Exhibit 10.1


EXECUTION COPY




 


 





 





AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


 


 


THIS AGREEMENT originally
entered into on April 30, 2018 by and between COMMUNITY BANK OF THE CHESAPEAKE, with its principal place of business at
3035 Leonardtown Road, Waldorf, Maryland 20601 (the “Bank”), CHRISTY LOMBARDI (the “Employee”),
and THE COMMUNITY FINANCIAL CORPORATION (the “Company”), solely as guarantor of the Bank’s obligations
hereunder, is hereby amended and restated in its entirety (the “Agreement”) effective as of April 1, 2019 (the “Effective
Date”).


 


WHEREAS, the
parties desire by this writing to set forth the continuing employment relationship between the Bank and the Employee and reflect
the Employee’s new position as Chief Operating Officer of the Company and the Bank effective April 1, 2019; and


 


WHEREAS, this
Agreement shall supersede any and all prior employment agreements, by and between the Bank and the Employee, and any amendments
thereto.


 


NOW, THEREFORE,
in consideration of the mutual covenants contained herein, the Bank and the Employee hereby agree as follows:


 


1.       EMPLOYMENT.
The Employee shall serve the Bank as Executive Vice President and Chief Operating Officer of the Bank and the Company. In such
employment positions, the Employee shall have the duties, responsibilities, functions and authority determined and designated from
time to time by the Board of Directors of the Bank (the “Board”) and the Chief Executive Officer. The Employee shall
render such administrative and management services to the Bank, the Company and their respective affiliates as are customarily
performed by persons in a similar executive capacity.


 


2.       EFFECTIVE
DATE AND TERM. The term of the Agreement shall begin on the Effective Date and end on the day before the third (3rd) anniversary
of the Effective Date, unless otherwise extended as described below (the “Term”). The parties intend that, at any point
in time during the Employee’s employment hereunder, the then-remaining Term shall be three (3) years. On the day after the
Effective Date and on each day thereafter, the Term shall extend by one day, so that, on any date, the Term will expire on the
day before the third (3rd) anniversary of such date. These extensions shall continue unless (a) the Bank notifies the Employee
that it has elected to discontinue the extensions; (b) the Employee notifies the Bank of her election to discontinue the extensions;
or (c) the Employee’s employment with the Bank is terminated, whether by resignation, discharge or otherwise. On the earlier
of (i) the date on which such notice is given; or (ii) the effective date of a termination of employment with the Bank, the Term
will convert to a fixed period of three (3) years ending on the day before the third (3rd) anniversary of such date (provided,
however, that subject to any rights of the Employee under this Agreement, the Term shall end on such earlier date as may be specifically
provided in this Agreement in the event of the Employee’s death, voluntary termination, Disability or termination for Cause).
The last day of the Term, as extended in accordance with this Section 2, is referred to in this Agreement as the “Expiration
Date”.


 






     


     


    

 


3.       COMPENSATION
AND BENEFITS.


 


3.1       BASE
SALARY. During the Term, the Bank agrees to pay the Employee base salary at the rate of $275,000 per annum, subject
to increase from time to time in accordance with the usual practices of the Bank with respect to its review of compensation for
senior executives. Any increase in the Employee’s base salary shall become the “base salary” for purposes of
this Agreement. The Employee’s base salary shall be payable in periodic installments in accordance with the Bank’s
usual practice.


 


3.2       EMPLOYEE
BENEFITS. The Employee shall also be eligible to participate in any and all employee benefit plans, medical insurance plans,
disability income plans, retirement plans, bonus incentive plans and other benefit plans from time to time in effect for senior
executives of the Bank. Such participation shall be subject to (a) the terms of the applicable plan documents, (b) generally applicable
policies of the Bank and (c) the discretion of the Board or any administrative or other committee provided for in, or contemplated
by, such plans.


 


3.3       INCENTIVE
COMPENSATION. The Employee shall be eligible to participate in any incentive compensation or bonus programs sponsored by the
Bank on such terms as the Board may establish for the Employee’s participation.


 


3.4       BUSINESS
EXPENSES. The Bank shall pay, or reimburse, the Employee for reasonable travel and other business expenses incurred by the
Employee in the performance of the Employee’s duties and responsibilities, subject to such reasonable requirements with respect
to substantiation and documentation as may be specified by the Bank.


 


3.5       LEAVE.
The Employee shall be eligible to leave (vacation, sick and personal) in accordance with the Bank’s standard policies for
senior executives. Further, the Board, in its discretion, may grant to the Employee a leave or leaves of absence, with or without
pay, at such time or times and upon such terms and conditions as the Board, in its discretion, may determine.


 


3.6       OTHER
EMPLOYEE BENEFITS. The Employee shall be entitled to participate in any compensatory plans, arrangements or programs the Bank
makes available to its senior executive officers, including, but not limited to, stock compensation programs, supplemental retirement
arrangements, or executive health or life insurance programs, subject to, and on a basis consistent with, the terms and conditions
of such plans, arrangements or programs.


