Exhibit 10.1
SEPARATION AGREEMENT
This Separation Agreement (the "Agreement") is made as of the 6th day of
April, 2009, between East Boston Savings Bank ("EBSB" or the "Bank) and Xxxxxxx
X. Xxxxx ("Xx. Xxxxx").
In consideration of the mutual covenants and agreements herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties agree as follows:
1. Resignation/Retirement. Effective April 29, 2009 (the
"Resignation/Retirement Date"), Xx. Xxxxx retires from employment with the Bank
and resigns from his positions as Treasurer and Chief Financial Officer, and
from any other positions that he holds with EBSB, Meridian Interstate Bancorp,
Inc., Meridian Financial Services, Inc., Meridian Charitable Foundation, Inc.,
Hampshire First Bank, Prospect, Inc., ESOP Funding Corp., or any other affiliate
of EBSB. If so requested by the Bank, Xx. Xxxxx shall sign any document
reasonably requested by the Bank to confirm any such actions.
2. Accrued Compensation. On April 29, 2009, the Bank shall pay Xx. Xxxxx
(a) $5,603.48 for all salary earned but not yet paid through the
Resignation/Retirement Date, and (b) the amount of $8,685.39 in payment for his
12.4 accrued but unused vacation days.
3. Employment Agreement - Salary Continuation. In consideration for Xx.
Xxxxx'x release of claims set forth in Section 10 below and the execution,
delivery and non-revocation by Xx. Xxxxx of a second release of claims in the
form of Exhibit A hereto (the "Second Release") no sooner than the
Resignation/Retirement Date and no later than 30 days after the
Resignation/Retirement Date, the Bank agrees to pay Xx. Xxxxx an amount equal to
$364,226 in equal installments over 24 months pursuant to Section 6(e) of the
December 29, 2003 Employment Agreement between Xx. Xxxxx and EBSB (the
"Employment Agreement"), subject to the provisions of Section 7 below, with the
first payment commencing on October 30, 2009. The first payment made on October
30, 2009 shall include a catch-up payment covering amounts that would have
otherwise been paid during April 30, 2009 through October 29, 2009 but for the
six-month delay due to the application of Section 409A of the Code, as
referenced in Section 7 of this Agreement. Xx. Xxxxx'x post-termination
obligations under the Employment Agreement, including but not limited to those
set forth in Section 7 thereof, shall remain in full force and effect following
the Resignation/Retirement Date.
4. Supplemental Executive Retirement Agreement. The Amended and Restated
Supplemental Executive Retirement Agreement between Xx. Xxxxx and EBSB, dated as
of January 1, 2007 (the "SERP"), remains in full force and effect. Xx. Xxxxx has
elected to have the Bank pay his SERP benefits in a lump sum payment pursuant to
Section 2(d) of the SERP, in an amount equal to $1,281,818 as adjusted for
interest calculated at the Prime Rate as reported in The Wall Street Journal on
May 1, 2009 for the period beginning on May 1, 2009 and ending October 29, 2009,
subject to the provisions of Section 6 below, with the lump sum payment to be
made on October 30, 2009.
5. Split Dollar and Bank Owned Life Insurance. The Split Dollar Agreement
between Xx. Xxxxx and EBSB, dated December 29, 2003 (the "SDA") and the Bank
Owned Life Insurance covering Xx. Xxxxx, remain in full force and effect, and it
is acknowledged that the SDA and Bank Owned Life Insurance each provide a death
benefit equal to $455,283 and $364,226, respectively, payable to Xx. Xxxxx'x
beneficiary upon his death.
6. Death. In the event of Xx. Xxxxx'x death before all payments are made
pursuant to Sections 2, 3 and 4 of this Agreement, all payments will be made to
Xx. Xxxxx'x beneficiary, as identified in the SDA, at the same time the payments
would have been made if Xx. Xxxxx had not died, subject to Section 7 of this
Agreement.
7. Section 409A. EBSB has determined that Xx. Xxxxx is a "specified
employee" within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue
Code (the "Code"). Because the salary continuation payments referenced in
Section 3 above and the lump sum distribution that Xx. Xxxxx has elected under
his SERP referenced in Section 4 above will be considered deferred compensation
subject to Section 409A of the Code, such payments shall not be payable until
the date that is the earlier of (i) six months and one day after his separation
from service, or (ii) Xx. Xxxxx'x death. The first salary continuation shall
include a catch-up payment covering amounts that would otherwise have been paid
during the six-month period but for the application of this provision, and the
balance of the installments shall be payable in accordance with their original
schedule.
