Contract
Exhibit
(10)(i)
FRONTIER
BANK
CHANGE
OF
CONTROL AGREEMENT
This
CHANGE OF CONTROL AGREEMENT (this “Agreement”) is made by and between FRONTIER
FINANCIAL CORPORATION and FRONTIER BANK (hereinafter jointly referred to
as the
“Bank”), and __________________(hereinafter referred to as “Executive”). The
Bank and Executive are sometimes referred to herein as “the
Parties.”
WHEREAS,
Executive has rendered valuable services to the Bank, and the Board of Directors
of the Bank (the “Board”) desires to be assured that Executive will continue
rendering such services to the Bank; and
WHEREAS,
the Board wishes to assure the Bank of continuity of management in the event
of
a Change of Control of the Bank; and
WHEREAS,
Executive desires assurance that Executive will be protected in the event
of any
Change of Control;
NOW,
THEREFORE, in consideration of the mutual covenants and promises herein,
the
Parties agree as follows:
1. Severance
Benefits.
The Bank
agrees that if there is a Change of Control of the Bank and the Bank terminates
Executive’s employment other than for Cause, as defined below, or Executive
terminates this Agreement for Good Reason, as defined below, within twenty-four
(24) months after such Change of Control, Executive shall receive the benefits
provided in Paragraphs 1.1
and
1.2
(the
“Severance Benefit”):
1.1 Executive
shall receive a lump sum payment equal to two (2) times Executive’s W-2
compensation before salary deferrals (excluding any gains from stock-based
compensation) over the twelve (12) months prior to the effective date of
the
Change of Control, less statutory payroll deductions on the first day of
the
seventh calendar month following the discontinuance of Executive’s employment
due to a Change of Control; and
1.2 Executive
shall continue to be covered by all of the Bank’s medical and dental plans for
twenty-four (24) months following discontinuance of Executive’s employment due
to a Change of Control.
2. Termination
Before Change of Control.
If
Executive’s employment is involuntarily terminated (other than for Cause, as
defined below) or Executive dies or terminates employment due to disability
as
defined below on or after the date of the press release announcing the entering
into of an agreement that will result in a Change of Control of the Bank,
Executive shall be entitled to the Severance Benefits described in Section
1,
said
benefits to be paid after the Change of Control actually occurs but no earlier
than the first day of the seventh calendar month following the discontinuance
of
Executive’s employment due to a Change of Control. For purposes of this
paragraph, “disability” shall be determined using the definition of that term in
the Bank’s long-term disability plan in effect at the time of the disability, or
if no such plan is then in effect, the definition of “disability” contained in
such other plan providing a disability benefit. If there is no such plan
then in
effect, the definition of “disability” found in Internal Revenue Code Section
22(e), as may be amended from time to time, shall apply.
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3. Consideration.
3.1 The
amounts paid to Executive hereunder shall be considered severance pay in
consideration of the past services Executive has rendered to the Bank and
in
consideration of Executive’s continued service from the date hereof to the date
of Executive’s entitlement to such payments, and in further consideration for
the covenant not to compete/non-solicitation, as described in Section
13.
3.2 Executive
shall have no duty to mitigate the amount of any payment under this Agreement
by
seeking other employment. Should Executive actually receive earnings from
any
such other employment, the payments called for hereunder shall not be reduced
or
offset by any such future earnings.
4. Change
of Control.“Change
of Control” as used herein will be deemed to have occurred when there is a
Change in the Ownership of the Bank. For purposes of this Agreement, a Change
in
the Ownership of the Bank shall be deemed to occur when any one person, or
more
than one person acting as a group, acquires ownership of the Bank stock that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the
Bank.
A Change in Ownership of the Bank will not occur when any one person, or
more
than one person acting as a group, owning more than fifty percent (50%) of
the
total fair market value or total voting power of the stock of the Bank acquires
additional stock. For the purposes of this section, an increase in the
percentage of stock owned by any one person, or more than one person if acting
as a group, as a result of a transaction in which the Bank acquires its stock
in
exchange for property will be treated as an acquisition of stock.
