Document:

Exhibit 10.9

 

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (“Agreement”) is made as of the         day of              , 2016 by and among HarborOne Bancorp, Inc. a Massachusetts stock holding company (the “Company”), and it subsidiary, HarborOne Bank, a Massachusetts stock co-operative bank with its main office in Brockton, Massachusetts (the “Bank”) (the Bank and the Company shall be hereinafter collectively referred to as the “Employers”), and David B. Reilly (the “Employee”).

 

1.                                      Purpose.  The Employers consider it essential to the best interests of its stockholders to promote and preserve the continuous employment of key management personnel.  The Board of Directors of each of the Employers (collectively, the “Board”) recognizes that, as is the case with many corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Employers and their stockholders.  Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Employers’ key management, including the Employee, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control.  Nothing in this Agreement shall be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Employee and the Employers, the Employee shall not have any right to be retained in the employ of the Employers.

 

2.                                      Change in Control.  A “Change in Control” shall be deemed to have occurred upon the occurrence of any one of the following events:

 

(a)                                 any “Person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than HarborOne Bancorp or the Company, any of their subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 40 percent or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Company’s Board (“Voting Securities”) (in such case other than as a result of an acquisition of securities directly from the Company or in connection with a public offering); or

 

(b)                                 persons who, as of the date hereof, constitute the Company’s Board (the “Incumbent Directors”) cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Company’s Board, provided that any person becoming a director of the Company subsequent to the date hereof shall be considered an Incumbent Director if such person’s election was approved by or such person was nominated for election by either (i) a vote of at least a majority of the Incumbent Directors or (ii) a vote of at least a majority of the Incumbent Directors who are

 

 

members of a nominating committee comprised, in the majority, of Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Company’s Board or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Company’s Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

 

(c)                                  the consummation of (i) any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than 50 percent of the voting shares of the Company issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or of the Bank.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred for purposes of the foregoing clause (a) solely as the result of an acquisition of securities by the Company that, by reducing the number of shares of Voting Securities outstanding, increases the proportionate number of shares of Voting Securities beneficially owned by any person to 40 percent or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in this sentence shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Company) and immediately thereafter beneficially owns 40 percent or more of the combined voting power of all then outstanding Voting Securities, then a “Change in Control” shall be deemed to have occurred for purposes of the foregoing clause (a).

 

3.                                      Terminating Event.

 

A “Terminating Event” shall mean any of the events provided in this Section 3:

 

(a)                                 Termination by the Employers.  Termination by the Employers of the employment of the Employee with the Employers for any reason other than for Cause, death or Disability.  For purposes of this Agreement, “Cause” shall mean, as determined by the Company’s Board in its good faith:

 

(i)                                     conduct by the Employee constituting a material act of misconduct in connection with the performance of his duties, including, without limitation, misappropriation of funds or property of the Employers other than the occasional, customary and de minimis use of Employers’ property for personal purposes; or

 

(ii)                                  the commission by the Employee of any felony or a misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or any conduct by the Employee that would reasonably be expected to result in material injury or reputational harm to the Employers if he were retained in his position; or

 

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(iii)                               continued non-performance by the Employee of his duties to the Employers (other than by reason of the Employee’s physical or mental illness, incapacity or disability) which has continued for more than 30 days following written notice of such non-performance from the Company’s Board; or

 

(iv)                              a material violation by the Employee of the Employers’ written employment policies; or

 

(v)                                 failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Employers to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the willful inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

 

A Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Employee being an employee of any direct or indirect successor to the business or assets of the Employers, rather than continuing as an employee of the Employers following a Change in Control.  For purposes hereof, the Employee will be considered “Disabled” if, as a result of the Employee’s incapacity due to physical or mental illness, the Employee shall have been absent from his duties to the Employers on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

 

(b)                                 Termination by the Employee for Good Reason.  Termination by the Employee of the Employee’s employment with the Employers for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean that the Employee has complied with the “Good Reason Process” (hereinafter defined) following, the occurrence of any of the following events:

 

(i)                                     a material diminution in the Employee’s responsibilities, authority or duties;

 

(ii)                                  a material diminution in the Employee’s base salary except for across-the-board salary reductions based on the Employers’ financial performance similarly affecting all or substantially all senior management employees of the Employers;

 

(iii)                               a material change in the geographic location at which the Employee provides services to the Employers; or

 

(iv)                              the material breach of this Agreement by the Employers.

