Exhibit 10.6

 

MADISON BANK OF MARYLAND

 

TWO-YEAR CHANGE IN CONTROL AGREEMENT

 

THIS AGREEMENT is entered into as of January 15, 2015, by and between the
Madison Bank of Maryland (the “Bank”), Robin L. Taylor (the “Executive”) and MB
Bancorp, Inc. (the “Company”), a Maryland corporation and the holding company of
the Bank, as guarantor (the “Agreement”).

 

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

 

NOW THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows.

 

1.          Term of Agreement.

 

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

 

(b)          Commencing on or before the first anniversary date of this
Agreement, the Board of Directors of the Bank (“Board”) or designated committee
of the Board shall consult with the Chief Executive Officer of the Bank for
purposes of determining whether to extend the term of the Agreement beyond the
expiration date set forth in Section 1(a) of this Agreement or as extended under
this Section 1(b) of this Agreement.

 

(c)          Notwithstanding anything in this Section 1 to the contrary, this
Agreement shall terminate if Executive or the Bank terminates Executive’s
employment prior to a Change in Control (as defined in this Agreement).

 

2.          Change in Control.

 

(a)          Upon the occurrence of a Change in Control of the Bank 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 Just Cause, as defined in Section 2(c) 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 following an event constituting “Good Reason.”

 

“Good Reason” means, unless Executive has consented in writing thereto, the
occurrence following a Change in Control, of any of the following:

 

 

 

 

(i)          a material diminution of the Executive’s base salary (unless the
reduction is part of a Bank-wide or executive-level restructuring of
compensation),

 

(ii)         a material diminution of the Executive’s authority, duties, or
responsibilities, or

 

(iii)        a change in the geographic location at which the Executive must
perform services for the Bank by more than 25 miles from such location at the
Effective Date.

 

(b)          For purposes of this Agreement, a “Change in Control” means a
change in control of the Bank 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.”

 

(c)          Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon termination for Just Cause. The term “Just
Cause” shall mean termination 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. Notwithstanding the foregoing, Executive shall not be deemed
to have been terminated for Just Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
a majority of the entire membership of the Board of Directors at a meeting of
the Board of Directors called and held for that purpose (after reasonable notice
to Executive and an opportunity for him, together with counsel, to be heard
before the Board of Directors), finding that in the good faith opinion of the
Board of Directors, Executive was guilty of conduct justifying termination for
Just Cause and specifying the particulars thereof in detail. Executive shall not
have the right to receive compensation or other benefits for any period after
termination for Just Cause.

 

3.          Termination Benefits.

 

(a)          If within one (1) year of a Change in Control, Executive’s
employment is involuntarily terminated for reasons other than Just Cause or
Executive elects to terminate her employment for “Good Reason” (in accordance
with Section 2(a) of this Agreement) Executive shall receive:

 

(i)a lump sum cash payment equal to eighteen (18) months of the Executive’s then
current base salary or her base salary as of the date of the Change in Control,
whichever is greater. Such payment shall be made not later than five (5) days
following Executive’s termination of employment. In addition to the cash
severance benefit provided for under this Section 3(a)(i) the Bank shall provide
or cause to be provided post-termination insurance coverage described in Section
3(a)(ii) below, subject to the provisions of Section 3(c) of this Agreement.

 

2

 

 

(ii)Continued health and dental insurance coverage for Executive and her
dependents at the Bank’s expense. The health and dental insurance coverage shall
continue until the first to occur: (x) Executive’s attainment of age 65, (y)
Executive’s death or (z) twelve (12) months after Executive’s termination of
employment. To the extent that benefits required under this Section 3(a)(ii)
cannot be provided under the terms of any employee benefit plan maintained by
the Bank or a successor to the Bank, the Bank (or its successor) shall pay to
the Executive in a single lump sum an amount in cash equal to the present value
of the Bank’s projected cost to maintain that particular insurance benefit (and
associated income tax gross-up benefit, if applicable) had the Executive’s
employment not terminated, assuming continued coverage for twelve (12) months.

 

(b)          Notwithstanding any other provisions of this Agreement, in the
event that the aggregate payments or benefits to be made or afforded to the
Executive under this Agreement or otherwise, which are deemed to be parachute
payments as defined in Section 280G of the Code or any successor thereof (the
“Termination Benefits”), would be deemed to include an “excess parachute
payment” under Section 280G of the Code, then the Termination Benefits shall be
reduced to a value which is one dollar ($1.00) less than an amount equal to
three (3) times the Executive’s “base amount,” as determined in accordance with
Section 280G of the Code. The allocation of the reduction required hereby among
the Termination Benefits shall first be made from any cash severance benefit due
under Section 3(a)(i) of this Agreement. Nothing contained in this Agreement
shall result in a reduction of any payments or benefits to which the Executive
may be entitled upon termination of employment other than pursuant to Sections 3
hereof or a reduction in the payments and benefits specified, below zero.

