CHANGE OF CONTROL AGREEMENT

 

THIS CHANGE OF CONTROL AGREEMENT (this "Agreement"), is made on this 23rd day of
May, 2016, by and between Malvern Federal Savings Bank (the "Company") and
William Boylan (the "Employee").

 

WHEREAS, the Employee serves as an employee of the Company; and

 

WHEREAS, the Company and the Employee desire to enter into this Agreement to
establish certain protections for the Employee in the event of Employee's
termination of employment under the circumstances described herein; and

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
promises contained herein, and intending to be bound hereby, the parties agree
as follows:

 

SECTION 1 Definitions. As used herein:

 

1.1.            "Affiliate" means, with respect to any specified Person, any
other Person that directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such specified
Person, provided that, in any event, any business in which the Company has any
direct ownership interest shall be treated as an Affiliate of the Company.

 

1.2.            "Base Salary" means, as of any given date, the annual base rate
of salary payable to the Employee by the Company, as then in effect; provided,
however, that in the case of a resignation by the Employee for the Good Reason
described in Section 1.9.3, "Base Salary" will mean the annual base rate of
salary payable to the Employee by the Company, as in effect immediately prior to
the reduction giving rise to the Good Reason.

 

1.3.           "Board" means the Board of Directors of the Company.

 

1.4.            "Cause" means (i) indictment, commission of, or the entry of a
plea of guilty or no contest to, (A) a felony or (B) any crime (other than a
felony) that causes the Company or its Affiliates public disgrace or disrepute,
or adversely affects the Company's or its Affiliates' operations or financial
performance or the relationship the Company has with its Affiliates, (ii) gross
negligence or willful misconduct with respect to the Company or any of its
Affiliates, includi ng, without limitation fraud, embezzlement, theft or proven
dishonesty in the course of his employment; (iii) alcohol abuse or use of
controlled substances (other than prescription drugs taken in accordance with a
physician's prescription); (iv) refusal or failure to perform any material
obligation or fulfill any duty (other than any duty or obligation of the type
described in clause (vi) below) to the Company or any of its Affiliates, which
failure or refusal is not cured within 10 days after delivery of written notice
thereof; (v) material breach of any agreement with or duty owed to the Company
or any of its Affiliates; or (vi) any breach of any obligation or duty to the
Company or any of its Affiliates (whether arising by statute, common law,
contract or otherwise) relating to confidentiality, noncompetition,
nonsolicitation or proprietary rights.

 

 

 

 

 

1.5.            "Change of Control" means, with respect to the Company: (i) any
entity, person or group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than (1) the
Company, (2) any of its Affiliates, (3) any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its Affiliates or (4)
any shareholder of the Company as of the effective date of this agreement, shall
have acquired beneficial ownership of, or shall have acquired voting control
over, 50% or more of the outstanding capital stock entitled to vote in the
election of directors of the Company (on a fully diluted basis), unless the
transaction pursuant to which such person, entity or group acquired such
beneficial ownership or control resulted from the original issuance by the
Company of shares of its voting capital stock; (ii) a consolidation, share
exchange, reorganization or merger of the Company resulting in the stockholders
of the Company immediately prior to such event not owning at least a majority of
the voting power of the resulting entity's securities outstanding immediately
following such event or, if the resulting entity is a direct or indirect
subsidiary of the entity whose securities are issued in such transaction(s), the
voting power of such issuing entity's securities outstanding immediately
following such event; or (iii) the sale or other disposition of all or
substantially all the assets of the Company (other than a transfer of financial
assets made in the ordinary course of business for the purpose of secutitization
or any similar purpose). For the avoidance of doubt, a transaction 01 a series
ofrelated transactions will not constitute a Change of Control if such
transaction(s) result(s) in the Company, any successor to the Company, or any
successor to the Company's business, being controlled, directly or indirectly,
by the same Person or Persons who controlled the Company, directly or
indirectly, immediately before such transaction(s).

 

1.6.            "Code" means Internal Revenue Code of 1986, as amended.