 

“Good Reason Process” shall mean that (i) the Employee reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the Employee notifies the Employers in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Employee cooperates in good faith with the Employers’ efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Employee terminates his employment within 60 days after the end of the Cure Period.

 

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If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

 

4.                                      Change in Control Payment.  In the event a Terminating Event occurs within 12 months after a Change in Control, the following shall occur:

 

(a)                                 the Employers shall pay to the Employee an amount equal to the sum of (i) the Employee’s annual base salary in effect immediately prior to the Terminating Event (or the Employee’s annual base salary in effect immediately prior to the Change in Control, if higher) and (ii) the Employee’s average annual bonus over the three fiscal years immediately prior to the Change in Control, payable in one lump-sum payment within ten days following the Date of Termination; and

 

(b)                                 if the Employee was participating in the Employers’ group health and dental plans immediately prior to the Date of Termination and elects COBRA health continuation, then the Employers shall pay to the Employee a monthly cash payment for 18 months or the Employee’s COBRA health continuation period, whichever ends earlier, in an amount equal to the monthly employer contribution that the Employers would have made to provide health and dental insurance to the Employee if the Employee had remained employed by the Employers.

 

5.                                      Additional Limitation.

 

(a)                                 Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Employers to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Employee becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Employee receiving a higher After Tax Amount (as defined below) than the Employee would receive if the Aggregate Payments were not subject to such reduction.  In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

 

(b)                                 For purposes of this Section 5, the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Employee as a result of the Employee’s receipt of the Aggregate Payments.  For

 

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purposes of determining the After Tax Amount, the Employee shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

 

(c)                                  The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 5(a) shall be made by a nationally recognized accounting firm selected by the Employers (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Employers and the Employee within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Employers or the Employee.  Any determination by the Accounting Firm shall be binding upon the Employers and the Employee.

 

6.                                      Section 409A.

 

(a)                                 Anything in this Agreement to the contrary notwithstanding, if at the time of the Employee’s “separation from service” within the meaning of Section 409A of the Code, the Employers determine that the Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Employee becomes entitled to under this Agreement on account of the Employee’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Employee’s separation from service, or (B) the Employee’s death.

 

(b)                                 The parties intend that this Agreement will be administered in accordance with Section 409A of the Code.  To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code.  The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

 

(c)                                  All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Employers or incurred by the Employee during the time periods set forth in this Agreement.  All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred.  The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year.  Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

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(d)                                 To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Employee’s termination of employment, then such payments or benefits shall be payable only upon the Employee’s “separation from service.”  The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

(e)                                  The Employers make no representation or warranty and shall have no liability to the Employee or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

 

7.                                      Term.  This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) the termination of the Employee’s employment for any reason prior to a Change in Control, (b) the termination of the Employee’s employment with the Employers after a Change in Control for any reason other than the occurrence of a Terminating Event, or (c) the date which is 12 months after a Change in Control if the Employee is still employed by the Employers.

 

8.                                      Withholding.  All payments made by the Employers to the Employee under this Agreement shall be net of any tax or other amounts required to be withheld by the Employers under applicable law.

 

9.                                      Notice and Date of Termination.

 

(a)                                 Notice of Termination.  After a Change in Control and during the term of this Agreement, any purported termination of the Employee’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 9.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

(b)                                 Date of Termination.  “Date of Termination” shall mean:  (i) if the Employee’s employment is terminated by his death, the date of his death; (ii) if the Employee’s employment is terminated on account of Employee’s Disability or by the Employers with or without Cause, the date on which Notice of Termination is given; (iii) if the Employee’s employment is terminated by the Employee without Good Reason, 30 days after the date on which a Notice of Termination is given, and (iv) if the Employee’s employment is terminated by the Employee with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period.  Notwithstanding the foregoing, in the event that the Employee gives a Notice of Termination to the Employers, the Employers may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Employers for purposes of this Agreement.

 

10.                               No Mitigation.  The Employers agree that, if the Employee’s employment by the Employers is terminated during the term of this Agreement, the Employee is not required to seek

 

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other employment or to attempt in any way to reduce any amounts payable to the Employee by the Employers pursuant to Section 4 hereof.  Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Employee to the Employers or otherwise.

 

11.                               Arbitration of Disputes.  Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Employee’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators.  In the event that any person or entity other than the Employee or the Employers may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11.

