Document:

PURCHASE AND ASSUMPTION AGREEMENT

             This Purchase and Assumption Agreement (this "Agreement") is made and entered into this 23 day of June, 2009, by and between Sound Community Bank, a federally chartered savings
bank (the "Purchaser"), and 1st Security Bank of Washington, a Washington chartered mutual
savings bank (the "Seller").

             WHEREAS, Seller owns and operates a branch facility located at 2941 South 38th Street,
#A, Tacoma, Washington (the "Branch"); and

             WHEREAS, Seller desires to sell and Purchaser agrees to acquire the Branch and, in that
regard, Seller desires to sell and Purchaser desires to acquire certain assets relating thereto, all as
set forth in this Agreement; and

             WHEREAS, Seller desires to assign to Purchaser and Purchaser desires to assume from
Seller certain liabilities relating to the Branch, all as set forth in this Agreement.

             NOW THEREFORE, in consideration of the premises and the mutual promises, Seller
and Purchaser agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS AND

ASSIGNMENT AND ASSUMPTION OF LIABILITIES

             1.1   Purchase and Sale of Assets.  Upon the terms and subject to the conditions set
forth in this Agreement, Seller shall sell, convey, assign, transfer and deliver to Purchaser, and
Purchaser shall purchase and accept from Seller, the following assets relating to the Branch (the
"Assets").

		          A.          Personal Property.  The personal property contained in and used
primarily for the operation of the Branch as described in Exhibit 1.1A. hereto (the
"Personal Property").

		          B.          Loans.

		          1.          Such loans (i) secured in whole or in part, by deposit accounts ("Deposit
Account Loans") or (ii) automatically created as the result of an overdraft of a deposit
account pursuant to a pre-approved overdraft protection program offered by the Seller
("Overdraft Protection Loans" and together with the Deposit Account Loans, the "Branch
Loans"), related to the Deposit Liabilities being transferred and which are carried on the
books and records of the Branch as of the close of business on May 31, 2009, but
excluding those accounts which Purchaser declines to purchase for any reason, as
provided in Exhibit 1.1B(1) (the "Excluded Loans") (collectively, the "Existing Loans").
Attached hereto as Exhibit 1.1B(2) is a list setting forth the outstanding principal balance
and accrued but unpaid interest on the Existing Loans as of the close of business on May
31, 2009.

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		          2.          Such Branch Loans that are originated and entered on the books and
records of the Branch during the period from May 31, 2009 to the close of business on the
day immediately before the Closing Date (as defined in Section 1.7) (the "Interim
Loans"), provided that Purchaser shall have the right to refuse to purchase any Interim
Loan for any reason so long as a written election for the exclusion is made by Purchaser
within seven (7) days after it receives all pertinent information with respect to such
Interim Loan, and any such Interim Loan that Purchaser refuses to purchase shall also be
known as an "Excluded Loan."

          3.          For purposes of this Agreement, the Existing Loans and Interim Loans are
collectively referred to the as the "Purchased Loans."  The Purchased Loans, together
with interest accrued thereon but unpaid as of the close of business on the day
immediately before the Closing Date (the "Accrued Loan Interest"), shall be purchased by
Purchaser.  Seller will generate Exhibit 1.1B(3), which exhibit will provide the same
information as Exhibit 1.1(B)(2) for the Purchased Loans and be current and made a part
hereof as of the Closing Date.

          C.          Cash on Hand.  Any cash on hand at the Branch as of the start of business
on the Closing Date (the "Cash on Hand").

          D.          Records, Etc.  All records, files, books of accounts and other original
documents and instruments pertaining to the Assets and the Assumed Liabilities (as
defined in Section 1.2) being transferred and assumed, respectively.

          E.          Rights Relating to Assets.  Any statutory or common law right, title and
interest in and related to the Assets which Seller may have and which Seller may assign,
including, without limitation, claims, causes of action, rights of recovery or set offs, and
credit of any kind or nature relating to the Assets of the Branch (the "Rights").

             1.2   Assignment and Assumptions of Liabilities.  Upon the terms and subject to the
conditions set forth in this Agreement, Seller shall assign to Purchaser, and Purchaser shall
accept and assume from Seller, the following liabilities relating to the Branch, which liabilities
Purchaser agrees to perform and discharge (the "Assumed Liabilities"), as follows:

		          A.          Deposit Liabilities.  All liabilities for payment of deposits given an
account number maintained at the Branch including, without limitation, all savings
accounts, certificates of deposit, money market deposit accounts, checking and NOW
accounts and IRA accounts, and all other deposit accounts given an account number
maintained at the Branch or assigned to the Branch in the ordinary course pursuant to the
Seller's accounting system (except to the extent of deposit liabilities transferred at the
request of a depositor as provided in Section 4.8), in each case as of the close of business
on May 31, 2009 (the "Cut-Off Date Deposits"), all of which shall be listed in full on
Exhibit 1.2A(1) hereto (the "Deposit Balance"), together with any changes in the Cut-Off
Date Deposits and all new deposits from May 31, 2009 through the close of business on
the day immediately before the Closing Date (the "Interim Deposits") (the Cut-Off Date
Deposits and Interim Deposits, in each case as of the close of business on the day
immediately before the Closing Date are hereinafter collectively referred to as the
"Deposits" or the "Deposit Liabilities"), in accordance with the terms of the agreements
pertaining to such Deposits, together with interest accrued thereon but unpaid as of the
close of business on the day

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		immediately before the Closing Date (the "Accrued Deposit
Interest"). Said Deposit Liabilities and Accrued Deposit Interest shall be specified in
Exhibit 1.2A(2) to be attached hereto and made a part hereof as of the Closing Date.

          B.          Contracts. All obligations of the Seller relating to the period on and after
the Closing Date under any and all contracts relating to the operation of the Branch which
are assignable by Seller to Purchaser and which are all listed on Exhibit 1.2B to this
Agreement (the "Contracts").

             1.3   Transfer of Funds.  In connection with the acquisition by Purchaser of the Assets
and the assumption by Purchaser of the Assumed Liabilities of Seller, Seller shall transfer to the
Purchaser by wire transfer of immediately available funds (the "Transfer Payment") an amount
equal to:

		          A.          the estimated amount of the Deposit Liabilities; plus

          B.          the estimated amount of the Accrued Deposit Interest; minus

          C.          Fifteen Thousand Dollars ($15,000) representing the purchase price of the
Personal Property; minus

          D.          the estimated unpaid principal amount of the Purchased Loans; minus

          E.          the estimated amount of the Accrued Loan Interest; minus

          F.          the amount of Cash on Hand; minus

          G.          	2.25% of the Deposit Liabilities (the "Deposit Premium"); plus or minus

          H.          the estimated amount of prorations, as provided in Section 1.6 hereof, plus

          I.          the amount of Earnest Money (as defined in Section 9.3).

The parties agree that if the sum of subsections A through I is less than zero, the Purchaser will
transfer to the Seller, by wire transfer on the Closing Date (or the business day immediately
before the Closing Date, if the Closing Date occurs on a day when funds cannot be wired for
same day reinvestment), immediately available funds in the amount by which such sum is less
than zero. 

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             1.4   Adjustment Payment Date.

		          A.          On the fifteenth (15th) day after the Closing Date or such earlier date as
may be agreed to in writing by the parties (the "Adjustment Payment Date"), Seller shall
deliver the following documents to Purchaser:

			          (i)          A statement setting forth (a) the aggregate amount of Deposit
Liabilities and the Accrued Deposit Interest thereon transferred to and assumed by
Purchaser, calculated as of the close of business on the day immediately before the
Closing Date; and (b) any corrections to the information contained in the Deposit
Listing (as defined in Section 6.8) delivered to the Purchaser on the Closing Date;

          (ii)         A statement of the Purchased Loans as of the close of business on
the day immediately before the Closing Date, setting forth the aggregate unpaid
principal amount of such Purchased Loans and the Accrued Loan Interest and
listing, for each such Purchased Loans, the name and address of the borrower, the
unpaid principal amount thereof interest rate thereon and the amount of the
Accrued Loan Interest;

          (iii)        A statement of the actual proration amounts to be paid in
accordance with Section 1.6 hereof as of the start of business on the Closing Date;
and

          (iv)         A closing statement for execution by the parties.

		          B.          If the statement delivered in accordance with the foregoing subsection A
requires an adjustment to be made to the Transfer Payment, Seller or Purchaser, as the
case may be, shall make an adjustment payment to the other party (the "Adjustment
Payment") to correct any discrepancy between the amount of the estimated Transfer
Payment paid under Section 1.3 and the amount of the Transfer Payment as finally
determined pursuant to Section 1.4A. Seller shall provide Purchaser with the worksheets
it used to calculate the Adjustment Payment. Any Adjustment Payment due to either party
on the Adjustment Payment Date pursuant to this provision shall be paid to such party on
the Adjustment Payment Date by the other party by wire transfer, and shall bear interest
from and including the Closing Date to the date of payment at the effective federal funds
rate as published daily by the Federal Reserve Bank of San Francisco during the period(s)
involved.