 

1.7.           "Control" (including, with correlative meanings, the terms
"Controlled by" and "under common Control with"), as used with respect to any
Person, means the direct or indirect possession of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 

1.8.           "Disability" means a condition entitling the Employee to benefits
under the Company's long term disability plan, policy or arrangement; provided,
however, that if no such plan, policy or arrangement is then maintained by the
Company and applicable to the Employee, "Disability" will mean the Employee's
inability, by reason of any physical or mental impairment, to substantially
perform Employee's regular duties to the Company, as determined by the Board in
its sole discretion (after affording the Employee the opportunity to present
Employee's case), which inability is reasonably contemplated to continue for at
least one year from its commencement and at least 90 days from the date of such
determination.

 

1.9.            "Good Reason" means, without the Employee's prior written
consent, any of the following:

 

1.9.1.     a material diminution in the Employee's authorities, duties, titles
or responsibilities;

 

1.9.2.     a relocation of the Employee's principal worksite of more than 50
miles unless such relocation reduces the Employee's commute to such worksite;

 

 

 

 

1.9.3.a reduction of the Employee's Base Salary of ten percent (10%) or more; or

 

1.9.4.any material breach by the Company of this Agreement.

 

However, the foregoing events or conditions will constitute Good Reason only if
(A) such event or condition occurs during the period beginning ninety (90) days
immediately preceding a Change of Control and ending twelve (12) months
thereafter and (B) the Employee provides the Company with written objection to
the event or condition within 60 days following the occurrence thereof, the
Company does not reverse or otherwise cure the event or condition within 30 days
ofreceiving that written objection and the Employee resigns Employee's
employment within 30 days following the expiration of that cure period.

 

1.10.       "Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, association, governmental
entity, unincorporated entity or other entity.

 

1.11.       "Release" means a release substantially identical to the one
attached hereto as Exhibit A.

 

SECTION 2 Certain Terminations Following a Change of Control.

 

2.1.             Severance Events Following a Change of Control. If the
Employee's employment with the Company ceases within the twelve (12) month
period following the date of a Change of Control as a result of a termination by
the Company without Cause or a resignation by the Employee for Good Reason, then
the Employee will be entitled to the following:

 

2.1.1.      (i) any Base Salary earned through the effective date of termination
that remains unpaid, with any such amounts paid on the first regularly scheduled
payroll date following the effective date of termination; (ii) any bonus payable
with respect to any fiscal year which ended prior to the effective date of the
Employee's termination of employment, which remains unpaid, with such amount
paid in the first regularly scheduled payroll date following the effective date
of termination or, if later, at the same time the bonus would have otherwise
been payable to the Employee; and (iii) any expense reimbursement due to the
Employee on or prior to the date of such termi nation which remains unpaid to
the Employee, with any such reimbursement being made promptly following the
effective date of termination (collectively, the "Accrued Obligations");

 

2.1.2.      a lump sum cash payment equal to 100% of the Employee's Base Salary
as in effect on such date (without taking into effect any reduction described in
Section

1.9.3 above); and

 

2.1.3.      if the Employee validly elects to receive continuation coverage
under the Company's group health plan pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), reimbursement of the applicable
premium otherwise payable for COBRA continuation coverage for the twelve (12)
month period immediately following the effective date of termination to the
extent such premium exceeds the monthly amount charged to active
similarly-situated employees of the Company for the same coverage.

 

 

2.2.            Severance Events Preceding a Change of Control. Ifthe Employee's
employment with the Company ceases during the ninety (90) days immediately
preceding the date of a Change of Control as a result of a termination by the
Company without Cause or a resignation by the Employee for Good Reason, then the
Employee will be entitled to the following:

 

2.2.1.      the Accrued Obligations;

 

2.2.2.      a lump sum cash payment to the Employee equal to 100% of the
Employee's Base Salary as in effect on such date (without taking into effect any
reduction described in Section 1.9.3 above)[; and

 

2.2.3.      if the Employee validly elects to receive continuation coverage
under the Company's group health plan pursuant to COBRA, reimbursement of the
applicable premium otherwise payable for COBRA continuation coverage for the
twelve (12) month period immediately following the effective date of termination
to the extent such premium exceeds the monthly amount charged to active
similarly-situated employees of the Company for the same coverage.

