S-8

As filed with the Securities and Exchange Commission on November 6, 2002.

Registration No. 333-______

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

AMERICANWEST BANCORPORATION

(Exact name of registrant as specified in its charter)

Washington	91-1259511
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9506 North Newport Highway

Spokane, Washington 99218-1200

(Address of registrant’s principal executive offices)

Latah Bancorporation, Inc. 1999 Employee Incentive Stock Option Plan

Latah Bancorporation, Inc. Non-Qualified Stock Option Plan

(Full titles of the plans)

Wesley E. Colley

President and Chief Executive Officer

AmericanWest Bancorporation

9506 North Newport Highway

Spokane, Washington 99218-1200

(509) 467-6949

(Name, address and telephone number of agent for service)

With copies to:

Thomas A. Sterken

Keller Rohrback L.L.P.

1201 Third Avenue, Suite 3200

Seattle, Washington 98101-3052

(206) 623-1900

(Name, address and telephone number)

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share(1)	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Common Stock, no par value Common Stock, no par value	248,629(2) 6,705(3)	$2.50 $6.10	$621,573 $40,901	$57.18 $3.76

⁽¹⁾ Estimated only for the purpose of calculating the registration fee in accordance with Rule 457(h)(1) under the Securities Act of 1933, as amended (the “Securities Act”), based on the average exercise prices of the options outstanding under the Plans.

⁽²⁾ Shares of registrant’s common stock issuable upon exercise of options outstanding under the Latah Bancorporation, Inc. 1999 Employee Incentive Stock Option Plan, together with an indeterminate number of additional shares which may be necessary to adjust the number of shares reserved for issuance under the plan as a result of any future stock split, stock dividend or similar adjustment of the outstanding common stock, as provided in Rule 416(a) under the Securities Act.

⁽³⁾ Shares of registrant’s common stock issuable upon exercise of options outstanding under the Latah Bancorporation, Inc. Non-Qualified Stock Option Plan, together with an indeterminate number of additional shares which may be necessary to adjust the number of shares reserved for issuance under the plan as a result of any future stock split, stock dividend or similar adjustment of the outstanding common stock, as provided in Rule 416(a) under the Securities Act.

This Registration Statement shall become effective automatically upon the date of filing in accordance with Section 8(a) of the Securities Act of 1933, as amended, and 17 C.F.R. Section 230.462.

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

The document(s) containing the plan information required by Item 1 of Form S-8 and the statement of availability of registrant information and any other information required by Item 2 of Form S-8 will be sent or given to participants in the Latah Bancorporation, Inc. 1999 Employee Incentive Stock Option Plan and the Latah Bancorporation, Inc. Non-Qualified Stock Option Plan as specified by Rule 428 of the Securities Act of 1933, as amended (the “Securities Act”). In accordance with Rule 428 and the requirements of Part I of Form S-8, such document(s) are not being filed with the Securities and Exchange Commission (“Commission”), either as part of this registration statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act. AmericanWest Bancorporation (“AmericanWest”) shall maintain a file of such documents in accordance with the provisions of Rule 428. Upon request, AmericanWest shall furnish to the Commission or its staff a copy or copies of all of the documents included in such file.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.    Incorporation of documents by reference

The following documents are incorporated by reference into this registration statement:

(a) AmericanWest’s annual report on Form 10-K for the fiscal year ended December 31, 2001;

(b) AmericanWest’s quarterly reports on Form 10-Q for the quarters ended June 30, 2002 and March 31, 2002;

(c) AmericanWest’s current reports on Form 8-K filed on August 1, 2002 and April 1, 2002; and

(d) The description of AmericanWest’s common stock, no par value, as set forth in its registration statement on Form S-4 filed on May 8, 2002 (Commission File No. 333-87838), including any amendments or reports filed for the purpose of updating such description.

All documents subsequently filed by AmericanWest Bancorporation (“AmericanWest”) pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents.

Item 4.    Description of Securities

Not applicable.

Item 5.    Interests of Named Experts and Counsel

Not applicable.

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Item 6.    Indemnification of directors and officers

Sections 23B.08.500 through 23B.08.600 RCW of the Washington Business Corporation Act (“WBCA”) contain specific provisions relating to indemnification of directors and officers of Washington corporations. In general, the statute provides that (i) a corporation must indemnify a director or officer who is wholly successful in his or her defense of a proceeding to which he or she is a party because of his or her status as such, unless limited by the articles of incorporation, and (ii) a corporation may indemnify a director or officer if he or she is not wholly successful in such defense, if it is determined as provided in the statute that the director meets a certain standard of conduct, provided when a director is liable to the corporation, the corporation may not indemnify him or her. The statute also permits a director or officer of a corporation who is a party to a proceeding to apply to the courts for indemnification or advance of expenses, unless the articles of incorporation provide otherwise, and the court may order indemnification or advance of expenses under certain circumstances set forth in the statute. The statute further provides that a corporation may in its articles of incorporation or bylaws or by resolution provide indemnification in addition to that provided by the statute, subject to certain conditions set forth in the statute.

Pursuant to AmericanWest’s bylaws, AmericanWest will, to the fullest extent permitted by the WBCA, reimburse and indemnify the directors and officers of AmericanWest, its subsidiaries and affiliates for expenses, judgments, fines and amounts paid in settlement incurred by such person in connection with any legal action, suit or proceeding by reason of the fact that such person is or was a director or officer, except (a) with respect to any matter as to which he or she shall be finally adjudged to be liable for negligence or bad faith in the performance of his or her duties as such director or officer, or (b) in the case of a criminal proceeding that he had not acted in good faith for a purpose which he or she reasonably believed to be in the best interests of the corporation and had no reasonable cause to believe that his or her conduct was unlawful. Executives and managers of the corporation are entitled to similar reimbursement and indemnification.

Item 7.    Exemption from Registration Claimed

Not applicable.

Item 8.    Exhibits

The following documents are filed as part of this registration statement or incorporated by reference herein:

Exhibit Number	Description
5.1	Opinion of Keller Rohrback L.L.P., regarding legality of the common stock being registered.
23.1	Consent of Moss Adams LLP.
23.2	Consent of Keller Rohrback L.L.P. (included in Exhibit 5.1).
24.1	Power of Attorney (included on the signature page of this registration statement).
99.1	Latah Bancorporation, Inc. 1999 Employee Incentive Stock Option Plan.
99.2	Latah Bancorporation, Inc. Non-Qualified Stock Option Plan.

