EXHIBIT 10.25

 

First Essex Bancorp

 

Salary Continuation Benefit Program

 

References to the “Company” in this document shall mean First Essex Bancorp and
any of its wholly owned direct and indirect subsidiaries, including, without
limitation, First Essex Bank.  References to the “Bank” shall mean either First
Essex Bank or any other bank that is a wholly owned subsidiary of First Essex
Bancorp.

 

1.                   COVERED EMPLOYEES:

 

Subject to Section 2 below, the Salary Continuation Benefit (as herein defined)
will be provided to any employee whose employment is terminated within twelve
months after a Change of Control (as herein defined).

 

2.                   LIMITATIONS ON CHANGE OF CONTROL BENEFITS

 

2.1.           GENERAL.  NO EMPLOYEE WILL BE ELIGIBLE FOR A SALARY CONTINUATION
BENEFIT IF (A) THE EMPLOYEE’S EMPLOYMENT IS TERMINATED FOR “CAUSE”, (B) THE
EMPLOYEE IS A TEMPORARY EMPLOYEE, (C) THE EMPLOYEE IS OFFERED A COMPARABLE
POSITION (AS HEREIN DEFINED) WITHIN THE COMPANY AND REFUSES TO ACCEPT SUCH
POSITION; OR (D) THE EMPLOYEE IS PAID SOLELY ON A COMMISSIONED BASIS
(“COMMISSIONED EMPLOYEES”).  COMMISSIONED EMPLOYEES SHALL BE ELIGIBLE FOR A
COMMISSIONED EMPLOYEE BENEFIT (AS HEREIN DEFINED).

 

2.2.           CAUSE.  THE TERM “CAUSE” SHALL MEAN AND INCLUDE (A) NEGLECT OF OR
REFUSAL TO PERFORM, OTHER THAN AS A RESULT OF SICKNESS, ACCIDENT OR SIMILAR
CAUSE BEYOND AN EMPLOYEE’S REASONABLE CONTROL, ANY DUTY OR RESPONSIBILITY AS AN
EMPLOYEE OF THE COMPANY AFTER WRITTEN NOTICE BY THE COMPANY TO THE EMPLOYEE; (B)
ANY MATERIAL BREACH BY THE EMPLOYEE OF ANY AGREEMENT TO WHICH THE EMPLOYEE AND
THE COMPANY ARE BOTH PARTIES; (C) DISHONESTY WITH RESPECT TO THE COMPANY OR THE
COMMISSION OF ANY CRIME INVOLVING MORAL TURPITUDE; OR (D) ANY MATERIAL
MISCONDUCT OR MATERIAL NEGLECT OF DUTIES BY THE EMPLOYEE IN CONNECTION WITH THE
BUSINESS OR AFFAIRS OF THE COMPANY.  THE FOREGOING DEFINITION OF CAUSE IS IN NO
WAY INTENDED TO LIMIT OR QUALIFY THE RIGHT OF THE COMPANY OR ANY SUCCESSOR IN
INTEREST TO TERMINATE ANY PERSON’S EMPLOYMENT FOR ANY REASON.

 

2.3.           COMPARABLE POSITION.  A COMPARABLE POSITION SHALL MEAN A POSITION
WHICH IS OFFERED TO AN EMPLOYEE WHERE (A) THERE IS NO REDUCTION IN BASE SALARY
OR SCHEDULED HOURS, AND (B) THE EMPLOYEE WILL BE PRINCIPALLY EMPLOYED AT A
LOCATION NOT MORE THAN 25 MILES FROM THE OFFICE WHERE THE EMPLOYEE IS
PRINCIPALLY EMPLOYED IMMEDIATELY PRIOR TO THE CHANGE OF CONTROL.