5. Cause.
For
purposes of this Agreement, “Cause” shall mean:
5.1 The
willful breach or habitual neglect of assigned duties related to the Bank,
including compliance with the Bank’s policies, and such breach or neglect is
materially detrimental to the Bank;
5.2 Conviction
(including any plea of nolo
contendere)
of
Executive of any felony or crime involving dishonesty or moral
turpitude;
5.3 Any
act
of personal dishonesty knowingly taken by Executive in connection with
Executive’s responsibilities as an employee and intended to result in personal
enrichment of Executive or any other person;
5.4 Bad
faith
conduct that is materially detrimental to the Bank;
5.5 Inability
of Executive to perform Executive’s duties due to alcohol or illegal drug
use;
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5.6 Executive’s
failure to comply with any material legal written directive of the Board;
or
5.7 Any
act
or omission of Executive which is of substantial detriment to the Bank because
of Executive’s intentional failure to comply with any statute, rule or
regulation, except any act or omission believed by Executive in good faith
to
have been in or not opposed to the best interest of the Bank (without intent
of
Executive to gain, directly or indirectly, a profit to which Executive was
not
legally entitled) and except that Cause shall not mean bad judgment or
negligence other than habitual neglect of duty.
6. Good
Reason.
For
purposes of this Agreement, “Good Reason” means any one or more of the
following: reduction of Executive’s base compensation without Executive’s
consent (other than as part of an overall program applied uniformly to all
members of senior management of the Bank); assignment of Executive to a position
which provides Executive with significantly less responsibility; or the
relocation or transfer of Executive’s principal place of employment to a
different location in excess of thirty (30) miles of Executive’s then existing
principal job location.
7. Effect
on Other Benefits.
The
arrangements called for by this Agreement are not intended to have any effect
on
Executive’s participation in any other benefits available to executive personnel
or to preclude other compensation or additional benefits as may be authorized
by
the Board from time-to-time.
8. Voluntary
Retirement.
In the
event Executive, after attaining age 60, voluntarily retires within twelve
(12)
months following a Change of Control of the Bank, Executive shall receive
as a
Severance Benefit a lump sum payment equal to one (1) times Executive’s W-2
compensation before salary deferrals (excluding any gains from stock-based
compensation) over the twelve (12) months prior to the effective date of
the
Change of Control. Such payment shall be made on the first day of the seventh
calendar month after the discontinuance of Executive’s employment. In addition,
Executive shall continue to be covered by all of the Bank’s medical and dental
plans for twelve (12) months after the discontinuance of Executive’s
employment.
9. Golden
Parachute (FDIC).
The Bank
shall not be obligated to make, and Executive shall not be entitled to, any
payment under this Agreement if such payment would constitute a “golden
parachute” payment prohibited by 12 U.S.C. 1828(k) or 12 CFR 359.0 et
seq.
The
Bank shall have no liability to Executive under or in relation to this payment
should any payment be deemed a prohibited “golden parachute”
payment.
10.
Golden
Parachute (IRS).
Executive is aware that under this Agreement payments made to Executive may
constitute an “excess parachute payment” under Section 280G of the Internal
Revenue Code, as amended, and thus would subject Executive to the Excise
Tax
under Internal Revenue Code Section 4999, as amended.
11.
Binding
Effect.
This
Agreement shall be binding and shall inure to the benefit of the respective
successors, assigns, legal representative and heirs of the Parties.
12.
Miscellaneous.
If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions shall continue to
be
fully effective. No provision of this Agreement may be modified or waived
unless
such waiver or modification is agreed to in writing by Executive and the
Board.
This is the entire agreement between the Parties and replaces any prior
agreement regarding Change of Control. This Agreement shall be governed under
the laws of the State of Washington.
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13. Covenant
Not to Compete/Non-Solicitation.
Executive agrees that if Executive receives a Severance Benefit under this
Agreement, the following shall apply:
13.1 Executive
shall not, for a period of two (2) years after termination of employment
with
the Bank, directly or indirectly become interested in, as a principal
shareholder, director, or officer, any financial institution, now existing
or
organized hereafter, that competes or will compete with the Bank, including
any
successor, or any of the Bank’s affiliates within any county in which the Bank
does business; provided, that Executive shall not be deemed a “principal
shareholder” unless (i) Executive’s investment in such an institution exceeds 2%
of the institution’s outstanding voting securities or (ii) Executive is active
in the organization, management or affairs of such institution. The provisions
restricting competition by Executive may be waived by action of the Board.
