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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), signed this 31ST day of July,
1998, between FRONTIER FINANCIAL CORPORATION ("FFC"), FRONTIER BANK ("Frontier")
and XXXXX X. XXXXXX ("Executive") takes effect on the consummation of the
Mergers ("Effective Date").
RECITALS
A. FFC and Frontier Bank have entered into a Plan and Agreement of Mergers
("Plan") with Valley Bancorporation ("Valley") and the Bank of Xxxxxx
("Xxxxxx"), under which Valley Bancorporation will be merged into FFC,
and Xxxxxx will be merged into Frontier (collectively "Mergers").
B. FFC/Frontier wishes to retain Executive, who is presently the President
and Chief Executive Officer of Sumner, to serve as Senior Vice President
and Manager of the Xxxxxx County Division of Frontier Bank. Executive
wishes to accept employment in that capacity with Frontier.
C. This Agreement sets forth the terms and conditions of Executive's
employment with Frontier.
AGREEMENT
The parties agree as follows.
1. Employment. Upon the Effective Date, Frontier shall employ Executive,
and Executive agrees to be employed, as Senior Vice President and
Manager of the Xxxxxx County Division of Frontier Bank. Executive will
also serve as a member of the Executive Management Team of Frontier.
2. Term. Executive's employment shall continue for a period of one year,
beginning on the Effective Date and ending one years thereafter (the
"Term"). If the Plan terminates before closing of the Mergers, this
Agreement will not become effective and will be void. Section 6 hereof
entitled "Special Bonus" shall survive the termination of this
Agreement.
3. Duties. Executive will faithfully and diligently perform the duties
assigned to Executive from time to time by Frontier's Board of Directors
or by the President or Chief Executive Officer of Frontier. Executive
will use her best efforts to perform her duties and will devote full
time and attention to these duties during working hours. These duties
will include, without limitation, the following:
(a) Xxxxxx County Office Performance. Executive will be responsible for
all aspects of the performance of the Xxxxxx County Offices of
Frontier Bank, including, but not limited to, directing that daily
operational and managerial matters are performed in a manner
consistent with Frontier's policies. These duties will also
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include formulating and implementing Frontier's expansion
strategies in the Xxxxxx County area and performing all other tasks
in connection with Frontier's management and affairs that are
normal and customary to Executive's position.
(b) Development and Preservation of Business. Executive will be
responsible for the development and preservation of banking
relationships and other business development efforts (including
appropriate civic and community activities) in the Sumner/Xxxxxx
County market area.
(c) Report to President. Executive will report directly to the
President of Frontier. Frontier's Board of Directors may, from time
to time, modify Executive's title or add to, delete from, or modify
Executive's performance responsibilities to accommodate management
succession, as well as any other management objectives of Frontier.
Executive will assume any additional positions, duties and
responsibilities as may reasonably be requested of her with or
without additional compensation, as appropriate and consistent with
Sections 3(a) and (b) of this Agreement.
4. Salary. Executive will receive an annual salary of $100,000, to be paid
in accordance with Frontier's regular payroll schedule.
5. Incentive Compensation. As additional incentive to Executive, Executive
shall receive an incentive bonus at the expiration of the term, if the
1999 earnings of the current branches of the Bank of Xxxxxx ("Xxxxxx
Earnings"), after adjustment for costs of the Merger, are: (i) 100 to
115 percent of the 1998 Xxxxxx Earnings, then Executive will receive 3
percent of the pretax earnings of said branches; (ii) 115.1 to 120
percent of the 1998 Xxxxxx Earnings, then the Executive will receive 5
percent of the pretax earnings for said branches; and (iii) 120.1
percent or greater of the 1998 Xxxxxx Earnings, then Executive will
receive 10 percent of the pretax earnings for said branches. The
foregoing notwithstanding, the incentive bonus shall not exceed 50
percent of Executive's annual salary. In calculating the 1999 Xxxxxx
Earnings, overhead for Xxxxxx shall be calculated by dividing the
average Xxxxxx assets for 1999 by the average Frontier Bank assets for
1999, multiplied by Frontier Bank's 1999 overhead.
6. Special Bonus. In the event Executive remains in the employ of FFC or
any of its subsidiaries for two years from the Effective Date, or if
Executive is terminated without Cause (by FFC/Frontier) or for Good
Reason (by Executive) during such two-year period, Executive shall
receive a special bonus of 1,000 shares of common stock of FFC. The
1,000 shares shall be as of the Effective Date and shall be adjusted
during such two-year period to reflect any change in the outstanding
shares through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, splitoff, spinoff, combination of
shares, exchange of shares, or other like change in the capital
structure of FFC.
7. Income Deferral and Benefits. Subject to eligibility requirements and in
accordance with and subject to any policies adopted by Frontier's Board
of Directors with respect to any benefit plans or programs, Executive
will be entitled to receive benefits (including stock options and
deferred compensation, if applicable) similar to those offered to other
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executive officers of Frontier and its subsidiaries with positions and
duties comparable to those of Executive.
8 Business Expenses. Frontier will reimburse Executive for ordinary and
necessary expenses (including, but not limited to, travel, entertainment
and similar expenses) incurred in performing and promoting Frontier's
business. Executive will present from time to time itemized accounts of
these expenses, subject to any limitations of Frontier's policies or the
rules and regulations of the Internal Revenue Service.
