Exhibit 10.1

 

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (“Agreement”) is made as of the 19th day of
December, 2018 by and between PB Bancorp, Inc., a Maryland corporation (the
“Company”), its wholly-owned subsidiary, Putnam Bank (the “Bank” and, together
with the Company, the “Employers”) and Thomas Borner (the “Executive”).

 

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

 

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

 

(a)          Merger: The Company or the Bank merges into or consolidates with
another entity, or merges another bank or corporation into the Company or the
Bank, 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;

 

(b)          Acquisition of Significant Share Ownership: A 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 securities having the right to vote in an
election of the board of the directors (“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;

 

(c)          Change in Board Composition: During any period of two consecutive
years, individuals who constitute the Board 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 Board 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) 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 who is appointed as a director as a result of a
directive, supervisory agreement or order issued by the primary federal
regulator of the Company or the Bank or by the Federal Deposit Insurance
Corporation shall be deemed to have also been a director at the beginning of
such period; or

 

 

 

 

(d)           Sale of Assets: The Company or the Bank sells to a third party all
or substantially all of its assets.

 

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

 

(a)          Termination by the Employers. Termination by either of the
Employers of the employment of the Executive with the Employers for any reason
other than for Cause, death or Disability. For purposes of this Agreement,
“Cause” shall mean the Executive’s personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, material breach
of the Company’s Code of Business Conduct and Ethics, material violation of the
Sarbanes-Oxley 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, willfully engaging in actions
that in the reasonable opinion of the Board will likely cause substantial
financial harm or substantial injury to the business reputation of the Bank,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than routine traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.

 

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

 

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

 

(i)          a material diminution in the Executive’s base compensation;

 

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

 

(iii)        a change in the geographic location at which the Executive must
perform his/her duties that is more than thirty-five (35) miles from the
location of the Executive’s principal workplace on the date of this Agreement.

 

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

 

4.           Change in Control Payment. In the event a Terminating Event occurs
within 12 months after a Change in Control, subject to the Executive signing a
separation agreement containing, among other provisions, a general release of
claims in favor of the Employers and related persons and entities,
confidentiality, return of property and non-disparagement, in a form and manner
satisfactory to the Employers (the “Separation Agreement and Release”) and the
Separation Agreement and Release becoming irrevocable, all within 60 days after
the Date of Termination, then the Employers shall pay the Executive a lump sum
amount in cash equal to THREE times the Executive’s annual base salary in effect
immediately prior to the Terminating Event (or the Executive’s annual base
salary in effect immediately prior to the Change in Control, if higher). The
amount payable under this Section 4 shall be paid within 60 days after the Date
of Termination; provided, however, that if the 60-day period begins in one
calendar year and ends in a second calendar year, such payment shall be paid or
commence to be paid in the second calendar year by the last day of such 60-day
period.

 

5.           Additional Limitation.

 

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

 

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(b)          For purposes of this Section 5, the “After Tax Amount” means the
amount of the Aggregate Payments less all federal, state, and local income,
excise and employment taxes imposed on the Executive as a result of the
Executive’s receipt of the Aggregate Payments. For purposes of determining the
After Tax Amount, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation applicable to individuals
for the calendar year in which the determination is to be made, and state and
local income taxes at the highest marginal rates of individual taxation in each
applicable state and locality, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.

 

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

 

6.           Section 409A.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.           Notice and Date of Termination.

 

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

 

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

 

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10.         No Mitigation. The Employers agree that, if the Executive’s
employment by the Employers is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Employers pursuant to
Section 4 hereof. Further, the amount of any payment provided for in this
Agreement shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Employers or
otherwise.

 

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

 

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

 

13.         Protected Disclosures.  The Executive understands that nothing
contained in this Agreement or any other agreement limits the Executive’s
ability to communicate with any federal, state or local governmental agency or
commission, including to provide documents or other information, without notice
to the Employers.  The Executive also understands that nothing in this Agreement
or any other agreement limits the Executive’s ability to share compensation
information concerning the Executive or others, except that this does not permit
the Executive to disclose compensation information concerning others that the
Executive obtains because the Executive’s job responsibilities require or allow
access to such information.

 

14.         Defend Trade Secrets Act of 2016.  The Executive understands that
pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall
not be held criminally or civilly liable under any federal or state trade secret
law for the disclosure of a trade secret that (a) is made (i) in confidence to a
federal, state, or local government official, either directly or indirectly, or
to an attorney; and (ii) solely for the purpose of reporting or investigating a
suspected violation of law; or (b) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under seal

 

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

 

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

 

17.         Enforceability. If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any Section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.

 

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

 

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

 

20.         Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employers.

 

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

 

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

 

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

 

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

 

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

 

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

 

  PB BANCORP, INC.         By: /s/ Charles H. Puffer     Name: Charles H. Puffer
    Title: Chairman of the Board of Directors

 

  PUTNAM BANK         By: /s/ Charles H. Puffer     Name: Charles H. Puffer    
Title: Chairman of the Board of Directors

 

  EXECUTIVE       /s/ Thomas Borner   Thomas Borner, President and Chief
Executive Officer

 

[Signature Page to Change in Control Agreement]