Executive recognizes and agrees that any breach of this covenant by Executive
will cause immediate and irreparable injury to the Bank, and Executive hereby
authorizes recourse by the Bank to injunction and/or specific performance,
as
well as to the other legal or equitable remedies to which the Bank may be
entitled.
13.2 During
the non-competition period described in Paragraph 13.1,
Executive shall not solicit or attempt to solicit any other employee of the
Bank
or its affiliates to leave the employ of those companies, or in any way
interfere with the relationship between the Bank and any other employee of
the
Bank.
14. Dispute
Resolution.
The
Parties agree to attempt to resolve all disputes arising out of this Agreement
by mediation. Any party desiring mediation may begin the process by giving
the
other party a written Request to Mediate, describing the issues involved
and
inviting the other party to join with the calling party to name a mutually
agreeable mediator and a timeframe for the mediation meeting. The Parties
and
mediator may adopt any procedural format that seems appropriate for the
particular dispute. The contents of all discussions during the mediation
shall
be confidential and non-discoverable in subsequent arbitration or litigation,
if
any. If the Parties can, through the mediation process, resolve the dispute(s),
the agreement reached by the Parties shall be reduced to writing, signed
by the
Parties, and the dispute shall be at an end.
If
the
result of the mediation is a recognition that the dispute cannot be successfully
mediated, or if either party believes mediation would be unproductive or
too
slow, then either party may seek to resolve the dispute in accordance with
the
procedures established by Judicial Arbitration and Mediation Services,
Inc.
The
award
rendered by the arbitrator (whether through Judicial Arbitration and Mediation
Services, Inc. or otherwise) shall be final, and judgment may be entered
upon it
in accordance with applicable law in any court having jurisdiction
thereof.
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The
arbitrator shall allocate the costs charged by Judicial Arbitration and
Mediation Services, Inc., or other arbitrator as the case may be, for the
arbitration between the Parties in a manner which the arbitrator considers
equitable. It is agreed that the arbitrator shall award to the prevailing
or
substantially prevailing party all fees incurred by such party with regard
to
such arbitration, including reasonable legal and accounting fees. If the
arbitrator determines that there is no prevailing or substantially prevailing
party, the legal and accounting fees shall be the responsibility of each
party.
Notwithstanding
the above, if Executive violates Section 13
above,
the Bank will be entitled, in addition to the rights set forth heretofore,
to
commence legal action in a court of competent jurisdiction to obtain a
temporary, primary and permanent injunction in order to prevent or restrain
the
breach of Section 13,
and the
Bank will not be required to post a bond as a condition to the granting of
any
such relief.
15. Independent
Legal Counsel.
Executive acknowledges that they have had the opportunity to review and consult
with their own personal legal counsel regarding this Agreement.
16. Termination.
This
Agreement shall terminate immediately and without notice (1) upon the voluntary
or involuntary termination of Executive’s employment, death or disability (as
defined in Section 2)
occurring prior to the date of the press release announcing the entering
into an
agreement that will result in a Change of Control of the Bank; or (2) if
Executive’s employment with the Bank is reduced to part time (defined for
purposes of this Agreement as less than thirty (30) hours per work week)
other
than due to short-time disability or medical leave; or (3) upon written notice
to Executive if Executive’s duties and responsibilities are reduced
significantly as determined by the Personnel Committee of the Board of
Directors.
17. Compliance
with Internal Revenue Code Section 409A.
Where
required, the provisions of this Agreement are intended to comply with the
requirements of Section 409A of the Internal Revenue Code. Notwithstanding
any other provision of this Agreement, this Agreement shall be interpreted
and
administered in accordance with the requirements of Section 409A of the
Internal Revenue Code.
IN
WITNESS WHEREOF, the Parties have signed this Agreement this 3rd
day of
January, 2007.
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FRONTIER
FINANCIAL CORPORATIONFRONTIER BANK
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EXECUTIVE
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By:
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Xxxx
Xxxxxxx, President
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