EXHIBIT 10.1

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EXECUTIVE MANAGEMENT AGREEMENT

 

This Executive Management Agreement (“Agreement”) is entered into by and between
Craig J. Chapman (“Executive”) and Washington Mutual, Inc. (“Employer”).

Employer recognizes the valuable contributions Executive has made to Employer’s
business in the past and expects Executive to make additional valuable
contributions in the future.

In consideration of the mutual promises contained herein, Executive and Employer
hereby agree as follows:

1.  The term of this Agreement is from January 1, 2005 (“Inception Date”)
through December 31, 2007 (“Expiration Date”).

2.  During the term of this Agreement, and as long as Executive shall remain
employed by Employer following the end of the term, Executive’s employment with
Employer shall be “at will,” meaning that it can be terminated by either
Executive or Employer at any time with or without notice.

3.  During the term of this Agreement, if Executive’s employment is terminated
by Employer without cause, as defined herein, or if Employer requires Executive
to relocate outside the Seattle metropolitan area and Executive declines to
relocate, Employer shall provide to Executive these separation benefits
(“Benefits”) subsequent to the date on which Executive’s employment is
terminated (“Separation Date”):

 

 a. A lump sum equivalent to the product of (i) $100,000.00 times (ii) the
    number of full calendar months between the Separation Date and the
    Expiration Date will be paid to Executive within ten days of Executive’s
    execution and return of a Confidential Executive Separation Agreement.
 b. Executive’s unvested stock options, which were granted prior to January 1,
    2005, will vest effective on the Separation Date, and all vested options
    will then remain exercisable by Executive until the earlier of the one-year
    anniversary of the Separation Date or the expiration of their ten-year
    term.  If Executive dies prior to the exercise of such options and prior to
    their expiration, the right to exercise all vested options through the
    one-year anniversary of the Separation Date will pass to his estate.
 c. Lapse of restrictions on Executive’s shares of restricted stock, which were
    granted prior to January 1, 2005, will be accelerated.
 d. The restrictions on any performance shares awarded to Executive prior to
    January 1, 2005, will continue to lapse according to the schedule for
    payment of the Performance Share awards established at the time the awards
    were made.

 

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4.  Termination of Executive's employment for "cause" shall mean termination
because (i) Executive engages in abusive use of alcohol or other drugs on a
continuing or recurring basis, (ii) Executive is convicted of any felony or of a
misdemeanor involving moral turpitude (including forgery, fraud, theft or
embezzlement), or is convicted or enters into a pretrial diversion or similar
program in connection with the prosecution for an offense involving dishonesty,
breach of trust or money laundering, or (iii) Executive has engaged in
dishonesty, fraud, destruction or theft of property of Employer or a Subsidiary,
physical attack on another employee, willful malfeasance or gross negligence in
the performance of his duties, or misconduct materially injurious to Employer or
a Subsidiary

5.  In order to receive the Benefits, Executive agrees to sign, on or after the
Separation Date, a Confidential Executive Separation Agreement in the form
attached hereto as Attachment A and incorporated herein by this reference.

6.  This Agreement shall not be effective if Executive’s employment is
terminated for any reason upon or within two years after a “Change in Control,”
as that term is defined in the Employment Agreement between Employer and
Executive.

 

Dated effective as of December 22, 2004.

Executive   Employer           Washington Mutual, Inc.       /s/ Craig J.
Chapman   By:  /s/ Kerry K. Killinger Craig J. Chapman   Its:  Chairman and CEO

 

 

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ATTACHMENT A

 

Confidential Executive Separation Agreement

This Confidential Executive Separation and Release Agreement (“Agreement”) is
entered between Craig J. Chapman (“Executive”) and Washington Mutual, Inc.
(“Employer”) and is in consideration of the mutual undertakings set forth below.