8. Taxation of Payments and Benefits. EBSB shall undertake to make
deductions, withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that it reasonably and in good faith believes
that it is required to make such deductions, withholdings and tax reports.
Payments under this Agreement shall be in amounts net of any such deductions or
withholdings. Except to the extent otherwise specified, nothing in this
Agreement shall be construed to require EBSB to make any payments to compensate
Xx. Xxxxx for any adverse tax effect associated with any payments or benefits or
for any deduction or withholding from any payment or benefit.
9. Health Insurance and Other Benefits. EBSB shall provide Xx. Xxxxx with
the right to continue group medical and dental insurance coverage after the
Resignation/Retirement Date, at his own expense, under the law known as "COBRA."
The terms for that opportunity will be set forth in a separate written notice.
The Bank agrees to maintain or cause to be maintained in effect, and to pay or
cause to be paid the applicable premiums under, the long term care policies
currently in effect for Xx. Xxxxx and his spouse (UNUM Policy Nos. LAC716035 and
XXX000000) respectively, until their respective deaths. Xx. Xxxxx'x eligibility
to participate in any other employee benefit plans and programs of the Company
ceases on or after the Resignation/Retirement Date in accordance with applicable
benefit plan or program terms.
10. Release of Claims. Xx. Xxxxx acknowledges that, pursuant to 6(e) of the
Employment Agreement, he is required to execute a release of any and all legal
claims in a form satisfactory to the Bank as a condition of his eligibility for
salary continuation payments under said Section 7(e). Accordingly, Xx. Xxxxx, in
consideration for said salary continuation payments (which are referenced in
Section 3 above), to which he acknowledges he otherwise would not be entitled,
voluntarily releases and forever discharges the Bank, its affiliated and related
entities (including Meridian Interstate Bancorp, Inc., Meridian Financial
Services, Inc., Meridian Charitable Foundation, Inc., Hampshire First Bank,
Prospect, Inc. and ESOP Funding Corp.), its and their respective predecessors,
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successors and assigns, its and their respective employee benefit plans and
fiduciaries of such plans, and the current and former officers, directors,
shareholders, employees, attorneys, accountants and agents of each of the
foregoing in their official and personal capacities (collectively referred to as
the "Releasees") generally from all claims, demands, debts, damages and
liabilities of every name and nature, known or unknown ("Claims") that, as of
the date when he signs this Agreement, Xx. Xxxxx has, ever had, now claims to
have or ever claimed to have had against any or all of the Releasees. This
release includes, without limitation, all Claims:
o relating to Xx. Xxxxx'x employment by and termination of employment with
the Bank and any of its affiliated and related entities;
o of wrongful discharge;
o of breach of contract;
o of discrimination or retaliation under federal, state or local law
(including, without limitation, Claims of age discrimination or retaliation
under the Age Discrimination in Employment Act);
o under any other federal or state statute;
o of defamation or other torts;
o of violation of public policy;
o for wages, bonuses, incentive compensation, stock, stock options, vacation
pay or any other compensation or benefits; and
o for damages or other remedies of any sort, including, without limitation,
compensatory damages, punitive damages, injunctive relief and attorney's
fees;
provided, however, that this release shall not affect Xx. Xxxxx'x vested rights
under the Bank's Section 401(k) plan, his rights under this Agreement and the
agreements referenced in Sections 4 and 5 of this Agreement, or any rights Xx.
Xxxxx may have to indemnification under the Bank's by-laws or Directors &
Officers Liability policy. In addition, this release shall not affect the grant
of 3,000 restricted stock awards and 15,000 stock options made on March 27,
2009, pursuant to necessary corporate approvals, and such awards and options
shall continue to vest as if Xx. Xxxxx were still an active employee with the
Bank subject to a vesting schedule that is typically used for similarly situated
executives.
Xx. Xxxxx agrees that he shall not accept damages of any nature, other
equitable or legal remedies for his own benefit, attorney's fees, or costs from
any of the Releasees with respect to any Claim released by this Agreement. As a
material inducement to the Bank to enter into this Agreement, Xx. Xxxxx
represents that he has not assigned to any third party any Claim released by
this Agreement.
