Document:

efc14-475_ex101.htm

Exhibit 10.1

 

UCP, INC.

2014 SHORT-TERM INCENTIVE PLAN

 

I.           Purposes

 

The purpose of the UCP, Inc. 2014 Short-Term Incentive Plan (the “Plan”) is to retain and motivate the officers and other employees of the Company and its subsidiaries who have been designated by the Committee to participate in the Plan for a specified Performance Period by providing them with the opportunity to earn incentive payments based upon the extent to which specified performance goals have been achieved or exceeded for the Performance Period.  It is intended that amounts payable under this Plan to Participants who are “covered employees” within the meaning of Section 162(m) of the Code will constitute “qualified performance-based compensation” within the meaning of U.S. Treasury regulations promulgated thereunder, and the Plan and the terms of any Awards hereunder shall be so interpreted and construed to the maximum extent possible.

 

II.           Definitions

 

(a)           “Applicable Period” shall mean, with respect to any Performance Period, a period commencing on or before the first day of the Performance Period and ending not later than the earlier of (a) the 90th day after the commencement of the Performance Period and (b) the date on which 25% of the Performance Period has been completed. Any action required to be taken within an Applicable Period may be taken at a later date if permissible under Section 162(m) of the Code or U.S. Treasury regulations promulgated thereunder.

 

(b)           “Award” shall mean an award to which a Participant may be entitled under the Plan if the performance goals for a Performance Period are satisfied. An Award may be expressed as a fixed cash amount or pursuant to a formula that is consistent with the provisions of the Plan.

 

(c)           “Board” shall mean the Board of Directors of the Company.

 

(d)           “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)           “Committee” shall mean the Compensation Committee of the Board, which is intended to be comprised of members of the Board that are “outside directors” within the meaning of Section 162(m) of the Code, or such other committee designated by the Board that satisfies any then applicable requirements of the principal national stock exchange on which the common stock of the Company is then traded to constitute a compensation committee, and which consists of two or more members of the Board, each of whom is intended to be an “outside director” within the meaning of Section 162(m) of the Code.

 

(f)           “Company” shall mean UCP, Inc., a Delaware corporation, and any successor thereto.

 

(g)           “Participant” shall mean an officer or other employee of the Company or any of its subsidiaries who is designated by the Committee to participate in the Plan for a Performance Period, in accordance with Article III.

 

 

 

 

  

  

  

 

(h)           “Performance Period” shall mean any period for which performance goals are established pursuant to Article IV. A Performance Period may be coincident with one or more fiscal years of the Company or a portion of any fiscal year of the Company.

 

(i)           “Plan” shall mean the UCP, Inc. 2014 Short-Term Incentive Plan, as set forth herein, or as it may be amended from time to time.

 

III.           Administration

 

3.1           General.  The Plan shall be administered by the Committee, which shall have the full power and authority to interpret, construe and administer the Plan and Awards granted hereunder (including in each case reconciling any inconsistencies, correcting any defaults and addressing any omissions).  The Committee’s interpretation, construction and administration of the Plan and all its determinations hereunder shall be final, conclusive and binding on all persons for all purposes.

 

3.2           Powers and Responsibilities.  The Committee shall have the following discretionary powers, rights and responsibilities in addition to those described in Section 3.1.

 

(a)           to designate within the Applicable Period the Participants for a Performance Period;

 

(b)           to establish within the Applicable Period the performance goals and targets and other terms and conditions that are to apply to each Participant’s Award;

 

(c)           to certify in writing prior to the payment with respect to any Award that the performance goals for a Performance Period and other material terms applicable to the Award have been satisfied;

 

(d)           subject to Section 409A of the Code, to determine whether, and under what circumstances and subject to what terms, an Award is to be paid on a deferred basis, including whether such a deferred payment shall be made solely at the Committee’s discretion or whether a Participant may elect deferred payment; and

 

(e)           to adopt, revise, suspend, waive or repeal, when and as appropriate, in its sole and absolute discretion, such administrative rules, guidelines and procedures for the Plan as it deems necessary or advisable to implement the terms and conditions of the Plan.

