TWO-YEAR CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the "Agreement") is made effective as of
the 18th day of March, 2010 (the "Effective Date"), by and between OBA Bank (the
"Bank"), a federally chartered stock savings bank that is headquartered in
Germantown, Maryland, and Xxxxx X. Xxxxxx ("Executive").
WITNESSETH
WHEREAS, the Bank is a wholly owned subsidiary of OBA Financial Services,
Inc., a corporation organized under the laws of the State of Maryland (the
"Company");
WHEREAS, Executive is currently employed as Senior Vice President and Chief
Financial Officer of the Bank;
WHEREAS, the Company and the Bank desire to be ensured of Executive's
continued active participation in the business of the Bank;
WHEREAS, in order to induce Executive to remain in the employ of the Bank
and in consideration of Executive's agreeing to remain in the employ of the
Bank, the parties desire to specify the severance benefits which shall be due
Executive in the event that his employment with the Bank is terminated under
specified circumstances.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. TERM OF AGREEMENT
(a) The term of this Agreement shall begin as of the Effective Date and
shall continue for twenty-four (24) full calendar months hereafter.
(b) Commencing on January 6, 2011 (the "Anniversary Date") and continuing
on each Anniversary Date thereafter, the term of this Agreement shall be
extended for an additional year such that the remaining term shall be
twenty-four (24) months ("Renewal Term"), until such time as the board of
directors of the Bank (the "Board") or Executive elects not to extend the term
of the Agreement by giving written notice to the other party at least ninety
(90) days prior to the last day of the Renewal Term, in which case the term of
this Agreement shall be fixed and shall terminate at the end of the twenty-four
(24) months following such Anniversary Date. Prior to each Anniversary Date, the
disinterested members of the Board will conduct a comprehensive performance
evaluation and review of Executive for purposes of determining whether to extend
this Agreement, and the results thereof will be included in the minutes of the
Board's meeting.
2. DEFINITIONS
(a) Change in Control. For purposes of this Agreement, a "Change in
Control" means any of the following events:
(1) Merger: The Company or the Bank merges into or consolidates with
another entity, or merges another bank or corporation into the
Bank or 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 or the Bank immediately before the
merger or consolidation;
(2) 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, as amended, 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 or the Bank's voting securities;
provided, however, this clause (b) shall not apply to beneficial
ownership of the Company's or the Bank's 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;
(3) Change in Board Composition: During any period of two consecutive
years, individuals who constitute the Company's or the Bank'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
or the Bank's Board of Directors; provided, however, that for
purposes of this clause (c), each director who is first elected
by the board (or first nominated by the board for election by the
stockholders or corporators) 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
(4) Sale of Assets: The Company or the Bank sells to a third party
all or substantially all of its assets.
(b) Good Reason shall mean a termination by Executive following a Change in
Control if, without Executive's express written consent, any of the following
occurs:
(1) failure to elect or reelect or to appoint or reappoint Executive
as Senior Vice President and Chief Financial Officer;
(2) a material change in Executive's position to become one of lesser
responsibility, importance or scope then the position Executive
held immediately prior to the Change in Control;
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(3) a liquidation or dissolution of the Bank other than liquidations
or dissolutions that are caused by reorganizations that do not
affect the status of Executive;
(4) a material reduction in Executive's base salary and benefits; or
(5) a relocation of Executive's principal place of employment by more
than 30 miles from its location as of the date of this Agreement;
provided, however, that prior to any termination of employment for
Good Reason, Executive must first provide written notice to the Bank
(or its successor) within ninety (90) days following the initial
existence of the condition, describing the existence of such
condition, and the Bank shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Bank received the
written notice from Executive. If the Bank remedies the condition
within such thirty (30) day cure period, then no Good Reason shall be
deemed to exist with respect to such condition. If the Bank does not
remedy the condition within such thirty (30) day cure period, then
Executive may deliver a Notice of Termination for Good Reason at any
time within sixty (60) days following the expiration of such cure
period.
(c) Termination for Cause shall mean termination because of, in the good
faith determination of the Board, Executive's:
(1) personal dishonesty;
(2) incompetence;
(3) willful misconduct;
(4) breach of fiduciary duty involving personal profit;
(5) material breach of the Bank's Code of Ethics;
(6) material violation of the Xxxxxxxx-Xxxxx requirements for
officers of public companies that in the reasonable opinion of
the Board will likely cause substantial financial harm or
substantial injury to the reputation of the Bank;
(7) intentional failure to perform stated duties under this Agreement
after written notice thereof from the Board;
(8) willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) that reflect adversely on
the reputation of the Bank, any felony conviction, any violation
of law involving moral turpitude, or any violation of a final
cease-and-desist order; or
(9) material breach by Executive of any provision of this Agreement.