 

Except as otherwise provided in this Section 2, all compensation and benefits
will cease at the time of the Employee's cessation of employment and the Company
will have no further liability or obligation by reason of such cessation of
employment. The payments and benefits described in this Section 2 are in lieu of
(and not in addition to) any other severance plan, fund, agreement or other
arrangement maintained by the Company. Notwithstanding any provision of this
Agreement, the payments and benefits described in Section 2.1.2 and 2.1.3 or
2.2.2 and 2.2.3 (as applicable) are conditioned on the Employee's execution and
delivery to the Company and the expiration of all applicable statutory
revocation periods, by the 60th day following the effective date of his
cessation of employment, of the Release. Subject to Section 2.4, below, the
benefits described in Section 2.1.2 and 2.1.3 or 2.2 .2 and 2.2.3 (as
applicable) will begin to be paid or provided as soon as administratively
practicable after the Release becomes irrevocable, provided that if the 60 day
period described above begins in one taxable year and ends in a second taxable
year such payments or benefits shall not commence until the second taxable year.

 

2.3.            Other Terminations. Ifthe Employee's employment with the Company
ceases for any reason other than as described in Section 2.1 or 2.2 above
(including but not limited to (a) termination by the Company for Cause, (b)
resignation by the Employee without Good Reason, (c) termination as a result of
the Employee's Disability, or (d) the Employee's death), then the Company's
obligation to the Employee will be limited solely to the payment of accrued and
unpaid Base Salary through the date of such cessation of employment. All
compensation and benefits will cease at the time of such cessation of employment
and, except as otherwise provided by COBRA, the Company will have no further
liability or obligation by reason of such termination.

 

2.4.            Compliance with Section 409A. Notwithstanding anything to the
contrary in this Agreement, no portion of the benefits or payments to b_ made
under Section 2.1.2 and 2.1.3 or 2.2.2 and 2.2.3 (as applicable) hereof will be
payable until the Employee has a "separation from service" from the Company
within the meaning of Section 409A of the Code.

 

 

In addition, to the extent compliance with the requirements of Treas. Reg. §
l.409A-3(i)(2) (or any successor provision) is necessary to avoid the
application of an additional tax under Section 409A of the Code to payments due
to the Employee upon or following his "separation from service", then
notwithstanding any other provision of this Agreement (or any otherwise
applicable plan, policy, agreement or arrangement), any such payments that are
otherwise due within six months following the Employee's "separation from
service" (taking into account the preceding sentence of this paragraph) will be
deferred without interest and paid to the Employee in a lump sum immediately
following that six month period. This paragraph should not be construed to
prevent the application of Treas. Reg. § 1.409A-l(b)(9)(iii) (or any successor
provision) to amounts payable hereunder. For purposes of the application of
Section 409A of the Code, each payment in a series of payments will be deemed a
separate payment.

 

SECTION 3 Parachute Payments.

 

3.1.           The payments and benefits provided under Section 2 shall be made
without regard to whether such payments and benefits, either alone or in
conjunction with any other payments or benefits made available to the Employee
by the Company and its Affiliates, will result in the Employee being subject to
an excise tax under Section 4999 of the Code (the " x:cise Tax") or whether the
deductibility of such payments and benefits would be limited or precluded by
Section 280G of the Code; provided, however, that if the Total After-Tax
Payments (as defined below) would be increased by limitation or elimination of
payments or benefits provided under Section 2, then the amounts and benefits
payable under Section 2 will be reduced to the minimum extent necessary to
maximize the Total After-Tax Payments. For purposes of this Section 3, "Total
After-Tax Payments" means the total of all "parachute payments" (as that term is
defined in Section 280G(b)(2) of the Code) made to or for the benefit of the
Employee (whether made under this Agreement or otherwise), after reduction for
all applicable taxes (including, without limitation, the Excise Tax). If a
reduction to the payments or benefits provided under Section 2 is required
pursuant to this Section 3, such reduction shall occur to the payments and
benefits in the order that results in the greatest economic present value of all
payments and benefits actually made to the Employee.

 

3.2.           All determinations to be made under this Section 3 shall be made
by the Company in good faith.

 

3.3.            As a result of the uncertainty in the application of Section
280G and Section 4999 of the Code at the time of the Change of Control, it is
possible that payments and benefits which will not have been made or provided by
the Company should have been made ("Underpayment") or payments and benefits are
made or provided by the Company which should not have been made ("Overpayment"),
consistent with the calculations required to be made hereunder. In the event
that there is a final determination by the Internal Revenue Service, or a final
determination by a court of competent jurisdiction, that an Overpayment has been
made, any such Overpayment shall repaid to the Company by the Employee within 30
days of such determination, with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code. 1n'the event that there is a
final determination by the Internal Revenue Service, or a final determmation by
a court of competent jurisdiction, any such Underpayment shali be promptly paid
by the Company to or for the benefit of the Employee together with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of the Code,
within 30 days of such determination.