             1.5   Purchase Price.  The purchase price is to be paid by the Purchaser to Seller for
the assets to be acquired under this Agreement.  The "Purchase Price" shall be equal to the sum
of the amounts referred to in subsections C, D, E, F, G and H of Section 1.3 herein, as the same are adjusted pursuant to Section 1.4.

             1.6   Prorations.  It is the intention of the parties hereto that Seller shall operate for its
own account the business being transferred pursuant to this Agreement until the close of business
on the day immediately before the Closing Date, and that Purchaser shall operate for its own

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account the business being transferred pursuant to this Agreement from and after the Closing
Date.  Thus, except as otherwise specifically provided in this Agreement, items of income and
expense allocable to the Assets and Liabilities shall be prorated as of the close of business on the
day immediately before the Closing Date using the accrual method of accounting, whether or not
such adjustment would normally be made as of such time.  For purposes of this Agreement, items
of proration and other adjustments shall include, but not be limited to; (i) rental payments and
security deposits on the Leased Real Property; (ii) personal property taxes and assessments; (iii)
FDIC deposit insurance assessments (prorated in accordance with the number of days elapsed
during the quarter in which the Closing Date occurs and applicable FDIC assessment rates); and
(iv) other accrued expenses (including but not limited to those under the Contracts) and prepaid
expenses (but only including prepaids that will inure directly to the benefit of Purchaser and
excluding all others, such as by way of example, prepaid advertising) for the Branch.

             1.7   Closing Date: Closing.  The consummation of the purchase and assumption
transactions (the "Closing") provided for in this Agreement shall occur (i) no later than fifteen
(15) calendar days after receipt by the parties of all required regulatory approvals and all other
approvals, consents and assignments required by law or contract for consummation of the
transactions provided for herein and lapse of all required waiting periods associated therewith
(such date referred to hereinafter as the "Closing Date"), with a target date of August 29, 2009 or
(ii) such other date as is mutually agreed upon in writing by the parties hereto. In any event, the
Closing Date may be extended to December 30, 2009, if regulatory approvals and waiting
periods necessitate, in accordance with paragraph 9.4C herein.  Delivery of the documents and
instruments to be delivered by Seller and Purchaser, payment of the Transfer Payment by Seller
or Purchaser and other transactions herein contemplated to take place concurrently with such
deliveries, assumptions and payments, shall take place on the Closing Date at 8:00 a.m. (local
time) at the offices of Seller in the State of Washington (or at such other time and place as are
agreed to by both parties), and all such transactions shall be deemed effective as of the close of
business on the day immediately before the Closing Date; provided, however, that any payment
to be made by either party to the other by wire transfer of immediately available funds on the
Closing Date shall be made by wire transfer initiated prior to 10:00 a.m. (local time) on the
Closing Date (or on the business day immediately before the Closing Date, if the Closing Date
occurs on a day when funds cannot be wired for same day reinvestment).  Any deliveries,
conveyances, assignments or transfers required under this Agreement, other than the foregoing,
shall be made at the time and date specified in this Agreement (and where no time is specified,
on or before the start of business on the date specified) and in the manner and place specified in
this Agreement (of, where not specified, in the manner and place as reasonably requested in
writing by the party that is to receive such delivery, conveyances, assignment or transfer).

             1.9   Limitations On Assumption of Liabilities.  The parties agree that Purchaser
shall assume only the Assumed Liabilities.  Purchaser assumes no other liabilities of the Seller or
Seller's banking operations.

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             1.10  IRA Accounts. 

                    (a)       Included in the Deposit Liabilities are deposits of customers of the Branch
relating to IRA accounts (which the parties acknowledge include SEP IRA accounts, SIMPLE
IRA accounts and any other type of retirement account reflected in the deposit balances of the
Branch) pursuant to which Seller is currently acting as custodian.

                    (b)       Within such period prior to the Closing Date as is required by applicable
law or regulation, Seller will, at its sole cost and expense, notify the depositors who maintain
such IRA accounts of Seller's intent to resign as custodian as of Closing and to appoint Purchaser
as successor custodian and the discharge and release of Seller from all liabilities as custodian
from and after the effective time of its resignation. Purchaser will accept such appointment as
successor custodian, unless the customer objects in writing to such appointment or to Purchaser's
master IRA agreement. It is agreed that Seller is required to notify each such depositor only once,
which notification will be by means of a letter approved by Purchaser and accompanied by all
appropriate forms and documents necessary to effect such replacement and release and to adopt
Purchaser's master agreement. The IRA account of any customer not accepting the appointment
of Purchaser and the Purchaser's master plan will not be included in the Deposit Liabilities.

                    (c)       Purchaser agrees that, with respect to the IRA accounts transferred to
Purchaser pursuant to Section 1.10(b) above, Purchaser will make no payment to any such
customer to satisfy the minimum distribution requirements beginning the first day of April of the
year following the year in which the customer reaches age 70 1/2 until such customer provides
Purchaser with a written payment instruction in a form satisfactory to Purchaser.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

             Seller hereby makes the following representations and warranties to Purchaser:

             2.1   Corporate Organization.  Seller is a state chartered mutual savings bank duly
organized and existing in good standing under the laws of the State of Washington and possesses
full corporate power and all necessary approvals to own and operate the Branch and to carry on
its business as presently owned, operated, and conducted by it.  Seller's deposit liabilities are
insured by the Federal Deposit Insurance Corporation ("FDIC") to the fullest extent permitted
under federal law. No proceedings for the termination or revocation of such insurance are
pending or to Seller's knowledge threatened, and Seller is not currently under any cease and
desist order by any regulatory agency, nor to Seller's knowledge is any such action threatened
which would preclude Seller from entering into or consummating this Agreement.

             2.2   Corporate Authority and Action.  Seller has full right, power and authority to
sell, convey, assign, transfer and deliver the Assets and the Assumed Liabilities to Purchaser and
to otherwise fully perform Seller's obligations under this Agreement, subject however to (i)
Seller's receipt of all required regulatory approvals, (ii) any required third party consent to the
assignment of the Leased Real Property, and (iii) compliance by Purchaser with all of its
obligations under this Agreement.  Seller has full right, power and authority to execute and
deliver 

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this Agreement and each of the documents and instruments contemplated hereby.  This
Agreement, and each such other document and instrument, constitutes a valid and binding
obligation of Seller enforceable in accordance with its terms except as the same may be limited
by bankruptcy, insolvency, reorganization, or other laws relating to or affecting the enforcement
of creditors' rights including, without limitation, the avoidance powers of the FDIC pursuant to
the Federal Deposit Insurance Act and except as courts of equity may limit certain remedies such
as specific performance.  This Agreement and the transactions contemplated hereby have been
approved by the Board of Directors of Seller and no other corporate or member action is required
on the part of Seller relating to this Agreement and the transactions contemplated hereby.

             2.3   No Default Effected.  The execution and delivery of this Agreement by Seller
and the consummation by Seller of the transactions contemplated hereby, subject to the
fulfillment of the terms and compliance with the provisions hereof and all regulatory approvals,
will not conflict with, or result in the breach of, or a default (or an occurrence which, with the
lapse of time or action by a third party, could result in a breach or default) with respect to (i) any
of the terms, conditions, or provisions of any laws applicable to Seller, or of the articles of
incorporation or bylaws of Seller; (ii) any agreement or other instrument to which Seller is a
party or is subject, or by which Seller or any of its properties or assets are bound; or (iii) any
order, judgment, injunction, decree, directive, or award of any court, arbitrator, government
agency, or public official by which Seller is bound.

             2.4   Brokers.  All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Seller without the intervention of any other person
acting on behalf of Seller in such manner as to give rise to any valid claim by any person against
Seller or Purchaser for reimbursement of expenses or a finder's fee, brokerage commission, or
other similar payment, and Seller shall pay all commissions, fees, costs and expenses, directly or
indirectly, due any such person and indemnify Purchaser against all commissions, fees, costs,
expenses, or other similar payments in connection therewith.

             2.5   Litigation.  There are no actions, causes of action, claims, suits or proceedings,
pending or, to Seller's knowledge, threatened, against Seller affecting the Branch, the Assets or
the Assumed Liabilities whether at law, in equity or before or by a governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and to Seller's
knowledge, there are no unresolved disputes under any written or oral agreement, whether
express or implied, to which Seller is a party or by which it is bound that would adversely affect
the Branch, the Assets, the Assumed Liabilities or the transactions contemplated hereby, and
Seller has no knowledge of any state of facts or the occurrence of any event which would form
the basis for any claim which would adversely affect the Branch, the Assets, the Assumed
Liabilities or the transactions contemplated hereby.