Employer and Executive have mutually agreed to end Executive’s employment.  In
order to assist Executive in his transition to new employment and acknowledge
past contributions, Employer will provide Executive the benefits described
below.  To clearly set forth the terms and conditions of Executive’s departure,
the parties agree as follows:

1.      The purpose of this Agreement is to set forth the mutual understanding
of the parties.  This Agreement shall not be construed as an admission by
Employer that it acted wrongfully with respect to Executive, nor shall it be
construed as an admission by Executive of any misconduct or impropriety.

2.      Executive’s employment with Employer is ended effective _______________
(“Separation Date”). 

3.      Employer shall provide to Executive the Benefits described in Paragraph
3 of the Executive Management Agreement between Executive and Employer dated
effective as of ________________, 2004.

4.      In exchange for the benefits contained in this Agreement, Executive
releases and discharges Employer, all subsidiary, parent, and affiliated
entities, and any Employer-sponsored benefit plans in which Executive
participates, and all of their respective owners, officers, directors, trustees,
shareholders, employees, agents, attorneys, and insurers from any and all
claims, actions, causes of action, rights, benefits, compensation, or damages,
including costs and attorneys’ fees, of whatever nature, whether known or
unknown, suspected or unsuspected, matured or unmatured, now existing or arising
in the future from any act, omission, event, occurrence, or non-occurrence prior
to the date Executive signs this Agreement arising out of or in any way related
to Executive’s employment with Employer.  This release includes but is not
limited to any claims under any federal, state, or local laws prohibiting
discrimination in employment, including Title VII, the Age Discrimination in
Employment Act, and the Americans with Disabilities Act; based upon any
employment agreement, severance plan, compensation plan, or change in control
agreement; based upon any alleged legal restriction on Employer’s right to
terminate its employees; and based upon any obligations under WARN or ERISA. 
This Agreement shall not affect Executive’s entitlement to receive any 401(k),
stock option, or pension benefits that have vested as of the Separation Date.

 

 

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5.      Executive agrees that, as a result of his employment by Employer, he has
been exposed to confidential information that is not generally known to the
public, all of which information is owned by Employer. This includes information
developed by Executive, alone or with others, or entrusted to Employer by
customers or others.  Employer’s confidential information includes, without
limitation, information relating to its finances, business and strategic plans,
unannounced acquisition and/or investment prospects, trade secrets, know-how,
procedures, purchasing, accounting, marketing, sales, customers and employees
(including customer lists).  Executive agrees that, during his remaining
employment by Employer and for all time thereafter, as long as such information
is not made public by Employer, Executive shall hold such information in strict
confidence and not disclose or use it except as specifically authorized by
Employer and for Employer’s benefit.

6.      Executive recognizes that Employer’s workforce and contracting
relationships are a vital part of its business.  Therefore, Executive agrees
that for twenty-four (24) months after the Separation Date, Executive will not
directly or indirectly be involved in (a) soliciting any employee or contractor
to leave his or her employment or contract relationship with Employer, or (b)
hiring any employee or contractor who, at the time of hiring or during the three
month period before the hiring, was an employee of Employer.  This includes that
Executive will not (a) disclose to any third party the names, backgrounds or
qualifications of any of Employer’s employees or contractors, or otherwise
identify them as potential candidates for employment, or (b) personally or
through any other person approach, recruit, interview or otherwise solicit
employees or contractors of Employer to work for any other employer or to reduce
their relationship with Employer.

7.        Executive agrees to fully and reasonably cooperate with Employer with
respect to business issues, claims, administrative charges, and litigation
related to Employer or its business interests.  This would include, but not be
limited to, responding to questions, providing information, attending meetings,
depositions, administrative proceedings, and court hearings, and assisting
Employer, its counsel and any expert witnesses.  Employer will reimburse any
actual and reasonable expenses necessarily incurred by Executive in complying
with this obligation.  Executive agrees not to communicate with any party, its
legal counsel, or others adverse to Employer in any pending or threatened
claims, charges, or litigation except through legal counsel designated by
Employer. 

