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EXHIBIT 10.3
COVENANT NOT TO COMPETE
XXXX TELLING
THIS AGREEMENT is made by and between FRONTIER FINANCIAL CORPORATION and
FRONTIER BANK (hereinafter referred to jointly as "Frontier") and XXXX TELLING
(hereinafter referred to as "Executive"), and takes effect on the consummation
of the Mergers ("Effective Date").
WHEREAS, Frontier has entered into a Plan and Agreement of Mergers
("Plan") with Valley Bancorporation and the Bank of Xxxxxx (hereinafter referred
to jointly as "Valley", unless otherwise specified); and
WHEREAS, Executive is the Executive Vice President and Chief Loan
Officer of Bank of Xxxxxx, and Frontier would not be willing to enter into the
Plan with Valley if it were not that Executive has agreed to enter into this
Covenant Not to Compete; NOW, THEREFORE,
IT IS HEREBY AGREED AS FOLLOWS:
1. Non-Competition. In consideration of immediate payment to Executive
of $140,000 ($150,000 if the Mergers are consummated after December 31, 1998),
Executive agrees that for a 18-month period from the date she ceases employment
with Frontier, or 18 months from the Effective Date, whichever last occurs (the
"Covenant Period"):
a. She will not become involved with a Competing Business or serve,
directly or indirectly, a Competing Business in any manner, including, without
limitation, as a shareholder, member, partner, director, officer, manager,
investor, organizer, "founder," employee, consultant, or agent, within a
thirty-mile radius of the current Main Office of the Bank of Xxxxxx (the
"Restricted Area"). The parties specifically agree that the time and distance of
the non-compete provision are reasonable and that this non-compete provision
covers this radius for the reason that Valley has drawn customers from that wide
an area. "Competing Business" means any financial services corporation or trust
company that competes with Frontier or any of its subsidiaries. The term
"Competing Business" includes, without limitation, any start-up or other
financial institution or trust company in formation.
b. She will not directly or indirectly encourage, solicit or attempt
to solicit (i) any employees of Frontier or any of its subsidiaries employed in
Xxxxxx County, to leave their employment or (ii) any customers of any Xxxxxx
County office of Frontier or any of its subsidiaries to remove their business
from Frontier or any of its subsidiaries, or to participate in any manner in a
Competing Business. Solicitation prohibited under this Section includes
solicitation by any means, including, without limitation, meetings, letters or
other mailings, electronic communications of any kind, and internet
communications.
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2. Investment in Competing Business. During the Covenant Period,
Executive will not acquire an interest exceeding two percent of the total equity
interest in any Competing Business.
3. Employment Outside Restricted Area. Nothing in this Agreement
prevents Executive from accepting employment outside the Restricted Area.
4. Enforcement.
a. Frontier and Executive stipulate that, in light of all of the
facts and circumstances of the relationship between Executive and Frontier, the
agreements referred to in Sections 1 and 2 (including without limitation their
scope, duration and geographic extent) are fair and reasonably necessary for the
protection of Frontier's confidential information, goodwill and other
protectable interests. If a court of competent jurisdiction should decline to
enforce any of those covenants and agreements, Executive and Frontier request
the court to reform these provisions to restrict Executive's use of confidential
information and Executive's ability to compete with Frontier or its subsidiaries
to the maximum extent, in time, scope of activities and geography, the court
finds enforceable.
b. Executive acknowledges that Frontier will suffer immediate and
irreparable harm that will not be compensable by damages alone, if Executive
repudiates or breaches any of the provisions of Sections 1 and 2 or threatens or
attempts to do so. For this reason, under these circumstances, Frontier, in
addition to and without limitation of any other rights, remedies or damages
available to it at law or in equity, will be entitled to obtain temporary,
preliminary, and permanent injunctions in order to prevent or restrain the
breach, and Frontier will not be required to post a bond as a condition for the
granting of this relief.
5. Adequate Consideration. Executive specifically acknowledges the
receipt of adequate consideration for the covenants contained in Sections 1 and
2 and that Frontier is entitled to require her to comply with these Sections.