             2.6   Deposits.  The Deposits are insured by FDIC to the fullest extent permitted under
federal law.  The Deposits (i) are in all respects genuine and enforceable obligations of Seller and
have been acquired and maintained in full compliance with all applicable laws, including (but not
limited to) the Truth in Savings Act and regulations promulgated thereunder; (ii) were acquired
in the ordinary course of Seller's business; and (iii) are not subject to any claims that are superior
to the rights of persons shown on the records delivered to Purchaser indicating the owners of the

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Deposits, other than claims against such Deposit owners, such as state and federal tax liens,
garnishments, and other judgment claims, which have matured or may mature into claims against
the respective Deposits.

             2.7   Title to Assets.  Seller has good and marketable title to the Assets, and complete
and unrestrictive power to sell, transfer and assign the Assets to Purchaser subject to the receipt
of all required regulatory approvals, free and clear of any and all claims, liens, encumbrances or
rights of third parties.  Seller has no knowledge of any defects in, or damage to, any of the
Personal Property, reasonable wear and tear excepted, other than such as would be plainly visible
upon a due diligence inspection.  However, Seller makes no other representation relating to the
physical condition of the Personal Property.  The Personal Property shall be conveyed in "AS IS"
condition without any representation as to suitability for any particular purpose.

             2.8   Proceedings Relating to Branch.  No proceedings to take all or any part of the
Branch premises by condemnation or right of eminent domain are pending or, to Seller's
knowledge, threatened.  Seller's use of the Branch premises is not, and no complaints have been
received by Seller that Seller is, in violation of applicable building, zoning, platting, subdivision,
use, safety, building, energy and environmental or similar laws, ordinances, regulations and
restrictions.  The Branch premises are adequately serviced by all utilities necessary for effective
operation as presently used for a financial institution branch office.

             2.9   Contracts and Agreements.  A true and complete copy of each Contract to be
assumed by Purchaser is attached to Exhibit 1.2B of this Agreement.  Each such Contract is valid
and enforceable according to its terms, Seller is not in default under any Contract and there has
been no event which, with notice or the lapse of time, or both, would constitute a default under
any such Contract by Seller including, but not limited to, the consummation of the transactions
contemplated by this Agreement (subject to receipt of the assignment of the Leased Real
Property).

             2.10  Compliance with Laws.  Insofar as it may affect the transactions contemplated
by this Agreement, to Seller's knowledge, Seller is in compliance with all laws applicable to the
operation of its business as presently conducted at the Branch, specifically including, without
limitation, compliance with all regulations concerning truth-in-savings, consumer protection,
occupational safety, civil rights, and labor and/or employment laws.

             2.11  IRS Reporting.  Seller has timely filed all applicable reports, returns and filing
information data required to be filed with any and all federal and state banking authorities and
any  and all other governmental authorities and regulatory agencies, it being acknowledged and
agreed that the Purchaser shall file Form 1099s with respect to the Branch Deposits up to and
including the day before the Closing Date; provided that, within five (5) business days after the
Closing Date, Seller shall provide Purchaser with all the information necessary to allow
Purchaser to complete said Form 1099s, such information to be in the form reasonably acceptable
to the Purchaser.

             2.12  Environmental Matters.  There is no legal, administrative, arbitral or other
proceeding, claim, action, cause of action or governmental investigation pending or, to Seller's

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knowledge, threatened which seeks to impose on Seller or any, predecessor of Seller in
connection with the Branch any liability arising under any environmental laws, nor to Seller's
knowledge is there any basis for any of the foregoing.  Seller is not subject to any agreement,
order, judgment, decree or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any such liability with respect to the Branch.  To Seller's
knowledge, there are no environmental conditions such as above ground or under ground storage
tanks, discharges or emissions or releases of hazardous materials which constitute a violation of
any environmental laws present at, on, under, or above the Branch premises.

             2.13  Taxes.  Seller shall be entitled to the tax deduction (to the extent permitted by
applicable law) for the accrued interest on the Deposit Liabilities prior to the Closing Date.  As
of the Closing Date, the Deposit Liabilities shall not be subject to any tax liens or levies of any
kind relating to obligations of Seller.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER

             Purchaser hereby makes the following representations and warranties to Seller:

             3.1   Corporate Organization.  Purchaser is a federal savings bank duly organized and
existing in good standing under the laws of the United States and possesses full corporate power
and all necessary approvals to own and operate its properties and to carry on its business as
presently owned, operated and conducted by it.  Purchaser's deposit accounts are insured by the
FDIC to the fullest extent permitted under federal law.  No proceedings for the termination or
revocation of such insurance are pending or to Purchaser's knowledge threatened, and Purchaser
is not currently under any cease and desist order by any regulatory agency nor to Purchaser's
knowledge is any such action threatened which would preclude Purchaser from entering into or
consummating this Agreement.

             3.2   Corporate Authority and Action.  Purchaser has full right, power and authority
to acquire the Assets and assume the Assumed Liabilities from Seller and to otherwise fully
perform Purchaser's obligations under this Agreement, subject however, (i) Purchaser's receipt of
all required regulatory approvals and (ii) compliance by Seller with all of its obligations under
this Agreement.  Purchaser has full right, power and authority to execute and deliver this
Agreement and each of the documents and instruments contemplated hereby.  This Agreement,
and each such other document and instrument, constitutes a valid and binding obligation of
Purchaser enforceable in accordance with its terms except as the same may be limited by
bankruptcy, insolvency, reorganization, or other laws relating to or affecting the enforcement of
creditors' rights including, without limitation, the avoidance powers of the FDIC pursuant to the
Federal Deposit Insurance Act and except as courts of equity may limit certain remedies such as
specific performance.  This Agreement and the transactions contemplated hereby have been
approved by the Board of Directors of Purchaser and no other corporate or shareholder action is
required on the part of Purchaser relating to this Agreement and the transactions contemplated
hereby.

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             3.3   No Default Effected.  The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby, subject to the
fulfillment of the terms and compliance with the provisions hereof and all regulatory approvals,
will not conflict with, or result in the breach of, or a default (or an occurrence which, with the
lapse of time or action by a third party, could result in a breach or default) with respect to (i) any
of the terms, conditions or provisions of any laws applicable to Purchaser, or of the charter or
bylaws of Purchaser; (ii) any agreement or other instrument to which Purchaser is a party or is
subject or by which Purchaser or any of its properties or assets are bound; or (iii) any order,
judgment, injunction, decree, directive, or award of any court, arbitrator, government agency or
public official by which Purchaser is bound.

             3.4   Brokers.  Negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Purchaser without the assistance of any other
person acting as Purchaser's broker.  Purchaser shall pay all commissions, fees, costs and
expenses, directly or indirectly, due any such person acting as Purchaser's broker and indemnify
Seller against all commissions, fees, costs, expenses, or other similar payments in connection
therewith.

             3.5   Litigation.  There are no actions, causes of action, claims, suits, or proceedings,
pending or, to Purchaser's knowledge, threatened, against Purchaser which would adversely
affect the transactions contemplated by this Agreement, whether at law, in equity or before or by
a governmental department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, and to Purchaser's knowledge, there are no unresolved disputes under any written or oral
agreement, whether express or implied, to which Purchaser is a party or by which it is bound that
would adversely affect the transactions contemplated hereby, and Purchaser has no knowledge of
any state of facts or the occurrence of any event which could form the basis for any claim which
would adversely affect the transactions contemplated hereby.

             3.6   Compliance with Law.  Insofar as it may affect the transactions contemplated by
this Agreement, Purchaser is in compliance with all laws applicable to the operation of its business.

ARTICLE IV
AGREEMENTS PENDING CLOSING

             4.1   Regulatory Approval and Standards.  Purchaser shall file an application with
the Office of Thrift Supervision within 30 days of the date hereof, seeking requisite approval of
the transactions contemplated hereby and promptly thereafter shall furnish Seller with copies
thereof (except for the confidential portions thereof) and any amendments, as well as each
material notice, order, opinion or other item of correspondence received by Purchaser from such
regulatory agency with respect to such application which do not contain confidential information.
Seller shall file such regulatory applications or notices, if any, as are required of it.

             4.2   Notification of Customers.  Purchaser and Seller shall take such actions required
by law or regulation to notify customers, creditors or depositors of the Branch of the transfers and
assumptions to be effected pursuant to this Agreement.  Purchaser and Seller shall work together

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to develop the contents of any such notifications and shall issue any such notifications, at Seller's
expense, after all regulatory approvals have been obtained (or as otherwise mutually agreed to by
the parties or required by applicable laws and regulations) but prior to the Closing.

