Exhibit 10.2
SEPARATION AND RELEASE AGREEMENT
This Separation Agreement (the "Agreement") is made as of the 31st day of
March, 2009, between East Boston Savings Bank ("EBSB" or the "Bank) and Xxxxxx
X. Xxxxxxx ("Xx. Xxxxxxx").
In consideration of the settlement of the dispute between the parties
regarding the effect of the provisions of the employment agreement by and
between EBSB and Xx Xxxxxxx dated December 29, 2003 (the "Employment Agreement")
and the termination of Xx. Xxxxxxx'x employment with EBSB on February 26, 2009
(the "Resignation/Retirement Date") and 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. Effective as of the date of this Agreement, Xx. Xxxxxxx
shall resign from all positions (including any position as a member of an
executive committee, Director, Trustee, committee member or any officer
designation) that he holds with EBSB, Meridian Interstate Bancorp, Inc. ("MIB"),
Meridian Financial Services, Inc. ("MFS"), Meridian Charitable Foundation, Inc.,
Hampshire First Bank, Prospect, Inc., ESOP Funding Corp., or any other affiliate
of EBSB, MIB or MFS. If requested by the Bank, Xx. Xxxxxxx shall sign a document
which confirms such resignations.
2. Settlement Payment and Post-Resignation Obligations. Within five (5)
business days of Xx. Xxxxxxx'x execution of this Agreement, the Bank shall pay
Xx. Xxxxxxx a lump-sum gross payment of $53,234.47 (representing for his base
salary in effect as of February 26, 2009 and for the period from February 27,
2009 to May 15, 2009). The Bank shall also pay Xx. Xxxxxxx the xxxxx amount of
$123,580 over six (6) months in equal amounts, with the first payment commencing
June 15, 2009 and with such payments to be made in accordance with ordinary
payroll practices. In consideration for these payments, Xx. Xxxxxxx shall abide
by all of the post-termination obligations contained in the Employment
Agreement, including but not limited to the obligations set forth in Section 7
(Confidential Information, Noncompetition and Cooperation) of the Employment
Agreement, and such post-termination obligations shall remain in full force and
effect following the Retirement/Resignation Date.
3. Supplemental Executive Retirement Agreement. The Amended and Restated
Supplemental Executive Retirement Agreement between Xx. Xxxxxxx and EBSB, dated
as of January 1, 2007 (the "SERP"), remains in full force and effect. Xx.
Xxxxxxx has elected to have the Bank pay the non-forfeitable percentage of his
SERP benefits, in which he is 100% vested, in a lump sum payment pursuant to
Section 2(d) of the SERP, in an amount equal to $1,303,351 plus $21,470, which
represents the amount of interest calculated at the Prime Rate as reported in
The Wall Street Journal on February 26, 2009 for the period beginning on such
date and ending August 30, 2009, subject to the provisions of Section 6 below,
with the total lump sum payment in the amount of $1,324,821 to be made to Xx.
Xxxxxxx on September 1, 2009. This payment would have been made to Xx. Xxxxxxx
and/or his beneficiaries regardless of whether or not he executed this Agreement
as it is owed to Xx. Xxxxxxx by the Bank under the SERP.
4. Split Dollar and Bank Owned Life Insurance. The Split Dollar Agreement
between Xx. Xxxxxxx and EBSB, dated December 29, 2003 (the "SDA") and the Bank
Owned Life Insurance covering Xx. Xxxxxxx, remain in full force and effect, and
it is represented and acknowledged by EBSB that the SDA and Bank Owned Life
Insurance each provide a death benefit equal to $617,900 and $494,320,
respectively, payable to Xx. Xxxxxxx'x beneficiaries upon his death. The Bank
agrees to maintain or cause to be maintained in effect, and to pay or cause to
be paid the full amount of applicable premiums under, the SDA in effect for Xx.
Xxxxxxx until Xx. Xxxxxxx'x death and the Bank Owned Life Insurance in effect
for Xx. Xxxxxxx and his spouse, respectively until, as to each, their respective
deaths. These benefits would have been provided to Xx. Xxxxxxx, and payments
made to his beneficiaries, regardless of whether or not he executed this
Agreement as these are benefits owed to Xx. Xxxxxxx by the Bank.
5. Death. In the event of Xx. Xxxxxxx'x death before all payments are made
to Xx. Xxxxxxx pursuant to this Agreement, all payments will be made to Xx.
Xxxxxxx'x beneficiaries, as he has identified, at the same time the payments
would have been made if Xx. Xxxxxxx had not died.
6. Taxation of Payments. EBSB shall undertake to make appropriate tax
deductions, tax 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 tax deductions, tax withholdings and
tax reports; provided, however, that no withholdings shall be made on account of
Section 409A of the Internal Revenue Code. Payments made 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. Xxxxxxx for any adverse tax
effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.
7. Health Insurance and Other Benefits. EBSB shall provide Xx. Xxxxxxx 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 full amount of applicable premiums under, the long term
care policies currently in effect for Xx. Xxxxxxx and his spouse (UNUM Policy
Nos. LAC716021 and LAC716145) respectively, until, as to each, their respective
deaths. Xx. Xxxxxxx'x eligibility to participate in any other employee benefit
plans and programs of the Bank ceases on or after the Resignation/Retirement
Date in accordance with applicable benefit plan or program terms.