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Item 9.    Undertakings

A.    AmericanWest hereby undertakes:

1.    To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

i.    To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

ii.    To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; and

iii.    To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; provided, however, that paragraphs A.1.i. and A.1.ii. above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by AmericanWest pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) that are incorporated by reference in this registration statement.

2.    That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3.    To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.

B.    AmericanWest hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of AmericanWest’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 (and, where applicable, each filing of any employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

C.    Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of AmericanWest pursuant to the foregoing provisions or otherwise, AmericanWest has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by AmericanWest of expenses incurred or paid by a director, officer or controlling person of AmericanWest in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registrered, AmericanWest will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act, AmericanWest certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Spokane, State of Washington, as of the 1st day of November, 2002.

AMERICANWEST BANCORPORATION
By:	/s/    WESLEY E. COLLEY
	Wesley E. Colley President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Wesley E. Colley and Wade A. Griffith, or either of them, with full power of substitution and full power to act as his or her true and lawful attorney-in-fact and agent in his or her name, place and stead, and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this registration statement, including any and all post-effective amendments, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or the substitute for such attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities indicated as of the 1st day of November, 2002.

Signature	Title
/s/    WESLEY E. COLLEY         Wesley E. Colley	President and Chief Executive Officer, Director (Principal Executive Officer)
/s/    WADE A. GRIFFITH         Wade A. Griffith	Vice President and Acting Chief Financial Officer (Principal Financial and Accounting Officer)
/s/    JAMES R. ELLIOTT         James R. Elliott	Director
/s/    ROBERT J. GARDNER         Robert J. Gardner	Director

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/s/    NORMAN V. MCKIBBEN         Norman V. McKibben	Director
/s/    KEITH P. SATTLER         Keith P. Sattler	Director
/s/    DONALD H. SWARTZ II         Donald H. Swartz II	Director
/s/    P. MIKE TAYLOR         P. Mike Taylor	Director

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INDEX TO EXHIBITS

Exhibit Number	Description
5.1	Opinion of Keller Rohrback L.L.P., regarding legality of the common stock being registered.
23.1	Consent of Moss Adams LLP.
23.2	Consent of Keller Rohrback L.L.P. (included in its opinion filed as Exhibit 5.1).
24.1	Power of Attorney (included on the signature page of this registration statement).
99.1	Latah Bancorporation, Inc. 1999 Employee Incentive Stock Option Plan.
99.2	Latah Bancorporation, Inc. Non-Qualified Stock Option Plan.

EX-5.1

Exhibit 5.1

LAW OFFICES OF
KELLER ROHRBACK L.L.P.
KAREN E. BOXX°°°	MARK A. GRIFFIN	RYAN M. RODENBERG	GEORGE KAHIN (1965)
JOHN H. BRIGHT	AMY N.L. HANSON**	CARMEN R. ROWE	JOHN D. CARMODY (1966)
GRETCHEN FREEMAN CAPPIO	IRENE M. HECHT	DAVID J. RUSSELL	ERLE W. HORSWILL (1978)
KATHLEEN KIM COGHLAN†	SCOTT C. HENDERSON	LYNN LINCOLN SARKO**†††	ROBERT K. KELLER (1992)
T. DAVID COPLEY°	STEPHEN J. HENDERSON	FREDERICK W. SCHOEPFLIN	PINCKNEY M. ROHRBACK (1994)
CLAIRE CORDON	BENJAMIN J. LANTZ	WILLIAM C. SMART
ROB J. CRICHTON***	ELIZABETH A. LELAND	THOMAS A. STERKEN	*    ALSO ADMITTED IN CALIFORNIA
JENNEFER A. FALLAT°°	DAVID R. MAJOR	BRITT L. TINGLUM**	**    ALSO ADMITTED IN WISCONSIN
HAROLD FARDAL	JOHN MELLEN††	LAURENCE R. WEATHERLY	***    ALSO ADMITTED IN NEW YORK
JULI E. FARRIS*†††	ALEXANDER PERKINS	MARGARET E. WETHERALD	†    ALSO ADMITTED IN HAWAII
DANIEL S. FRIEDBERG**	PAULETTE E. PETERSON	MICHAEL WOERNER	††    ALSO ADMITTED IN ILLINOIS
GLEN P. GARRISON	ERIN M. RILEY**	BENSON D. WONG	†††    ALSO ADMITTED IN WASHINGTON, D.C.
			°    ALSO ADMITTED IN ARIZONA
			° °   ALSO ADMITTED IN FLORIDA
			° ° °   OF COUNSEL

November 6, 2002

The Board of Directors

AmericanWest Bancorporation

9506 North Newport Highway

Spokane, WA 99218-1200

Re: Form S-8 Registration Statement; Latah Bancorporation, Inc. Stock Option Plans

Ladies and Gentlemen:

We have acted as counsel to you in connection with the preparation of a registration statement on Form S-8 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Act”), which you are filing with the Securities and Exchange Commission with respect to 255,334 shares of common stock, no par value per share (the “Shares”), which may be issued by AmericanWest Bancorporation pursuant to outstanding options issued under the 1999 Employee Incentive Stock Option Plan and the Non-Qualified Stock Option Plan of Latah Bancorporation, Inc. (“Latah”) (the “Plans”). These options were assumed by AmericanWest in its merger with Latah. We have examined the Registration Statement and such documents and records of AmericanWest and other documents as we have deemed necessary for the purpose of this opinion. In giving this opinion, we are assuming the authenticity of all instruments presented to us as originals, the conformity with originals of all instruments presented to us as copies, and the genuineness of all signatures.

Based upon, and subject to, the foregoing, we are of the opinion that upon the issuance of the Shares of AmericanWest Bancorporation in accordance with the terms of the outstanding options issued under the Plans, such Shares will be duly authorized, validly issued, fully paid, and nonassessable.

We consent to the filing of this opinion as an exhibit to the Registration Statement, and further consent to the use of our name when appearing on the Registration Statement and any amendment thereto.

Very truly yours,

/s/    KELLER ROHRBACK LLP

Keller Rohrback L.L.P.

1201 THIRD AVENUE    SUITE 3200    SEATTLE, WASHINGTON 98101-3052    

Telephone (206) 623-1900    Fax: (206) 623-3384    www.kellerrohrback.com

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by reference in this registration statement on Form S-8 with respect to the 1999 Employee Incentive Stock Option Plan and the Non-Qualified Stock Option Plan of Latah Bancorporation, Inc., of our report dated January 24, 2002, included in AmericanWest Bancorporation’s Annual Report on Form 10-K for the year ended December 31, 2001.