             4.3   Operations.

		          A.          No later than thirty (30) days prior to the Closing Date, Seller shall supply
such information as is necessary for Purchaser to conduct a conversion from Seller's data
processing system to Purchaser's data processing system.  In addition, Seller shall supply
Seller's personnel for a reasonable period of time to assist Purchaser in such conversion.

          B.          Purchaser agrees to use its best efforts at its expense to convert operations
to its own data processing system on the Closing Date.  Purchaser shall be solely
responsible for the cost of such conversion.

          C.          All of the Seller's Branch ATM/Debit/POS Cards shall be terminated on
the Closing Date.

             4.4   Covenants Not to Compete.  From the Closing Date and for a period of 3 years
thereafter (the "Restrictive Period"), the Seller (and its affiliates, successors and assigns) shall
not open any branch office, deposit taking facility (including ATM), or loan office within a four
(4) mile radius from the Branch location (the "Restricted Area").  Seller agrees that said time and
geographic restrictions are reasonable and necessary to protect Purchaser's legitimate business
concerns, that said covenants do not violate public policy, and do not place any unreasonable
restraints upon Sellers other ongoing business operations.  During the Restrictive Period, Seller
(and its affiliates, successors, and assigns) shall not directly or indirectly encourage any employee
of Purchaser to cease employment with Purchaser or change such person's employment.

             4.5   [Intentionally Omitted]

             4.6   Sales and Transfer Taxes.  Purchaser and Seller agree that no sales or transfer tax is due on
this transaction because it is not in the ordinary course of business of either Purchaser or Seller;
however, in the event that a sales or transfer tax is imposed by a governmental authority having
jurisdiction to impose such a tax, Seller shall be responsible for the full and timely payment of
same and shall indemnify and hold harmless Purchaser for the amount of any such taxes due, and
from any expenses, fines, penalties, fees, costs, or other damages resulting from the imposition of
such tax or for any failure to make timely payment thereof.  Seller shall indemnify Purchaser and
holder Purchaser harmless for the amount of any taxes attributable to its operations prior to the
Closing Date, and from any expenses, fines, penalties, fees, costs or other damages resulting
from the imposition of such tax or for any failure to make timely payment thereof provided that
Purchaser promptly notifies Seller of same.

             4.7   Bulk Sales Act Indemnity.  Seller shall promptly pay when due all its creditors
in order to avoid any claim by any such creditor against Purchaser or any of the Assets by virtue
of the transactions contemplated by this Agreement or any bulk transfer provisions under
applicable law.  Seller hereby agrees to indemnify and hold Purchaser harmless from any
liability, loss or

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damage arising from failure of any applicable bulk transfer law to be satisfied or
from Seller's failure to perform this covenant.

             4.8   Negative Operating Covenants.  Except as may be required by regulatory
authorities, Seller shall not, without the prior written consent of Purchaser: (a) transfer to Seller's
other banking facility any of the deposit liabilities maintained at the Branch except upon the
unsolicited request of a depositor in the ordinary course of business; (b) transfer to the Branch
any of the deposits domiciled at its other banking facility except upon the unsolicited request of a
depositor in the ordinary course of business; (c) transfer, assign, encumber or otherwise dispose
of or enter into any contract, agreement or understanding to transfer, assign, encumber or
otherwise dispose of any of the Assets; (d) enter into any contract, commitment, or other
transaction relating to the Branch, except for deposit taking and lending activities in the ordinary
course of business consistent with past practices; (e) offer interest rates on any deposit liabilities
at the Branch in excess of those interest rates paid on similar deposits at Seller's other banking
facility; or (f) alter its current advertising or marketing programs at the Branch in any material
respect, other than as part of a general advertising or marketing campaign implemented by Seller
company wide.

             4.9   Affirmative Operating Covenants.  Seller shall use its best efforts to (a) cause
the Deposits to be equal to or greater than the Deposit Balance, (b) preserve the goodwill of
customers and others doing business with the Branch and (c) cause the Employees (as defined in
Section 9.2) to continue their employment with Purchaser on and after the Closing Date.

             4.10  [Intentional Omitted]

             4.11  Assistance in Obtaining Regulatory Approvals.  Seller agrees to use all
reasonable efforts to assist Purchaser in obtaining all regulatory approvals necessary to complete
the transactions contemplated hereby, and Seller will provide to Purchaser and to the appropriate
regulatory authorities all information reasonably required of Seller to be submitted by Purchaser
in connection with such approvals.

             4.12  Other Relationships.  Except for the deposit relationships being transferred by
Seller to Purchaser, as of the Closing Date neither Seller nor any of its affiliates will have any
other business relationship with any of holders of Deposits, except to the extent of any existing
loan relationships that may be outstanding.

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ARTICLE V

DOCUMENTS TO BE DELIVERED TO SELLER

             At or prior to the Closing, Purchaser shall deliver the following documents to Seller:

             5.1   Certified copies of resolutions of the Board of Directors of Purchaser approving
and authorizing the execution, delivery and performance of this Agreement and any other
documents required to be executed and delivered by Purchaser hereunder;

             5.2   Evidence of requisite regulatory approval for Purchaser to consummate the
transactions contemplated hereby; and

             5.3   An Instrument of Transfer, Assignment and Assumption, in the form attached
hereto as Exhibit 6.9, whereby Purchaser assumes and agrees to pay or perform the Assumed
Liabilities.

ARTICLE VI

DOCUMENTS TO BE DELIVERED TO PURCHASER

             At or prior to the Closing, Seller shall deliver the following documents to Purchaser:

             6.1   A statement setting forth the aggregate amount of Deposit Liabilities and Accrued
Deposit Interest thereon to be transferred to and assumed by Purchaser, as of the opening of
business five (5) business days prior to the Closing Date;

             6.2   A statement of the Purchased Loans, as of the opening of business five (5)
business days prior to the Closing Date, setting forth the aggregate unpaid principal amount of
such Purchased Loans and accrued interest thereon and listing, for each Purchased Loan, the
name and address of the borrower, the unpaid principal amount thereof interest rate thereon and
the amount of accrued but unpaid interest owing in regard thereto, the amount of escrows held by
Seller with respect thereto, if any, and such other information as may be necessary for Purchaser
to establish accounts therefore;

             6.3   A statement of the Cash on Hand as of the opening of business on the Closing
Date, and of the estimated proration amounts determined in accordance with Section 1.6 hereof,

             6.4   All records, files and documents of the Branch relating to the Deposit Liabilities
and Purchased Loans to be assumed or purchased by Purchaser, including, but not limited to,
signature cards, applications, certificates, notes, security agreements, pledge agreements, and
properly executed assignments and endorsements with respect thereto, and actual physical
possession of the Branch;

             6.5   On or prior to Closing, Seller will have obtained and delivered all material
consents and assignments reasonably necessary to authorize the transfer and assignment to Purchaser of, or the
substitution of Purchaser for Seller under, all material Contracts (without any material 

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alterations required by any third party and preserving for Purchaser all material rights and privileges
thereunder).

             6.6   Certified copies of resolutions of the Board of Directors of Seller approving and
authorizing the execution, delivery and performance of this Agreement and any other documents
required to be executed and delivered to the Seller hereunder;

             6.7   A provisional closing statement for execution by the parties;

             6.8   A listing of the Deposits as of the close of business five (5) business days prior to
the Closing Date (the "Deposit Listing") on hard copy or utilizing such other method of
information transfer as the parties shall have agreed, which Deposit Listing shall include, for
each Deposit, the name and address of the owner thereof, the account number, the principle
balance, the accrued interest, the maturity date, if any, the interest rate, the tax identification
number, and such other information as may be necessary for Purchaser to establish accounts
therefore;

             6.9   An Instrument of Transfer, Assignment and Assumption in the form attached
hereto as Exhibit 6.9, and such other instruments of transfer reasonably requested by Purchaser as
necessary to transfer good and marketable title to the Assets free
and clear of all claims, encumbrances and rights of third parties.

ARTICLE VII

POST-CLOSING MATTERS

             7.1   Information In Usable Form.  Promptly following the Closing, Purchaser and
Seller will use reasonable efforts to cause all information concerning the Purchased Loans and
the Deposits to be transferred into a form usable by Purchaser.

             7.2   Transactions After Closing Date.

		          A.          Following the Closing, Purchaser agrees to pay in accordance with law all
checks, drafts and withdrawal orders which are properly drawn by depositors with respect
to the Deposits assumed by Purchaser, duly endorsed (or for which necessary
endorsements are deemed supplied by applicable law) and otherwise properly payable, in
light of credit balances and any overdraft privileges applicable to such depositors, and
presented to Purchaser by mail, over its counters, or through the check clearing system of
the banking industry, and in all other respects to discharge, in the usual course of the
banking business, the duties and obligations of Seller with respect to the balances due and
owing to the depositors whose Deposits are assumed by the Purchaser.