 

12.                               Consent to Jurisdiction.  To the extent that any court action is permitted consistent with or to enforce Section 11 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts.  Accordingly, with respect to any such court action, the Employee (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

 

13.                               Integration.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes in all respects all prior agreements between the parties concerning such subject matter.

 

14.                               Successor to the Employee.  This Agreement shall inure to the benefit of and be enforceable by the Employee’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees.  In the event of the Employee’s death after a Terminating Event but prior to the completion by the Employers of all payments due him under this Agreement, the Employers shall continue such payments to the Employee’s beneficiary designated in writing to the Employers prior to his death (or to his estate, if the Employee fails to make such designation).

 

15.                               Enforceability.  If any portion or provision of this Agreement (including, without limitation, any portion or provision of any Section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this

 

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Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

16.                               Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

 

17.                               Notices.  Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight currier service of by registered or certified mail, postage prepaid, return receipt requested, to the Employee at the last address the Employee has filed in writing with the Employers, or to the Employers at its main office, attention of the Board of Directors.

 

18.                               Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Employee and by duly authorized representatives of the Employers.

 

19.                               Effect on Other Plans.  An election by the Employee to resign after a Change in Control under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Employee for the purpose of interpreting the provisions of any of the Employers’ benefit plans, programs or policies.  Nothing in this Agreement shall be construed to limit the rights of the Employee under the Employers’ benefit plans, programs or policies except as otherwise provided in Section 5 hereof, and except that the Employee shall have no rights to any severance benefits under any Company or Bank severance pay plan.  In the event that the Employee is party to an employment agreement with the Employers providing for change in control payments or benefits, the Employee may receive payment under this Agreement only and not both.  The Employee shall make such an election in the event of a Change in Control.

 

20.                               Governing Law.  This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such Commonwealth.  With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the First Circuit.

 

21.                               Successors to Employers.  The Employers shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Employers expressly to assume and agree to perform this Agreement to the same extent that the Employers would be required to perform it if no succession had taken place.  Failure of the Employers to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

 

22.                               Gender Neutral.  Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.

 

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23.                               Counterparts.  This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

 

24.                               Allocation of Obligations Between Employers.  The obligations of the Employers under this Agreement are intended to be the joint and several obligations of the Bank and the Company, and the Employers shall, as between themselves, allocate these obligations in a manner agreed upon by them.

 

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

 

	
 
    	
HARBORONE   BANCORP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:   
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
HARBORONE   BANK
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:   
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    

 

[Change in Control Agreement Signature Page]Exhibit 10.10

 

HARBORONE BANK

 

DIRECTOR RETIREMENT PLAN

 

1.                                      PURPOSE.

 

The purpose of the HarborOne Bank Director Retirement Plan (the “Plan”) is to recognize and provide specified benefits to directors of HarborOne Bank (the “Bank”) for services and contributions to the Bank that contribute materially to the continued growth, development and future business success of the Bank.  Subject to the terms of the Plan, Participants or their beneficiaries may receive a benefit from the Bank upon retirement, death or disability.

 

This Plan shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

 

2.                                      EFFECTIVE DATE.  The Plan is effective as of November 1, 2014 (the “Effective Date”).

 

3.                                      DEFINITIONS.

 

As used in the Plan:

 

(a)                                 “Actuarial Equivalent” means the present value of the annual benefit payable under Paragraph 4(a) computed using the applicable interest rate determined under Section 417(e)(3)(C) of the Internal Revenue Code of 1986, as amended (the “Code”) for the month of December preceding the payment date of the benefit.

 

(b)                                 “Bank” means HarborOne Bank, organized and existing under the laws of the Commonwealth of Massachusetts, and any present or future parents, subsidiaries or affiliates.

 

(c)                                  “Beneficiary” means the person(s) or trust(s) designated in writing by a Participant to receive benefits pursuant to the Plan in the event of such Participant’s death.  The Participant may change a Beneficiary designation at any time by submitting a new form to the Secretary of the Board (or, in the case of the Secretary submitting an election as a Participant, to the Chair of the Board).  Any such change shall follow the same rules as for the original Beneficiary designation and shall supersede automatically the existing Beneficiary form on file with the Board.  If no Beneficiary is designated, the Beneficiary shall be the Participant’s surviving spouse, if living, and otherwise the Participant’s estate.  If the Beneficiary is a minor or is under guardianship or conservatorship, the Board may direct that distribution of a benefit be made to the Beneficiary’s guardian, conservator or legal representative.