/s/    Moss Adams LLP

Everett, Washington

October 31, 2002

EX-99.1

Exhibit 99.1

LATAH BANCORPORATION, INC.

1999 EMPLOYEE INCENTIVE STOCK OPTION PLAN

Dated December 10, 1999

As amended October 12, 2000

TABLE OF CONTENTS

		Page
ARTICLE I	Purpose of Plan	1
ARTICLE II	Administration of the Plan	1
ARTICLE III	Eligibility	2
ARTICLE IV	Shares Available for Incentive Stock Options	3
ARTICLE V	Option Terms	3
ARTICLE VI	Limitation on Exercise of Options	4
ARTICLE VII	Exercise of Option	4
ARTICLE VIII	Transferability of Options	5
ARTICLE IX	Termination of Options	6
ARTICLE X	Adjustments to Options	6
ARTICLE XI	Right of Repurchase	7
ARTICLE XII	Termination and Amendment	9
ARTICLE XIII	Option Agreement and Legend Requirement	10
ARTICLE XIV	Miscellaneous Provisions	11
ARTICLE XV	Effective Date of Plan	11

LATAH BANCORPORATION, INC., a Washington corporation (the “Company”), hereby establishes and sets forth the terms of the 1999 EMPLOYEE INCENTIVE STOCK OPTION PLAN (the “Plan”), dated December 10, 1999.

ARTICLE I

Purpose of Plan

The purpose of this Plan is to provide participating employees an incentive to exert their best efforts on behalf of the Company. The Plan seeks to accomplish this purpose by giving such employees an opportunity to gain a proprietary interest in the Company in the form of stock options. Holders of the options are allowed to acquire stock of the Company on favorable terms. An option granted hereunder shall be referred to herein as an “Incentive Stock Option”, and all such options granted hereunder are intended to constitute an “incentive stock option”‘ as such term is defined in Section 422 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

ARTICLE II

Administration of the Plan

2.1    This Plan shall be administered by the Board of Directors of the Company (the “Board”) unless a committee of the Board is appointed in accordance with this Section 2. The Board, or such committee, if appointed, will be referred to in this Plan as the “Administrative Committee.”

2.2    The Board may at any time appoint a committee, consisting of not less than two (unless there shall be fewer than two Directors) of its members, to administer this Plan on behalf of the Board in accordance with such terms and conditions not inconsistent with this Plan as the Board may prescribe. The committee, after it is appointed, shall continue to serve until otherwise directed by the Board. The Board may appoint additional members to the Committee, remove members (with or without cause), fill vacancies however caused, and/or remove all members of the committee and thereafter directly administer this Plan.

2.3    A majority of the members of the Administrative Committee shall constitute a quorum, and, subject to the limitations of this Section 2, all actions of the Administrative Committee shall require the affirmative vote of members who constitute a majority of a quorum. Members of the Administrative Committee may vote on any matters affecting the administration of, or the grant of Incentive Stock Options under the Plan provided, however, that no member (unless there shall be only one member) shall vote on the granting of an Incentive Stock Option to himself or herself (but a member may be counted in determining the existence of a quorum at a. meeting of’ the Administrative Committee during which action is taken with respect to the granting of such an Incentive Stock Option).

2.4    Notwithstanding the foregoing provisions of this Section 2, if the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of’ 1934 (the “Exchange Act”), this Plan shall, from the effective date of registration until six months after the termination of thereof, be administered in a manner that satisfies the conditions of Rule 16b-3 under the Exchange Act (including any amendments thereof and any successor provision similar hereto) so that the grant of Incentive Stock Options under this Plan, and all other actions taken with respect to the Plan, to the options granted thereunder’ and to the Common Stock acquired upon exercise of Incentive Stock Options, shall, to the extent possible, be exempt from the operation of Section 16(b) of the Exchange Act.

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2.5    The following provisions shall apply to the Administrative Committee:

(a)    The Administrative Committee shall have the authority (i) to administer this Plan in accordance with its express terms; (ii) to determine all questions arising in connection with the administration, interpretation, and application of this Plan, including all questions relating to the value of the Common Stock; (iii) to correct any defect, supply any information and reconcile any inconsistency in such manner and to such extent as shall be deemed necessary or, advisable to carry out the purpose of this Plan; (iv) to prescribe, amend and rescind rules and regulations relating to the administration of this Plan; (v) to determine the duration and purposes of leaves of absence which may be granted to participants without constituting a termination of employment for purposes of this Plan; and (vi) to make all other determinations necessary or advisable for administration of this Plan.

(b)    The authority of the Administrative Committee to administer the Plan shall be exercised consistently with the intent that the Incentive Stock Options issued under this Plan qualify under Section 422 of the Code (including any amendments thereof or successor provision similar thereto).

(c)    All determinations made by the Administrative Committee in good faith on matters referred to in this Section 2.5 shall be final, conclusive, and binding upon all persons. The Administrative Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan.

ARTICLE III

Eligibility

3.1    An officer, director or other individual shall be eligible to participate in this Plan provided that such individual (i) is in the employ of the Company or its Affiliate, (ii) is determined by the Administrative Committee to be a key employee of the Company or its Affiliate, and (iii) is selected by the Administrative Committee to receive one or more Incentive Stock Options under this Plan. Each key employee so selected by the Administrative Committee shall hereafter be referred to as an “Optionee.”

3.2    As used in this Plan. an “Affiliate” of a corporation shall mean a “Parent corporation” of such corporation, as described in Section 424(e) of the Code, or a ‘subsidiary corporation” of such corporation, as described in Section 424(f) of the Code.

3.3    No Incentive Stock Option shall be granted hereunder to a key employee who is not a resident of the State of Washington, unless the Administrative Committee shall have determined, based on the advice of counsel, that the grant of such Incentive Stock Option (and the exercise thereof by the Optionee) will not violate the securities laws of the state where the Optionee resides.

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ARTICLE IV

Shares Available for Incentive Stock Options

The aggregate number of shares of Common Stock reserved for issuance upon exercise of Incentive Stock Options granted under this Plan shall be 80,000. This number shall be subject to any adjustment required or permitted by the provisions of Section 10. If any Incentive Stock Option granted under the terms of this Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares of Common Stock formerly subject thereto shall again be available for purposes of this Plan.

ARTICLE V

Option Terms

5.1    With respect to each Incentive Stock Option granted to an Optionee selected by the Administrative Committee in accordance with Section 3, the Administrative Committee shall specify the following terms of the option:

(a)    The number of shares of Common Stock subject to the Incentive Stock Option.