 

(c)          The parties to this Agreement intend for the payments to satisfy
the short-term deferral exception under Section 409A of the Code or, in the case
of health and dental benefits, not constitute deferred compensation (since such
amounts are not taxable to Executive). However, notwithstanding anything to the
contrary in this Agreement, to the extent payments do not meet the short-term
deferral exception of Section 409A of the Code and, in the event Executive is a
“Specified Employee” (as defined herein) no payment shall be made to Executive
under this Agreement prior to the first day of the seventh month following the
Executive’s termination of employment in excess of the “permitted amount” under
Section 409A of the Code. For these purposes the “permitted amount” shall be an
amount that does not exceed two times the lesser of: (A) the sum of Executive’s
annualized compensation based upon the annual rate of pay for services provided
to the Bank for the calendar year preceding the year in which Executive
terminates employment, or (B) the maximum amount that may be taken into account
under a tax-qualified plan pursuant to Section 401(a)(17) of the Code for the
calendar year in which Executive’s termination of employment occurs. The payment
of the “permitted amount” shall be made within five (5) days of the Executive’s
termination of employment. Any payment in excess of the permitted amount shall
be made to Executive on the first day of the seventh month following Executive’s
termination of employment. “Specified Employee” shall be interpreted to comply
with Section 409A of the Code and shall mean a key employee within the meaning
of Section 416(i) of the Code (without regard to paragraph 5 thereof), but an
individual

 

3

 

 

shall be a “Specified Employee” only if the Bank is a publicly-traded
institution or the subsidiary of a publicly-traded holding company.

 

4.          Notice of Termination.

 

(a)          Any purported termination by the Bank 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 Just 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 Bank. 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 Bank are not timely
paid or provided by the Bank, 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 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.
Nothing in this Agreement shall confer upon Executive the right to continue in
the employ of the Bank or shall impose on the Bank 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 Bank and their respective successors and assigns.

 

4

 

 

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 Bank, 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 his 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.

 

5

 

 

13.         Payment of Legal Fees.

 

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, only if Executive is successful pursuant to a legal
judgment, arbitration or settlement.

 

14.         Indemnification.

 

The Company or the Bank 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 his
heirs, executors and administrators) to the fullest extent permitted under
applicable law against all expenses and liabilities reasonably incurred by her
in connection with or arising out of any action, suit or proceeding in which she
may be involved by reason of her having been a director or officer of the
Company or the Bank (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 cost of reasonable settlements.

 

15.         Successors to the Bank.

 

The Bank 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 Bank or the Company, 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.

 

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 Board may terminate the Executive’s employment at any time, but
any termination by the Bank, other than termination for Just Cause, shall not
prejudice the Executive’s right to compensation or other benefits under this
Agreement. The Executive shall not have the right to receive compensation or
other benefits for any period after termination for Just Cause as defined in
this Agreement.

 

(b)          If the 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) or 8(g)(1) of the Federal Deposit Insurance Act, 12
U.S.C. Section 1818(e)(3) or (g)(1), 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 the Executive all or part of the compensation withheld while
its contract obligations were suspended; and (ii) reinstate (in whole or in
part) any of the obligations which were suspended.

 

6

 

 

(c)          If the 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) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1818(e)(4) or (g)(1), 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.

 

(d)          If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1), 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.

 

(e)          All obligations under this Agreement shall terminate, except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Bank: (i) by the Comptroller of the Currency, or his
or her designee (the “Comptroller”), at the time the Federal Deposit Insurance
Corporation (FDIC) enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1823(c), or (ii) by the Comptroller at
the time the Comptroller approves a supervisory merger to resolve problems
related to the operations of the Bank or when the Bank is determined by the
Comptroller 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 the Executive pursuant to this Agreement, or
otherwise, are subject to, and conditioned upon, their compliance with 12 U.S.C.
Section 1828(k) and FDIC Regulation 12 C.F.R. Part 359, Golden Parachute and
Indemnification Payments.

 

7

 

 

SIGNATURES

 

IN WITNESS WHEREOF, Madison Bank of Maryland and MB Bancorp, Inc. each caused
this Agreement to be executed by their duly authorized officers, and Executive
has signed this Agreement on January 15, 2015.

 

  MADISON BANK OF MARYLAND         By: /s/ Lawrence W. Williams     On behalf of
the Board of Directors         MB BANCORP, INC.   (Guarantor)         By: /s/
Lawrence W. Williams     On behalf of the Board of Directors         EXECUTIVE  
      /s/ Robin L. Taylor   Robin L. Taylor

 

8