          B.          For a period of ninety (90) days after the Closing Date, Seller agrees to act
as Purchaser's limited correspondent for the processing of checks, drafts and withdrawal
orders drawn before or after the Closing on the draft or check forms provided by the
Seller on accounts assumed by Purchaser hereunder, and Purchaser will honor and pay all
such checks, drafts, and withdrawals orders, if duly endorsed and to the extent that the

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		credit balances or overdraft privileges of the drawers or makers permit, provided that the
Seller's sole responsibility shall be to actually deliver at Seller's cost to a location
reasonably designated by Purchaser in the State of Washington all such checks, drafts and
withdrawal orders to Purchaser or Purchaser's agent at such times and places as the
parties so shall agree but in no event later than the same day Seller receives such checks,
drafts and withdrawal orders from its agent or processor.  Purchaser agrees to indemnify
Seller for third party costs incurred by Seller with respect to this paragraph, including
charges to the Seller through the check clearing system of the banking industry which
result from check, draft or withdrawal forms of the Seller being used after the Closing
Date by the depositors whose accounts are assumed hereunder.

          C.          If any uncollected item credited to a Deposit at the time of the transfer of
such Deposit to Purchaser is subsequently returned resulting in an overdraft to the
Deposit account, Seller agrees, not later than two (2) business days after demand, to pay
to Purchaser the amount of such uncollected item; provided, however, that Purchaser
shall, upon Seller's making payment for such uncollected item, deliver such uncollected
item to Seller and shall assign to Seller any and all rights which Purchaser may have or
obtain in connection with such returned item.

          D.          If the balance due on any Purchased Loan transferred and assigned to
Purchaser pursuant to the terms of the Agreement has been reduced as a result of the
receipt of an item or items prior to the Closing Date, which are returned after the Closing
Date as uncollected, the asset value represented by the Purchased Loan transferred shall
be correspondingly increased, and an amount in cash equal to such increase shall be paid
by Purchaser to Seller within two (2) business days after receipt of such returned item.

          E.          If Seller receives payment with respect to any Purchased Loan after the
Closing Date, Seller shall remit such payments to Purchaser in the same form that Seller
receives such payments.

          F.          For a period of thirty (30) days after the Closing Date, Seller agrees that
upon demand of Purchaser Seller shall immediately pay to Purchaser the overdraft
amount (negative balance) of any transferred Deposit.

             7.3   Further Assurances.  On and after the Closing Date, Seller shall (i) give such
further assurances to Purchaser and shall execute, acknowledge and deliver all such bills of sale,
deeds acknowledgments and other instruments, and take such further action as may be necessary
and appropriate to effectively vest in Purchaser the full legal and equitable title to the Assets and
to the security interests, if any, relating to the Assets, and (ii) use reasonable efforts to assist
Purchaser in the orderly transition of the Branch operations being acquired by the Purchaser.  In
order to comply with its obligations set forth in subsection (i) above, Seller will grant to specified
employees of Purchaser, if necessary, a power of attorney (the "Power of Attorney") for the
limited purpose of signing and filing all such bills of sale, acknowledgments, assignments and
other instruments.

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             7.4   Signage.  All interior and exterior signs identifying the Seller will be covered or
removed by Purchaser, at Purchaser's expense, by the opening of business on the first business
day after the Closing Date and all signs will be removed within ten (10) calendar days following
the Closing Date.  From and after the Closing Date, Purchaser will at its expense as soon as
reasonably practicable change the name on all documents and facilities relating to the Branch to
Purchaser's name or to a name which is not deceptively similar to Seller.

             7.5   Indemnification by Purchaser.  Purchaser agrees to indemnify and hold Seller
harmless from and against any and all damages, liabilities and losses which may be sustained by
Seller by reason of Purchaser's breach of any representation, warranty or covenant to Seller under
this Agreement.  Purchaser further agrees to indemnify and hold Seller harmless from and against
any and all damages, liabilities and losses which may be sustained by Seller by reason of
Purchaser's actions on and after the Closing Date with respect to the Assets or Assumed
Liabilities transferred hereunder. 

             Purchaser's covenants shall not be deemed to be violated by discharge of Assumed
Liabilities in accordance with normal trade practices or by forbearing to discharge any such
obligation which Purchaser is disputing in good faith and for which Purchaser has provided
adequate reserves, provided Purchaser indemnifies and holds Seller harmless in connection with
the same as set forth above.

             7.6   Indemnification by Seller.  Seller agrees to indemnify and hold Purchaser
harmless from and against any and all damages, liabilities and losses which may be sustained by
Purchaser by reason of Seller's breach of any representation, warranty or covenant to Purchaser
under this Agreement.  Seller further agrees to indemnify and hold Purchaser harmless from and
against any and all damages, liabilities and losses which may be sustained by Purchaser with
respect to the Branch, the Assets or the Assumed Liabilities arising from acts, omissions or
events occurring prior to the Closing Date.

             7.7   Defense of Actions - Purchaser Indemnifications.  Seller shall notify Purchaser
promptly of any lawsuit or claim against Seller which it has reasonable cause to believe would
entitle it to indemnification hereunder.  Purchaser shall be entitled to assume at its expense the
defense of, and to determine the terms of settlement of, any such suit or claim, except that no
term awarding relief other than money damages against Seller may be agreed to without the
consent of Seller, and no award of money damages against Seller shall be agreed to without
satisfactory prior arrangements between Purchaser and Seller to assure Seller that Purchaser will
have sufficient funds available to respond to the award.  If Purchaser promptly so elects to
assume, and promptly so notifies Seller, and does assume, the defense of any such suit or claim,
it shall not be liable for any legal expense or other expenses incurred by Seller with respect to
such suit or claim and Seller shall be solely responsible for those expenses (whether incurred by
Seller before or after Purchaser assumes the defense of any such suit or claim).  If Purchaser does
not assume the defense of any such suit or claim, it shall thereafter be barred from disputing the
nature and amount of the monetary damages ultimately incurred or determined to have been
incurred by Seller in settling or litigating the suit or claim.

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             7.8   Defense of Actions - Seller Indemnifications.  Purchaser shall notify Seller
promptly of any lawsuit or claim against Purchaser which it has reasonable cause to believe
would entitle it to indemnification hereunder.  Seller shall be entitled to assume at its expense the
defense of and to determine the terms of settlement of, any such suit or claim, except that no term
awarding relief other than money damages against Purchaser may be agreed to without the
consent of the Purchaser, and no award of money damages against Purchaser shall be agreed to
without satisfactory prior arrangements between Seller and Purchaser to assure Purchaser that
Seller will have sufficient funds available to respond to the award.  If Seller promptly so elects to
assume, and promptly so notifies Purchaser, and does assume, the defense of any such suit or
claim, it shall not be liable for any legal expense or other expenses incurred by Purchaser with
respect to such suit or claim and Purchaser shall be solely responsible for those expenses
(whether incurred by Purchaser before or after Seller assumes the defense of any such suit or
claim).  If the Seller does not assume the defense of any such suit or claim, it shall thereafter be
barred from disputing the nature and amount of the monetary damages ultimately incurred or
determined to have been incurred by the Purchaser in settling or litigating the suit or claim.

ARTICLE VIII

 CLOSING CONDITIONS

             8.1   Conditions Precedent to Seller's Obligation to Close.  The obligation of Seller
to close the transactions contemplated by this Agreement is subject to the satisfaction (unless
waived in advance in writing by Seller) of each of the following conditions and at or prior to
Closing;

		          (A)         The representations and warranties of Purchaser shall be true and correct
as of the date hereof and as of the time of Closing as if made anew at such time;

          (B)         Purchaser shall have performed all of its covenants and agreements
contained herein which require performance at or prior to Closing;

          (C)         No action or proceeding shall have been instituted pertaining to the
transactions contemplated by this agreement; and

          (D)         All required regulatory approvals, regardless of whether Seller or
Purchaser was required to apply for the same, shall have been received without the
imposition of any burdensome condition upon Seller and all applicable waiting periods
shall have expired.