 

3.3           Delegation of Power.  The Committee may delegate some or all of its power and authority hereunder to the Chief Executive Officer or other executive officer of the Company as the Committee deems appropriate; provided, however, that with respect to any person who is a “covered employee” within the meaning of Section 162(m) of the Code or who, in the Committee’s judgment, is likely to be a covered employee at any time during the applicable Performance Period or during any period in which an Award may be paid following a Performance Period, only the Committee shall be permitted to (a) designate such person to participate in the Plan for such Performance Period, (b) establish performance goals and Awards for such person and (c) certify the achievement of such performance goals.

 

 

 

 

  

  

  

 

IV.           Performance Goals

 

The Committee shall establish within the Applicable Period of each Performance Period one or more objective performance goals (the outcome of which, when established, shall be substantially uncertain) for each Participant or for any group of Participants (or both).  To the extent necessary for an Award to be qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder, the performance goals shall be based on one or more of the following corporate-wide or subsidiary, division, operating unit or individual measures, stated in either absolute terms or relative terms, such as rates of growth or improvement: the attainment by a share of common stock of the Company of a specified fair market value for a specified period of time; earnings per share; return on assets; return on equity; return on investments; return on invested capital; total stockholder return; earnings or net income of the Company before or after taxes and/or interest; earnings before interest, taxes, depreciation and amortization; revenues; market share; cash flow or cost reduction goals; interest expense after taxes; economic value created; gross margin; operating margin; net cash provided by operations; and strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, reductions in errors and omissions, reductions in lost business, management of employment practices and employee benefits, supervision of litigation and information technology, quality and quality audit scores, efficiency, and goals relating to acquisitions or divestitures, or any combination of the foregoing.   The applicable performance measures may be applied on a pre- or post-tax basis and may be established or adjusted in accordance with Section 162(m) of the Code to include or exclude objectively determinable components of any performance measure, including, without limitation, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles (“Adjustment Events”).  In the sole discretion of the Committee, unless such action would cause a grant to a covered employee to fail to qualify as qualified performance-based compensation under Section 162(m) of the Code, the Committee may amend or adjust the performance measures or other terms and conditions of an outstanding Award in recognition of any Adjustment Events.  With respect to Participants who are not “covered employees” within the meaning of Section 162(m) of the Code and who, in the Committee’s judgment, are not likely to be covered employees at any time during the applicable Performance Period or during any period in which an Award may be paid following a Performance Period, the performance goals established for the Performance Period may consist of any objective or subjective corporate-wide or subsidiary, division, operating unit or individual measures, whether or not listed herein. Performance goals shall be subject to such other special rules and conditions as the Committee may establish at any time within the Applicable Period; provided, however, that to the extent such goals relate to Awards to “covered employees” within the meaning of Section 162(m) of the Code, such special rules and conditions shall not be inconsistent with the provisions of Treasury regulation Section 1.162-27(e) or any successor regulation describing “qualified performance-based compensation.”

 

V.           Terms of Awards

 

5.1           Performance Goals and Targets.  At the time one or more performance goals are established for a Performance Period, the Committee also shall establish an Award opportunity for each Participant or group of Participants, which shall be based on the achievement of such specified performance goals.  The amount payable to a Participant upon achievement of the applicable performance goals shall be expressed in terms of an objective formula or standard, including a fixed cash amount, the allocation of a bonus pool or a percentage of the Participant’s annual base salary.  In all cases the Committee shall have the sole and absolute discretion to 

 

 

 

 

  

  

  

 

reduce the amount of any payment with respect to any Award that would otherwise be made to any Participant or to decide that no payment shall be made.  With respect to each Award, the Committee may establish terms regarding the circumstances in which a Participant will be entitled to payment notwithstanding the failure to achieve the applicable performance goals or targets (e.g., where the Participant’s employment terminates due to death or disability or where a change in control of the Company occurs); provided, however, that with respect to any Participant who is a “covered employee” within the meaning of Section 162(m) of the Code, the Committee shall not establish any such terms that would cause an Award payable upon the achievement of the performance goals not to satisfy the conditions of Treasury regulation Section 1.162-27(e) or any successor regulation describing the “qualified performance-based compensation.”