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A determination of whether Executive's employment shall be terminated for
Cause shall be made at a meeting of the Board called and held for such purpose,
at which the Board makes a finding that in good faith opinion of the Board an
event set forth in clauses (1), (2), (3), (4), (5), (6), (7), (8), or (9) above
has occurred and specifying the particulars thereof in detail.
(d) For purposes of this Agreement, any termination of Executive's
employment shall be construed to require a "Separation from Service" in
accordance with Code Section 409A and the regulations promulgated thereunder,
such that the Bank and Executive reasonably anticipate that the level of bona
fide services Executive would perform after termination of employment would
permanently decrease to a level that is less than 20% of the average level of
bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding thirty-six (36)-month period.
3. BENEFITS UPON TERMINATION
(a) If Executive's employment by the Bank shall be terminated subsequent to
a Change in Control and during the term of this Agreement by (i) the Bank for
other than Cause, or (ii) Executive for Good Reason, then the Bank shall:
(1) pay Executive, or in the event of Executive's subsequent death,
Executive's beneficiary or beneficiaries or estate, as
applicable, a cash severance amount equal to:
(i) two (2) times Executive's base salary in effect as of
the Date of Termination,
(ii) the highest rate of bonus earned by Executive from the
Bank in any one of the three calendar years immediately preceding
the year in which the termination occurs, and
(iii) payable by lump sum within ten (10) business days of
the Date of Termination.
(2) cause to be continued at no cost to Executive, non-taxable
medical and dental coverage substantially identical to the
coverage maintained by the Bank for Executive prior to
Executive's termination for twenty-four (24) months.
(b) In no event shall the payments or benefits to be made or provided to
Executive under Section 3 hereof (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order to avoid such a result, Termination Benefits will be
reduced, if necessary, to an 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 Section 280G of the Code. The reduction of the
Termination Benefits provided by this Section 3 shall be applied to the cash
severance benefits otherwise payable under Section 3(a) hereof.
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4. NOTICE OF TERMINATION
Any purported termination by the Bank or by Executive in connection with or
following a Change in Control 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 Date of
Termination and, in the event of termination by Executive, the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated. "Date of
Termination" shall mean the date specified in the Notice of Termination (which,
in the case of a termination for Cause, shall be immediate). In no event shall
the Date of Termination exceed thirty (30) days from the date the 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 Bank.
6. REQUIRED REGULATORY PROVISIONS
(a) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) (12 USC ss.1818(e)(3)) or 8(g)(1) (12 USC ss.1818(g)(1)) of the
Federal Deposit Insurance Act ("FDIA"), the Bank's obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
(b) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) (12 U.S.C. ss.1818(e)(4)) or 8(g)(1) (12 U.S.C. ss.1818(g)(1))
of FDIA, all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the contracting parties
shall not be affected.
(c) If the Bank is in default as defined in Section 3(x)(1) (12 U.S.C.
ss.1813(x)(1)) of FDIA, all obligations under this Agreement shall terminate as
of the date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
(d) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank, (i) by the Director of OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) (12
U.S.C. ss.1823(c)) of FDIA; or (ii) by the Director of OTS or his or her
designee at the time the Director of OTS or his or her designee approves a
supervisory merger to resolve problems related to operations of the Bank or when
the Bank is determined by the Director of OTS or his or her designee to be in an
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unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.
(e) Notwithstanding anything herein to the contrary, any payments to
Executive by the Company, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of FDIA, 12
U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R.
Part 359.
7. NO ATTACHMENT
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 effect any such action shall be null,
void, and of no effect.
8. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
(a) This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank 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 her without reference to this
Agreement.
(b) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(c) 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.
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11. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Maryland but
only to the extent not superseded by federal law.
12. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by binding arbitration, as an alternative
to civil litigation and without any trial by jury to resolve such claims,
conducted by a single arbitrator, mutually acceptable to the Bank and Executive,
sitting in a location selected by the Bank within fifty (50) miles from the main
office of the Bank, in accordance with the rules of the American Arbitration
Association's National Rules for the Resolution of Employment Disputes then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
13. PAYMENT OF LEGAL FEES
To the extent that such payment(s) may be made without triggering penalty
under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the Bank, provided that the dispute or
interpretation has been resolved in Executive's favor, and such reimbursement
shall occur no later than sixty (60) days after the end of the year in which the
dispute is settled or resolved in Executive's favor.
14. OBLIGATIONS OF BANK
The termination of Executive's employment, other than following a Change in
Control, shall not result in any obligation of the Bank under this Agreement.
15. SUCCESSORS AND ASSIGNS
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
[Signature Page Follows]
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SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, as of the
Effective Date.
OBA BANK
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President & CEO
EXECUTIVE
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Senior Vice President & CFO
