exv10w11






Exhibit 10.11




FORM OF

FRATERNITY FEDERAL SAVINGS AND LOAN ASSOCIATION

EMPLOYEE SEVERANCE COMPENSATION PLAN




A. Purpose.



The primary purpose of the Fraternity Federal Savings and Loan Association Employee Severance
Compensation Plan is to ensure the successful continuation of the business of Fraternity Federal
Savings and Loan Association and the fair and equitable treatment of the employees of Fraternity
Federal Savings and Loan Association following a Change in Control.




B. Definitions.



In this Plan, whenever the context so indicates, the singular or the plural number and the
masculine or feminine gender shall be deemed to include the other, the terms “he,” “his,” and
“him,” shall refer to an employee and, except as otherwise provided, or unless the context
otherwise requires, the capitalized terms shall have the following meanings:



“Association” means Fraternity Federal Savings and Loan Association and its successors.



“Base Compensation” means




     (a)
    For salaried employees, the employee’s annual base salary at the rate in effect on his
termination date or, if greater, the rate in effect on the date immediately preceding the Change in
Control.



     (b)
    For employees whose compensation is determined in whole or in part on the basis of
commission income, the employee’s base salary at his termination date (or, if greater, the
employee’s base salary on the date immediately preceding the effective date of the Change in
Control), if any, plus the commissions earned by the employee in the twelve (12) full calendar
months preceding his termination of employment (or, if greater, the commissions earned in the
twelve (12) full calendar months immediately preceding the effective date of the Change in
Control).




     (c) For hourly employees, the employee’s total hourly wages for the twelve (12) full calendar
months preceding his termination of employment or, if greater, the twelve (12) full calendar months
preceding the effective date of the Change in Control.




“Board of Directors” means the Board of Directors of the Association.



“Cause” means grounds for termination of employment due to the employee’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order.



“Change in Control” means a change in control of the Association or the Corporation, as defined in
Section 409A of the Code and rules, regulations, and guidance of general application thereunder
issued by the Department of the Treasury, including:




     (a) Change in ownership: a change in ownership of the Corporation occurs on the date
any one person or group accumulates ownership of Corporation stock constituting more than 50% of
the total fair market value or total voting power of Corporation stock,

 









 






     (b)
Change in effective control: (x) any one person or more than one person acting as
a group acquires within a 12-month period ownership of Corporation stock possessing 30% or more of
the total voting power of Corporation stock, or (y) a majority of the Corporation’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 Corporation’s board of directors, or




     (c)
Change in ownership of a substantial portion of assets: a change in ownership of a
substantial portion of the Corporation’s assets occurs if in a 12-month period any one person or
more than one person acting as a group acquires from the Corporation assets having a total gross
fair market value equal to or exceeding 40% of the total gross fair market value of all of the
Corporation’s assets immediately before the acquisition or acquisitions. For this purpose, gross
fair market value means the value of the Corporation’s assets, or the value of the assets being
disposed of, determined without regard to any liabilities associated with the assets.


“Change in Control Severance Benefit” means the benefit provided for in Paragraph D of the Plan.



“Code” means the Internal Revenue Code of 1986, as amended.



“Comparable Position” means a position that would (i) provide the employee with base compensation
and benefits that are comparable in the aggregate to those provided to the employee prior to the
Change in Control; (ii) provide the employee with an opportunity for variable bonus compensation
that is comparable to the opportunity provided to the employee prior to the Change in Control;
(iii) be in a location that would not require the employee to increase his daily one-way commuting
distance by more than thirty-five (35) miles as compared to the employee’s commuting distance
immediately prior to the Change in Control; and (iv) have job skill requirements and duties that
are comparable to the requirements and duties of the position held by the employee immediately
prior to the Change in Control.



“Corporation” means Fraternity Community Bancorp, Inc. and its successors.



“Plan” means this Fraternity Federal Savings and Loan Association Employee Severance Compensation
Plan, as may be amended from time to time.



“Year of Service” means each 12-month period of service following an employee’s date of hire during
which the employee completes at least one hour of service each month. The taking of a leave of
absence shall not eliminate a period of time from being a Year of Service if the period of time
otherwise qualifies as a year of service. A “leave of absence” means (i) the taking of an
authorized or approved leave of absence under the provisions of the federal Family and Medical
Leave Act (“FMLA”), (ii) any state law providing qualitatively similar benefits as the FMLA, or
(iii) a leave of absence authorized under the policies of the Association.




C. Covered Employees.






     (a)
    Any employee of the Association with at least one Year of Service as of the date of his
termination of employment shall receive a Change in Control Severance Benefit if, within the period
beginning on the effective date of a Change in Control and ending on the first anniversary of the
effective date of the Change in Control, (i) the Association terminates the employee’s employment
without Cause, or (ii) the employee terminates employment with the Association voluntarily after
being offered continued employment in a position that is not a Comparable Position.




     (b)
Notwithstanding the foregoing, no employee shall be eligible for a Change in Control
Severance Benefit if, at the time of his termination of employment, the employee is a party to an


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individual employment agreement or change in control agreement with the Association and/or the
Corporation pursuant to which he is entitled to severance benefits.



D. Determination and Payment of the Change in Control Severance Benefit.




     (a)
    The Change in Control Severance Benefit payable to an eligible employee under this Plan
shall be determined under as follows:




     (1)
    An eligible employee shall receive a Change in Control Severance Benefit equal to
the product of (i) the employee’s Years of Service from his hire date (including partial
years and years prior to the adoption of this Plan) through the date of the termination of
his employment and (ii) an amount equal to the employee’s Base Compensation for two (2)
weeks. The maximum payment to an eligible employee shall be an amount equal to fifty-two
(52) weeks of Base Compensation.


