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:


 

















 


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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