FORM OF SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Exhibit
10.10
FORM
OF
THIS SUPPLEMENTAL EXECUTIVE
RETIREMENT AGREEMENT (the “Agreement”) is dated as of July 1, 2007, by
and between MERIDIAN INTERSTATE
BANCORP, INC. (the “Company”) and XXXXXXX X. XXXXXXXXX (the
“Executive”).
In
consideration of the mutual covenants herein contained, the parties hereby agree
as follows:
1. Definitions.
(a) “Actuarial
Equivalent” means a benefit of equivalent value when computed on the basis of an
interest rate of 6.5% and the 1983 Group Annuity Mortality Table, Unisex (50%
male, 50% female), with no setback; provided, however, that for purposes of
determining the value of a lump sum distribution, the following assumptions will
be used:
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Interest:
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Applicable
interest rate under Section 417(e)(3) of the Code, as determined for the
month of November of the preceding
year.
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Mortality:
Applicable mortality table under Section 417(e)(3) of the
Code.
(b) “Accrued
Benefit” means 70% of the Executive’s Final Average Salary, multiplied by the
Executive’s Non-forfeitable Percentage set forth in Paragraph 2(b) if the
Executive has less than 8 years of service.
(c) “Cause”
means the following:
(i) the
conviction of the Executive for any felony involving moral turpitude, deceit,
dishonesty or fraud;
(ii) a
material act or acts of dishonesty in connection with the performance of the
Executive’s duties, including without limitation, material misappropriation of
funds or property;
(iii) an
act or acts of gross misconduct (including sexual harassment) by the Executive
exposing the Company to potential material liability or loss; or
(iv) continued,
willful and deliberate non-performance by the Executive of duties (other than by
reason of illness or disability) which has continued for more than 30 days
following written notice of non-performance from the Board of
Directors.
(d) For
purposes of this Agreement, a “Change in Control” means a change in control of
Company as defined in Section 409A of the Internal Revenue Code of 1986 (the
“Code”), as amended, and rules, regulations, and guidance of general application
thereunder, including the following:
(i) Change in ownership:
A change in ownership of the Company occurs on the date any one person or group
of persons accumulates ownership of more than 50% of the total fair market value
or total voting power of the Company; or
(ii) Change in effective
control: A change in effective control occurs when either (i) any one
person or more than one person acting as a group acquires within a 12-month
period ownership of stock of the Company possessing 35% or more of the total
voting power of the
Company;
or (ii) a majority of the Company’s Board of Directors is replaced during any
12-month period by Directors whose appointment or election is not endorsed in
advance by a majority of the Company’s Board of Directors (as applicable);
or
(iii) Change in ownership of a
substantial portion of assets: A change in the ownership of a substantial
portion of the Company’s assets occurs if, in a 12 month period, any one person
or more than one person acting as a group acquires assets from the Company
having a total gross fair market value equal to or exceeding 40% of the total
gross fair market value of the Company’s entire assets immediately before the
acquisition or acquisitions. For this purpose, “gross fair market value”
means the value of the Company’s assets, or the value of the assets being
disposed of, determined without regard to any liabilities associated with the
assets.
(e) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
(f) “Final
Average Compensation” means the average of the Executive’s annual base salary
(prior to any salary reduction contributions to any Section 401(k) plan or any
other pre-tax salary reductions), excluding bonuses, for the three calendar
years during the Executive’s employment with the Company for which the
Executive’s annual base salary was the highest.
(g) “Normal
Form” means an unreduced life annuity with 50% spousal survivor
annuity.
(h) “Separation
from Service” means a termination of the Executive’s services (whether as an
employee or as an independent contractor) to the Company. Whether a
Separation from Service has occurred shall be determined in accordance with the
requirements of Section 409A of the Code based on whether the facts and
circumstances indicate that the Company and the Participant reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services the Executive would perform after such date
(whether as an employee or as an independent contractor) would permanently
decrease to no more than twenty percent (20%) of the average level of bona fide
services performed (whether as an employee or an independent contractor) over
the immediately preceding thirty-six (36) month period.
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2.
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Payments to
Executive.
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(a) Upon
his Separation from Service the Company will pay to the Executive annually, a
benefit payable in the Normal Form in equal monthly installments commencing on
the first day of the month next following his Separation from Service, an amount
equal to 70% of the average of the Executive’s Final Average Compensation,
adjusted as provided in clause (b) of this Paragraph 2.
(b) The
Executive’s benefits under the Agreement shall become non-forfeitable in
accordance with the following schedule:
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Years of
Service
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Non-forfeitable
Percentage
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1
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12.5
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2
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25.0
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3
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37.5
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4
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50.0
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5
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62.5
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6
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75.0
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7
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87.5
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8
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100.0
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Notwithstanding
the foregoing, the Executive shall become fully vested immediately upon his
death prior to a Separation from Service, a Change in Control or upon any
involuntary termination of his employment by the Company other than for
Cause.