 

3.                   DEFINITION OF “CHANGE OF CONTROL”:

 

A “Change of Control” will be deemed to have occurred:

 

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3.1.           IF THERE HAS OCCURRED A CHANGE IN CONTROL WHICH THE COMPANY WOULD
BE REQUIRED TO REPORT IN RESPONSE TO ITEM 1 OF FORM 8-K PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “1934 ACT”), OR, IF SUCH
REGULATION IS NO LONGER IN EFFECT, ANY REGULATIONS PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO THE 1934 ACT WHICH ARE INTENDED TO SERVE
SIMILAR PURPOSES;

 

3.2.           WHEN ANY “PERSON” (AS SUCH TERM IS USED IN SECTIONS 13(D) AND
14(D)(2) OF THE 1934 ACT) BECOMES A “BENEFICIAL OWNER” (AS SUCH TERM IS DEFINED
IN RULE 13D-3 PROMULGATED UNDER THE 1934 ACT), DIRECTLY OR INDIRECTLY, OF
SECURITIES OF THE COMPANY OR THE BANK REPRESENTING TWENTY-FIVE PERCENT (25%) OR
MORE OF THE TOTAL NUMBER OF VOTES THAT MAY BE CAST FOR THE ELECTION OF DIRECTORS
OF THE COMPANY OR THE BANK, AS THE CASE MAY BE;

 

3.3.           DURING ANY PERIOD OF TWO CONSECUTIVE YEARS, INDIVIDUALS WHO AT
THE BEGINNING OF SUCH PERIOD CONSTITUTE THE BOARD OF DIRECTORS OF THE COMPANY,
AND ANY NEW DIRECTOR (OTHER THAN A DIRECTOR DESIGNATED BY A PERSON WHO HAS
ENTERED INTO AN AGREEMENT WITH THE COMPANY TO EFFECT A TRANSACTION DESCRIBED IN
SECTION 3.2, 3.4 OR 3.5 OF THIS AGREEMENT) WHOSE ELECTION BY THE BOARD OR
NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS WAS APPROVED BY A VOTE OF
AT LEAST TWO-THIRDS (2/3) OF THE DIRECTORS THEN STILL IN OFFICE WHO EITHER WERE
DIRECTORS AT THE BEGINNING OF THE PERIOD OR WHOSE ELECTION OR NOMINATION FOR
ELECTION WAS PREVIOUSLY SO APPROVED, CEASE FOR ANY REASON TO CONSTITUTE AT LEAST
A MAJORITY OF THE BOARD OF DIRECTORS OF THE COMPANY;

 

3.4.           THE STOCKHOLDERS OF THE COMPANY APPROVE A MERGER, SHARE EXCHANGE
OR CONSOLIDATION (“MERGER OR CONSOLIDATION”) OF THE COMPANY WITH ANY OTHER
CORPORATION, OTHER THAN (A) A MERGER OR CONSOLIDATION WHICH WOULD RESULT IN THE
VOTING SECURITIES OF THE COMPANY OUTSTANDING IMMEDIATELY PRIOR THERETO
CONTINUING TO REPRESENT (EITHER BY REMAINING OUTSTANDING OR BY BEING CONVERTED
INTO VOTING SECURITIES OF THE SURVIVING ENTITY) MORE THAN 50% OF THE COMBINED
VOTING POWER OF THE VOTING SECURITIES OF THE COMPANY OR SUCH SURVIVING ENTITY
OUTSTANDING IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION OR (B) A MERGER OR
CONSOLIDATION EFFECTED TO IMPLEMENT A RECAPITALIZATION OF THE COMPANY (OR
SIMILAR TRANSACTION) IN WHICH NO “PERSON” (AS HEREINABOVE DEFINED) ACQUIRES MORE
THAN 30% OF THE COMBINED VOTING POWER OF THE COMPANY’S THEN OUTSTANDING
SECURITIES; OR

 

3.5.           THE STOCKHOLDERS OF THE COMPANY OR THE BANK APPROVE A PLAN OF
COMPLETE LIQUIDATION OF THE COMPANY OR THE BANK OR AN AGREEMENT FOR THE SALE OR
DISPOSITION BY THE COMPANY OR THE BANK OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S OR THE BANK’S ASSETS.