 

5.2           Payments.  At the time the Committee determines an Award opportunity for a Participant, the Committee shall also establish the payment terms applicable to such Award. Such terms shall include when such payments will be made; provided, however, that the timing of such payments shall in all instances either (A) satisfy the conditions of an exception from Section 409A of the Code (e.g., the short-term deferrals exception described in Treasury Regulation Section 1.409A-1(b)(4)), or (B) comply with Section 409A of the Code and provided, further, that in the absence of such terms regarding the timing of payments, such payments shall occur no later than the 15th day of the third month of the calendar year following the calendar year in which the Participant’s right to payment ceased being subject to a substantial risk of forfeiture.

 

5.3           Maximum Awards.  No Participant shall receive a payment under the Plan with respect to any Performance Period having a value in excess of $3 million, which maximum amount shall be proportionately adjusted with respect to Performance Periods that are less than or greater than one year in duration.

 

VI.           General

 

6.1           Effective Date. The Plan shall be submitted to the stockholders of the Company for approval at the 2014 annual meeting of stockholders and, if approved, shall become effective for Performance Periods beginning on and after January 1, 2014.  In the event that the Plan is not approved by the stockholders of the Company, the Plan shall be null and void with respect to Participants who are “covered employees” within the meaning of Section 162(m) of the Code.

 

6.2           Amendments and Termination.  The Committee may amend, suspend or terminate the Plan at any time (including but not limited to any time following the close of the Performance Period and prior to the date payment is made) in its sole and absolute discretion. The Committee may amend the Plan without stockholder approval, unless such approval is necessary to comply with applicable laws, including provisions of the Code. Termination of the Plan shall not affect any Awards previously paid under the Plan.

 

6.3           Non-Transferability of Awards.  No Award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. Except to the extent permitted by the foregoing sentence, no Award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to sell, transfer, assign, pledge, hypothecate, encumber or otherwise 

 

 

 

  

  

  

 

dispose of any such Award, such Award and all rights thereunder shall immediately become null and void.

 

6.4           Tax Withholding.  The Company shall have the right to withhold from the payment of any Award or require, prior to the payment of any Award, payment by the Participant of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award.

 

6.5           No Right of Participation or Employment. No person shall have any right to participate in the Plan. Neither the Plan nor any Award shall confer upon any person any right to continued employment by the Company or any subsidiary or affiliate of the Company or affect in any manner the right of the Company or any subsidiary or affiliate of the Company to terminate the employment of any person at any time without liability hereunder.

 

6.6           Governing Law.  The Plan and each Award, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of California and construed in accordance therewith without giving effect to principles of conflicts of laws.

 

6.7           Other Plans.  Payments pursuant to the Plan shall not be treated as compensation for purposes of any other compensation or benefit plan, program or arrangement of the Company or any of its subsidiaries, unless either (a) such other plan provides that compensation such as payments made pursuant to the Plan are to be considered as compensation thereunder or (b) the Board or the Committee so determines in writing.  Neither the adoption of the Plan nor the submission of the Plan to the Company’s stockholders for their approval shall be construed as limiting the power of the Board or the Committee to adopt such other incentive arrangements as it may otherwise deem appropriate.

 

6.8           Binding Effect. The Plan shall be binding upon the Company and its successors and assigns and the Participants and their beneficiaries, personal representatives and heirs.  If the Company becomes a party to any merger, consolidation or reorganization, then the Plan shall remain in full force and effect as an obligation of the Company or its successors in interest, unless the Plan is amended or terminated pursuant to Section 6.2.

 

6.9           Unfunded Arrangement.  The Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Company for payment of any benefit hereunder.  No Participant shall have any interest in any particular assets of the Company or any of its affiliates by reason of the right to receive a benefit under the Plan and any such Participant shall have only the rights of an unsecured creditor of the Company with respect to any rights under the Plan.

