Exhibit 10.2


CHANGE IN CONTROL SEVERANCE AGREEMENT



          THIS    CHANGE    IN
CONTROL SEVERANCE AGREEMENT (the “Agreement”) is made and entered into
as of this  ____ day of  ________________,  2007   (the  “Commencement
Date”),  by and between FIRST SAVINGS BANK NORTHWEST (which,  together with
any  successor  thereto  which  executes and delivers the  assumption  agreement
provided for in Section 5(a)  hereof or which  otherwise  becomes bound by all of
the terms and  provisions of this  Agreement by operation of law, is hereinafter
referred to as the “Savings Bank”),  and _______________________  (the
“Employee”).


          WHEREAS, the Employee is currently serving as _______________________________;  and


          WHEREAS, the board of directors of the Savings Bank (the “Board”) recognizes that the possibility of a change in control of the Savings Bank or of its holding company, First Financial Northwest, Inc. (the “Company”), may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management to the detriment of the Savings Bank, the Company and its stockholders; and


          WHEREAS, the Board believes it is in the best interests of the Savings Bank to enter into this Agreement with the Employee in order to assure continuity of management of the Savings Bank and to reinforce and encourage the continued attention and dedication of the Employee to the Employee’s assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company and/or the Savings Bank, although no such change is now contemplated; and


          WHEREAS, the Board has approved and authorized the execution of this Agreement with the Employee;


          NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:


          1.     Certain Definitions.




                    (a)          The
term “Change in Control” means (1) an offeror other than the Company
purchases shares of stock of the Company or the Savings Bank pursuant to a
tender or exchange offer for such shares; (2) an event of a nature that results
in the acquisition of control of the Company or the Savings Bank within the
meaning of the  Savings and Loan Holding Company Act under 12 U.S.C.
Section 1467a and 12 C.F.R. Part 574 (or any successor statute or regulation) or
requires the filing of a notice with the Office of Thrift Supervision
(“OTS”) or the Federal Deposit Insurance Corporation
(“FDIC”); (3) any person (as the term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (“Exchange Act”)) that is
or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) directly or indirectly of securities of the Company or the Savings Bank
representing 25% or more of the combined voting power of the Company’s or
the Savings Bank’s outstanding securities; (4) individuals who are members
of the board of directors of the Company immediately following the Commencement
Date or who are members of the Board immediately following the Commencement Date
(in each case, the”Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided that any person becoming
a director













subsequent to the Commencement Date whose election was approved by a
vote of at least three-quarters of the directors comprising the Incumbent Board
or whose nomination for election by the Company’s stockholders was approved
by the nominating committee serving under an Incumbent Board, shall be
considered a member of the Incumbent Board; or (5) consummation of a plan of
reorganization, merger, acquisition, consolidation, sale of all or substantially
all of the assets of the Company or a similar transaction in which the Company
is not the resulting entity, provided that the term “Change in
Control” shall not include an acquisition of securities by an employee
benefit plan of the Savings Bank or the Company.


                    (b)          The term “Commencement Date” means the date of this Agreement.


                    (c)          The term “Consolidated Subsidiaries” means any subsidiary or subsidiaries of the Company (or its successors) that are part of the affiliated group (as defined in Section 1504 of the Internal Revenue Code of 1986, as amended (the “Code”), without regard to subsection (b) thereof) that includes the Savings Bank, including but not limited to the Company.


                    (d)          The term “Date of Termination” means the date upon which the Employee ceases to serve as an employee of the Savings Bank.


                    (e)          The term “Involuntary Termination” means the termination of the employment of Employee (i) by the Savings Bank, without his express written consent; or (ii) by the Employee by reason of a material diminution of or interference with his duties, responsibilities or benefits, including (without limitation) any of the following actions unless consented to in writing by the Employee:  (1) a requirement that the Employee be based at any place other than Renton, Washington, or within a radius of 35 miles from the location of the Savings Bank’s administrative offices as of the Commencement Date, except for reasonable travel on Company or Savings Bank business; (2) a material demotion of the Employee; (3) a material reduction in the number or seniority of personnel
reporting to the Employee or a material reduction in the frequency with which, or in the nature of the matters with respect to which such personnel are to report to the Employee, other than as part of a Savings Bank- or Company-wide reduction in staff; (4) a reduction in the Employee’s salary or a material adverse change in the Employee’s perquisites, benefits, contingent benefits or vacation, other than as part of an overall program applied uniformly and with equitable effect to all members of the senior management of the Savings Bank; (5) a material permanent increase in the required hours of work or the workload of the Employee; or (6) any purported termination of the Employee’s employment, except for Termination for Cause (and, if applicable, the requirements of Section 1(f) hereof), which purported termination shall not be effective for purposes of this Agreement.  The term “Involuntary Termination” does not include Termination for Cause, retirement or suspension or
temporary or permanent prohibition from participation in the conduct of the Savings Bank’s affairs under Section 8 of the Federal Deposit Insurance Act.



