TWO-YEAR CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the "Agreement") is made effective as of
the 4th day of January, 2010 (the "Effective Date"), by and between East Boston
Savings Bank (the "Bank"), a bank organized under the laws of the Commonwealth
of Massachusetts with its headquarters located in East Boston, Massachusetts
(the "Bank") and Xxxx Xxxxxx ("Executive").
WITNESSETH
WHEREAS, the Bank wishes to provide for the employment by the Bank of the
Executive as of the Effective Date, and the Executive wishes to serve the Bank
as of the Effective Date, on the terms and conditions set forth in this
Agreement; and
WHEREAS, in order to induce the Executive to accept employment with the
Bank, the parties desire to specify the severance benefits which shall be due
the Executive by the Bank in the event that his employment with the Bank is
terminated under specified circumstances.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. TERM OF AGREEMENT
(a) The term of this Agreement shall be (i) the initial term, consisting of
the period commencing on the Effective Date and ending on the second anniversary
date of the Effective Date, plus (ii) any and all extensions of the initial term
made pursuant to this Section 1.
(b) The term of this Agreement shall be extended for one day each day so
that a constant twenty-four (24) calendar month term shall remain in effect,
until such time as the board of directors of the Bank (the "Board") or Executive
elects not to extend the term of the Agreement by giving written notice to the
other party in accordance with the terms of this Agreement, in which case the
term of this Agreement shall be fixed and shall end on the second anniversary of
the date of such written notice.
2. DEFINITIONS
(a) "Change in Control" shall mean a change in control of the Bank or
Company as defined in Section 409A of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder, including the
following:
(1) Change in ownership: A change in ownership of the Bank or 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 Bank or the Company; or
(2) 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 twelve (12)-month period ownership of stock of
the Bank or Company possessing 35% or more of the total voting power
of the Bank or Company; or (ii) a majority of the Bank's or 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 Bank's or Company's Board of Directors (as applicable), or
(3) Change in ownership of a substantial portion of assets: A change
in the ownership of a substantial portion of the Bank's or Company's
assets occurs if, in a twelve (12)-month period, any one person or
more than one person acting as a group acquires assets from the Bank
or Company having a total gross fair market value equal to or
exceeding 40% of the total gross fair market value of the Bank's or
Company's entire assets immediately before the acquisition or
acquisitions. For this purpose, "gross fair market value" means the
value of the Bank's or Company's assets, or the value of the assets
being disposed of, determined without regard to any liabilities
associated with the assets.
(4) Notwithstanding anything in this Agreement to the contrary, in no
event shall a reorganization of Meridian Financial Services,
Incorporated, the Bank or Company solely within its corporate
structure constitute a "Change in Control" for purposes of this
Agreement.
(b) "Good Reason" shall mean a termination by the Executive following a
Change in Control based on the following:
(1) a material diminution in the Executive's base compensation as in
effect immediately prior to the date of the Change in Control or as
the same may be increased from time to time thereafter, (2) a material
diminution in the Executive's authority, duties or responsibilities as
in effect immediately prior to the Change in Control, or (3) a
material diminution in the authority, duties or responsibilities of
the officer (as in effect immediately prior to the date of the Change
in Control) to whom the Executive is required to report,
(2) any material breach of this Agreement by the Bank, or
(3) an involuntary relocation of the Bank's offices in which Executive
is principally employed by more than 10 miles;
provided, however, that prior to any termination of employment for
Good Reason, the Executive must first provide written notice to the
Bank (or its successor) within sixty (60) days of the initial
existence of the condition, describing the existence of such
condition, and the Bank shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Bank received the
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written notice from the Executive. If the Bank remedies the condition
within such thirty (30) day cure period, then no Good Reason shall be
deemed to exist with respect to such condition. If the Bank does not
remedy the condition within such thirty (30) day cure period, then the
Executive may deliver a Notice of Termination for Good Reason at any
time within sixty (60) days following the expiration of such cure
period.
(c) Termination for Cause shall mean:
(1) the commission by, or indictment of, Executive for any felony
involving moral turpitude, deceit, dishonesty, or fraud;
(2) a material act or acts of dishonesty in connection with the
performance of Executive's duties, including without limitation,
material misappropriation of funds or property;
(3) an act or acts of gross misconduct by Executive; or
(4) continued, willful, and deliberate non-performance by Executive of
duties (other than by reason of illness or disability) which has
continued for more than thirty (30) days following written notice of
non-performance from the Board.
