Exhibit 10.1


    
      

    

    


    Exhibit
      10.1 to Form 8-K

    


    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 the
      undersigned executive
      (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.

    


    
      
        
          
          

        

        
          -
            1
            -

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      10.1 to Form 8-K


     

    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;

    


    
      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      10.1 to Form 8-K

     

    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.

    


    
      
        
          
          

        

        
          -
            3
            -

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      10.1 to Form 8-K


     

    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.

    


    
      
        
          
          

        

        
          -
            4
            -

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      10.1 to Form 8-K

     

    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.

    


    
      	FRONTIER
              FINANCIAL CORPORATION	 	
              EXECUTIVE

            
	FRONTIER
              BANK	 	 
	 	 	 	 
	 	 	 	 
	
              By:

            	
                  /s/

            	 	
                  /s/

            
	 John
              Dickson, President and CEO 	 	 


    

     

     

     - 5
      -