                    (f)          The
terms  “Termination  for Cause”  and  “Terminated for Cause”
mean   termination   of  the   employment   of  the  Employee   because  of  the
Employee’s personal dishonesty,  willful misconduct,  breach of a fiduciary
duty involving  personal profit,  intentional  failure to perform stated duties,
willful violation of any law, rule, or regulation (other than traffic violations
or similar  offenses) or final  cease-and-desist  order,  or (except as provided
below)  material  breach of any  provision  of this  Agreement.   No act or
failure to act by the Employee  shall be considered  willful unless the Employee
acted or failed to 


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act with an absence of good  faith and  without a  reasonable
belief that his action or failure to act was in the best interest of the Company
or the  Savings  Bank.   The  Employee  shall  not be  deemed  to have been
Terminated  for Cause  unless and until there shall have been  delivered  to the
Employee a copy of a  resolution,  duly adopted by the  affirmative  vote of not
less than a majority of the entire  membership  of the Board of  Directors  at a
meeting of the Board duly  called and held for such  purpose  (after  reasonable
notice to the Employee and an  opportunity  for the Employee,  together with the
Employee’s counsel, to be heard before the Board), stating that in the good
faith  opinion of the Board of  Directors  the  Employee  has engaged in conduct
described in the preceding  sentence and specifying the  particulars  thereof in
detail.



          2.     Term.     The term of this Agreement shall be a period of three years beginning on the Commencement Date, subject to earlier termination as provided herein.  Beginning on the first anniversary of the Commencement Date, and on each anniversary thereafter, the term of this Agreement shall be extended for a period of one year in addition to the then-remaining term, provided that prior to such anniversary, the Board of Directors explicitly reviews and approves the extension.  Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms.


          3.     Severance Benefits.


                    (a)          If after a Change in Control, the Savings Bank shall terminate the Employee’s employment other than Termination for Cause, or employment is terminated in the event of Involuntary Termination by the Employee, within 12 months following a Change in Control, the Savings Bank shall (i) pay the Employee his salary, including the pro rata portion of any incentive award, through the Date of Termination; (ii) continue to pay, for the remaining term of this Agreement, for the life, health and disability coverage that is in effect with respect to the Employee and his/her eligible dependents; and (iii) pay to the Employee in a lump sum in cash, within 25 days after the later of the date of such Change in Control or the Date of Termination, an amount equal to 299% of the Employee’s
“base amount” as determined under Section 280G of the Code.


          Notwithstanding any other provision of this Agreement, if payments and the value of benefits received or to be received under this Agreement, together with any other amounts and the value of benefits received or to be received by the Employee, would cause any amount to be nondeductible by the Company or any of the Consolidated Subsidiaries for federal income tax purposes pursuant to or by reason of Section 280G of the Code, then payments and benefits under this Agreement shall be reduced (not less than zero) to the extent necessary so as to maximize amounts and the value of benefits to be received by the Employee without causing any amount to become nondeductible pursuant to or by reason of Section 280G of the Code.  The Employee shall determine the allocation of such reduction among payments and benefits to the Employee.