These Sections will survive termination of this Agreement. Executive represents
that if her employment is terminated, whether voluntarily or involuntarily,
Executive has experience and capabilities sufficient to enable Executive to
obtain employment in areas which do not violate this Agreement and that
Frontier's enforcement of a remedy by way of injunction will not prevent
Executive from earning a livelihood.
6. Arbitration.
a. Arbitration. At either party's request, the parties must submit
any dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement or any breach or alleged breach of this Agreement,
to arbitration under the American Arbitration Association's rules then in effect
(or under any other form of arbitration mutually acceptable to the parties). A
single arbitrator agreed on by the parties will conduct the arbitration. If the
parties cannot agree on a single arbitrator, each party must select one
arbitrator and those two arbitrators will select a third arbitrator. This third
arbitrator will hear the dispute. The arbitrator's decision is final (except as
otherwise specifically provided by law) and binds the parties, and either party
may request any court having jurisdiction to enter a judgment and to enforce the
arbitrator's decision. The arbitrator will provide the parties with a written
decision naming the substantially prevailing party in the action. This
prevailing party is entitled to reimbursement from the other party for its costs
and expenses, including reasonable attorneys' fees.
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b. Governing Law. All proceedings will be held at a place designated
by the arbitrator in Snohomish County, Washington. The arbitrator, in rendering
a decision as to any state law claims, will apply Washington law.
c. Exception to Arbitration. Notwithstanding the above, if Executive
violates Section 1 or 2, Frontier will have the right to initiate the court
proceedings described in Section 4.b, in lieu of an arbitration proceeding under
this Section 6. Frontier may initiate these proceedings wherever appropriate
within the state of Washington; but Executive will consent to venue and
jurisdiction in Snohomish County, Washington.
7. Miscellaneous Provisions.
a. Defined Terms. Capitalized terms used as defined terms, but not
defined in this Agreement, will have the meanings assigned to those terms in the
Plan.
b. Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto with respect to its subject matter and merges with and
supersedes all prior discussion, agreements, commitments, or understandings of
every kind and nature relating thereto, whether oral or written, between
Executive and Frontier. Neither party shall be bound by any term or condition
other than as is expressly set forth herein. Executive specifically waives the
terms of and all of her rights under all employment, change-in-control,
severance, salary continuation, or similar agreements, whether written or oral,
she has previously entered into with Valley Bancorporation or any of its
subsidiaries or affiliates.
c. Binding Effect. This Agreement will bind and inure to the benefit
of Frontier's and Executive's heirs, legal representatives, successors and
assigns.
d. Litigation Expenses. If either party successfully seeks to enforce
any provision of this Agreement or to collect any amount claimed to be due under
it, this party will be entitled to reimbursement from the other party for any
and all of its reasonable out-of-pocket expenses and costs including, without
limitation, reasonable attorneys' fees and costs incurred in connection with the
enforcement or collection.
e. Waiver. Any waiver by a party of its rights under this Agreement
must be written and signed by the party waiving its rights. A party's waiver of
the other party's breach of any provision of this Agreement will not operate as
a waiver of any other breach by the breaching party.
f. Counsel Review. Executive represents and agrees that she fully
understands her right to discuss all aspects of this Agreement with her private
attorney, that to the extent she desired, she availed herself of this right,
that she has carefully read and fully understands all of the provisions of the
Agreement, that she is competent to execute this Agreement that her decision to
execute this Agreement has not been obtained by any duress and that she freely
and voluntarily enters into this Agreement, and that she has read this document
in its entirety and fully understands the meaning, intent, and consequences of
this Agreement.
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g. Amendment. This Agreement may be modified only through a written
instrument signed by both parties.
h. Severability. The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other provisions of
this Agreement.
i. Governing Law and Venue. This Agreement will be governed by and
construed in accordance with Washington law, except to the extent that certain
matters may be governed by federal law. Except as otherwise provided in Section
6.c, the parties must bring any legal proceeding arising out of this Agreement
in Snohomish County, Washington, and the parties will submit to jurisdiction in
that county.
j. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which taken
together will constitute one and the same document.
Signed: July 30, 1998:
FRONTIER FINANCIAL CORPORATION
and FRONTIER BANK
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President and CEO
/s/ Xxxxxx Telling
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XXXX TELLING
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