 

6.10           Awards Subject to Clawback.  The Awards and any cash payment delivered pursuant to an Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

6.11           Right of Setoff.  The Company or any subsidiary of the Company may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or a subsidiary may owe to the Participant from time to time, including amounts payable in 

 

 

 

 

  

  

  

 

connection with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, although the Participant shall remain liable for any part of the Participant’s payment obligation not satisfied through such deduction and setoff.  By accepting any Award, the Participant agrees to any deduction or setoff under this Section 6.11.fraternity8kmay-14ex10.htm

FRATERNITY FEDERAL SAVINGS AND LOAN ASSOCIATION

CHANGE IN CONTROL AGREEMENT

This AGREEMENT (“Agreement”) is hereby entered into as of September 17, 2013 by and between FRATERNITY FEDERAL SAVINGS AND LOAN ASSOCIATION (the “Association”), a federally chartered savings Association, Michelle Miller, Chief Financial Officer (“Executive”), and FRATERNITY COMMUNITY BANCORP, INC. (the “Company”), the holding company of the Association, as guarantor.

WHEREAS, the Association recognizes the importance of Executive to the Association’s operations and wishes to protect her position with the Association in the event of a change in control of the Association or the Company for the period provided for in this Agreement; and

WHEREAS, Executive and the Board of Directors of the Association desire to enter into an agreement setting forth the terms and conditions of payments due to Executive in the event of a change in control and the related rights and obligations of each of the parties;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

	
1.  

	
Term of Agreement.

a.           The term of this Agreement shall be (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on the first anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 1.

b.  Commencing as of September 17, 2014 (the “Renewal Date”) and continuing as of each anniversary date thereafter, the Board of Directors of the Association (the “Board of Directors”) may extend the term of this Agreement for an additional one (1) year period (from the Renewal Date) beyond the then effective expiration date, provided that Executive shall not have given at least sixty (60) days’ written notice of her desire that the term not be extended.

c.           Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Association terminates Executive’s employment prior to a Change in Control.

	
2.  

	
Change in Control.

a.           Upon the occurrence of a Change in Control of the Association or the Company followed at any time during the term of this Agreement by the termination of Executive’s employment in accordance with the terms of this Agreement, other than for Cause, as defined in Section 2c. of this Agreement, the provisions of Section 3 of this Agreement shall apply.  Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate her employment at any time during the term of this Agreement for “Good Reason.”

 

 

  

  

  

For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Employee’s consent:

	
  

	
i.

	
The assignment to Executive of duties that constitute a material diminution of Executive’s authority, duties, or responsibilities (including reporting requirements);

	
  

	
ii.

	
A material diminution in Executive’s Base Salary; or

	
  

	
iii.

	
Relocation of Executive to a location outside a radius of twenty-five (25) miles of the Association’s principal office; or

provided, that within ninety (90) days after the initial existence of such event, the Association shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive.  Executive’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

 

b.           For purposes of this Agreement “Change in Control” means a change in control of the Association or the Company as defined in Internal Revenue 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,” “change in effective control” or “change in ownership of a substantial portion of assets.”

	
  

	
i.

	
Merger:  The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

	
  

	
ii.

	
Acquisition of Significant Share Ownership:  There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

	
  

	
iii.

	
Change in Board Composition:  During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

	
  

	
iv.

	
Sale of Assets:  The Company sells to a third party all or substantially all of its assets.

 

 

  

  

  

c.           Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon termination for “Cause.”  Termination for Cause shall mean termination of employment because of Executive’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order, or any material breach of any provision of this Agreement.  Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.

	
3.  

	
Termination Benefits.

a.           If Executive’s employment is voluntarily (in accordance with Section 2a. of this Agreement) or involuntarily terminated within one (1) year of a Change in Control, Executive shall receive:

	
  

	
i.

	
a lump sum cash payment equal to 1.0 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).  Such payment shall be made not later than five (5) days following Executive’s termination of employment under this Section 3.

	
  

	
ii.