9. Termination.
(a) Termination by Frontier for Cause. If, before the end of the Term,
Frontier terminates Executive's employment for Cause or Executive
terminates her employment without Good Reason (defined below),
Frontier will pay Executive the salary earned and expenses
reimbursable under this Agreement incurred through the date of
Executive's termination. Executive will have no right to receive
compensation or other benefits (including the Special Bonus) for
any period after termination under this Section 9(a).
(b) Other Termination by Frontier. If, before the end of the Term,
Frontier terminates Executive's employment without cause or
Executive terminates her employment for Good Reason, Frontier will
pay Executive for the remainder of the Term the salary and other
compensation and benefits to which Executive would have been
entitled to under this Agreement if her employment had not
terminated.
(c) Death or Disability. This Agreement terminates (i) if Executive
dies or (ii) if Executive is unable to perform her duties and
obligations under this Agreement for a period of 90 days as a
result of a physical or mental disability arising at any time
during the term of this Agreement, unless with reasonable
accommodation Executive could continue to perform her duties under
this Agreement and making these accommodations would not impose any
undue hardship on Frontier to expend any funds. If termination
occurs under this Section 9(c), Executive or her estate will be
entitled to receive only the compensation and benefits earned and
expenses reimbursable through the date this Agreement terminated.
(d) Return of Frontier Property. If and when Executive ceases, for any
reason, to be employed by Frontier, Executive must return to
Frontier all keys, pass cards, identification cards and any other
property of Frontier. At the same time, Executive also must return
to Frontier all originals and copies (whether in hard copy,
electronic or other form) of any documents, drawings, notes,
memoranda, designs, devices, diskettes, tapes, manuals, and
specifications which constitute proprietary information or material
of Frontier. The obligations in this paragraph include the return
of documents and other materials which may be in Executive's desk
at work, in Executive's car or place of residence, or in any other
location under Executive's control.
10. Definition of "Cause". "Cause" means any one or more of the following:
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(a) Willful misfeasance or gross negligence in the performance of
Executive's duties;
(b) Conviction of a crime in connection with her duties;
(c) Conduct demonstrably and significantly harmful to Frontier, as
reasonably determined by Frontier's Board of Directors on the
advice of legal counsel; or
(d) Death or Disability as provided in Section 9(c) hereof.
11. Definition of "Good Reason". "Good Reason" means any one or more of the
following:
(a) Reduction, without Executive's consent, of Executive's salary or
elimination of any compensation or benefit plan benefiting
Executive, unless the reduction or elimination is generally
applicable to substantially all similarly situated Frontier
employees (or employees of a successor or controlling entity of
Frontier) formerly benefited;
(b) The assignment to Executive without her consent of any authority or
duties materially inconsistent with Executive's position as of the
date of this Agreement; or
(c) A relocation or transfer of Executive's principal place of
employment that would require Executive to commute on a regular
basis more than 30 miles each way from her current business office
at Frontier on the date of this Agreement, unless Executive
consents to the relocation or transfer.
12. Confidentiality. Executive will not, after signing this Agreement,
including during and after its Term, use for her own purposes or
disclose to any other person or entity any confidential information
concerning Frontier or its business operations or customers, unless (i)
Frontier consents to the use or disclosure of their respective
confidential information, (ii) the use or disclosure is consistent with
Executive's duties under this Agreement or (iii) disclosure is required
by law or court order.
13. Enforcement.
(a) Frontier and Executive stipulate that, in light of all of the facts
and circumstances of the relationship between Executive and
FFC/Frontier, the agreements referred to in Section 12 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 FFC/Frontier request the
court to reform these provisions to restrict Executive's use of
confidential information and Executive's ability to compete with
FFC or its subsidiaries to the maximum extent, in time, scope of
activities and geography, the court finds enforceable.
(b) Executive acknowledges that FFC/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 Section
12 or threatens or attempts to do so. For
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this reason, under these circumstances, FFC/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 FFC/Frontier will not be
required to post a bond as a condition for the granting of this
relief.
14. Adequate Consideration. Executive specifically acknowledges the receipt
of adequate consideration for the covenants contained in Section 12 and
that Frontier is entitled to require her to comply with this Section,
which shall survive termination of this Agreement.
15. 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.
(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 12, FFC/Frontier will have the right to initiate
the court proceedings described in Section 13(b), in lieu of an
arbitration proceeding under this Section 15. Frontier may initiate
these proceedings wherever appropriate within the state of
Washington; but Executive will consent to venue and jurisdiction in
Snohomish County, Washington.
16. 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 FFC/Frontier.
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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.
(g) Assignment. The services to be rendered by Executive under this
Agreement are unique and personal. Accordingly, Executive may not
assign any of her rights or duties under this Agreement.
(h) Amendment. This Agreement may be modified only through a written
instrument signed by both parties.
(i) Severability. The provisions of this Agreement are severable. The
invalidity of any provision will not affect the validity of other
provisions of this Agreement.
(j) 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 15(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.
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(k) Parachute Payment. In the event the aggregate payments or benefits
to be made or afforded to Executive under this Agreement, together
with any other payments or benefits received or to be received by
Executive in connection with the Mergers (including the Deferred
Compensation Agreement) would be deemed to include an "excess
parachute payment" under Section 280G of the Internal Revenue Code
of 1986, as amended, then the payments or benefits to be provided
under this Agreement, or any other applicable agreements, shall be
reduced to the extent necessary to avoid treatment as an excess
parachute payment.
(l) 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: ____________________, 1998:
FRONTIER FINANCIAL CORPORATION
and FRONTIER BANK
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President and CEO
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
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