             8.2   Conditions Precedent to Purchaser's Obligation to Close.  The obligation of
Purchaser to close the transactions contemplated by this Agreement is subject to the satisfaction
(unless waived in advance in writing by Purchaser) of each of the following conditions at or prior
to closing:

		          (A)         The representations and warranties of Seller shall be true and correct as of
the date hereof and as of the time of Closing as if made anew at such time;

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		          (B)         Seller shall have performed all of its covenants and agreements contained
herein which require performance at or prior to Closing;

          (C)         No action or proceeding shall have been instituted pertaining to the
transactions contemplated by this Agreement;

          (D)         All required regulatory approvals, regardless of whether Seller or
Purchaser was required to apply for the same, shall have been received without the
imposition of any burdensome condition upon Purchaser and all applicable waiting
periods shall have expired; and

ARTICLE IX

MISCELLANEOUS

             9.1   Expenses.  Seller and Purchaser each shall pay all of their own out-of-pocket
expenses in connection with this Agreement, including appraisals, accounting and legal fees and
taxes, if any, whether or not the transactions contemplated by this Agreement are consummated.
Purchaser shall be responsible for payment of all costs associated with the filing and recording of
bills of sale and other instruments necessary or desirable to be filed by Purchaser after the
Closing.

             9.2   Employment of Existing Employees.  The Seller shall terminate employees of
the Branch (the "Employees") on or prior to the Closing Date.  The Seller shall provide to the
Purchaser, within ten (10) days after the Signing Date of this Agreement, a list of Seller's present
Branch employees, their salaries, and their benefits.  Prior to Closing, Purchaser agrees to extend
offers of at-will employment to the Employees for the same or similar positions that the
Employees hold with Seller and at no less than the existing annual base salary paid by Seller to
the Employees as of May 31, 2009; provided, however, nothing in this offer of employment shall
limit the right of the Purchaser to terminate the Employees service for any reason and with or
without cause.  Purchaser's employment offers also shall provide the Employees with at least the
same or similar benefits as the Purchaser offers to the Purchaser's other employees that are
similarly situated in terms of their position and longevity (giving Employee credit for years of
service with Seller).  Seller shall be responsible for payment of all salaries and benefits of the
Employees prior to the Closing.  Purchaser and Seller acknowledge that shortly following
Closing, Purchaser expects to close its Lakewood banking branch office and consolidate its
Lakewood operations with and into the Branch.  In connection with this consolidation, an
Employee's employment with the Purchaser may be terminated, or the Employee's duties,
responsibilities or benefits may be materially changed, in Purchaser's sole discretion. Seller shall
indemnify Purchaser for any damages, losses and expenses (including reasonable attorney fees)
incurred by the Purchaser resulting from employment claims by Seller's Branch employees
against Purchaser relating to Seller's actions with respect to such employees prior to termination
of employment on or prior to the Closing Date, as required by the first sentence of this Section
9.2.  The Purchaser shall indemnify Seller for any damages, losses and expenses (including
reasonable attorney fees) incurred by Seller resulting from employment claims by Seller's Branch
employees against the Seller relating to Purchaser's actions with respect to such employees from
and after the Closing Date.

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             9.3   Earnest Money.  Purchaser has paid to Seller simultaneously with the execution
of this Agreement earnest money in the amount of Twenty-Five Thousand Dollars ($25,000) (the
"Earnest Money"), the receipt of which the Seller hereby acknowledges.  The Earnest Money is
not refundable if this Agreement is properly terminated by Seller pursuant to Section 9.4A or by
Purchaser or Seller pursuant to Section 9.4C.

             9.4   Termination; Extension of Closing Date.  This Agreement may be terminated:

		          A.          By the non-defaulting party, if the other party hereto shall fail to perform
or comply in a timely manner with its obligations under this Agreement and such failure
remains uncured on the tenth (10th) day following receipt of written notice from the non-defaulting party thereof.

          B.          By mutual consent of the parties hereto.

          C.          By Seller or Purchaser, if the Closing has not occurred as of September 30,
2009, unless Purchaser provides Seller with written notice at least 30 days prior to
September 30, 2009 of its election to further extend the time for consummation of the
transactions contemplated by this Agreement to December 30, 2009; provided a
defaulting party may not exercise a right of termination or extension under this paragraph.

          D,          By Seller or Purchaser, in the event Seller is unable to obtain an
assignment, at no additional cost to Seller except as expressly set forth in Section 13 of
the real property lease set forth in Schedule 1.2B, of the Leased Real Property to
Purchaser (without any material alterations required by any third party and preserving for
Purchaser all material rights and privileges thereunder).

             9.5   Modification and Waiver.  No modifications of any provision of the Agreement
shall be binding unless in writing and executed by the party sought to be bound thereby.
Performance of or compliance with any covenant given herein or satisfaction of any condition to
the obligations of either party hereunder may be waived by the party to whom such covenant is
given or by whom such condition is intended to benefit, except to the extent any such condition
is required by law, so long as any such waiver is in writing.

             9.6   Binding Effect, Assignment.  This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and assigns, provided,
however, that neither this Agreement nor any rights, privileges, duties or obligations of the
parties hereto may be assigned by either party without the written consent of the other party to
this Agreement, and provided further that in the case of any such assignment the assigning party
shall also remain responsible as a party hereto.

             9.7   Entire Agreement; Governing Law.  This Agreement, together with the Exhibits
attached hereto and made a part hereof, contains the entire Agreement between the parties hereto
with respect to the transactions covered and contemplated hereunder, and supersedes all prior
agreements or understandings between the parties hereto relating to the subject matter thereof.
This Agreement shall be governed by and construed in accordance with the federal banking laws

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of the United States, as appropriate, and otherwise in accordance with the laws of the State of Washington.

             9.8   Headings.  The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of this Agreement.

             9.9   Severability.  In the event that any provision of this Agreement shall be held
invalid, illegal or unenforceable in any respect, the validity, illegality and enforceability of the
remaining provisions contained in this Agreement shall not in any way be affected or impaired
thereby, and this Agreement shall otherwise remain in full force and effect.

             9.10  Counterparts.  This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same agreement and shall become effective when one
or more counterparts have been signed by each of the parties hereto.

             9.11  Notices.  All notices, consents, requests, instruction, approvals, waivers,
stipulations and other communications provided herein to be given by one party hereto to the
other party shall be deemed validly given, made or served, if in writing and delivered personally
or sent by certified mail, return receipt requested, if to 

             Seller addressed to:

		6920 220th Street, SW

Mountlake Terrace, WA  98043

Attention: Joseph Adams, CEO

             Purchaser addressed to:

		2001 5th Avenue, Suite 200

Seattle, WA  98121

Attention: Laurie Stewart, President and CEO

             Notice by certified mail shall be deemed to be received three (3) business days after
mailing of the same. Either party may change the persons or addresses to whom or to which
notices may be sent by written notice to the other.

             9.12  Survival.  All of the representations, warranties, covenants and agreements of the
parties contained in this Agreement, except as otherwise stated, shall survive the Closing.

             9.13  Remedies.  In the event the transactions contemplated by this Agreement are not
consummated due to the willful breach by a party hereto, then the nonbreaching party shall be
entitled to all remedies and relief, at law or in equity, against the breaching party with all
remedies being deemed cumulative and no remedy being deemed exclusive.

             The parties hereto have caused this Agreement to be executed, by their duly authorized
representatives, as of the day and year first above written.

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	PURCHASER:		SELLER:
	By:	/s/ Laura Lee Stewart 
		By:	/s/ Joe Adams 

	Name:	Laura Lee Stewart  
		Name:	Joe Adams 

	Title:	President/CEO
		Title	CEO 

21

INDEX OF EXHIBITS

	Exhibit 1.1A		Personal Property

			
	Exhibit 1.1B		1.1B(1) Excluded Loans as of May 31, 2009; 1.1B(2) Existing Loans
as of May 31, 2009: 1.1B(3) Purchased Loans as of the Closing Date
			
	Exhibit 1.2A		Deposit Liabilities [1.2A(1) as of May 31, 2009; 1.2A(2) as of the
Closing Date]
			
	Exhibit 1.2B		Contracts
			
			
	Exhibit 6.9		Instrument of Transfer, Assignment and Assumption

22EXHIBIT 4.21

EXHIBIT 4.21

Loan Agreement

Borrower: 

Guizhou Yongfu Mining Co., Ltd. (hereinafter referred to as “Party A”)

Address: 

Unit 3-8-20, No. 59 Ruijin North Road, Yunyan District, Guiyuan City, Guizhou Province, the PRC

Postal code:

n/a

Legal representative/ 

Person-in-charge: 

Li Qing

Telephone: 

0851-6885028

Fax:

0851-6831703

Bank:

Corporate Bank Division, Chongqing Branch, China Minsheng Bank Corp Ltd

Account number: 

1101014210021339

Lender: 

Chongqing Branch of China Minsheng Banking Corp. Ltd. (hereinafter referred to as “Party B”)

Address:

No. 9 Jiansin North Road, Chongqing City, the PRC

Postal code:

400020

Legal representative:

Zhang Chang Cun

Telephone:

67695759

Fax:

67695762

According to the applicable laws and regulations of the People’s Republic of China (the “PRC”), Party A and Party B, after reaching an agreement through negotiations, hereby enter into and execute this Agreement.