(c) In
lieu of the Normal Form provided by the foregoing provisions of this Paragraph
2, with the consent of the Company, the Executive may elect an optional form of
payment which is the Actuarial Equivalent of the Normal Form to which the
Executive is entitled, which optional form of payment may be any optional form
provided under the SBERA Plan sponsor by East Boston Savings Bank (whether or
not the Executive participates in that plan), including a lump
sum. On or after January 1, 2009, if the Executive wishes to change
his payment election as to the form of payment, the Executive may do so by
completing a payment election form approved by the Board of Directors, provided
that any such election (i) must be made prior to the Executive’s Separation from
Service, (ii) must be made at least 12 months before the date on which any
benefit payments are scheduled to commence, (iii) shall not take effect until at
least 12 months after the date the election is made, and (iv) for payments to be
made other than upon death or disability, must provide an additional deferral
period of at least five years from the date such payment would otherwise have
been made (or in the case of any installment payments treated as a single
payment, five years from the date the first amount was scheduled to be
paid). For purposes of this Agreement and clause (iv) above, all
installment payments under this Agreement shall be treated as a single
payment. On or before December 31, ,2008, if the Executive wishes to
change his payment election as to the form of payment, the Participant may do so
by completing a payment election form, provided that any such election (i) must
be made prior to the Executive’s Separation from Service, (ii) shall not take
effect before the date that is 12 months after the date the election is made,
and (iii) made in 2008 cannot apply to amounts that would otherwise be payable
in 2008 and may not cause an amount to be paid in 2008 that would otherwise be
paid in a later year. A lump sum payment shall be made within sixty
(60) days following the date the Participant becomes entitled to receive a
benefit under the Plan.
(d) Notwithstanding
anything to the contrary set forth herein, in no event shall the Executive be
entitled to receive any benefits under this Agreement if he is terminated by the
Board of Directors of the Company for Cause. A determination of
whether the Executive’s employment is terminated for Cause shall be made at a
meeting of the Board of Directors called and held for such purpose, at which the
Board of Directors makes a finding that in their good faith opinion an event set
forth in Section 1(c) of this Agreement has occurred and specifying the
particulars thereof in detail.
(e) Notwithstanding
any provision of this Agreement to the contrary, if the Executive is considered
a Specified Employee at Separation from Service under such procedures as
established by the Company in accordance with Section 409A of the Code, benefit
distributions that are made upon Separation from Service may not commence
earlier than six (6) months after the date of such Separation from
Service. Therefore, in the event this Section 2(e) is applicable to
the Executive, any distribution which would otherwise be paid to the Executive
within the first six months following the Separation from Service shall be
accumulated and paid (with interest calculated at the Prime Rate reported in the
Wall Street Journal as of the date the benefit first became payable) to the
Executive in a lump sum on the first day of the seventh month following the
Separation from Service. All subsequent distributions shall be paid
in the manner specified under this Section 2 of the Plan with respect to the
applicable benefit. A Specified Employee means a key employee (as
defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of
the Company if any stock of the Company is publicly traded on an established
securities market or otherwise.
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3.
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Death of the
Executive.
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(a) If
the Executive dies prior to the commencement of the payment of benefits under
this Agreement, the Company will pay to the Executive’s Accrued Benefit to his
beneficiary, as designated in a form acceptable to the Company.
(b) If
the Executive dies following the commencement of the payment of benefits under
this Agreement, death benefits, if any, will be determined pursuant to the form
of benefit payment in effect at the time of death.
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4.
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Disability
Benefits.
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If the
Executive becomes permanently and totally disabled, as determined by a physician
mutually acceptable to the Company and the Executive, from any cause while in
the employ of the Company and prior to the commencement of payments under
Paragraph 2 above, the Executive shall be entitled to receive the Accrued
Benefit that would be payable to the Executive pursuant to Paragraph 2 above if
the Executive had terminated his employment on the date of his disability with
eight (8) years of service. Disability payments may be subject to a
six (6) month waiting period, in which case during such time the Company shall
continue to pay the Executive his base salary. For purposes of this
Agreement, “Disabilities” shall mean the Executive is unable to engage in any
substantial activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months.
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5.
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Claims
Procedure.