8.        Should Executive receive notice of a subpoena or other attempt to
communicate with or obtain information from Executive in any way relating to
Employer or its business interests, Executive agrees to notify Employer’s Senior
Vice President and Associate General Counsel, Litigation, and to provide a copy
of any such subpoena or request within two (2) business days of receipt of such
notice, and not to provide any such information except through counsel
designated by Employer unless compelled to do so by court order after Employer
has had an opportunity to raise and resolve any objections.

 

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Because Employer does not offer such benefits to all departing employees, it is
important to Employer that this Agreement be maintained confidential.  Executive
agrees not to disclose the fact or terms of this Agreement to anyone, or to tell
anyone that he received any special consideration from Employer.  Executive may
disclose the terms of this Agreement only to his spouse, his attorney, and his
accountant or similar advisor, on the condition that he shall direct each such
person, and they agree, to maintain the confidentiality of this Agreement.  

9.        Executive agrees that, as a condition of and before receiving the
separation pay and other benefits described in this Agreement, he will return to
Employer all of Employer’s property, including all physical property (laptop
computers, cellular phones, personal digital assistants, computer disks, access
cards, etc.) as well as any and all documents, data, plans, or other
information, whether on paper or in electronic form.

10.   Executive represents that he has not filed any claim against Employer or
any of the individuals or entities released in paragraph 4, and that he will not
do so at any time in the future concerning any of the claims released in this
Agreement.

11.   Executive agrees and covenants that he will not directly or indirectly,
publicly or privately disparage Employer or any of its subsidiaries, affiliates,
employees, officers, directors, business partners, methods, services, or
products.

12.   Executive and Employer shall cooperate to coordinate appropriate internal
and external communications concerning Executive’s separation from employment
and to designate individuals to whom reference requests shall be directed.
 Employer shall have final approval on all communications.

13.   Executive understands and acknowledges the significance and consequences
of this Agreement and agrees that it is voluntary, and that he is not signing as
a result of any coercion.  Executive has been encouraged to seek the advice of
an attorney and, to the extent desired, has availed himself of that
opportunity.  Executive acknowledges that he has been given at least twenty-one
(21) days after receipt of this Agreement during which to consider it.

14.   Executive understands and acknowledges that he has seven (7) days after
signing this Agreement in which to revoke it.  This Agreement will become
effective after that period has expired.

15.   This Agreement is binding on and shall inure to the benefit of the parties
and to those individuals and entities released in paragraph 4, as well as to all
of their heirs, successors, and assigns.

16.   The interpretation of this Agreement shall be governed by the laws of the
State of Washington.  If any of the provisions of the Agreement is held to be
invalid or unenforceable, the remaining provisions will nevertheless continue to
be valid and enforceable to the fullest extent permitted by law. 

 

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17.   In the event of any dispute concerning the validity, interpretation,
enforcement or breach of this Agreement or in any way related to Executive’s
employment by Employer or the Separation of such employment, the dispute shall
be resolved by arbitration within King County, Washington, and the parties waive
their right to trial by jury.  Executive and Employer will submit the dispute to
a mutually acceptable arbitration service, or, if they cannot agree to an
arbitration service, the dispute will be submitted to the American Arbitration
Association.  The procedural rules of the selected arbitration service shall
apply, provided that during the time the arbitration proceedings are ongoing,
Employer will advance any required administrative and/or arbitration fees.  The
party who substantially prevails shall be entitled to recover reasonable
attorneys’ fees, costs, and disbursements from the other party.  Judgment upon
any arbitration award may be entered and enforced by any state or federal court
having jurisdiction.

18.   This Agreement represents and contains the entire understanding between
the parties in connection with its subject matter, and supersedes any prior
written or oral agreements or understandings.  No modification or waiver of any
provision of this Agreement shall be valid unless in writing and signed by
Executive and an Executive Vice President of Employer.  Executive acknowledges
that in signing this Agreement he has not relied upon any representation or
statement not set forth in this Agreement made by Employer or any of its
representatives.

 

Washington Mutual, Inc. Executive     By__________________________
  ______________________________
Craig J. Chapman     Its__________________________          
Date________________________ Date________________________

 

 

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