     (b)
    The Change in Control Severance Benefit shall be paid in a lump sum not later
than five (5) business days after the date of the eligible employee’s termination of employment.

    


     (c)
All payments under this Plan will be subject to required withholding for federal, state
and local tax purposes.



E. Parachute Payment.



Notwithstanding anything in this Plan to the contrary, if a Change in Control Severance Benefit
that is otherwise payable to an employee who is a “disqualified individual” would constitute an
“excess parachute payment,” taking into account payments under this Plan and otherwise, then the
benefit payable under this Plan shall be reduced to the maximum amount which does not include an
excess parachute payment. The terms “disqualified individual” and “excess parachute payment” shall
have the same meanings as under Section 280G of the Code.




F. Adoption by Affiliates.



Upon approval by the Board of Directors, this Plan may be adopted by any “subsidiary” or “parent”
of the Association. Upon such adoption, the provisions of the Plan shall be fully applicable to
the employees of that subsidiary or parent. The term “subsidiary” means any corporation in which
the Association, directly or indirectly, holds a majority of the voting power of its outstanding
shares of capital stock. The term “parent” means any corporation which holds a majority of the
voting power of the outstanding shares of capital stock of the Association.




G. Administration.



The Plan shall be administered by the Board of Directors, which shall have the discretion to
interpret the terms of the Plan and to make all determinations about eligibility and payment of
benefits. All decisions of the Board of Directors, any action taken by the Board of Directors with
respect to the Plan and within the powers granted to the Board of Directors under the Plan, and any
interpretation by the Board of Directors of any term or condition of the Plan, shall be conclusive
and binding on all persons, and will be given the maximum possible deference allowed by law. The
Board of Directors may delegate and reallocate any authority and responsibility with respect to the
Plan.







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H. Source of Payments.



Unless otherwise determined by the Board of Directors, all payments and benefits provided under
this Agreement shall be paid solely by the Association or, if applicable, any affiliate that adopts
the Plan.




I. Inalienability.



In no event may any employee sell, transfer, anticipate, assign or otherwise dispose of any right
or interest under the Plan. At no time will any such right or interest be subject to the claims of
creditors, nor liable to attachment, execution or other legal process.




J. Governing Law.



The provisions of the Plan will be construed, administered and enforced in accordance with the laws
of the State of Maryland, except to the extent that federal law applies.




K. Severability.



If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability
will not affect any other provision of the Plan, and the Plan will be construed and enforced as if
such provision had not been included.




L. No Employment Rights.



Neither the establishment nor the terms of this Plan shall be held or construed to confer upon any
employee the right to a continuation of employment, nor constitute a contract of employment,
express or implied. The Association and, if applicable, any affiliate that adopts the Plan,
reserves the right to dismiss or otherwise deal with any employee to the same extent and on the
same basis as though this Plan had not been adopted. Nothing in this Plan is intended to alter the
at-will status of an employee’s employment status, it being understood that, except to the extent
otherwise expressly set forth to the contrary in an individual employment-related agreement, the
employment of any employee may be terminated at any time by the Association or, if applicable, any
affiliate that adopts the Plan.




M. Amendment and Termination.



The Board of Directors may terminate or amend the Plan in any respect, unless a Change in Control
has previously occurred. If a Change in Control occurs, the Plan no longer shall be subject to
amendment, change, substitution, deletion, revocation or termination in any respect whatsoever.
The form of any proper amendment or termination of the Plan shall be a written instrument signed by
a duly authorized officer or officers of the Association, certifying that the amendment or
termination has been approved by the Board of Directors. A proper amendment of the Plan
automatically shall effect a corresponding amendment to each Participant’s rights hereunder. A
proper termination of the Plan automatically shall effect a termination of all employees’ rights
and benefits hereunder.




N. Required Provisions.




     (1)
    In the event any of the provisions of this Paragraph N are in conflict with the terms of
this Plan, this Paragraph N shall prevail.




     (2)
    The Association may terminate an employee’s employment at any time, but any termination by
the Association, other than termination for Cause, shall not prejudice an employee’s right


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to compensation or other benefits under this Plan. An employee shall not have the right to
receive compensation or other benefits for any period after termination for Cause.





     (3) If an employee is suspended from office and/or temporarily prohibited from participating
in the conduct of the Association’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Association’s obligations
under this Plan shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Association may in its discretion:
(i) pay the employee all or part of the compensation withheld while their contract obligations were
suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.







     (4) If an employee is removed and/or permanently prohibited from participating in the conduct
of the Association’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Association under
this Plan shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.








     (5) If the Association is in default as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. §1813(x)(1) all obligations under this Plan shall terminate as of the date
of default, but this paragraph shall not affect any vested rights of the contracting parties.








     (6) All obligations under this Plan shall be terminated, except to the extent determined that
continuation of the Plan is necessary for the continued operation of the Association: (i) by the
Director of the Office of Thrift Supervision (“OTS”), or his designee, at the time the Federal
Deposit Insurance Corporation (“FDIC”) enters into an agreement to provide assistance to or on
behalf of the Association under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his designee) at the time
the Director of the OTS (or his designee) approves a supervisory merger to resolve problems related
to the operations of the Association or when the Association is determined by the Director of the
OTS to be in an unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.








     (7) Any payments made to employees pursuant to this Plan, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359,
Golden Parachute and Indemnification Payments.



[Signature Page to Follow]







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This plan has been approved and adopted by the Board of Directors of the Association and is
effective as of [date].


















	 	 	 	 	 
	 	

FRATERNITY FEDERAL SAVINGS AND

LOAN ASSOCIATION

 	 
	Attest:                                           	By:  	
 	 
	 	 	For the Entire Board of Directors 	 
	 	 	 	 



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