	
Continued benefit coverage under all Association health and welfare plans (as defined in accordance with Section (3)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. Sec. 1002(1), and applicable regulations thereunder) which Executive participated in as of the date of the Change in Control (collectively, the “Employee Benefit Plans”) for a period of twelve (12) months following Executive’s termination of employment.  Said coverage shall be provided under the same terms and conditions in effect on the date of Executive’s termination of employment.  Solely for purposes of benefits continuation under the Employee Benefit Plans, Executive shall be deemed to be an active employee.

b.           Notwithstanding the preceding provisions of this Section 3, in no event shall the aggregate payments or benefits to be made or afforded to Executive under said paragraphs (the “Termination Benefits”) constitute an “excess parachute payment” under Section 280G of the Code or any successor thereto, and to avoid such a result, Termination Benefits will be reduced, if necessary, to an amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with said Section 280G, with the reduction to be made first to the payment due under Section 3.a.i. of this agreement.

	
4.  

	
Notice of Termination.

a.           Any purported termination by the Association or by Executive shall be communicated by Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

b.           “Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given).

 

 

  

  

  

	
5.  

	
Source of Payments.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Association.  The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Association are not timely paid or provided by the Association, such amounts and benefits shall be paid or provided by the Company.

 

	
6. 

	
Effect on Prior Agreements and Existing Benefit Plans.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Association and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided.  No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.  Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Association or shall impose on the Association any obligation to employ or retain Executive in its employ for any period.

 

	
7. 

	
No Attachment.

 

a.           Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

b.           This Agreement shall be binding upon, and inure to the benefit of, Executive, the Association and their respective successors and assigns.

 

	
8. 

	

Modification and Waiver.

a.           This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

b.           No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

 

	
9. 

	

Severability.

 

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

 

  

  

  

 

	
10.  

	
Headings for Reference Only.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.  In addition, references herein to the masculine shall apply to both the masculine and the feminine.

	
11.  

	
Governing Law.

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Maryland, without regard to principles of conflicts of law of that state.

	
12.  

	
Arbitration.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Association, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of her right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

	
13.  

	
Payment of Legal Fees.

All reasonable legal fees and expenses paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Association, only if Executive is successful pursuant to a legal judgment, arbitration or settlement.

 

	
14. 

	
Indemnification.

 

The Company or the Association shall provide Executive (including her heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and her heirs, executors and administrators) to the fullest extent permitted under applicable law, including 12 C.F.R. Section 145.121, against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which she may be involved by reason of having been a director or officer of the Company or the Association (whether or not she continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys’ fees and the costs of reasonable settlements.

 

	
15. 

	

Successors to the Association and the Company.

The Association and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Association or the Company, expressly and unconditionally to assume and agree to perform the Association’s and the Company’s obligations under this Agreement, in the same manner and to the same extent that the Association and the Company would be required to perform if no such succession or assignment had taken place.

 

 

  

  

  

 

	
16. 

	

Required Provisions.   In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

 

a. The Association’s board of directors may terminate Executive’s employment at any time, but any termination by the Association, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause.

b.           If Executive is suspended 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 contract 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 Executive 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.

c.           If Executive 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 contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

d.           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 contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

e.           All obligations under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Association:  (i) by the Comptroller of the Currency (the “Comptroller”) or his or her designee, at the time the 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 Comptroller or his or her designee at the time the Comptroller or his or her designee approves a supervisory merger to resolve problems related to the operations of the Association or when the Association is determined by the Comptroller or his or her designee 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.

f.           Any payments made to Executive pursuant to this Agreement, 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.

 

	
17. 

	

Section 409A of the Code.

 

a.           This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code.  If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed.  For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs.  To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below.  In no event shall Executive, directly or indirectly, designate the calendar year of payment.

 

  

  

  

b.           If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 3a.i. would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Association will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 3a.i. to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

c.           If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 3a.ii. it is not possible to continue coverage for Executive and her dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 3a.ii. would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Association shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Association’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months.  The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 17b. applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

d.           References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

  

  

  

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of September 17, 2013.