 

(d)                                 “Board” means the board of directors of the Bank.

 

(e)                                  “Cause” means a Director’s deliberate dishonesty with respect to the Bank or any subsidiary or affiliate of the Bank; conviction of a crime involving moral turpitude; or gross and willful failure to perform (other than on account of a medically determinable Disability that

 

 

renders the Director incapable of performing such services) a substantial portion of the Director’s duties and responsibilities as a Director of the Bank.

 

(f)                                   “Director” means a person who is duly elected as a member of the Board; provided, however, that a person duly elected as a director of the Board who is also compensated as an employee of the Bank shall be deemed to be serving as a Director within the meaning of the Plan only from and after the effective date of such person’s termination of service as an employee of the Bank.  For purposes of the preceding sentence, a person shall be deemed to be duly elected as a director of the Bank commencing as of effective date of such election and terminating as of the expiration of such person’s term of office as a director or, if earlier, the date of such person’s death, Disability, Separation from Service as a director, or resignation or removal as a director.

 

(g)                                  “Disability” means any medically determinable physical or mental illness, impairment or condition affecting a Participant that can be expected to result in death and/or to last for a continuous period of not less than twelve (12) months and that causes a Separation from Service.

 

(h)                                 “Normal Retirement Age” means the age as set forth in each Participant’s Participation Agreement.

 

(i)                                     “Participant” means (i) each Director as of the Effective Date who has been provided with and executed a Participation Agreement and has not waived his or her right to participate in the Plan, and (ii) each person who becomes a Director after the Effective Date who is provided with and executes a Participation Agreement and has not waived his or her right to participate in the Plan, provided that in each case such Director also has executed a non- competition, non-solicitation, and confidentiality agreement in a form reasonably requested by the Bank.  A Participation Agreement must be executed within thirty (30) days (or such longer period as the Board determines reasonable and appropriate based on the facts and circumstances consistent with the requirements of Section 409A of the Code and Treasury Regulations issued thereunder (“Treas. Reg.”) including, without limitation, Treas. Reg. Section 1.409A-2(a)(7)) after an individual becomes a Director and is offered a participation Agreement or, in the case of the Plan Year ending 2014, within thirty (30) days after the adoption of the Plan.  Any person participating in the Plan who has a Separation from Service as a Director for reasons other than death or Disability prior to the completion of at least six (6) Years of Service shall cease to be a Participant as of the effective date of such Separation from Service.  In no event shall a person be eligible to be a Participant after the payment of any benefits to which such individual is entitled under Paragraph 4 is completed.

 

(j)                                    “Participation Agreement” means a written instrument in the form or substantially in the form appended to the Plan as Appendix A, as amended from time to time.

 

(k)                                 “Plan Year” means the calendar year.

 

(l)                                     “Retirement” means Separation from Service as a Director for any reason other than death, Disability or Cause.

 

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(m)                             “Separation from Service” means a Director’s separation from service with the Bank within the meaning of Code Section 409A and the regulations promulgated thereunder.  Without limiting the foregoing, a Director will be presumed to have separated from service as of the effective date of a reduction in his or her work schedule (other than in connection with an authorized leave of absence for reasons other than Disability) where the level of bona fide services performed after such effective date continues at a level that is more than twenty percent (20%) but less than fifty percent (50%) of the average level of service performed by the Director during the thirty-six (36) month period immediately preceding such effective date.

 

(n)                                 “Year of Service” means, for a Director, each twelve (12) month period ending December 31 during which the Director serves continuously as a duly elected director of the Bank, or any predecessor of the Bank; provided, however, that the calendar year in which a director is first elected to the Board shall be deemed a complete calendar year.

 

(o)                                 “Final Director Fees” means the total director fees paid to the Director in the final full calendar year preceding the Participant’s Retirement.  The director fees paid to the Director shall be the total compensation amount shown on a Director’s 1099 (or its equivalent) as issued by the Bank to the Director.

 

4.                                      PLAN BENEFITS.

 

(a)                                 Normal Retirement.