A determination of whether Executive's employment shall be terminated for
Cause shall be made at a meeting of the Board called and held for such purpose,
at which the Board makes a finding that in good faith opinion of the Board an
event set forth in clauses (1), (2), (3), or (4) above has occurred and
specifying the particulars thereof in detail.
(d) For purposes of this Agreement, any termination of Executive's
employment shall be construed to require a "Separation from Service" in
accordance with Code Section 409A and the regulations promulgated thereunder,
such that the Bank and Executive reasonably anticipate that the level of bona
fide services Executive would perform after termination of employment would
permanently decrease to a level that is less than 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.
3. BENEFITS UPON TERMINATION
(a) If the Executive's employment by the Bank shall be terminated
subsequent to a Change in Control and during the term of this Agreement by (i)
the Bank for other than Cause, or (ii) the Executive for Good Reason, then the
Bank shall:
(1) pay Executive, or in the event of Executive's subsequent death,
Executive's beneficiary or beneficiaries or estate, as applicable, a
cash severance amount equal to:
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(i) two (2) times the Executive's base salary in effect as of the
Date of Termination,
(ii) the highest level of cash incentive compensation earned by
the Executive from the Bank in any one of the three calendar years
immediately preceding the year in which the termination occurs, and
(iii) payable by lump sum within ten (10) business days of the
Date of Termination.
(2) cause to be continued non-taxable medical and dental coverage
substantially identical to the coverage maintained by the Bank for
Executive prior to Executive's termination, with the Executive
responsible for his share of employee premiums, for twenty-four (24)
months.
(b) In no event shall the payments or benefits to be made or provided to
Executive under Section 3 hereof (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order to avoid such a result, Termination Benefits will be
reduced, if necessary, to an amount the value of which is one dollar ($1.00)
less than an amount equal to three (3) times Executive's "base amount," as
determined in accordance with Section 280G of the Code. The reduction required
among the Termination Benefits provided by this Section 3 shall be applied to
the cash severance benefits otherwise payable under Section 3(a) hereof.
4. NOTICE OF TERMINATION
Any purported termination by the Bank or by Executive in connection with or
following a Change in Control shall be communicated by Notice of Termination to
the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the Date of
Termination and, in the event of termination by Executive, the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated. "Date of
Termination" shall mean the date specified in the Notice of Termination (which,
in the case of a termination for Cause, shall be immediate). In no event shall
the Date of Termination exceed thirty (30) days from the date the Notice of
Termination is given.
5. SOURCE OF PAYMENTS
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank.
6. REQUIRED REGULATORY PROVISIONS
Notwithstanding anything herein contained to the contrary, any payments to
Executive by the Bank, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations
promulgated thereunder in 12 C.F.R. Part 359.
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7. NO ATTACHMENT
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null,
void, and of no effect.
8. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
(a) This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.
(b) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(c) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
9. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
10. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
11. GOVERNING LAW
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts but only to the extent not superseded by federal law.
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12. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by binding arbitration, as an alternative
to civil litigation and without any trial by jury to resolve such claims,
conducted by a single arbitrator, mutually acceptable to the Bank and Executive,
sitting in a location selected by the Bank within twenty-five (25) miles from
the main office of the Bank, in accordance with the rules of the American
Arbitration Association's National Rules for the Resolution of Employment
Disputes then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
13. PAYMENT OF LEGAL FEES
To the extent that such payment(s) may be made without triggering penalty
under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the Bank, provided that the dispute or
interpretation has been resolved in Executive's favor, and such reimbursement
shall occur no later than sixty (60) days after the end of the year in which the
dispute is settled or resolved in Executive's favor.
14. OBLIGATIONS OF BANK
The termination of Executive's employment, other than following a Change in
Control, shall not result in any obligation of the Bank under this Agreement.
15. SUCCESSORS AND ASSIGNS
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
[Signature Page Follows]
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SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, as of the
Effective Date.
EAST BOSTON SAVINGS BANK
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
EXECUTIVE
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
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