
the effective date of the Change of Control.  If Nelson leaves the employment of
Cascade,  whether voluntarily or involuntarily,  within twelve (12) months after
such Change of Control,  Nelson  shall  receive an amount equal to two (2) times
her Base  Compensation  plus Bonus before salary  deferrals over the twelve (12)
month period prior to the Change of Control.  "Change of Control" as used herein
will be deemed to have occurred when there is:

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

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

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

            (d) Nelson shall,  under no  circumstances,  receive a payment under
8(d) and a Change of Control payment.

      10. Federal Regulatory Provisions.

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

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

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

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

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

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

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

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

      13. No  Solicitation.  During  the Term and for  twenty-four  (24)  months
thereafter, if Nelson receives compensation under paragraphs 8(d) or 9, she will
not, directly or indirectly, solicit or attempt to solicit: (i) any employees of
Cascade to leave their  employment,  or (ii) any  customers of Cascade to remove
their business from Cascade to participate in any manner in a competing business
("Competing Business").  "Competing Business" means any financial institution or
trust company that competes with or will compete with Cascade in King, Snohomish
or Pierce  County,  or any  start-up  or other  financial  institution  or trust
company in King, Snohomish or Pierce County.

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

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      15. Enforcement of Confidentiality and Non-Competition Covenants.  Cascade
and Nelson stipulate that, in light of all of the facts and circumstances of the
relationship  between them, the covenants  referred to in paragraphs 10, 12, 13,
and  14  above,  including,   without  limitation,  their  scope,  duration  and
geographic  extent,  are fair and  reasonably  necessary  for the  protection of
Cascade's confidential information, goodwill and other protectable interests. If
a court  of  competent  jurisdiction  should  decline  to  enforce  any of those
covenants and  agreements,  Nelson and Cascade request the court to reform these
provisions to restrict  Nelson's use of  confidential  information  and Nelson's
ability to compete  with  Cascade,  to the  maximum  extent,  in time,  scope of
activities, and geography, as the court finds enforceable.

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

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

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

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

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

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      If the result of the mediation is a recognition that the dispute cannot be
successfully   mediated,   or  if  either  party  believes  mediation  would  be
unproductive  or too slow,  then either party may seek to resolve the dispute in
accordance with the procedures established by Judicial Arbitration and Mediation
Services, Inc.

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

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

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

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

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

      23.  Independent Legal Counsel.  Nelson  acknowledges that she has had the
opportunity to review and consult with her own personal legal counsel  regarding
this Agreement.

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

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

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

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

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

CASCADE FINANCIAL CORPORATION

By: /s/ Janice Halladay                                      /s/ Carol K. Nelson
    -------------------------------------------------        -------------------
Title: Chair, Compensation & Personnel Committee             CAROL KOBUKE NELSON
       ----------------------------------------------

CASCADE BANK

By: /s/ Janice Halladay
    -------------------------------------------------
Title:Chair, Compensation & Personnel Committee
      -----------------------------------------------

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

                                     - 9 -

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