 

Upon a Participant’s Retirement after attainment of Normal Retirement Age as a Director on or after the Participant’s completion of six (6) or more Years of Service, the Participant shall be entitled to receive an annual benefit, payable each year in the amount and for the number of years determined in accordance with the following schedule:

 

	
Years of Service
    	
 
    	
Annual Benefit
    	
 
    	
Number of Annual
   Installments
    
	
Less than 6 Years of Service
    	
 
    	
None
    	
 
    	
Not Applicable
    
	
At least 6, but less than 11 Years of Service
    	
 
    	
30% of Final Director   Fees
    	
 
    	
5
    
	
At least 11, but less than 21 Years of Service
    	
 
    	
45% of Final Director   Fees
    	
 
    	
10
    
	
At least 21 Years of Service
    	
 
    	
60% of Final Director   Fees
    	
 
    	
10
    

 

Such amount shall be paid annually commencing within sixty (60) days after the Participant’s Retirement provided that the Participant’s Retirement occurred upon or after Normal Retirement Age.  Annual Installment Payments made after the first installment will be made in January of each following Plan Year until the total number of Annual Installments has been paid, not to exceed the Number of Annual Installments listed above that corresponds with the applicable Years of Service.  Notwithstanding the forgoing, if in the Participant’s

 

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Participation Agreement the Participant elects to receive the Normal Retirement benefit in a lump sum in lieu of annual installments, then the Bank shall pay the Participant the Actuarial Equivalent of the benefit described above.  If so elected, this lump sum payment shall be made within sixty (60) days after the Participant’s Retirement.

 

Death.  If a Participant dies while serving as a Director and after the completion of six (6) or more Years of Service, the Participant’s Beneficiary shall be entitled to a benefit, payable in a single lump sum within sixty (60) days after the Participant’s death, in an amount equal to the Actuarial Equivalent of the benefit that would have been payable to the Participant under Paragraph 4(a) if the Participant had attained Normal Retirement Age with the Participant’s actual Years of Service as of the date of the Participant’s death and experienced a Retirement as of the date of the Participant’s death.  If a retired Participant dies before receiving the full benefit payable to such Participant, the Actuarial Equivalent of any remaining benefit shall be paid to the Participant’s Beneficiary in a single lump sum within sixty (60) days after the Participant’s death.  Notwithstanding the forgoing, if in the Participant’s Participation Agreement the Participant elects to receive the Death benefit in annual installments in lieu of a lump sum, then the Bank shall pay the Participant the benefit that would have been payable to the Participant under Paragraph 4(a) if the Participant had attained Normal Retirement Age with the Participant’s actual Years of Service as of the date of the Participant’s death and experienced a Retirement as of the date of the Participant’s death (or the Actuarial equivalent thereof if the Participant has not yet achieved eleven (11) Years of Service).  If so elected, the first Annual Installment Payment shall be made within sixty (60) days after the Participant’s death and the remaining annual payments shall be made in January of each following Plan Year until ten (10) total installments have been paid.

 

(b)                                 Disability.  If a Participant suffers a Disability while serving as a Director and after the completion of six (6) or more Years of Service, but prior to Normal Retirement Age, the Participant shall be entitled to a benefit, payable in a single lump sum within sixty (60) days after the Participant’s Disability, in an amount equal to the Actuarial Equivalent of the benefit that would have been payable to the Participant under Paragraph 4(a) if the Participant had attained Normal Retirement Age with the Participant’s actual Years of Service as of the date of the Participant’s Disability and experienced a Retirement as of the date of the Participant’s Disability.  Notwithstanding the forgoing, if in the Participant’s Participation Agreement the Participant elects to receive the Disability benefit in annual installments in lieu of a lump sum, then the Bank shall pay the Participant the benefit that would have been payable to the Participant under Paragraph 4(a) if the Participant had attained Normal Retirement Age with the Participant’s actual Years of Service as of the date of the Participant’s Disability and experienced a Retirement as of the date of the Participant’s Disability (or the Actuarial Equivalent thereof if the Participant has not yet achieved eleven (11) Years of Service).  If so elected, the first Annual Installment Payment shall be made within sixty (60) days after the Participant’s Disability and the remaining payments shall be made in January of each following Plan Year until ten (10) total installments have been paid.

 

(c)                                  Termination for Cause.  In the event a Participant’s service as a Director is terminated at any time for Cause, the Participant shall not be entitled to any benefit under the Plan.

 

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5.                                      MISCELLANEOUS.