 

4.                   “SALARY CONTINUATION BENEFIT” DEFINED.

 

The Salary Continuation Benefit hereunder shall include each of the following
three items:

 

4.1.           PAYMENT IN ONE LUMP SUM AS OF DATE OF TERMINATION OF EMPLOYMENT
OF A

 

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SEVERANCE BENEFIT EQUAL TO THE GREATER OF (I) TWO WEEKS SALARY, AT THE THEN
APPLICABLE BASE SALARY RATE, FOR EACH YEAR OR PARTIAL YEAR OF SERVICE, UP TO A
MAXIMUM OF 52 WEEKS SALARY, OR (II) THE APPLICABLE MINIMUM BENEFIT SET FORTH IN
SECTION 6 BELOW; AND

 

4.2.           CONTINUATION OF GROUP MEDICAL, DENTAL AND LIFE INSURANCE UNDER
THE SAME TERMS AND CONDITIONS AS IF THE EMPLOYEE HAD REMAINED ACTIVELY EMPLOYED
BY THE COMPANY FOR THE “BENEFIT CONTINUATION PERIOD,” WHICH IS THE GREATER OF
(A) SIX MONTHS OR (B) THE NUMBER OF WEEKS OF SALARY CONTINUATION BENEFITS TO
WHICH THE EMPLOYEE IS ENTITLED UNDER THIS PROGRAM; AND

 

4.3.           AFTER THE END THE BENEFIT CONTINUATION PERIOD, COBRA BENEFITS FOR
MEDICAL AND DENTAL INSURANCE DETERMINED AS THOUGH EMPLOYMENT HAD TERMINATED AT
THE END OF SUCH BENEFIT CONTINUATION PERIOD.

 

For purpose of this Section 4 and Section 6 below, “Base Salary” shall mean:

 

(A)              FOR SALARIED EMPLOYEES, THE EMPLOYEE’S ANNUAL BASE SALARY, BUT
SHALL NOT INCLUDE BONUS PAYMENTS, 401(K) MATCHING PAYMENTS, PENSION PAYMENTS, OR
OTHER PAYMENTS NOT SPECIFICALLY INCLUDED UNDER THIS PROGRAM.

 

(B)             FOR EMPLOYEES WHO RECEIVE COMMISSIONS BUT WHO ALSO RECEIVE A
BASE SALARY (BUT EXCLUDING THOSE COMMISSIONED EMPLOYEES WHO RECEIVE A “DRAW” AS
BASE SALARY), THE EMPLOYEE’S ANNUAL BASE SALARY, BUT SHALL NOT INCLUDE BONUS
PAYMENTS, 401(K) MATCHING PAYMENTS, PENSION PAYMENTS, OR OTHER PAYMENTS NOT
SPECIFICALLY INCLUDED UNDER THIS PROGRAM.

 

(C)              FOR HOURLY EMPLOYEES, THE EMPLOYEE’S TOTAL HOURLY WAGES FOR THE
TWELVE (12) FULL CALENDAR MONTHS PRECEDING TERMINATION OF EMPLOYMENT, BUT SHALL
NOT INCLUDE BONUS PAYMENTS, 401(K) MATCHING PAYMENTS, PENSION PAYMENTS, OR OTHER
PAYMENTS NOT SPECIFICALLY INCLUDED UNDER THIS PROGRAM.

 

5.                   COMMISSIONED EMPLOYEE BENEFIT

 

The benefit to Commissioned Employees hereunder shall include each of the
following two items:

 

5.1.           CONTINUATION OF GROUP MEDICAL, DENTAL AND LIFE INSURANCE UNDER
THE SAME TERMS AND CONDITIONS AS IF THE EMPLOYEE HAD REMAINED ACTIVELY EMPLOYED
BY THE COMPANY FOR A PERIOD OF SIX MONTHS; AND

 

5.2.           AFTER THE END SUCH SIX MONTH PERIOD, COBRA BENEFITS FOR MEDICAL
AND DENTAL INSURANCE DETERMINED AS THOUGH EMPLOYMENT HAD TERMINATED AT THE END
OF SUCH SIX MONTH PERIOD.