	
Attest:

	 	 	
FRATERNITY FEDERAL SAVINGS AND LOAN

ASSOCIATION

	 	 	 	 
	 	 	 	 
	
/s/ M. Celeste Tolson

	 	 	
By: /s/ Thomas K. Sterner

	
Corporate Secretary

	 	 	
  

	
  

	 	 	
  

	 	 	 	 
	Attest: 	 	 	
FRATERNITY COMMUNITY BANCORP, INC.

	 	 	 	(Guarantor) 
	 	 	 	 
	 	 	 	 
	

/s/ M. Celeste Tolson

	 	 	
By: /s/ Thomas K. Sterner

	
Corporate Secretary 

	 	 	 
	 	 	 	 
	 	 	 	 
	[SEAL]	 	 	 
	 	 	 	 
	 	 	 	 
	Attest:	 	 	EXECUTIVE
	 	 	 	 
	 	 	 	 
	
/s/ M. Celeste Tolson

Corporate Secretary 

	 	 	
/s/ Michelle L. Miller

Michelle L. Miller 

 

  

  

  

First Amendment

Michelle Miller

Change in Control Agreement

WHEREAS, Fraternity Federal Savings and Loan Association (the “Association”) and Fraternity Community Bancorp, Inc. (the “Company”) have previously entered into a Change in Control Agreement (the “Agreement”) with Chief Financial Officer Michelle Mil

ler;

WHEREAS, the parties have determined that certain modifications to the Agreement are necessary and appropriate;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the Agreement is amended as follows:

First Change

Paragraphs a. and b. of Section 1 are amended to read as follows:

“1.           Term of Agreement.

a.           The term of this Agreement shall be for the period beginning on May 13, 2014 and ending eighteen (18) months thereafter, plus (ii) any and all extensions of the initial term made pursuant to this Section 1.

b.            Commencing as of November 13, 2015, (the “Renewal Date”) and continuing as of each anniversary of such date thereafter, the Board of Directors of the Association (the “Board of Directors”) may extend the term of this Agreement for an additional one (1) year period (from the Renewal Date) beyond the then effective expiration date, provided that Executive shall not have given at least sixty (60) days’ written notice of her desire that the term not be extended.”

Second Change

Paragraphs a(i) and (ii) of Section 3 are amended to read as follows:

“i.           a lump sum cash payment equal to 1.5 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).  Such payment shall be made not later than five (5) days following Executive’s termination of employment under this Section 3.

ii.           Continued benefit coverage under all Association health and welfare plans (as defined in accordance with Section (3)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. Sec. 1002(1), and applicable regulations thereunder) which Executive participated in as of the date of the Change in Control (collectively, the “Employee Benefit Plans”) for a period of eighteen (18) months following Executive’s termination of employment.  Said coverage shall be provided under the same terms and conditions in effect on the date of Executive’s termination of employment.  Solely for purposes of benefits continuation under the Employee Benefit Plans, Executive shall be deemed to be an active employee.”

*     *     *

  

  

  

In all other respects, the parties hereby ratify and affirm the terms of the Agreement.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Agreement effective as of May 13, 2014.

 

	
Attest:

	 	 	
FRATERNITY FEDERAL SAVINGS AND LOAN

ASSOCIATION

	 	 	 	 
	 	 	 	 
	
/s/ M. Celeste Tolson

	 	 	
By: /s/ Thomas K. Sterner

	
Corporate Secretary

	 	 	
  

	
  

	 	 	
  

	 	 	 	 
	Attest: 	 	 	
FRATERNITY COMMUNITY BANCORP, INC.

	 	 	 	(Guarantor) 
	 	 	 	 
	 	 	 	 
	

/s/ M. Celeste Tolson

	 	 	
By: /s/ Thomas K. Sterner

	
Corporate Secretary 

	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	EXECUTIVE
	 	 	 	 
	 	 	 	 
	
 

 

	 	 	
/s/ Michelle L. Miller

Michelle L. Miller

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