(b)    The date on which the grant of the Incentive Stock Option shall be effective (the “Date of Grant”).

(c)    The period of time during which the Incentive Stock Option shall be exercisable, which shall in no event be more than ten (10) years from the Date of Grant of the option; provided, however, that if the Incentive Stock Option is granted to an optionee who on the Date of Grant owns, either directly or indirectly within the meaning of Section 424(d) of the Code, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or an Affiliate of the Company, the period of time during which such Incentive Stock Option shall be exercisable shall in no event be more than five (5) years following its Date of Grant.

(d)    The price or prices at which the Incentive Stock Option shall be exercisable by the Optionee (the “Option Price”); provided, however, that the Option Price shall in no event be less than the fair market value, on the Date of’ Grant, of the shares of Common Stock subject thereto; and provided further, that, if such Incentive Stock Option is granted to an Optionee who on the Date of Grant owns, either directly or indirectly within the meaning of’ Section 424(d) of the Code, more than ten percent (10%) of’ the total combined voting power of all classes of stock of the Company or an Affiliate of the Company, then the Option Price shall be at least one hundred ten percent (110%) of’ the fair market value, on the Date of grant, of the Common Stock subject thereto

(e)    Any vesting schedule pursuant to which the right of the Optionee to exercise the Incentive Stock Option shall be contingent upon the passage of a specified period of time following its Date, of Grant, it being intended that the Administrative Committee shall have complete discretion with respect to the terms of the vesting schedule, including, without limitation, discretion (i) to allow full and immediate vesting upon grant of the Incentive Stock Option, (ii) to permit partial vesting in stated percentage amounts based on the length of the holding period of the Incentive Stock Option, or (iii) to permit full vesting after a stated holding period has passed. No rights to exercise the Incentive Stock Option shall vest after the termination of an Optionee’s employment with the Company, unless further vesting is expressly allowed in the written agreement evidencing the Incentive Sock Option.

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(f)    Whether shares of Common Stock acquired upon exercise of the incentive Stock Option will be subject to repurchase in accordance with Section 11 below.

(g)    Such other terms and conditions as the Administrative Committee deems advisable and as are consistent with the terms and conditions of this Plan, including, without limitation, any repurchase provisions different from those set forth in Section 11 below.

5.2    Notwithstanding any provision of this Section 5 to the contrary, no Incentive Stock Option shall be granted hereunder after the date immediately preceding the tenth (10th) anniversary of the date this Plan is adopted by the Board. Except as expressly provided herein, nothing contained in this Plan shall require that the terms and conditions of Incentive Stock Options granted hereunder be uniform.

ARTICLE VI

Limitation on Exercise of Options

The aggregate fair market value of the Common Stock with respect to which, during any calendar year, one or more Incentive Stock Options under this Plan (and/or one or more options under any other plan maintained by the Company or any of its Affiliates for the granting of options intended to qualify under Section 422 of the Code) are exercisable for the first time by an Optionee shall not exceed $100,000 (said value to be determined as of the respective Dates of Grant of such options).

ARTICLE VII

Exercise of Option

Subject to Section 6 and any terms of an Incentive Stock Option specified pursuant to Section 5, an Optionee (or the Qualified Successor, as defined in Sections 8.2 and 8.3) may exercise an Incentive Stock Option, or any pan thereof’ (unless partial exercise is specifically prohibited by the terms of the Incentive Stock Option), by giving written notice thereof to the Company at its principal place of business. Such notice shall include a written representation that the shares to be acquired will be acquired and held for investment and not for resale or distribution and be accompanied by any documents required by Section 5.3 above. Such notice shall be accompanied by foil payment of the Option Price for the shares of Common Stock for which exercise is made. Payment shall be in lawful money of the United States and shall be made in cash or by certified or cashier’s check: provided, however, that in the discretion of the Administrative Committee, payment may be made, in whole or in part, by surrendering, or attesting to the ownership to shares of Common Stock that are already owned by the Optionee. Such shares of Common Stock shall be, valued at their fair market on the date when the Incentive Stock Option is exercised. The Optionee shall not surrender, or attest to the ownership of shares of Common Stock in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Incentive Stock Option for financial reporting purposes. Payment may also be made in any other form approved by the Administrative Committee. Following the exercise of an Incentive Stock Option, the Administrative Committee shall cause the information statement required by Section 6039 of the Code to be furnished to the optionee within the time and in the manner prescribed by law.

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ARTICLE VIII

Transferability of Options

8.    Except as provided in Sections 8.2, 8.3 and 8.4 below, no Incentive Stock Option shall be transferable or exercisable by any person other than the optionee to whom such Incentive Stock Option was originally granted.

8.2    In the event of the demise of an optionee while in the employ of the Company. any incentive Stock Options held by the Optionee shall pass to the person or persons entitled thereto under the will of the Optionee or applicable laws of descent and distribution (such person or persons are sometimes herein referred to collectively as the “Qualified Successor” of the Optionee). Any right under an Incentive Stock Option which the Optionee could have exercised immediately prior to the date of his or her demise shall, subject to Section 9 below, be exercisable by the Qualified Successor for a period of one (1) year following such demise.

8.3    In the event of an Optionee’s demise, after the termination of Optionee’s employment on account of a Disability (as defined in Section 9.2 below) but prior to the expiration of the one (1) year period specified in Section 9.2, any right under an Incentive Stock Option which the Optionee could have exercised immediately prior to the date of his or her demise shall, subject to Section 9, pass to and be exercisable by the Qualified Successor of the Optionee until the expiration of such period of one (1) year following the date optionee’s termination.

8.4    In the event of the demise of an Optionee, after the termination of Optionee’s employment for any reason other than Disability, but prior to the expiration of the three (3) month period specified in Section 9.3, any right under any Incentive Stock Option which the Optionee could have exercised immediately prior to the date of his or her demise shall. subject to Section 9, pass to and be exercisable by the Qualified Successor of the Optionee until the expiration of the three (3) months period following the date of Optionee’s employment termination.

8.5    In the event, two or more persons constitute the Qualified Successor of an Optionee, all rights of such Qualified Successor shall be exercisable, if at all, by the unanimous agreement of such persons.