Article 1

Loan Type

Clause 1

In accordance with the terms and conditions of this Loan Agreement, Party B agrees to provide a long-term loan for Party A.

Article 2

Purpose of the Loan

Clause 2

The purpose of the Loan hereunder is coal mine construction.  Without the written approval of Party B, Party A shall not alter the purpose of the Loan.

Article 3

Amount and Period of the Loan

Clause 3

The amount of the Loan hereunder shall be RMB Two Hundred Million (RMB 200,000,000) only.

Clause 4

The Loan shall have a tenure of eight years.  The loan tenure shall start on February 2, 2009 (the contracted first drawdown date) and continue until February 2, 2017 (the contracted maturity date).

Article 4

Calculation of Interest

Clause 5

5.1

The interest rate shall be 7.722% per annum, which is an annual rate equal to 30% above the 5.94% over-5-year official base lending rate stipulated by The People’s Bank of China on the day when this contract is signed (the “Contracted Interest Rate”).

5.2

The interest shall be calculated from the drawdown date.  On each interest payment date, Party A shall pay Party B the interest accrued from the day after the preceding interest payment date or the drawdown date until that interest payment date and the principal due (if applicable) on that interest payment date.

5.3

The length of the interest period of the Loan is three months.  The interest shall be calculated on a monthly basis and payable on a quarterly basis.  Interest payment date is the 20th day of the last month of each quarter.  The last interest payment date is the maturity date of the Loan.

5.4

In the event of default in the repayment of any part of the Loan on the due date, Party A shall be charged an interest rate equal to 50% above the Contracted Interest Rate (referred to as the “Default Interest Rate”) on the overdue sum from the due date to the actual payment date.  Such default interest shall be calculated monthly on a compound basis based on the actual number of days elapsed.

5.5

In the event of failure to use the loan proceeds for the designated purpose, interest at the rate of 100% above the Contracted Interest Rate stated in Clause 5.1 (referred to as the “Penalty Interest Rate”) shall be charged on the amount of proceeds used for purpose other than the designated one starting from the date when the loan proceeds are inappropriately used.  In the event of failure to pay the penalty interest on time, such penalty interest shall be calculated monthly on a compound basis based on the actual number of days that the loan proceeds are inappropriately used.  In addition, Party B has the right to declare any part or the entire Loan under the Loan Agreement to be forthwith due and payable and Party A shall be held responsible for the default.

5.6

Should The People’s Bank of China adjust the above base lending rate after this contract is signed (the “Adjustment”), the Contracted Interest Rate as stipulated in this Loan Agreement will be automatically adjusted according to the method of interest calculation under Clause 5.1.  The adjusted Contracted Interest Rate will take effect from the day after the date of Adjustment.

In the event of any change in the Contracted Interest Rate, all the Default Interest Rate and Penalty Interest Rate will be automatically adjusted and calculated accordingly.

Party A and Party B are required to neither sign further agreement for the change of interest rate according to Clause 5.6 of this Agreement, nor seek each other’s consent or inform the guarantors or obtain their consent.

Article 5

Drawdown

Clause 6

Upon the full force and effect of this Agreement, Party B has the right to refuse Party A’s drawdown until the following conditions precedent have been satisfied:

6.1

Party A has provided the following documents (including without limitation) in form and substance satisfactory to Party B:

6.1.1

Party A’s business registration certificate (latest annual inspection duly passed), organization code certificate and tax registration certificates;

6.1.2

Party A’s article of association as in force for the time being;

6.1.3

Proof of identity of Party A’s legal representative and his/ her copy of identity card;

6.1.4

A list of names and specimen signatures of Party A’s directors and relevant senior officers mentioned in this Loan Agreement; and

6.1.5

Resolutions of its board of directors authorizing the borrowing of the Loan and the power of attorney to sign on its behalf this Loan Agreement.

6.2

All the relevant guarantee, lien and pledge documents have been duly executed and in full force and effect.

6.3

There is no occurrence or persistence in any event of default.  In case the event of default shall have occurred, either waiver has been obtained from Party B or rectification has been performed to the satisfaction of Party B.

6.4

All the representations and warranties contained in Clause 10 of this Agreement made by Party A shall be true, correct and valid with the same effect as though made on and as of the drawdown date with reference to the facts and circumstances then existing.

6.5

There has been no material adverse change in the financial condition of Party A between the execution date of this Agreement and the drawdown date.

Party B shall, at its absolute discretion, release the Loan even if all the above conditions have not been satisfied.  Party B’s act shall not constitute or be deemed to constitute its defective performance under this Agreement.

Clause 7

Party A may withdraw the proceeds of the Loan in accordance with the drawdown schedule specified in Attachment 1.  Should the actual drawdown date be different from the one specified in the Attachment, the date as recorded in the loan drawdown note shall govern.

Article 6

Repayment of Loan

Clause 8

8.1

Party A shall repay the loan in accordance with the repayment schedule specified in Attachment 2.

8.2

Should the actual first drawdown date be different from the contracted first drawdown date, the maturity date under this Agreement shall be adjusted as follows:

8.2.1

If Party A opts for full lump sum repayment of principal at the time of expiry, the maturity date will be adjusted in accordance with the loan tenure set forth in Clause 4 and the actual first drawdown date;

8.2.2

If Party A opts for repayment of principal by installments, the maturity date and other payment dates will not alter in response to the change of the first drawdown date.

8.3

If the repayment date or the interest payment date falls on a public holiday, payment shall be made on the first business day after that repayment date or interest payment date (and interest will be calculated up to the actual repayment date).  Party A shall ensure sufficient funds are available in its repayment account 

on the repayment date or the interest payment date to meet the principal or interest due.  In the event of a default on a payment due to inadequate funds in Party A’s repayment account, Party A will be liable for default interest and compound interest on the amount overdue.

8.4

Should there be insufficient funds to meet the principal and interest in Party A’s repayment account, Party B has the right to directly debit the principal, interest, default interest, compound interest, liquidated damages and other expenses Party A is liable for from the accounts Party A has in the business establishments owned by China Minsheng Banking Corp. Ltd and Party B is not responsible for any loss or interest incurred.

8.5

Any grant of early repayment of the Loan shall be conditional upon there being no default in payment of the Loan under this Agreement.  Party A should apply to Party B in writing for an early repayment and obtain Party B’s consent ten (10) bank business days in advance.  No early repayment charge is imposed on early repayment of the Loan.

8.6

Should Party A consider a time extension for the repayment of the Loan necessary, it should submit a “Loan Extension Application” to Party B at least thirty (30) days prior to the maturity day.  If Party B decides to grant the time extension, both parties shall enter into a “Loan Extension Agreement”.  In the event that Party B decides not to grant the extension application, Party A should pay the full amount of the loan due as scheduled.

Article 7

Guarantee

Clause 9

Both parties agree to execute the one or more following guarantees:

(i)

Guarantee agreement number “Gong 99112009298673”; and 

(ii)

Collateral agreement number “Gong 991120092668”.

Article 8

Party A’s Representations and Warranties

Clause 10

Party A represents and warrants as follows:

10.1

Party A is a company duly incorporated and validly existing under the law of the People’s Republic of China with full capacity for civil rights and civil acts to enter into and execute this Agreement and has obtained all the permits, permission, registration and documents required to sign this Agreement.

10.2

All the internal authorization procedures needed for signing this Agreement have been completed and are fully valid.  All the necessary actions and authorizations to enter into this Agreement and the obligations under this Agreement shall not 

contradict with the current articles of association, internal regulations, and any contracts, agreements or documents having a binding effect on Party A.

10.3

No action, suit, proceeding or potential material dispute is pending or threatened against Party A before any court, board of arbitration or administrative agency which could or might have a material adverse effect on Party A’s performance of this Agreement.

10.4

Party A does not have any material debt or contingent liability not disclosed to Party B.

10.5

All the information provided for Party B by Party A is true, complete and valid and Party A has not omitted or concealed any significant facts.

10.6

Party A undertakes to use the loan proceeds in accordance with this Agreement and the purpose prescribed by the laws of the PRC.

10.7

Party A shall accept the investigation, enquiry and supervision of Party B in respect of the use of proceeds under this Agreement.

10.8

Party A shall actively give assistance and cooperation to Party B in connection with its investigation, enquiry and supervision of the production, operation and financial condition of Party A.  Party A shall furnish to Party B financial reports such as balance sheet, income statement, statement of cash flow, etc on a regular basis.

10.9

Party A shall promptly inform Party B in writing of any occurrence of an event (including without limitation those events stipulated in Clause 10.3) threatening normal operation or inhibiting the repayment obligations under this Agreement.

