Exhibit 10.4

 

MEETINGHOUSE BANK

EMPLOYEE SEVERANCE COMPENSATION PLAN

 

A.           Purpose.

 

The primary purpose of the Meetinghouse Bank Employee Severance Compensation Plan is to ensure the successful continuation of the business of Meetinghouse Bank and the fair and equitable treatment of the employees of Meetinghouse Bank 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:

 

“Bank” means Meetinghouse Bank 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 Bank.

 

“Cause” means  grounds for termination of employment due to the employee’s personal dishonesty, 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 Bank 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 50% 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 Meetinghouse Bancorp, Inc. and its successors.

 

“Plan” means this Meetinghouse Bank 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 Bank.

 

C.           Covered Employees.

 

(a)          Any employee of the Bank 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 Bank terminates the employee’s employment without Cause, or (ii) the employee terminates employment with the Bank 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 individual employment agreement or change in control agreement with the Bank and/or the Corporation pursuant to which he is entitled to severance benefits.

 

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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) week’s of Base Compensation and the minimum payment shall be an amount equal to four (4) week’s 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 Bank.  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 Bank, 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 Bank.

 

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 Bank 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 Commonwealth of Massachusetts, 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 Bank 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 Bank 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 Bank, 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 Bank may terminate an employee’s employment at any time, but any termination by the Bank, other than termination for Cause, shall not prejudice an employee’s right to compensation or

 

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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 Bank’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 Bank’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 Bank 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 Bank’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 Bank 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 Bank 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)          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.

 

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

 

 

	
 
    	
MEETINGHOUSE BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Attest:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
For the Entire Board of   Directors
    


 

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