11. Return of Property. All documents, records, data, equipment and other
physical property, whether or not pertaining to Confidential Information, that
have been or are in the future furnished to Xx. Xxxxx by the Bank or are
produced by Xx. Xxxxx in connection with his employment or other engagement will
be and remain the sole property of the Bank. Xx. Xxxxx shall return all such
materials and property by the Resignation/Retirement Date, pursuant to Section
7(c) of his Employment Agreement.
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12. Nondisparagement. Xx. Xxxxx shall not at any time, either before or
after the Resignation/Retirement Date, make or cause to be made any derogatory
or disparaging statement to anyone about EBSB or any of its affiliates, its or
their products or services, its or their financial condition or proposals, or
about any of the directors, officers or employees of EBSB or its affiliates. Xx.
Xxxxx represents to the Bank that he has not made or caused to be made any such
statement prior to entering into this Agreement. The provisions of this section
shall not be construed to affect the obligations of Xx. Xxxxx to testify
truthfully in any legal proceeding or to provide truthful information in any
government investigation.
13. Announcements re: Xx. Xxxxx'x Retirement/Resignation. The Bank will
issue an internal announcement to employees regarding Xx. Xxxxx'x
retirement/resignation in the form set forth in Exhibit B hereto.
14. Integration. This Agreement and the Employment Agreement (as modified
hereby), the SERP (as modified hereby) and the SDA constitute the entire
agreement between the parties and supersede all prior agreements between the
parties. Xx. Xxxxx acknowledges that this Agreement resolves all matters
concerning his employment separation, including without limitation separation
compensation.
15. Assignment; Successors and Assigns, etc. The Bank may assign its rights
under this Agreement in the event that it shall effect a reorganization,
consolidate with or merge into any other corporation, partnership, organization
or other entity, or transfer all or substantially all of its properties or
assets to any other corporation, partnership, organization or other entity. This
Agreement shall inure to the benefit of and be binding upon Xx. Xxxxx and the
Bank and each party's respective successors, executors, administrators, heirs
and permitted assigns.
16. Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
17. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
18. Notices. Except for the notice referred to in Section 22 below, any
notices, requests, demands and other communications provided for by this
Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally recognized overnight courier service or by registered or certified
mail, postage prepaid, return receipt requested, to Xx. Xxxxx at the last
address he has filed in writing with EBSB or, in the case of EBSB, at its main
offices, attention of the CEO. Delivery by overnight courier service shall be
effective on the first business day after mailing. Delivery by registered or
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certified mail shall be effective three days after mailing. Delivery in person
shall be effective upon delivery.
19. Amendment. This Agreement may be amended or modified only by a written
instrument signed by Xx. Xxxxx and by a duly authorized representative of the
Bank.
20. Governing Law. This is a Massachusetts contract and shall be construed
under and be governed in all respects by the laws of the Commonwealth of
Massachusetts, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law, such disputes
shall be determined in accordance with the law as it would be interpreted and
applied by the United States Court of Appeals for the First Circuit.
21. Consideration of Agreement. Xx. Xxxxx acknowledges that he has had the
opportunity, if he so desired, to take up to 21 days to consider this Agreement.
Xx. Xxxxx agrees that any modifications, material or otherwise, made to this
Agreement do not restart or affect in any manner the original 21 day
consideration period. Xx. Xxxxx further acknowledges that he has been advised to
consult with an attorney prior to executing this Agreement. Xx. Xxxxx represents
that he has carefully read and reviewed this Agreement, fully understands all of
its terms and conditions, has not relied upon any other representations by the
Bank or the employees or agents of the Bank concerning the terms of this
Agreement, and is knowingly and voluntarily executing this Agreement.
22. Revocation Period. Xx. Xxxxx will have seven days following his signing
of this Agreement in which to revoke this Agreement by a written notice to be
received by EBSB's counsel, Xxxxxxxx Spaccasi, Xxxx Xxxxxx Xxxxxxxx & Xxxxxx,
P.C., 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX 00000 no later than
the end of such seven-day period. This Agreement shall not become effective
until the revocation period has expired.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original. Such counterparts shall together constitute one and the same
document.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
EAST BOSTON SAVINGS BANK
By: /s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
Its: Chairman and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
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EXHIBIT A
General Release of Claims.