 

6.                   MINIMUM BENEFIT

 

6.1.           OFFICERS AT THE LEVEL OF SENIOR VICE PRESIDENT AND ABOVE SHALL
RECEIVE 52 WEEKS SALARY, AT THE THEN APPLICABLE BASE SALARY RATE; AND

 

6.2.           OFFICERS AT THE LEVEL OF ASSISTANT VICE PRESIDENT AND ABOVE SHALL
RECEIVE AT LEAST 26 WEEKS SALARY, AT THE THEN APPLICABLE BASE SALARY RATE; AND

 

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6.3.           ALL OTHER EXEMPT EMPLOYEES SHALL RECEIVE AT LEAST 13 WEEKS
SALARY, AT THE THEN APPLICABLE BASE SALARY RATE; AND

 

6.4.           ALL OTHER FULL-TIME EMPLOYEES SHALL RECEIVE AT LEAST 8 WEEKS
SALARY, AT THE THEN APPLICABLE BASE SALARY RATE; AND

 

6.5.           ALL PART-TIME EMPLOYEES SHALL RECEIVE AT LEAST 6 WEEKS SALARY OR
WAGES, AT THE THEN APPLICABLE BASE SALARY RATE.

 

7.                   OFFSET FOR AMOUNTS RECEIVED UNDER OTHER AGREEMENTS OR
LAWS.  Salary Continuation Benefits payable pursuant to this program shall be
reduced by the amount of any severance pay benefits payable to any officer under
any employment, special termination, or change of control contract or to any
employee under any “tin parachute”, WARN or similar law.

 

8.                   WITHHOLDING.  All payments will be subject to customary
withholding and co-payments by employees, for health, life insurance and dental
benefits.  The Company will have the right to withhold for lump sum amounts
otherwise payable the aggregate amount of any co-payments required to be made by
employees with respect to employee benefit programs which are continued under
the Salary Continuation Program.

 

9.                   PARACHUTE PAYMENT.  In the event that any amounts otherwise
payable exceed in the aggregate the amount that may be deducted by the Company
or by any successor in interest by reason of the operation of Section 280G of
the Internal Revenue Code of 1986, as amended, the amount of such payments shall
be reduced to the maximum which can be deducted by the Company.

 

10.            OUTPLACEMENT SERVICES.  The following outplacement services shall
be made available to employees whose employment is terminated:

 

10.1.              ALL EXEMPT AND NON-EXEMPT EMPLOYEES:  GROUP WORKSHOPS
PROVIDING RESUMÉ WRITING GUIDANCE AND JOB SEARCH ASSISTANCE FOR A PERIOD OF
THREE MONTHS FOLLOWING TERMINATION OF EMPLOYMENT.

 

10.2.              OFFICERS AT THE LEVEL OF ASSISTANT VICE PRESIDENT AND ABOVE
:  RESUMÉ WRITING GUIDANCE, JOB SEARCH ASSISTANCE, INTERVIEW SKILLS WORKSHOPS
AND NETWORKING WORKSHOPS, FOR A PERIOD OF THREE MONTHS FOLLOWING TERMINATION OF
EMPLOYMENT.

 

10.3.              OFFICERS AT THE LEVEL OF SENIOR VICE PRESIDENT AND ABOVE: 
RESUMÉ WRITING GUIDANCE, JOB SEARCH ASSISTANCE, INTERVIEW SKILLS WORKSHOPS AND
NETWORKING WORKSHOPS, FOR A PERIOD OF SIX MONTHS FOLLOWING TERMINATION OF
EMPLOYMENT.

 

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