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 Philip
F. Freehan ("Mr. Freehan").
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 Mr Freehan dated December 29, 2003 (the
"Employment Agreement")
and the termination of Mr. Freehan's 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, Mr. Freehan
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, Mr. Freehan shall
sign a document
which confirms such resignations.
2. Settlement Payment and
Post-Resignation Obligations. Within five (5)
business days of Mr. Freehan's execution of this
Agreement, the Bank shall pay
Mr. Freehan 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 Mr.
Freehan the gross 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, Mr.
Freehan 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 Mr.
Freehan and EBSB, dated
as of January 1, 2007 (the "SERP"), remains
in full force and effect. Mr.
Freehan 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 Mr.
Freehan on September 1, 2009. This payment would have been
made to Mr. Freehan
and/or his beneficiaries regardless of whether or not he executed
this Agreement
as it is owed to Mr. Freehan by the Bank under the SERP.
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4. Split Dollar and Bank Owned Life
Insurance. The Split Dollar Agreement
between Mr. Freehan and EBSB, dated December 29, 2003
(the "SDA") and the Bank
Owned Life Insurance covering Mr. Freehan, 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 Mr. Freehan's
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 Mr.
Freehan until Mr. Freehan's death and the Bank Owned
Life Insurance in effect
for Mr. Freehan and his spouse, respectively until, as to each,
their respective
deaths. These benefits would have been provided to
Mr. Freehan, and payments
made to his beneficiaries, regardless
of whether or not he executed this
Agreement as these are benefits owed to Mr. Freehan by the
Bank.
5. Death. In the event of Mr.
Freehan's death before all payments are made
to Mr. Freehan pursuant to this Agreement,
all payments will be made to Mr.
Freehan's beneficiaries, as he has
identified, at the same time the payments
would have been made if Mr. Freehan 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 Mr. Freehan
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 Mr. Freehan 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 Mr. Freehan
and his spouse (UNUM Policy
Nos. LAC716021 and LAC716145) respectively, until, as to
each, their respective
deaths. Mr. Freehan's 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, Mr. Freehan
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, direct