 


3.7       GENERAL.
The Employee’s participation in any plans, arrangements or programs currently in effect or made available in the future
shall not be deemed to be in lieu of other compensation to which the Employee is entitled as described under this Agreement.


 


4.       EXTENT
OF SERVICE. During the Term, the Employee shall devote his full time, best efforts and business judgment, skills and knowledge
to the advancement of the Bank’s interests and to the discharge of her responsibilities under this Agreement; provided, however,
that the Employee may:


 






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(a)       invest
personal assets in such form or manner as shall not require any material services on the Employee’s part in the operations
or affairs of the entities in which such investments are made, provided that the Employee may not own any interest in an entity
that competes with the Bank or any affiliate (other than up to 4.9% of the outstanding voting stock of such entity that is a publicly-traded
entity); or


 


(b)       serve
on the board of directors of any company not in competition with the Bank or any affiliate, provided that the Employee shall not
render any material services with respect to the operations or affairs of any such company; or


 


(c)       engage
in religious, charitable or other community or non-profit activities which do not impair the Employee’s ability to fulfill
her duties and responsibilities under this Agreement.


 


5.       DEATH.
In the event of the Employee’s death during the Term, the Employee’s employment (and the Term) shall terminate
on the date of death. The Bank shall pay to the Employee’s beneficiary, or estate, (a) any compensation due the Employee
through the last day of the calendar month in which death occurred, plus (b) any other compensation or benefits as may be provided
in accordance with the terms and provisions of any applicable plans and programs of the Bank in which the Employee participated
as of the date of death.


 


		6.	DISCHARGE FOR CAUSE. 



 


6.1       NOTICE
AND DETERMINATION OF CAUSE. The Bank may terminate the Employee’s employment at any time during the Term for “Cause”,
as defined below. A termination for Cause shall be deemed to have occurred only if:


 


(a)       The
Board, by a separate affirmative vote of at least three-fourths (3/4) of the entire membership, determines that the Employee has:
(i) engaged in acts of personal dishonesty which have resulted in loss to the Bank or one of its affiliates; (ii) intentionally
failed to perform stated duties; (iii) committed a willful violation of any law, rule, regulation (other than traffic violations
or similar offenses); (iv) become subject to the entry of a final cease and desist order which results in substantial loss to the
Bank or one of its affiliates; (v) been convicted of a crime or act involving moral turpitude; (vi) willfully breached the Bank’s
or the Company’s code of conduct and business ethics; (vii) been disqualified or barred by any governmental or self-regulatory
authority from serving in the Employee’s then-current employment capacity or (viii) willfully attempted to obstruct or failed
to cooperate with any investigation authorized by the Board or any governmental or self-regulatory entity. No act or failure to
act on the part of the Employee shall be considered “willful” unless it is done, or omitted to be done, by the Employee
in bad faith or without reasonable belief that the Employee’s action or omission was in the best interests of the Bank. Any
act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Board, or upon the advice
of legal counsel for the Bank, shall be conclusively presumed to be done, or omitted to be done, by the Employee in good faith
and in the best interests of the Bank and its affiliates; and


 






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(b)       At
least ten (10) days prior to the vote contemplated by Section 6.1(a), the Bank has provided the Employee with notice of its intent
to discharge the Employee for Cause, detailing with particularity the facts and circumstances which are alleged to constitute Cause
(a “Notice of Intent to Discharge”); and


 


(c)       After
giving the Employee Notice of Intent to Discharge and before taking the vote contemplated by Section 6.1(a), the Employee is afforded
a reasonable opportunity to make both written and oral presentations before the Board for the purpose of refuting the alleged grounds
for Cause for discharge; and


 


(d)       After
the vote contemplated by Section 6.1(a), the Bank has furnished to the Employee a notice of termination which specifies the effective
date of the Employee’s termination of employment (which shall not be earlier than the date on which such notice is deemed
given), and include a copy of a resolution or resolutions adopted by the Board of Directors authorizing the termination of the
Employee for Cause and stating with particularity the facts and circumstances found to constitute Cause for discharge (the “Final
Discharge Notice”).


 


6.2       SUSPENSION;
FINAL DISCHARGE. Following the provision of Notice of Intent to Discharge, the Bank may temporarily suspend the Employee’s
duties and authority and, in such event, may also suspend the payment of salary and other cash compensation (but not participation
in retirement, insurance and other employee benefit plans). If the Employee is discharged for Cause, all payments withheld during
the suspension period shall be deemed forfeited and shall not be payable to the Employee. If the Bank does not give a Final Discharge
Notice to the Employee within one hundred and twenty (120) days after giving the Notice of Intent to Discharge to the Employee,
the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Employee for Cause shall require
the Bank to give the Employee a new Notice of Intent to Discharge.