 

(a)                                 Change of Control.  A “Change in Control”‘ will be deemed to have occurred if:

 

(i)                                     During any 12-month period, individuals who are Continuing Directors (as hereinafter defined) cease for any reason to constitute at least a majority of the Board of Directors of the Bank.  For this purpose, a “Continuing Director” means (x) an individual who was a Director of the Bank at the beginning of such period or (y) any new Director (other than a director designated by a person who has entered into, or made a bona-fide offer to enter into, any agreement with the Bank to effect an acquisition, merger or consolidation of the Bank) whose election by (he Board or nomination for election to the Board of the Bank was approved by a vote of a majority of the Directors of the Bank then still in office who either were Directors at the beginning of such period or whose election or nomination for election was previously so approved; or

 

(ii)                                  The Directors of the Bank approve a merger or consolidation of the Bank with any other bank or corporation in which individuals who are Directors of the Bank immediately prior to the transaction will cease, by reason of the transaction, to represent more than fifty percent of the Directors of the institution resulting from the merger or consolidation, provided that the effective date of such Change in Control shall be the date of the transaction; or

 

(iii)                               The Bank issues shares to the public (through a partial offering or a full conversion to stock form) and a person (or persons acting as a group, as defined in Treas. Reg. Section 1.409A-3(i)(5)(v)(B)), acquires ownership of a number of shares of such stock constituting at least 50% percent of the total fair market value, or total voting power, of the Bank’s stock;

 

provided that such event also constitutes a change in ownership or effective control of the Bank or a change in the ownership of a substantial portion of the assets of the Bank, in each case as defined in Treas. Reg. Section 1.409A-3(i)(5).

 

Any Participant whose service as a Director is terminated other than for Cause within one (1) year after a Change in Control shall be deemed to have experienced a Retirement at Normal Retirement Age with an aggregate number of Years of Service equal to the Participant’s actual Years of Service plus ten (10).  Such Participant shall be entitled to a benefit, payable in a single lump sum within sixty (60) days following the Participant’s Separation from Service, in an amount equal to the Actuarial Equivalent of the benefit determined as set forth in Paragraph 4(a) above based upon such aggregate Years of Service.

 

(b)                                 Plan Continuation.  The Bank shall not merge or consolidate into or with another organization, or reorganize, or sell substantially all of its assets to another organization, firm or person unless and until such succeeding or continuing organization, firm or person agrees to assume and discharge the obligations of the Bank under the Plan.  Upon the occurrence of such event, the term “Bank” as used in the Plan shall be deemed to refer to such successor or survivor organization.

 

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(c)                                  Plan Amendment or Termination.  The Plan may be amended or terminated by a two-thirds vote of the full Board, but any such amendment or termination shall not affect or change rights accrued or obligations incurred up to the time of such amendment or termination, including specifically, but without limitation, those rights contained in Paragraph 4.

 

(d)                                 Compliance with Code Section 409A.  It is the intent of the Bank that the Plan and all amounts payable to the Participants under the Plan meet the requirements of Section 409A of the Code to the extent applicable to the Plan and such payments.

 

(e)                                  Unfunded Status.  The Plan is intended to be “unfunded” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The Bank shall have no obligation to set aside, earmark or entrust any fund or money with which to pay its obligations under the Plan.  The Participants, Directors, Beneficiaries, and any successor(s) in interest shall be and remain simply general creditors of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation.  The Bank reserves the absolute right, at its sole discretion, to either fund the obligations undertaken by the Plan or to refrain from funding the same and to determine the extent, nature and method of such funding.  Should the Bank elect to fund the Plan, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part.  At no time shall any Participant, Director, or Beneficiary be deemed to have any lien, right, title or interest arising out of or relating to the Plan in any specific funding investment or assets of the Bank.  None of the Participants, Directors or Beneficiaries shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of such benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant, Director or Beneficiary, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

 

(f)                                   Taxes.  The Participants, Directors and Beneficiaries, as applicable, shall bear sole liability with respect to liability for taxes arising out of or associated with the benefits earned, payable or paid under the Plan.

 

(g)                                  Accounting.  The Bank shall account for the benefits provided under the Plan using the regulatory accounting principles of the Bank’s primary federal regulator, including, to the extent applicable, the establishment and maintenance of an accrued liability retirement account for the Participants into which appropriate reserves may be accrued.

 

(h)                                 Governing Law.  The Plan shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to choice of law or conflicts of laws and provisions thereof, and with any federal laws to which the Bank may be subject as an FDIC insured institution.

 

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IN WITNESS THEREOF, the Bank has caused this instrument to be executed by its duly authorized officer effective as of the day and year first written above.

 

	
 
    	
 
    
	
 
    	
HARBORONE   BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James Blake
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
President   and CEO

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