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I, Xxxxxxx X. Xxxxx, acknowledge that, pursuant to 6(e) of my December 29,
2003 Employment Agreement with East Boston Savings Bank (the "Bank"), I am
required to execute a release of any and all legal claims in a form satisfactory
to the Bank as a condition of my eligibility for salary continuation payments
under said Section 6(e). Accordingly, in consideration for such salary
continuation payments (which are referenced in Section 3 of the April 6, 2009
Separation Agreement between me and the Bank (the "Separation Agreement")), to
which I acknowledge I otherwise would not be entitled, I voluntarily release and
forever discharge the Bank, its affiliated and related entities (including
Meridian Interstate Bancorp, Inc., Meridian Financial Services, Inc., Meridian
Charitable Foundation, Inc., Hampshire First Bank, Prospect, Inc. and ESOP
Funding Corp.), its and their respective predecessors, successors and assigns,
its and their respective employee benefit plans and fiduciaries of such plans,
and the current and former officers, directors, shareholders, employees,
attorneys, accountants and agents of each of the foregoing in their official and
personal capacities (collectively referred to as the "Releasees") generally from
all claims, demands, debts, damages and liabilities of every name and nature,
known or unknown ("Claims") that, as of the date when I sign this release, I
have, ever had, now claim to have or ever claimed to have had against any or all
of the Releasees. This release includes, without limitation, all Claims:
o relating to my employment by and termination of employment with the Bank
and any of its affiliated and related entities;
o of wrongful discharge;
o of breach of contract;
o of retaliation or discrimination under federal, state or local law
(including, without limitation, Claims of age discrimination or retaliation
under the Age Discrimination in Employment Act);
o under any other federal or state statute;
o of defamation or other torts;
o of violation of public policy;
o for wages, bonuses, incentive compensation, stock, stock options, vacation
pay or any other compensation or benefits; and
o for damages or other remedies of any sort, including, without limitation,
compensatory damages, punitive damages, injunctive relief and attorney's
fees;
provided, however, that this release shall not affect my rights under the Bank's
Section 401(k) plan, my rights under this Agreement and the agreements
referenced in Sections 4 and 5 of the Separation Agreement, any rights I may
have to indemnification under the Bank's by-laws or Directors & Officers
Liability policy, or any rights I may have solely in my capacity as a
stockholder of Meridian Interstate Bancorp, Inc. and Hampshire First Bank. In
addition, this release shall not affect the grant of 3,000 restricted stock
awards and 15,000 stock options made on March 27, 2009, pursuant to necessary
corporate approvals, and such awards and options shall continue to vest as if
Xx. Xxxxx were still an active employee with the Bank subject to a vesting
schedule that is typically used for similarly situated executives.
I agree that I shall not accept damages of any nature, other equitable or
legal remedies for my own benefit, attorney's fees, or costs from any of the
Releasees with respect to any Claim released hereby. As a material inducement to
the Bank to make the salary continuation payments under Section 6(e) of my
Employment Agreement, I represent that I have not assigned to any third party
any Claim released hereby.
I have had the opportunity to consider this Release for twenty-one (21)
days before signing it. If I have signed this Release within less than
twenty-one (21) days of the date of its delivery to me, I acknowledge by signing
this Release that such decision was entirely voluntary and that I had the
opportunity to consider this Release for the entire twenty-one (21) day period.
For the period of seven (7) days from the date when I sign this Release, I have
the right to revoke this Release by written notice to the Bank's counsel,
Xxxxxxxx Spaccasi, Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., 0000 Xxxxxxxxx Xxxxxx,
XX, Xxxxx 000, Xxxxxxxxxx, XX 00000. For such a revocation to be effective, it
must be delivered so that it is received by Mr. Spaccasi or before the
expiration of the seven (7) day revocation period. This Release shall not become
effective or enforceable during the revocation period. This Release shall become
effective on the first business day following the expiration of the revocation
period.
I understand that this Release is a legally binding document and my
signature will commit me to its terms. I acknowledge that I have been advised by
the Bank to discuss all aspects of this Release with my attorney, that I have in
fact retained a personal attorney who has reviewed this Release and represented
me concerning it, that I have carefully read and fully understand all of the
provisions of this Release and that I am knowingly and voluntarily signing this
Release.
In signing this Release, I am not relying upon any promises or
representations made by anyone at or on behalf of the Bank, other than the
promises set forth in the Separation Agreement.
You are advised to consult with an attorney before signing this
Release.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
Dated: April 6, 2009