 

 

 

 

3.4.            Employee shall take such action (other than waiving Employee's
right to any payments or benefits) as the Company reasonably requests under the
circumstances to mitigate or challenge any tax contemplated by this Section 3.

 

SECTION 4 Miscellaneous.

 

4.1.            Section 409A.

 

4.1.1.       This Agreement shall be interpreted to avoid any penalty sanctions
under Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code"). If any payment or benefit cannot be provided or made at the time
specified herein without incurring sanctions under Section 409A, then such
benefit or payment shall be provided in full at the earliest time thereafter
when such sanctions will not be imposed. In no event may the Employee, directly
or indirectly, designate the calendar year of payment.

 

4.1.2.      Notwithstanding anything herein to the contrary or otherwise, except
to the extent any expense, reimbursement or in-kind benefit provided to the
Employee does not constitute a "deferral of compensation" within the meaning of
Section 409A of the Code, and its implementing regulations and guidance, (i) the
amount of expenses eligible for reimbursement or in-kind benefits provided to
the Employee during any calendar year will not affect the amount of expenses
eligible for reimbursement or in-kind benefits provided to the Employee in any
other calendar year, (ii) the reimbursements for expenses for which the Employee
is entitled to be reimbursed shall be made on or before the last day of the
calendar year following the calendar year in which the applicable expense is
incurred and (iii) the right to payment or reimbursement or in-kind benefits
hereunder may not be liquidated or exchanged for any other benefit.

 

4.2.            Term of Agreement. This Agreement shall continue in full force
and effect for the duration of the Employee's employment with the Company;
provided, however, that after the termination of the Employee's employment, this
Agreement shall remain in effect until all of the obligations of the parties
hereunder are satisfied or have expired.

 

4.3.                 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Company and Employee and their respective
successors, executors, administrators, heirs and/or permitted assigns; provided,
however, that neither Employee nor the Company may make any assignments of this
Agreement or any interest herein, by operation of law or otherwise, without the
prior written consent of the other party, except that, without such consent, the
Company may assign this Agreement to any successor to all or substantially all
of its assets and business by means ofliquidation, dissolution, merger,
consolidation, transfer of assets, or otherwise.

 

4.4.            Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Penn ylvania without regard
to the application of the principles of conflicts of laws.

 

 

 

4.5.             Waivers; separability. The waiver by either party hereto of any
right hereunder or any failure to perform or breach by the other party hereto
shall not be deemed a waiver of any other right hereunder or any other failure
or breach by the other party hereto, whether of the same or a similar nature or
otherwise. No waiver shall be deemed to have occurred unless set forth in a
writing executed by or on behalf of the waiving party. 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.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or the
effectiveness or validity of any provision in any other jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.

 

4.6.            Notices. All notices and communications that are required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or upon mailing by registered or
certified mail, postage prepaid, return receipt requested, as follows:

 

If to the Company, to:

 

Malvern Federal Savings Bank 42 E. Lancaster Ave, Paoli, PA 19301

Attn: Corporate Secretary

 

If to Employee, to the address on file with the Company,

 

or to such other address as may be specified in a notice given by one party to
the other party hereunder.

 

4.7.            Entire Agreement; Amendments. This Agreement contains the entire
agreement and understanding of the parties relating to the provision of
severance benefits upon termination in connection with a Change of Control, and
merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to that subject.

 

4.8.            Withholding. The Company will withhold from any payments due to
Employee hereunder, all taxes, FICA or other amounts required to be withheld
pursuant to any applicable law.

 

4.9.            Headings Descriptive. The headings of sections and paragraphs of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement. ;

 

4.10.        Counterparts and Facsimiles. This Agreement may be executed,
including execution by electronic or facsimile signature, in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

 

[signature page follows ]

 

 

[image_001.jpg][image_002.jpg]IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the date and year first above written.

 

 

 

 MALVERN FEDERAL SAVINGS BANK

/s/ Anthony C. Weagley

_______________________________

By: Anthony C. Weagley

Title: President & CEO

 

 

WILLIAM BOYLAN

 

/s/ William Boylan

 _____________________________