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ARTICLE IX

Termination of Options

To the extent not earlier exercised, an Incentive Stock Option shall terminate at the earliest of the following dates:

(i)    The date specified in such Incentive Stock Option, which date shall not be extended for any reason;

(ii)    One (1) year following the date of termination of the Optionee’s employment with the Company on account of (a) the Optionee’s demise, or (b) the Optionee’s disability, as defined in Section 22(e)(3) of the Code (herein referred to as “Disability”);

(iii)    Three (3) months following the date of termination of the Optionee’s employment with the Company for any reason other than the Optionee’s demise or Disability;

(iv)    The date of any sale, transfer or hypothecation, or any attempted sale, transfer or hypothecation, of the Incentive Stock Option, by the Optionee or his or her Qualified Successor;

(v)    The date a voluntary or involuntary petition is filed under the bankruptcy laws of’ the United States, or under the insolvency laws of any state, for the estate of the. Optionee or his or her Qualified Successor; and,

(vi)    The date specified in Section 10.2 for such termination in the event of a Terminating Event.

ARTICLE X

Adjustments to Options

10.1    In the event there is a material alteration in the capital structure of the Company on account of a reorganization, merger, recapitalization stock split, reverse stock split, stock dividend or otherwise, then the Administrative Committee shall make such adjustments to this Plan, and to the Incentive Stock Options then outstanding and thereafter granted under this Plan, as the Administrative Committee determines to be appropriate and equitable under the circumstances. Such adjustments may include, without limitation (a) a change in the number or kind of shares of stock of the Company covered by the Incentive Stock Options, and/or (b) a change in the Option Price payable per share; provided, however, that the aggregate Option Price applicable to the unexercised portion of existing Incentive Stock Options shall not be altered, it being intended that any adjustments made with respect to the Incentive Stock Options shall apply only to the price per share and the number of shares subject thereto. For purposes of this Section 10.1, neither (i) the issuance of additional shares of Common Stock or other securities of the Company in exchange for adequate consideration (including services), nor (ii) the conversion into Common Stock of any securities of the Company now or hereafter outstanding, shall be deemed material alterations in the capital structure of the Company. In the event the Administrative Committee shall determine that the nature of a material alteration in the capital structure of the Company is such that it is not feasible or advisable to make adjustments to this Plan or to the Incentive Stock Options granted hereunder, such event shall be deemed a Terminating Event as defined in Section 10.2 below.

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10.2    In the event of (a) the dissolution or liquidation of the Company, (b) a merger or other reorganization of the Company with one or more corporations as a result of which the Company will not be a surviving corporation, (c) the sale of all or substantially all of the assets of the Company or a material division of the Company, (d) a sale or other transfer, pursuant to a tender offer or otherwise, of more than fifty percent (50%) of the then outstanding shares of Common Stock of the Company, (e) an acquisition by the Company resulting in an extraordinary expansion of the Company’s business or the addition of a material new line of business, or (f) a material change in the capital structure of the Company that is subject to this Section 10.2 in accordance with the last sentence of Section 10.1 above (any of such events is herein referred to as a “Terminating Event”), the Administrative Committee shall determine whether provision will be made in connection with the Terminating Event for an appropriate assumption of the Incentive Stock Options theretofore granted under this Plan (which assumption may be effected by means of a payment to each Optionee (by the Company or any other person or entity involved in the Terminating Event), in cancellation of the Incentive Stock Options held by him or her, of the difference between the then fair market value of the aggregate number of shares of Common Stock then subject to the Incentive Stock Options and the aggregate exercise price that would have to be paid to acquire such shares) or for substitution of appropriate new options covering stock a successor corporation to. the Company or stock of an Affiliate of such successor corporation. If the Administrative Committee determines that such an appropriate assumption or substitution will be made, it shall give notice of such determination to Optionees under this Plan, and the provisions of such assumption or substitution, amid any adjustments made, (i) to the number and kind of shares subject to the Incentive Stock Options outstanding under this Plan (or to options issued in substitution therefor), (ii) to the Option Prices, and/or (iii) to the terms and conditions of the incentive Stock Options, shall be binding upon such Optionees. If the Administrative Committee determines that no such assumptions or substitution will be made, it shall give notice of such determination to the optionees, whereupon each Optionee shall have the right for period of thirty (30) days following such notice to exercise in full or in part any unexercised or unexpired Incentive Stock Options then held by him or her, without regard to any contingent vesting provision to which such Incentive Stock Options may have otherwise been subject pursuant to Section 5.1(e). Upon the expiration of said period of thirty (30) days, all Incentive Stock Options then outstanding shall expire to the extent not earlier exercised, and this Plan shall terminate.

ARTICLE XI

Right of Repurchase

11.1    If so specified by the Administrative Committee in accordance with Section 5.1(f) above, the Company shall have the right, but not the obligation, to repurchase from an Optionee (or his or her Qualified Successor) all or part of the shares of Common Stock acquired by the optionee (or his or her Qualified Successor) upon exercise of Incentive Stock Options granted hereunder. Such right shall be exercisable at any time and from time to time during the period

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commencing on the date of termination of the Optionee’s employment with the Company for any reason whatsoever (including the Optionee’s demise or Disability) and continuing for a period of six (6) months thereafter. Such right shall apply to all shares acquired by such Optionee (or his or her Qualified Successor) upon exercise of incentive Stock Options granted hereunder, regardless of whether acquired before or after the termination of employment. The Company’s right of repurchase under this Section 11 shall be deemed exercised upon delivery of written notice of such exercise to the Optionee or his or her Qualified Successor, specifying the number of shares to be repurchased and the effective date of such repurchase, which date shall not be earlier than the date of such notice no later than the date of termination of the Company’s right of repurchase. With respect to each share to be repurchased, the repurchase price shall be the fair market value of such share as of the effective date of such repurchase except as otherwise provided in Section 11.2. Such fair market value shall be determined in good faith by the Administrative Committee, and its determination shall be conclusive and binding on the Optionee (and his or her Qualified Successor).

11.2    If at the effective date of repurchase described in Section 11.1 the Optionee has acquired through exercise of the Incentive Stock Option a number of shares of Common Stock in excess of’ the product of the Applicable Percentage, as set forth in the table below, times the total number of shares subject to the Incentive Stock Option at the Date of Grant (the “Excess Shares”), then the Company may repurchase such Excess Shares at the Option Price. The Applicable Percentage shall be based on the time elapsed between (i) the date the Optionee is hired, or such other date as may he specified by the Administrative Committee at the time the Incentive Stock Option is granted to the Optionee, (the “Computation Date”), and (b) the date on which the employment of optionee terminates, as fellows:

Time Elapsed Since Computation Date	Applicable Percentage
Less than one (1) year	0%
At least one (1) but less than two (2) years	20%
At least two (2) but less than three (3) years	40%
At least three (3) but less than four (4) years	60%
At least four (4) but less than five (5) years	80%

In the event the Company exercises its right under Section 11.1 to repurchase less than all the shares held by the Optionee, the shares repurchased shall be deemed to be Excess Shares, to the extent thereof.