                    (b)          The
Employee shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced by any compensation earned by the Employee as the result of employment
by another employer, by retirement benefits after the Date of Termination or
otherwise. This Agreement does not constitute a contract of employment or impose
on the Company or the Savings Bank any obligation to retain the Employee,



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to change the status of the Employee’s employment, or to change the
Company’s or the Bank’s policies regarding termination of employment





          4.     Attorneys’ Fees.     If the Employee is purportedly Terminated for Cause and the Savings Bank denies payments and/or benefits under Section 3(a) of this Agreement on the basis that the Employee experienced Termination for Cause, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 12 that cause as contemplated by Section 1(f) of this Agreement did not exist for termination of the Employee’s employment, or if in any event it is determined by any such court or arbitrator that the Savings Bank has failed to make timely payment of any amounts or provision of any benefits owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys’ fees, incurred in challenging such termination of employment or collecting such
amounts or benefits. Such reimbursement shall be in addition to all rights to which the Employee is otherwise entitled under this Agreement. 


          5.     No Assignments.


                    (a)          This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other party; provided, however, that the Savings Bank shall require any successor or assign (whether direct or indirect, by purchase, merger, consolidation, operation of law or otherwise) to all or substantially all of the business and/or assets of the Savings Bank, by an assumption agreement in form and substance satisfactory to the Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Savings Bank would be required to perform it if no such succession or assignment had taken place.  Failure of the Savings Bank to obtain
such an assumption agreement prior to the effectiveness of any such succession or assignment shall be a breach of this Agreement and shall entitle the Employee to compensation and benefits from the Savings Bank in the same amount and on the same terms that Employee would be entitled to hereunder if an event of Involuntary Termination occurred, in addition to any payments and benefits to which the Employee is entitled under Section 3 hereof.  For purposes of implementing the provisions of this Section 5(a), the date on which any such succession becomes effective shall be deemed the Date of Termination.


                    (b)          This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  In the event of the death of the Employee, unless otherwise provided herein, all amounts payable hereunder shall be paid to the Employee’s devisee, legatee, or other designee or, if there be no such designee, to the Employee’s estate.




          6.     Deferred
Payments.     If following a termination of the
Employee, the aggregate payments to be made by the Savings Bank under this
Agreement and all other plans or arrangements maintained by the Company or any
of the Consolidated Subsidiaries would exceed the limitation on  deductible
compensation contained in Section 162(m) of the Code in any calendar year, any
such amounts in excess of such limitation shall be mandatorily deferred with
interest thereon at 8.0% per annum to a calendar year such that the amount to be
paid to the Employee in such calendar year, 



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including deferred amounts, does not
exceed such limitation, provided, however, that such deferral shall not
extend past when the deferred amount must be paid pursuant to Section 409A of
the Code and the regulations thereunder.




          7.     Delivery of Notices.     For the purposes of this Agreement, all notices and other communications to any party hereto shall be in writing and shall be deemed to have been duly given when delivered or sent by certified mail, return receipt requested, postage prepaid, addressed as follows:

	
   
  	
  
If to the   Employee:
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  


  	
  
 
  
	
  
 
  	
  
 
  	
  
At the   address last appearing
  	
  
 
  
	
  
 
  	
  
 
  	
  
on the   personnel records of
  	
  
 
  
	
  
 
  	
  
 
  	
  
the Employee
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
If to the   Savings Bank:
  	
  
First   Savings Bank Northwest
  	
  
 
  
	
  
 
  	
  
 
  	
  
201 Wells   Avenue South
  	
  
 
  
	
  
 
  	
  
 
  	
  
Renton,   Washington 98057
  	
  
 
  
	
  
 
  	
  
 
  	
  
Attention:  Secretary
  	
  
 
  




or to such other address as such party may have furnished to the other in writing in accordance herewith, except that a notice of change of address shall be effective only upon receipt.


          8.     Amendments.     No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise provided.  


          9.     Headings.     The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.


          10.     Severability.     The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.


          11.     Governing Law.     This Agreement shall be governed by the laws of the State of Washington to the extent that federal law does not govern.


          12.     Arbitration.     Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, conducted before a panel of three arbitrators in a location selected by the Employee within 100 miles of such Employee’s job location with the Savings Bank, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrators’ award in any court having jurisdiction. 


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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.


          THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

	
  Attest:
  	
  
 
  	
  
FIRST SAVINGS BANK NORTHWEST
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  


  	
  
 
  	
  


  
	
  
Gerald   Edlund, Secretary
  	
  
 
  	
  
By:
  	
  
Victor   Karpiak
  
	
  
 
  	
  
 
  	
  
Its:
  	
  
President   and Chief Executive Officer
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
EMPLOYEE
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  


  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
  


  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
  


  





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