THREE-YEAR CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (the “Agreement”) is made effective as of the
18th  day of February, 2014 (the “Effective Date”), by and between Cheviot
Savings Bank (the “Bank”), an Ohio-chartered stock savings and loan association
with its headquarters located in Cheviot, Ohio and Jeffrey J. Lenzer
(“Executive”).
 

WITNESSETH

WHEREAS, the Bank desires to be ensured of the Executive’s continued active
participation in the business of the Bank; and

WHEREAS, in order to induce the Executive to remain in the employ of the Bank
and in consideration of the Executive’s agreeing to remain in the employ of the
Bank, the parties desire to specify the severance benefits which shall be due
the 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)           Three-Year Term, Annual Renewal.  This Agreement shall continue
for a term commencing on the Effective Date and ending on the third anniversary
of the Effective Date (the “Term”). On each annual anniversary of the Effective
Date (each an “Anniversary Date”) this Agreement shall automatically renew for
an additional year in addition to the then-remaining term (so that the term is
three years, and each succeeding one year period shall also be referred to
herein as the “Term”), unless at least thirty (30) days prior to or thirty (30)
days after such Anniversary Date, either party gives written notice of
non-renewal to the other.  Prior to each Anniversary Date, the disinterested
members of the Board of Directors of the Bank 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.  If such notice of non-renewal is given as
permitted hereunder, the Term of this Agreement shall be fixed and shall
terminate at the end of the twenty-four month period following such Anniversary
Date.
 
 (b)           Potential Change in Control.  Notwithstanding any provision of
this Agreement to the contrary, in the event that at any time during the Term of
this Agreement, Cheviot Financial Corp., a Maryland corporation (the “Company”)
or the Bank has entered into an agreement to effect a transaction which would be
a Change in Control (as defined in Section 2(a) hereof), then the Term of this
Agreement shall be automatically extended from the date of such agreement
through the date that is thirty-six (36) months following the date on which the
Change in Control occurs, provided, however, that if the Change in Control does
not occur as contemplated, then the Agreement shall automatically renew on the
next Anniversary Date, unless a notice of non-renewal is given by either party
hereto in the manner set forth in Section 1(a).

 
 

--------------------------------------------------------------------------------

 

(c)           Change in Control.  Notwithstanding any provision of this
Agreement to the contrary, in the event of a Change in Control, the Term of this
Agreement shall be automatically extended through the date that is thirty-six
(36) months following the date on which the Change in Control occurs.

2.  
DEFINITIONS

(a)           “Change in Control” shall mean a change in control of the Company
or Bank as defined in Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the regulations promulgated thereunder, including the
following:

 
(1)
Change in ownership: A change in ownership of the Bank or the Company occurs on
the date any one person or group of persons accumulates ownership of more than
50% of the total fair market value or total voting power of the Bank or the
Company;  or

 
(2)
Change in effective control: A change in effective control occurs when either
(i) any one person or more than one person acting as a group acquires within a
twelve (12)-month period ownership of stock of the Bank or Company possessing
35% or more of the total voting power of the Bank or Company; or (ii) a majority
of the Bank’s or Company’s Board of Directors is replaced during any 12-month
period by Directors whose appointment or election is not endorsed in advance by
a majority of the Bank’s or Company’s Board of Directors (as applicable), or

 
(3)
Change in ownership of a substantial portion of assets: A change in the
ownership of a substantial portion of the Bank’s or Company's assets occurs if,
in a twelve (12)-month period, any one person or more than one person acting as
a group acquires assets from the Bank or Company having a total gross fair
market value equal to or exceeding 40% of the total gross fair market value of
the Bank’s or Company’s entire assets immediately before the acquisition or
acquisitions. For this purpose, “gross fair market value” means the value of the
Bank’s or Company’s assets, or the value of the assets being disposed of,
determined without regard to any liabilities associated with the assets.

(b)           “Good Reason” shall mean a termination by the Executive following
a Change in Control based on the following:

(1) a material diminution in the Executive’s base compensation as in effect
immediately prior to the date of the Change in Control or as the same may be
increased from time to time thereafter, (2) a material diminution in the
Executive’s authority, duties or responsibilities as in effect immediately prior
to the Change in Control, or (3) a material diminution in the authority, duties
or responsibilities of the officer (as in effect immediately prior to the date
of the Change in Control) to whom the Executive is required to report,
 
2

 
 

--------------------------------------------------------------------------------

 

                                 (2) any material breach of this Agreement by
the Bank, or

  (3) an involuntary relocation of the Bank’s offices in which Executive is
principally employed by more than 10 miles;

provided, however, that prior to any termination of employment for Good Reason,
the Executive must first provide written notice to the Bank (or its successor)
within sixty (60) days of 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 the 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 the 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:

 
(1)
the commission by, or indictment of, Executive for any felony involving moral
turpitude, deceit, dishonesty, or fraud;

 
(2)
a material act or acts of dishonesty in connection with the performance of
Executive’s duties, including without limitation, material misappropriation of
funds or property;

 
(3)
an act or acts of gross misconduct by Executive; or

 
(4)
continued, willful, and deliberate non-performance by Executive of duties (other
than by reason of illness or disability) which has continued for more than
thirty (30) days following written notice of non-performance from the Board.

