Exhibit 10.1
SEVERANCE AND RELEASE
AGREEMENT
WHEREAS , Sterling Bancshares, Inc., a Texas Corporation
(“Bancshares”), Sterling Bank, a banking association
chartered by the State of Texas and an indirect subsidiary of
Bancshares (“Bank”), collectively (the
“Company”), and John A Rossitto
(“Executive”) previously entered into a Severance and
Non-Competition Agreement dated January 11, 2006 (“Prior
Agreement”);
WHEREAS , Executive ceased to be Company’s
Executive Vice President of Retail Banking effective July 1,
2009; and
WHEREAS , Executive shall retire as the Company’s
Vice Chairman, effective October 5, 2009; and
WHEREAS, Executive and the Company agree that his
retirement with the Company is the result of a mutual agreement
between the two parties.
NOW, THEREFORE,
effective as of the date executed
below (“Effective Date”), Executive and the Company
hereby agree to enter into this Severance and Release Agreement
(“Agreement”) setting forth their respective
obligations related to Executive’s separation from the
Company as follows:
1. Severance from
Employment . Executive shall resign as Vice Chairman of the
Company and as any other officer, director, manager or similar
functionary of all entities related to the Company, effective
October 5, 2009.
2. Severance Payments
. The Company shall pay and provide, in exchange for the
execution of this Agreement, the Executive with the
following:
(a) Two (2) years’ base
pay payable in equal installments each regular pay period during
the two (2) years beginning with the first regular payroll
date following the Effective Date, with the initial payment to
occur, or be credited, on October 15, 2009. For purposes of
this calculation, base pay shall be calculated based on the rate of
annual salary being paid by the Company to Executive as of
September 30, 2009. Because Executive is a “specified
employee,” as such term is defined within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(“Code Section 409A”), payment of all amounts
under this Section (a) shall be suspended for a period of six
(6) months and one (1) day immediately following the
Effective Date. Immediately thereafter, the Company shall pay to
Executive all of the suspended payments under this Section (a),
with interest accrued on such amounts at the prime rate (as
published in the Wall Street Journal).
(b) Executive shall receive annual
bonus payments, payable on the first and second anniversaries of
the Effective Date, in an amount equal to fifty thousand dollars
($50,000).
(c) Reimbursement for the use of a
cell phone in an amount comparable to the cell phone provided by
the Company on the Effective Date for the two (2) years
following the Effective Date;
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(d) Continued participation in the
Company’s group health, dental, and/or vision plan
(“Health Plan”) during the two (2) year period
following October 31, 2009. This coverage shall be provided as
follows:
(i) During the initial eighteen
(18) months immediately following October 31, 2009 each
of Executive, his spouse and his covered dependents may enroll in
COBRA as permitted under the Health Plan. If one or more of such
individuals elect to enroll in COBRA, then Executive shall pay an
amount equal to the subsidized cost of coverage paid by an active
employee of the Company to receive such coverage.
(ii) During the period between
May 1, 2011, and October 31, 2011, each of Executive, his
spouse and his covered dependents may participate in the Health
Plan by paying the full non-subsidized cost to receive such
coverage.
Nothing in this Section
(d) shall be interpreted as limiting the right of
Executive’s spouse and covered dependents to receive extended
participation in the Company’s group health plan under COBRA
in the event Executive elects to enroll in Medicare in a timely
manner.
(e) Continued life insurance
benefits from the Company during the two (2) year period
following the Effective Date at a level of coverage that is equal
to the coverage level provided to the Executive on
September 30, 2009;
(f) Club dues paid for the two
(2) years following the Effective Date that are equal to than
those provided to the Executive immediately prior to the Effective
Date;
(g) Continuation of banking services
without service charge or at a reduced charge for the two
(2) years following the Effective Date if any of these banking
products were being utilized by the Executive immediately prior to
his resignation;
(h) Payment of reasonable and
customary business related expenses incurred through the last day
of active employment, provided all receipts shall be submitted in
writing to the Company within ninety (90) days following the
Effective Date;
(i) Outplacement or executive search
firm consulting services during the two (2) year period
following the Effective Date, provided the total value of such
services shall not exceed $20,000;
(j) Executive will be permitted to
exercise the vested portion of his stock options during the ninety
(90) day period immediately following the Effective Date.
Executive agrees that the only vested stock option awards to which
he is entitled are those listed on the attached Exhibit
A.
(k) In the event that Executive (or
his spouse or dependents) is enrolled in the Health Plan during the
period designated in Section (d)(ii) above, the Company shall
reimburse Executive for a portion of the medical premium expenses
that he incurs to purchase such continued medical coverage under
the Health Plan, but only to the extent such expense is equal to
the premium level that would be paid by an employee of the Company
receiving the same level of coverage (which amount shall be
referred to herein
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as the “Medical Reimbursement”). In
addition, the Company will pay Executive an amount equal to the
aggregate of the Federal, state and local income taxes that
Employee pays on the Medical Reimbursement payments, plus the
additional Federal, state and local income taxes imposed on
Employee due to such additional income tax gross-up payment by the
Company. The Company will pay the additional income tax gross-up
amounts owed to Executive under this paragraph at the same time
payments of the Medical Reimbursement are made.
The Company shall reimburse
Executive for the expenses related to benefits provided under
Subsections 2(f), (g), and (k) pursuant to Treasury Regulation
Section 1.409A-3(i)(1)(iv)(A). The availability of
reimbursement under this paragraph in any calendar year will not be
increased or decreased to reflect the amount actually reimbursed in
a prior or subsequent calendar year, and all reimbursements under
this paragraph will be paid to Executive within twenty
(20) days following the Company’s receipt of a request
for reimbursement. The Executive shall not be permitted to exchange
this right of reimbursement for cash or any other
benefit.
3. Release of all Claims
. In consideration for Sections 1 and 2 above, Executive
voluntarily and knowingly waives, releases, and discharges the
Company, its parent, predecessor, successor, subsidiary, and
affiliate companies, and all of their executives, officers,
directors, owners, agents and assigns from all claims, liabilities,
demands, and causes of action, known or unknown, fixed or
contingent, which Executive may have or claim to have against any
of them as a result of Executive’s employment and/or
severance from employment. Executive agrees not to file a lawsuit
to assert any such released claims and Executive agrees not to
accept any monetary damages or other personal relief (including
legal or equitable relief) in connection with any administrative
claim or lawsuit filed by any person or entity. This waiver,
release and discharge includes, but is not limited to:
(a) Claims arising under federal,
state, or local laws regarding employment or prohibiting employment
discrimination such as, without limitation, Title VII of the Civil
Rights Act of 1964, the Equal Pay Act, the Age Discrimination in
Employment Act, the Older Workers’ Benefit Protection Act,
the Genetic Information Nondiscrimination Act, the Occupational
Health and Safety Act, the National Labor Relations Act,
Section 1981 of the Civil Rights Act of 1866, the Americans
with Disabilities Act, the Fair Labor Standards Act, the Family and
Medical Leave Act (FMLA), Chapters 21, 61 and 451 of the Texas
Labor Code, the Sarbanes Oxley Act of 2002, Comprehensive Omnibus
Budget Reconciliation Act of 1985 (COBRA), the Worker Adjustment
and Retraining Notification (WARN) Act,
(b) Claims for breach of oral or
written express or implied contract or promissory estoppel or
quantum meruit,
(c) Claims for personal injury,
harm, or other damages (whether intentional or unintentional and
whether occurring on the job or not, including, without limitation,
negligence, defamation, misrepresentation, fraud, intentional
infliction