8. Mutual Release of Claims. In consideration for the settlement payments
made under Paragraph 2 of this Agreement, Xx. Xxxxxxx voluntarily releases and
forever discharges the Bank, its affiliated and related entities (including MIB,
MFS, 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 he signs this Agreement,
Xx. Xxxxxxx 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. Xxxxxxx'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 notwithstanding the foregoing, this release does not
include and will not preclude: (a) non-termination related claims under the
Massachusetts Workers Compensation Act (M.G.L. c. 152) or any disability
insurance policies; (b) rights and claims to vested benefits under the Bank's
Section 401(k) Plan, employee stock ownership plan and tax-qualified defined
benefit pension plan; (c) rights and claims under the SDA and Bank Owned Life
Insurance; (d) rights and claims under the long term care policies currently in
effect for Xx. Xxxxxxx and his spouse (UNUM Policy Nos. LAC716021 and
LAC716145); (e) non-termination related claims under the Employee Retirement
Income Security Act (29 U.S.C. ss. 1001 et seq.); (f) non-termination related
rights and claims as a shareholder of Meridian Interstate Bancorp, Inc. and/or
under the employee stock ownership plan; (g) rights under the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"); (h) rights and claims to
defense and indemnification from the Bank and/or the Bank's insurers under the
Bank's Bylaws, Directors & Officers Liability policy and/or under common law;
and/or (i) claims, actions, or rights arising under or to enforce the terms of
this Agreement.
Xx. Xxxxxxx 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. Xxxxxxx
represents that he has not assigned to any third party any Claim released by
this Agreement.
The Bank, its affiliated and related entities (including MIB, MFS, Meridian
Charitable Foundation, Inc., Hampshire First Bank, Prospect, Inc. and ESOP
Funding Corp.), its and their respective predecessors, successors and assigns
("Bank Releasees") voluntarily releases and forever discharges Xx. Xxxxxxx
generally from all claims, demands, debts, damages and liabilities of every name
and nature, known or unknown that, as of the date when the Bank signs this
Agreement, the Bank Releasees have, ever had, now claims to have or ever claimed
to have had against Xx. Xxxxxxx, provided, however, that this release shall not
affect the rights of the Bank under this Agreement and the rights of the Bank to
enforce all of the post-termination obligations under the Employment Agreement
or to obtain damages for any breach of this Agreement by Xx. Xxxxxxx. The Bank
represents and warrants that its Chairman and Chief Executive Officer has
authority to sign this release of claims on behalf of the Bank Releasees.
9. Return of Property. All documents, records, data, equipment and other
physical property, whether or not pertaining to any confidential information,
that have been or are in the future furnished to Xx. Xxxxxxx by the Bank or are
produced by Xx. Xxxxxxx in connection with his employment or other engagement
will be and remain the sole property of the Bank. Xx. Xxxxxxx shall return all
such materials and property by the Resignation/Retirement Date.
10. Mutual Nondisparagement. In consideration for the settlement payments
made under Paragraph 2 of this Agreement, Xx. Xxxxxxx shall not 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. In consideration for Xx. Xxxxxxx'x promises in this
Agreement, EBSB shall not make or cause to be made any derogatory or disparaging
statement to anyone about Xx. Xxxxxxx. The provisions of this section shall not
be construed to affect the obligations of Xx. Xxxxxxx to testify truthfully as
to facts, or provide a belief or opinion in good faith, in any legal proceeding
or to provide truthful information as to facts, or provide a belief or opinion
in good faith, in any government investigation. If either party believes, in
good faith, that the other party has breached this provision, before taking any
actions under or pursuant to this Agreement in response thereto, the alleged
non-breaching party shall provide the alleged breaching party (and the alleged
breaching party's counsel: if EBSB, Xxxxxxxx Spaccasi, Esq., and if Xx. Xxxxxxx,
Xxxxxxx X. Xxxx, Esq.) at least five business days' written notice by courier
(which notice shall state, to the extent known, who committed the alleged
breach, when and where the alleged breach occurred, all facts and words
constituting the alleged breaching statement, to whom the alleged breaching
statement was made, and the course of action the alleged non-breaching party
plans to take in response thereto) so that the alleged breaching party has an
opportunity to seek injunctive relief from a court in the Commonwealth of
Massachusetts.
11. 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. Xxxxxxx and the
Bank and each party's respective successors, executors, administrators, heirs
and permitted assigns.
12. 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.
13. 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.
14. Notices. Except as specifically provided in Paragraph 10 (Mutual
Non-Disparagement) 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.
Xxxxxxx 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 certified mail shall be effective three days after mailing.
Delivery in person shall be effective upon delivery.
15. Amendment. This Agreement may be amended or modified only by a written
instrument signed by Xx. Xxxxxxx and by a duly authorized representative of the
Bank.
16. 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.
17. Authority/Approval. The Bank represents and warrants that this
Agreement has been approved by its Board of Directors.
18. Full Resolution. Xx. Xxxxxxx and the Bank acknowledge that this
Agreement resolves all matters concerning his employment, Employment Agreement,
SERP and employment separation, including without limitation separation
compensation.
19. 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
/s/ Xxxx Xxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
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WITNESS Xxxxxxx X.Xxxxxxxxx
Its:Chairman and Chief Executive Officer
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxx X. Xxxxxxx
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WITNESS XXXXXX X. XXXXXXX