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), or (4) above has occurred and specifying the
particulars thereof in detail.

3.  
BENEFITS UPON TERMINATION

 
If the Executive's employment by the Bank shall be terminated in connection with
or subsequent to a Change in Control and during the term of this Agreement by
(i) the Bank for other than Cause, or (ii) the Executive for Good Reason, then
the Bank shall:
 
3

 
 

--------------------------------------------------------------------------------

 

 
(a) 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 the Executive’s base salary in effect as of the Date of
Termination, and
 
(ii) two (2) times the highest level of cash incentive compensation earned by
the 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.
 
(b) cause to be continued non-taxable medical and dental coverage substantially
identical to the coverage maintained by the Bank for Executive prior to
Executive’s termination, with the Executive responsible for his share of
employee premiums, for twenty-four (24) months.  Notwithstanding the foregoing,
if applicable law (including, but not limited to, laws prohibiting
discriminating in favor of highly compensated employees), or, if participation
by the Executive is not permitted under the terms of the applicable health
plans, or if providing such benefits would subject the Bank to penalties, then
the Bank shall pay the Executive a cash lump sum payment reasonably estimated to
be equal to the value of such non-taxable medical and dental benefits, with such
payment to be made by lump sum within ten (10) business days of the Date of
Termination, or if later, the date on which the Bank determines that such
insurance coverage (or the remainder of such insurance coverage) cannot be
provided for the foregoing reasons.
 
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.
 
4

 
 

--------------------------------------------------------------------------------

 

6.  
REQUIRED REGULATORY AND TAX 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 U.S.C. §1818(e)(3)) or 8(g)(1) (12 U.S.C.
§1818(g)(1)) of the Federal Deposit Insurance Act, the Bank’s obligations under
this Agreement shall be suspended as of the date of service, unless stayed in
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. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of
the Federal Deposit insurance Act, 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.
§1818(x)(1)) of the Federal Deposit Insurance Act, all obligations of the Bank
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 the contract is necessary for the
continued operation of the Bank, (i) by the Office of the Comptroller of the
Currency 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. §1823(c)) of the Federal Deposit Insurance Act; or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director 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.
 
(e)           Notwithstanding anything herein contained to the contrary, any
payments to Executive by the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the
regulations promulgated thereunder in 12 C.F.R. Part 359.
 
(f)           Notwithstanding anything else in this Agreement, Executive’s
employment shall not be deemed to have been terminated unless and until the
Executive has a Separation from Service within the meaning of Section 409A of
the Code.  For purposes of this Agreement, a “Separation from Service” shall
have occurred if the Bank and Executive reasonably anticipate that either no
further services will be performed by the Executive after the date of the
termination (whether as an employee or as an independent contractor) or the
level of further services performed will be less than 50% of the average level
of bona fide services in the thirty-six (36) months immediately preceding the
termination.  For all purposes hereunder, the definition of Separation from
Service shall be interpreted consistent with Treasury Regulation Section
1.409A-1(h)(ii).  If Executive is a “Specified Employee,” as defined in Code
Section 409A and any payment to be made under this Agreement shall be determined
to be subject to Code Section 409A, then if required by Code Section 409A, such
payment or a portion of such payment (to the minimum extent possible) shall be
delayed and shall be paid on the first day of the seventh month following
Executive’s Separation from Service.
 
5

 
 

--------------------------------------------------------------------------------

 

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 him 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.
 
6

 
 

--------------------------------------------------------------------------------

 

11.  
GOVERNING LAW

 
This Agreement shall be governed by the laws of the State of Ohio 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 twenty-five (25) 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]
 
7

 
 
 
 

--------------------------------------------------------------------------------

 

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.
 
 
                                                                                                             
CHEVIOT SAVINGS BANK

      By:   /s/ Thomas J. Linneman
Thomas J. Linneman
President and CEO

EXECUTIVE

      By:   /s/ Jeffrey J. Lenzer
Jeffrey J. Lenzer

 
8