11.3    Any right of repurchase of the Company, under this Section 11 shall terminate upon the occurrence of a Terminating Event in connection with which the Administrative Committee determines, pursuant to Section 10.2, that no assumption of or substitution for Incentive Stock Options will be made.

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ARTICLE XII

Termination and Amendment

12.1    Unless earlier terminated as provided below, this Plan shall terminate on, and no Incentive Stock Option shall be granted under this Plan after, the tenth (10th) anniversary of the date immediately preceding the date this Plain is adopted by the Board. Such termination shall not affect the rights of the Administrative Committee or the Company under the Plan (including, but not limited to, rights under Section 10 and Section 11 above) with respect to any Incentive Stock Options theretofore granted or shares of Common Stock issued upon exercise thereof.

12.1    The Board may at any time terminate; suspend on amend the terms of this Plan: provided, however, that, except as provided in Section 10 above, the Board may not, without prior approval by holders of shares of Common Stock constituting at least a majority of the shares of Common Stock represented in person or by proxy at the meeting at which such approval is sought:

(i)    Change the aggregate number of shares of Common Stock reserved for issuance upon exercise of Incentive Stock Options granted under this Plan;

(ii)    Increase the period during which Incentive Stock Options may be granted or exercised.

(iii)    Change the class of employees who are eligible to receive Incentive Stock Options under this Plan; or

(iv)    Make any change to the terms of this Plan which would cause the Incentive Stock Options granted hereunder to hose their qualification as incentive stock options under Section 422 of the Code.

12.3    Notwithstanding the above, the Administrative Committee may, subject to the terms and conditions of this Plan, grant additional Incentive Stock Options to an Optionee (if such Optionee is otherwise eligible) or, with the consent of the Optionee, grant a new Incentive Stock Option in lieu of an outstanding Incentive Stock Option, for a number of shares. at an Option Price and for a term which is greater or less than that of the earlier Incentive Stock Option.

12.4    No Incentive Stock Option may be granted during any suspension, or after termination, of this Plan. Amendment) suspension or termination of this Plan shall not, without the consent of the Optionee, alter or impair any rights or obligations with respect to any Incentive Stock Option theretofore granted or shares of Common Stock acquired upon exercise thereof.

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ARTICLE XIII

Option Agreement and Legend Requirement

Each Incentive Stock Option granted hereunder shall be evidenced by a written agreement executed by the Company and the Optionee. Such agreement shall contain the terms of the Incentive Stock Option specified by Section 5, together with other terms, conditions, and provisions that the Administrative Committee deems advisable and that are, not inconsistent with the terms and conditions of this Plan. Such agreement shall also provide that, by accepting an Incentive Stock Option granted under this Plan, the optionee, for himself or herself, for his or her Qualified Successor, and for his or her heirs, successors and assigns:

(i)    Recognizes, agrees and acknowledges that no registration statement under the Securities Act of 1933, as amended (the “1933 Act”), or under any state securities laws, will have been filed as to either the Incentive Stock Option or any shares of Common Stock that may be acquired upon exercise of such Incentive Stock Option;

(ii)    Warrants and represents that the Incentive Stock Option and any shares of Common Stock of the Company acquired upon exercise of the Option will be acquired and held by the Optionee for the Optionee’s own account, for investment purposes only, and not with a view towards the distribution or public offering thereof nor with any present intention of reselling or distributing the same at any particular future time;

(iii)    Acknowledges amid consents to the appearance of a printed legend on the back of each stock certificate representing shares of Common Stock issued upon exercise of the Incentive Stock Option, which legend shall are as follows:

NOTICE RESTRICTION ON TRANSFER

The securities represented hereby have not been registered under the Securities Act of 1933 or any state securities laws, and may not be offered, sold, transferred, encumbered or otherwise disposed of except upon satisfaction of certain conditions set forth in the Latah Bancorporation, Inc., 1999 Incentive Stock Option Plan. Information concerning these restrictions may be obtained from the corporation or its legal counsel. Any offer or disposition of these securities without satisfaction of such conditions will be wrongful and will not entitle the transferee to register ownership of the securities with the corporation. These securities may also be subject to repurchase by the corporation upon certain terms and conditions set forth in said documents.

(iv)    Agrees not to sell, transfer or otherwise dispose of any shares of Common Stock that may be acquired upon exercise of the Incentive Stock Option unless (i) there is an effective registration statement under the 1933 Act covering the proposed disposition and compliance with governing state securities laws, (ii) the Optionee delivers to the Company, at the Optionee’s expense, a “no-action” letter or similar interpretative opinion, satisfactory in form and substance to the Company, from the staff of each appropriate securities agency, to the effect that such shares may be disposed of by the Optionee in the manner proposed, or (iii) the Optionee delivers to the Company, at the Optionee’s expense, a legal opinion, satisfactory in form and substance to the Company, of legal counsel designated by the Optionee and satisfactory to the Company, to the effect that the proposed disposition is exempt from registration under the 1933 Act and governing state securities laws; and

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(v)    Agrees to indemnity the Company and hold it harmless from and against any loss, claim or liability, including attorney’s fees or other legal expenses incurred in the defense thereof incurred by the Company as a result of any breach by the Optionee of or any inaccuracy in any representation, warranty, covenant or other provision contained in such agreement.

If a registration statement under the 1933 Act is hereafter filed with respect to Incentive Stock Options granted or to be granted hereunder and the shares of Common Stock that may be acquired upon exercise of such Incentive Stock Options, then, following the effectiveness of such registration statement, the provisions in agreements representing Incentive Stock Options that would otherwise be required by this Section 13 may, in the discretion of the Administrative Committee, be modified or eliminated.

ARTICLE XIV

Miscellaneous Provisions

14.1    Nothing contained in this Plan shall obligate the Company to employ an Optionee for any period, nor shall this Plan interfere in any way with the right of the Company to reduce such Optionee’s compensation.

14.2    The provisions of this Plan, each Incentive Stock Option issued to an Optionee hereunder, and the such evidencing such Incentive Stock Option under Section 13 above shall be binding upon the Optionee. and his or her Qualified Successor, heirs, successors and assigns.