10.10

Without the prior written consent of Party B, Party A shall not undertake amalgamation, merger, spin-off, stock company reorganization, project contracting, leasing, joint venture, investment, application for business suspension for rectification, application for dissolution, application for reconciliation/ reform/ bankruptcy, transfer/ disposal of any of its material assets by any means, or other acts which shall affect the interests of Party B by altering the debt/ liability relationship under this Loan Agreement.

10.11

Prior to the full repayment of Loan, Party A shall not provide guarantee with the amount exceeding its net asset value for a third party.

10.12

During the tenure of the Loan, Party A shall notify Party B of any changes in its registered address, company name or legal representative and senior officers in seven (7) days.

10.13

Party A undertakes to provide a new guarantee to the satisfaction of Party B or repay the Loan before the maturity date in case the guarantor has violated any obligations and commitments under the guarantee agreement, the guarantor is incapable of providing guarantee, or the diminishment in the value or damage of the collateral.

10.14

The written consent of Party B is required if Party A shall transfer the liability under this Agreement to a third party.

Article 9

Party B’s Rights and Obligations

Clause 11

The rights and obligations of Party B

11.1

Party B undertakes to release the proceeds in accordance with this Agreement and the execution of this Loan Agreement has been properly authorized in full force and effect.

11.2

Upon full performance of the designated obligations by Party A and the satisfaction of the conditions precedent, Party B should remit the amount it undertakes to Party A as scheduled.

11.3

Party B should not, without prior consent of Party A, divulge in any form any information obtained under or in connection with this Agreement concerning Party A’s liabilities, finance, production, operation, etc. to any other parties, except under the following conditions:

11.3.1

Disclosure is required by applicable law or regulation, or by any competent judicial, governmental, supervisory or regulatory body or the stock exchange in which Party B is listed;

11.3.2

Disclosure in accordance with applicable law, rule and regulation to relevant parties or third party is required if Party B (i) transfers or assigns the debt under this Agreement to a third party; (ii) engages a trust to manage the debt under this Agreement; and (iii) conducts asset securitization exercise of which the debt under this Agreement is a part.

11.4

Party B shall announce its change of registered address in time while this Agreement is in effect.

11.5

The written consent of Party A is not required if Party B transfers or assigns its debt under this Agreement to a third party.  Party B shall inform Party A of the assignment after the execution of debt assignment agreement.

11.6

All the repayment made by Party A (including the monies received by Party B according to this Agreement) shall be applied and settled of debt in the following order: (i) expenses in connection with the enforcement of the debt and guarantee; (ii) damage compensation; (iii) liquidated damages; (iv) compound interest; (v) penalty interest; (vi) interest; (vii) principal.  Party B shall have the right to modify the above order.

11.7

Party B has the right to examine the use of the loan proceeds by reviewing the operation information of Party A.

Article 10

Default Liability

Clause 12

Party A shall be deemed to be in default under this Loan Agreement upon the occurrence of any or more of the following events:

12.1

The Guarantor fails to complete the guarantee formalities (whether caused by Party A or the Guarantor), or Party A fails to make the drawdown and such failure is not remedied within thirty (30) days (including statutory holidays, Saturday and Sunday).  Party B has the right to demand penalty based on the amount in default, the actual number of days elapsed and the Default Interest Rate.  In addition, Party B has the right to rescind this Agreement.

12.2

Party A fails to pay in accordance with the this Agreement any sums hereunder and thereunder when due.

12.3

The balance sheet and income statement furnished by Party A to Party B are falsified or have concealed material facts.  Party A refuses the investigation, enquiry and supervision of Party B in connection with its use of proceeds under this Agreement, production, operation and financial activities.  Any representation or warranty made or deemed to be made by Party A in Clause 10 is or proves to have been false, incorrect or misleading in any material respect when made or deemed to be made.

12.4

Party A explicitly states or expresses through its acts that it shall not perform this Agreement or any one of the obligations in other commitments, or the guarantor is in breach of any one of its obligation under the guarantee agreement.

12.5

Party A is in default with any contract, agreement, commitment or guarantee to which it is one of the parties, constitutes a default with other liabilities, or being declared (either actual or probably) other loan obligations to be due ahead of the contract due date.

12.6

Party A fails to use the proceeds for the designated purpose.

12.7

Party A fails to provide a new guarantee as demanded by Party B if there occurs a material adverse change in the condition of guarantee adversely affecting the debt of Party B, including without limitation, (i) the guarantee agreement is yet in full force and effect, void or rescinded; (ii) the guarantor fails to possess part or all of its guarantee ability or expresses its intention not to perform or comply with its guarantee obligations; (iii) the guarantor fails to duly perform or observe any of its obligations or commitments under the guarantee agreement or other commitment to which it is a party; and (iv) the pledged property or assets are damaged, lost, impaired or diminish in value.

12.8

There are material changes in Party A’s financial condition, or action, suit, proceeding or potential material dispute threatening against Party A before any court, board of arbitration or administrative agency, which could or might have a material adverse effect on Party A’s performance of this Agreement.

12.9

Party A fails to rectify any other material unfavorable conditions within the prescribed time required by Party B.

Clause 13

Upon the occurrence of any Event of Default by Party A, Party B may exercise all of its rights under this Agreement, declare the Loan and all other monies payable under this Agreement to be forthwith due and payable, demand immediate repayment, and cease extending the remaining tranche of the Loan.

Clause 14

Upon the occurrence of an Event of Default by Party A, Party B may take legal proceeding against Party A.  Party A shall bear on a full indemnity basis all litigation, attorney, travelling and debt/ guarantee enforcement expenses in connection with the legal proceeding.

Clause 15

Provided that Party A has performed all its obligations under this Agreement, it shall have the right to demand liquidated damages from Party B if Party B fails to make the loan proceeds available on the prescribed date and in the prescribed amount.  The liquidated damages shall be calculated with reference to the default amount, the actual number of days elapsed and the Default Interest Rate.

Article 11

Effectiveness of the Agreement

Clause 16

This Agreement shall be in full force and effect after it is duly signed and sealed by the legal representatives/ the persons-in-charge or authorized representatives of both parties.

Article 12

Amendment and Termination of Agreement

Clause 17

This Agreement cannot be amended or rescinded save in writing duly executed by both parties through mutual negotiation.

Article 13

Dispute Resolution

Clause 18

Disputes arising out of or in connection with the Loan Agreement shall be settled through negotiation, or submitted to the People’s Court of the place where Party B is located, should the negotiation fail.

Article 14

Supplementary Provisions

Clause 19

(Skipped)

Clause 20

Notices and Service of Proceedings

20.1

Any notice and written communication including with limitation any and all written documents and notices as stipulated by this Agreement to be made or delivered by one party to another shall be made by registered letter, facsimile, courier service, or other communication means to the designated address set out on page one of this Loan Agreement.

20.2

Any notices or written documents from one party to another shall be deemed to be sufficiently and duly served on the fourth day after having sent by registered letter.  Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission as evidenced by an automatically generated confirmation of transmission.  In case of courier delivery, any notices or written document shall be deemed to be sufficiently and duly served on the date when despatched to the recipient’s address.  Should there be any change in the contact details of either party, the party concerned shall inform the counter party in writing in seven (7) days in accordance with this clause.  All subsequent notices and documents shall then be served according to the new contact.

Clause 21 Miscellaneous

Party A shall ensure that its own RMB150 million project investment amount has been duly paid before the loan proceeds are released by Party B.  The actual repayment date of the Loan shall be determined by the drawdown document.

Clause 22

This Agreement is made in duplicate.  Each party holds one original copy with the same legal effect.

Clause 23

Party B has explained all the clauses in the Agreement in details to Party A on signing the Agreement.  Both Party A and Party B have no further comment on all the clauses of the Agreement and fully and correctly understand the legal implications of their respective rights, obligations, restrictions and exclusion.

Party A and Party B hereto have executed this Agreement on February 2, 2009 in Chongqing City.

Party A (affixing the Official Seal)

/s/ Li Qing

Legal Representative/ Person-in-charge (or Authorized Representative)

February 2, 2009

Party B (affixing the Official Seal)

/s/

Legal Representative/ Person-in-charge (or Authorized Representative)

February 2, 2009

Attachment 1

The Drawdown Date and Amount of the Loan

			
	Tranche

	Drawdown Date

	Amount in RMB

	1

	March 1, 2009

	One Hundred Million

	2

	December 1, 2009

	One Hundred Million

The actual drawdown date shall be governed by the loan drawdown note.

Attachment 2

The Repayment Date and Amount of the Loan

			
	Tranche

	Repayment Date

	Amount in RMB

	1

	February 2, 2013

	Twenty Million

	2

	February 2, 2014

	Twenty Million

	3

	February 2, 2015

	Forty Million

	4

	February 2, 2016

	Sixty Million

	5

	February 2, 2017

	Sixty Million

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