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(a) In
the event the Executive (or his beneficiary in the case of the Executive’s
death) or their authorized representative (hereinafter the “Claimant”) asserts a
right to a benefit under this Agreement which has not been received, the
Claimant must file a claim for such benefit with the Company on forms provided
by the Company. The Company shall render its decision on the claim
within 90 days after its receipt of the claim. If special
circumstances apply, the 90-day period may be extended by an additional 90 days;
provided, written notice of the extension is provided to the Claimant during the
initial 90-day period and such notice indicates the special circumstances
requiring an extension of time and the date by which the Company expects to
render its decision on the claim. If the Company wholly or partially
denies the claim, the Company shall provide written notice to the Claimant
within the time limitations of the immediately preceding
paragraph. Such notice shall set forth:
(i) the
specific reasons for the denial of the claim;
(ii) specific
reference to pertinent provisions of the Agreement on which the denial is
based;
(iii) a
description of any additional material or information necessary to perfect the
claim and an explanation of why such material or information is
necessary;
(iv) a
description of the Agreement’s claims review procedures, and the time
limitations applicable to such procedures; and
(v) a
statement of the Claimant’s right to bring a civil action under Section 502(a)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if
the claim denial is appealed to the Company and the Company fully or partially
denies the claim.
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(b) A
Claimant whose application for benefits is denied may request a full and fair
review of the decision denying the claim by filing, in accordance with such
procedures as the Company may establish, a written appeal which sets forth the
documents, records and other information relating to the claim within 60 days
after receipt of the notice of the denial from the Company. In
connection with such appeal and upon request by the Claimant, a Claimant may
review (or receive free copies of) all documents, records or other information
relevant to the Claimant’s claim for benefit, all in accordance with such
procedures as the Company may establish. If a Claimant fails to file
an appeal within such 60-day period, he shall have no further right to
appeal.
(c) A
decision on the appeal by the Company shall include a review by the Company that
takes into account all comments, documents, records and other information
submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial claim
determination. The Company shall render its decision on the appeal
not later than 60 days after the receipt by the Company of the
appeal. If special circumstances apply, the 60-day period may be
extended by an additional 60 days; provided, written notice of the extension is
provided to the Claimant during the initial 60-day period and such notice
indicates the special circumstances requiring an extension of time and the date
by which the Company expects to render its decision on the claim on
appeal. If the Company wholly or partly denies the claim on appeal,
the Company shall provide written notice to the Claimant within the time
limitations of the immediately preceding paragraph. Such notice shall
set forth:
(i) the
specific reasons for the denial of the claim;
(ii) specific
reference to pertinent provisions of the Agreement on which the denial is
based;
(iii) a
statement of the Claimant’s right to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant’s claim for benefits; and
(iv) a
statement of the Claimant’s right to bring a civil action under Section 502(a)
of ERISA.
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6.
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Violation of
Agreement.
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In the
event of the violation of any of any material terms of the Agreement by the
Executive, the Company, in addition to any other rights which it may have, shall
be relieved of the liability to make any further payments under the Agreement
to, or on behalf of, the Executive so long as such violation continues, and
shall have the right to specific enforcement of the Agreement by proceedings in
equity.
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7.
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Nonassignable
Rights.
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Except as
otherwise provided by the Agreement, neither the Executive nor his surviving
spouse shall have any right to commute, sell, assign, transfer or otherwise
convey the right to receive any payments hereunder, which payments and the right
thereto are expressly declared to be nonassignable and
nontransferable.
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8.
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Independence of
Agreement.
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The
benefits payable under the Agreement shall be independent of, and in addition
to, any other employment agreement that may exist from time to time between the
parties hereto, or any compensation payable by the Company to the Executive,
whether as salary, bonus or otherwise. The Agreement shall not be
deemed to constitute a contract of employment between the parties hereto, and no
provision hereof
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shall
restrict the right of the Company to discharge the Executive for adequate cause,
or restrict the right of the Executive to terminate his
employment. This Agreement shall replace in its entirety the
Supplemental Executive Retirement Agreement entered in by and between the
Executive and East Boston Savings Bank, dated December 9, 2004.
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9.
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General Obligation of
the Company.
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The
benefits provided under the Agreement constitute a mere promise by the Company
to make payments in the future, and the rights of the Executive hereunder shall
be those of a general unsecured creditor of the Company. Nothing
contained herein shall be construed to create a trust of any kind or to render
the Company a fiduciary with respect to the Executive. The Company
shall not be required to maintain any fund or segregate any amount or in any
other way currently fund the future payment of any benefit provided under the
Agreement, and nothing contained herein shall be construed to give the Executive
or any other person any right to any specific assets of the Company or of any
other person. This Agreement shall replace in its
entirety.
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10.
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Governing
Law.
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The
Agreement shall be construed under and governed by the laws of the Commonwealth
of Massachusetts.
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EXECUTED under seal as of the
day and year first above written, in the case of the Company by its duly
authorized officer.
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MERIDIAN
INTERSTATE BANCORP, INC.
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ATTEST:
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BY:
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[Name]
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[Title]
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WITNESS:
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BY:
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Executive
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