EMPLOYMENT AGREEMENT
EXHIBIT
99.1
THIS
EMPLOYMENT AGREEMENT (“Agreement”)
is entered into by First Mutual Bancshares, Inc. (“FMSB”), the holding company
of First Mutual Bank; First Mutual Bank, a Washington stock savings bank and
its
successors (the “Bank”); and Xxxxx X. Xxxxxxx (“Executive”).
FMSB
and the Bank, which may sometimes
be referred to together as “FMB” herein, desire to continue exclusive services
of Executive as its Executive Vice President and Chief Financial Officer, and
Executive desires to enter into such an arrangement with FMB.
In
consideration of the mutual
promises, covenants, agreements and undertakings in this Agreement, the Parties
hereby contract and agree as follows:
1. Employment
Term.
The
term of this Agreement shall be
from June 1, 2007 to August 31, 2007, unless earlier terminated in accordance
with the provisions of Section 5 of this Agreement.
2. Duties.
Executive
will act as Executive Vice
President of both FMSB and the Bank. As Executive Vice President,
Executive will serve as the Chief Financial Officer and will render such
executive, management and administrative services and perform such tasks in
connection with the affairs of FMB as are customary for these positions, subject
to the direction of the Board, provided however that if a new Chief Financial
Officer is appointed by the Board of Directors of the Company, Executive will
remain with both FMSB and the Bank, at the request of the Board, in the role
of
an advisor to the new Chief Financial Officer. Executive agrees to
devote his best efforts and full business time and attention to the business
and
affairs of FMB and any affiliated companies, as such business and affairs now
exist or hereafter may be changed or supplemented.
3. Salary,
Bonus and Other Compensation.
3.1 Base
Salary.
During
the Agreement Term, FMB will pay
Executive a monthly base salary of Seventeen Thousand Five Hundred and No Cents
($17,500.00) per month (“Base Salary”). This Base Salary will be
payable on a semi-monthly basis in accordance with established
procedures. FMB may increase the Base Salary in the event and to the
extent the Board deems appropriate.
3.2 Bonus.
For
agreeing to stay on with FMB
through the term of this agreement, FMB agrees to pay Executive a bonus of
Eighty Three Thousand Three Hundred and Thirty Three Dollars and No Cents
($83,333.00) monthly on the last day of each month.
3.3 Benefits.
In
addition to the Base Salary and
bonus payable or potentially payable to Executive pursuant to this
Section 3, Executive will be entitled to the following benefits, unless
otherwise altered by the Board, based upon policies adopted for senior
executives of FMB generally:
(a) Participation
in health insurance, life insurance, disability insurance (with eligibility
for
all three commencing at the Employment Date) and other health and welfare
benefit programs generally available to senior executives;
(b) Participation
in retirement and other benefit plans, including the Bank’s 401(k) and ESOP
plans;
(c) FMB
will pay for Executive’s lodging at the Eastgate Larkspur Landing, or other
equivalent lodging, each week during the term of this agreement.
(d) Such
other employment benefits as may be approved from time to time by the Board
of
FMB.
4. Early
Termination.
4.1 Bases
for Termination.
The
Agreement Term will end and
Executive’s employment with FMB will terminate in the event of the occurrence
and upon the first to occur of any of the following:
(a) Termination
by FMB for “cause” as defined below;
(b) Termination
by FMB in the event of Executive’s “disability,” as defined below;
(c) Executive’s
death;
(d) Termination
by FMB for unsatisfactory job performance by Executive;
(e) Termination
by Executive.
4.2 Bonus
Obligation.
In
the event that this agreement is
terminated pursuant to any of the provisions of this Section 4, Executive
shall be entitled to a portion of the bonus set forth in Section 3.2 based
upon
the pro rated number of days in the month prior to the
termination.
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4.3 Definitions.
The
term “cause” shall mean willful
misfeasance or gross negligence in the performance of his duties, conduct
demonstrably and significantly harmful to FMB, or conviction of a
felony. The term “disability” means full disability as defined in
FMB’s disability insurance plan, as in effect from time to time.
5. Mandatory
Arbitration.
Any
dispute or controversy arising
under on in connection with this Agreement shall be settled exclusively by
arbitration in Seattle, Washington, with Judicial Dispute Resolution according
to the rules of arbitration, with the administrative costs of the proceeding
to
be borne by the Bank. Payment of attorneys’ fees and costs shall be
governed by applicable law.
6. Indemnification
and D&O Insurance.
FMB
agrees to indemnify and hold
Executive harmless in accordance with and to the extent now provided in FMB’s
Articles of Incorporation or its Bylaws, provided that any change in such
indemnification provisions enhancing the indemnity or limit of liability
pertaining to other officers (or directors) also shall apply as to Executive,
and provided further that any change in such provisions reducing the benefit
to
Executive shall apply only with Executive’s express written
consent. If requested, FMB agrees to enter into a separate agreement
with respect to FMB’s indemnification of Executive. So long as it is
available at reasonable rates, as determined by the board of directors, FMB
agrees at all times to keep in continuous effect director and officer insurance
in favor of Executive in amounts determined by the Board.
7. General
Provisions.
7.1 Successors.
This
Agreement shall be binding upon
and inure to the benefit of the Parties and each of their respective affiliates,
legal representatives, successors and assigns.
7.2 Construction.
This
Agreement contains the entire
agreement among the Parties with respect to its subject matter, and may be
amended or modified only in a writing executed by all of the
Parties. Its language is and will be deemed to be the language chosen
by the Parties jointly to express their mutual intent. No rule of
construction based on which Party drafted the Agreement or certain of its
provisions will be applied against any Party.
7.3 Captions.
The
captions of the respective sections
of this Agreement have been included for convenience of reference
only. They shall not be construed to modify or otherwise affect in
any respect any of the provisions of the Agreement.
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7.4 Time.
Time
is of the essence in this
Agreement.
EXECUTED
by each of the Parties
effective June 28, 2007.
FIRST
MUTUAL BANCSHARES, INC.
FIRST
MUTUAL BANK
By “Xxxxxx
Xxxxxxxx” “Xxxxx
X. Xxxxxxx”
Xxxxxx
Xxxxxxxx Xxxxx
X. Xxxxxxx
Chair,
Compensation
and Executive
Stock
Option Committee
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