14.3    This Plan shall be construed, administered and enforced in accordance with the laws of the United States, to the extent applicable hereto, as well as the laws of the State of Washington.

ARTICLE XV

Effective Date of Plan

This Plan shall be effective upon adoption of a resolution of the Board approving it; and it shall be subject to approval, within twelve (12) months before or after the date it is adopted by the Board, by holders of shares of Common Stock constituting at least a majority of the shares of Common Stock represented in person or by proxy at a meeting at which such approval is sought. This Plan shall also be subject to the requirement of RCW 21.20.310(10) that the Administrator of Securities of the Department of Licensing of the State of Washington be provided with notification of the adoption of the Plan at least thirty (30) days prior to offering it to employees in the State of Washington. If the shareholder approval and notification requirements have not been satisfied on or prior to one year from the date hereof, this Plan, and any Incentive Stock Options granted hereunder prior to such date, shall be void.

As adopted by the Board of Directors on the 12th day of October, 2000.

LATAH BANCORPORATION, INC. A Washington corporation
By:	/s/    JOHN L. GILBERT
	John L. Gilbert President

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EX-99.2

Exhibit 99.2

LATAH BANCORPORATION, INC.

NON-QUALIFIED STOCK OPTION PLAN

Dated December 10, 1999

As amended on October 12, 2000

TABLE OF CONTENTS

		Page
ARTICLE I	Purpose of Plan	1
ARTICLE II	Administration of the Plan	1
ARTICLE III	Eligibility	1
ARTICLE IV	Identification of Stock	2
ARTICLE V	Terms and Conditions of Options	2
ARTICLE VI	Term of Plan	5
ARTICLE VII	Amendment of the Plan	5
ARTICLE VIII	Application of Funds	5
ARTICLE IX	No Obligation to Exercise Plan	5
ARTICLE X	Approval of Plan	6
ARTICLE XI	Securities Law Compliance	6

ARTICLE I

Purpose of Plan

This Non-Qualified Stock Option Plan (the “Plan”) is intended to serve as an incentive to and to encourage stock ownership by certain directors, officers, employees of and certain persons rendering service to LATAH BANCORPORATION, INC, a Washington corporation (the “Corporation”), so that they may acquire or increase their proprietary interest in the success of the Corporation, and to encourage them to remain in the Corporation’s service.

ARTICLE II

Administration of Plan

The Plan shall be administered by a committee appointed by the Corporation’s Board of Directors (the “Committee”). The Committee shall consists of not less than two (2) members who shall be appointed by, and serve at the pleasure of, the Corporation’s Board of Directors. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled only by the Board of Directors. The Committee shall select one of its members as Chairman, and shall hold meetings at such times and places as it may determine. Acts by a majority of the Committee in a meeting at which a quorum is present and acts approved in writing by a majority of the members of the Committee shall be the valid acts of the Committee. No member of the Committee shall vote on any matter concerning his or her own participation in the Plan, except that the Board of Directors as a whole may act on options granted to directors.

The Committee shall be authorized to grant options under the Plan to such directors, officers, employees of and other persons rendering service to the Corporation or any parent or subsidiary corporation of the Corporation, as defined for purposes of Internal Revenue Code Section 422A (“Parent or Subsidiary”), at such times and in such amounts as it may decide.

The interpretation and construction by the Committee of any provisions of the Plan or of any option granted under it shall be final unless otherwise determined by the Board of Directors. No member of the Committee or Board of Directors shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under it.

ARTICLE III

Eligibility

3.1    General:  Any person who performs services of special importance to the Corporation, or any Parent or Subsidiary thereof, relating to the Corporation’s management, operation or development shall be eligible to receive options under the Plan. The selection of options recipients shall be within the sole and absolute discretion of the Committee, or the Board of Directors.

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3.2    Termination of Eligibility:  Any option granted hereunder shall expire if, for any reason other than his or her death, the optionee (i) ceases to be employed by the Corporation or a Parent or Subsidiary thereof (ii) is no longer a member of the Corporation’s Board of Directors; or (iii) no longer performs services for the Corporation as an independent contractor. The expiration will take effect at the earliest of the following times: four (4) months from the date of the occurrence causing termination of eligibility (twelve (12) months if the optionee’s eligibility ceases because of his or her disability), or upon the date the option expires by its terms. During such four-month period, the option may be exercised in accordance with its terms, but only in respect of the number of shares for which the right to exercise has accrued on the date of termination of employment, or status as a director or independent contractor.

The Committee shall decide whether an authorized leave of absence or absence for military or governmental service, or absence for any other reason, shall constitute termination of eligibility for purposes of this Section. This determination shall be subject to review by the Board of Directors.

3.3    Death of Optionee and Transfer Option:  If the optionee dies while eligible to participate in the Plan, or within four (4) months after the termination of his or her eligibility, and shall not have fully exercised the option, the option may be exercised at any time within twelve (12) months after the optionee’s death by the optionee’s executors or administrators or by any person or persons who acquired the option directly from the optionee by bequest or inheritance. However, no option shall be exercisable after it expires, and options may be exercised only to the extent that the optionee’s right to exercise the option had accrued at the time of his or her death and had not been previously exercised.

No option shall be transferable by the optionee otherwise than by will or the laws of intestate succession.

ARTICLE IV

Identification of Stock

The stock subject to the options shall be shares of the Corporation’s authorized but unissued or acquired or reacquired no par value Common Stock (the “Stock”). The aggregate number of shares subject to outstanding options shall not exceed 20,000 shares of Stock (subject to adjustment as provided in Section 5.6). If any option granted hereunder shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject thereto shall again be available for purposes of this Plan.

ARTICLE V

Terms Amid Conditions Of Options

Any option granted pursuant to the Plan shall be evidenced by an agreement in such term as the Committee shall from time to time determine, which agreement shall comply with and he subject to the following terms and conditions.

5.1    Number of Shares:  Each option shall state the number of shares to which it pertains.

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5.2    Option Exercise Price:  Each option shall state the option price, which shall be not less than 100% of the fair market value of the Stock subject to the option on the date of granting the option, unless otherwise determined at the Committee’s discretion.

5.3    Method of Exercise:  An option shall be exercised by written notice to the Corporation stating the number of shares with respect to which the option is being exercised and designating a time for the delivery thereof, which shall be at least fifteen (15) days after notice is given unless an earlier date was mutually agreed upon. At the time specified in the notice, the Corporation shall deliver to the optionee at the Corporation’s principal office, or other appropriate place the Committee determines, a certificate(s) for such shares of previously authorized but unissued shares or acquired or reacquired shares of Stock as the Corporation may elect. Notwithstanding the foregoing, the Corporation may postpone delivery of any certificate(s) after notice of exercise for any reasonable period required to comply with any applicable listing requirements of any national or other securities exchange. In the event an option shall be exercisable by any person other than the optionee, the required notice under this section shall be accompanied by appropriate proof of such person’ s right to exercise the option.

5.4    Medium and Time Payment:  The option price shall be payable in full upon the exercise of the option by certified or bank cashier’s check, the promissory note of the optionee or, in the discretion of the Committee, payment may be made, in whole or in part, by surrendering, or attesting to the ownership of, shares of Common Stock that are already owned by the optionee. Such shares of Common Stock shall be valued at their fair market on the date when the Option is exercised. The optionee shall not surrender, or attest to the ownership of shares of Common Stock in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the option for financial reporting purposes. Payment may also be made in any other form approved by the Committee.

5.5    Term of Option:  The term of an option granted hereunder shall be determined by the Committee at the time of grant, but shall not exceed ten (10) years from the day of the grant. In no event shall any option be exercisable after the expiration of its term.

5.6    Adjustments Upon Changes In Capitalization:  Subject to any required shareholder action, the number of shares of stock covered by each outstanding option and the price per share in each such option shall be proportionately adjusted for any increase or decrease in the number of issued shares of Stock of the Corporation resulting from: (i) a subdivision or consolidation of shares; (ii) the payment of a stock dividend (but only on the Stock); (iii) any other increase or decrease in the number of such shares effected without receipt of consideration by the Corporation; (iv) or, as to Stock issued other than pursuant to a stock option granted to a director, officer, employee of a person rendering services as an independent contractor to the Corporation or any Parent or Subsidiary, any increase or decrease in the number of shares made for per share consideration less than the option price of such option. Any fraction of a share subject to option that would otherwise result from an adjustment to this subparagraph shall be rounded downward to the next full number of shares without other compensation or consideration to the holder of the option.

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Subject to any required shareholder action, if the Corporation shall be the surviving corporation in any merger or consolidation, each outstanding option shall pertain and apply to the securities to which a holder of the number of shares of Stock subject to the option would have been entitled. The Corporation’s Board of Directors may grant each optionee the right to exercise his or her option in whole or in part immediately prior to the Corporation’s dissolution or liquidation, or merger or consolidation in which the corporation is not the surviving corporation. If the Corporation is consolidated with or into any other corporation, or if the Corporation sells or transfers all or substantially all of its assets, or if any other similar event affecting shares of Stock of the Corporation should occur, and if the exercisability of the options is not accelerated by the Board of Directors and the acquiring Corporation assumes the Corporation’s obligation under the options granted under this Plan, which each optionee shall be entitled thereafter to purchase shares of stock and other securities and property in the kind and amount and at the price, which the optionee would have been entitled had his or her option been exercised prior to such event.

The Corporation shall make lawful provision therefore as part of any such transaction.

To the extent that the foregoing adjustments relate to stock or securities of the Corporation, they shall be made by the Committee, whose determinations shall be final, binding and conclusive.

The grant of an option pursuant to the Plan shall not affect in any way the Corporation’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets.

Whenever the Corporation takes any action resulting in any adjustment provided for in this Section 5.6, the Corporation shall forthwith deliver notice of the action to optionee. The notice shall set forth the number of shares subject to this Option and the purchase price thereof resulting from the adjustment.

5.7    Rights as a Shareholder:  An optionee or a transferee of an option shall have no rights as a shareholder with respect to any shares underlying his or her option until the date the optionee is issued a certificate for such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 5.6 above.

5.8    Vesting Schedule:  Any vesting schedule pursuant to which the right of the Optionee to exercise the Stock Option shall be contingent upon the passage of a specified period of time following its Date of Grant, it being intended that the Administrative Committee shall have complete discretion with respect to the terms of the vesting schedule, including, without limitation, discretion (i) to allow full and immediate vesting upon grant of the Stock Option, (ii) to permit partial vesting in stated percentage amounts based on the length of the holding period of the Stock Option, or (iii) to permit full vesting after a stated holding period has passed. No rights to exercise the Stock Option shall vest after the termination of an Optionee’s employment with the Company, unless further vesting is expressly allowed in the written agreement evidencing the Stock Option.

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5.9    Modification, Extension and Renewal of Options:  Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify, extend or renew outstanding options granted under the Plan, or accept the surrender of outstanding options (to the extent not theretofore exercised) and authorize the granting of new options in substitution therefore (to the extent not theretofore exercised).

5.10    Other Provisions:  The option agreements authorized under the Plan shall contain such other provisions, including without limitation, restrictions upon the exercise of the option, as the Committee and the Board of Directors of the Corporation shall deem advisable. Thus, for example, the Committee and the Board of Directors may require that all or any portion of an option granted hereunder not be exercisable until a specified period of time has passed or some other event has occurred.

ARTICLE VI

Term of Plan

Options may be granted pursuant to the Plan from time to time within a period of ten (10) years from the date the Plan is adopted by the Corporation’s Board of Directors or is approved by the Corporation’s shareholders, whichever occurs earlier. Termination of the Plan shall not affect any option previously granted.

ARTICLE VII

Amendment of the Plan

To the extent permitted by law and subject to any required approval by the Corporation’s shareholders, the Board of Directors may suspend or discontinue the Plan or revise or amend it in any way with respect to any shares not subject to options at that time.

ARTICLE VIII

Application of Funds

The proceeds received by the Corporation from the sale of Stock pursuant to options may be used for general corporate purposes.

ARTICLE IX

No Obligation to Exercise Option

The granting of an option shall impose no obligation upon the optionee to exercise such option.

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ARTICLE X

Approval of Plan

The Plan shall not take effect until approved by the Board of Directors or its Executive Committee.

ARTICLE XI

Securities Laws Compliance

Notwithstanding anything contained herein, the Corporation shall not be obligated to grant any option under this Plan, or to sell or issue any share pursuant to any option agreement executed pursuant to the Plan, unless the grant or sale is effectively registered or exempt from registration under the Securities Act of 1933, as amended, and is qualified or exempt from qualification under the applicable blue sky laws.

As adopted by the Board of Directors on the 12th day of October, 2000.

LATAH BANCORPORATION, INC. A Washington corporation
By:	/s/    JOHN L. GILBERT
	John L. Gilbert, President

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