 


6.3       EFFECT
OF TERMINATION FOR CAUSE. In the event of termination of Employee’s employment pursuant to this Section 6, the Term shall
end and the Bank shall pay to the Employee an amount equal to the sum of (a) base salary or other compensation earned through the
date of her termination of employment, plus (b) any other compensation or vested benefits as may be provided in accordance with
the terms and provisions of any applicable plans and programs of the Bank. All other obligations of the Bank shall terminate as
of the date of Employee’s termination of employment.


 


7.       DISABILITY.
The Bank may terminate the Employee’s employment (and the Term) after having established the Employee’s Disability.
For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs the Employee’s
ability to substantially perform her duties under this Agreement and results in the Employee becoming eligible for long-term disability
benefits under the Bank’s long-term disability plan (or, if the Bank has no such plan in effect, that impairs the Employee’s
ability to substantially perform her full-time duties under this Agreement for a period of one hundred eighty (180) consecutive
days). The Employee shall be entitled to the compensation and benefits provided for under this Agreement for (a) any period during
the Term and prior to the establishment of the Employee’s Disability during which the Employee is unable to work due to physical
or mental infirmity, and (b) any period of Disability which is prior to the Employee’s termination of employment pursuant
to this Section 7.


 






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8.       TERMINATION
WITHOUT CAUSE. The Board may, by written notice to the Employee, immediately terminate her employment at any time for a reason
other than Cause, in which event the Employee shall be entitled to receive the termination payment set forth in Section 10.2 of
this Agreement (without regard to whether a Change in Control has occurred), payable in one lump sum within ten (10) days of termination
of employment. The Bank shall also continue to provide the Employee with benefit continuation as set forth in Section 10.3 of this
Agreement.


 


9.       VOLUNTARY
TERMINATION BY EMPLOYEE. Subject to Section 11 hereof, Employee may voluntarily terminate her employment with the Bank during
the Term, upon at least 60 days’ prior written notice, in which case the Term shall end and the Bank shall pay to the Employee
an amount equal to the (a) base salary or other compensation earned through the date of her termination of employment, plus (b)
any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable benefit plans
and programs of the Bank.


 


10.       CHANGE
IN CONTROL.


 


10.1DEFINITION
OF CHANGE IN CONTROL. For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of
the following events:


 


(a)       individuals
who, on the date of this Agreement, constitute the Board of Directors of the Company (the “Incumbent Directors”) cease
for any reason to constitute at least half of the Board of Directors of the Company, provided that any person becoming a director
subsequent to such time, whose election or nomination for election was approved by a vote of at least two-thirds (2/3) of the Incumbent
Directors then on the Board of Directors of the Company (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual
or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies
or consents by or on behalf of any person other than the Board of Directors of the Company shall be deemed to be an Incumbent Director;


 


(b)       any
 “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”)
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined
voting power of the Company’s then outstanding securities eligible to vote for the election of the Board of Directors of
the Company (the “Company Voting Securities”); provided, however, that the event described in this paragraph (b) shall
not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any subsidiary, (B)
by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities or (D) a transaction (other than one described in (c) below)
in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution
providing expressly that the acquisition pursuant to this clause (D) does not constitute a Change in Control under this paragraph
(b);


 






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(c)       the
consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company
or any of its subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination:
(A) at least 50% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”),
is represented by the Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such
voting power among (and only among) the holders thereof is in substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the
beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible
to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least
50% of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent Directors at the time of the Company Board’s approval
of the execution of the initial agreement providing for such Business Combination; or


 


(d)       the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially
all of the Company’s assets.


 


Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more
than 25% of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces
the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes
the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, a Change in Control of the Company shall then occur.


 






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10.2       TERMINATION
PAYMENT. Notwithstanding any provision herein to the contrary, if during the Term the Bank (i) terminates Employee’s
employment pursuant to Section 8 of this Agreement (without regard to whether a Change in Control has occurred) or (ii) terminates
Employee’s employment under this Agreement without the Employee’s prior written consent and for a reason other than
Cause, in connection with or within twelve (12) months after a Change in Control, then Employee shall be paid an unreduced lump
sum severance benefit equal to the sum of the following items:


 


(a)        Two
(2) times the Employee’s annual base salary (as provided for in Section 3 of this Agreement) at the rate in effect on the
date of the Employee’s termination of employment (including any amount contributed by the Bank on the Employee’s behalf
pursuant to a salary reduction agreement and which is not included in the Employee’s gross income under Sections 125, 132(f)
or 402(e)(3) of the Internal Revenue Code of 1986, as amended); and


 


(b)        Two
(2) times the most recent annual incentive compensation payment made to the Employee (as provided for in Section 3 of this Agreement).


 


The severance
benefit payment under this Section 10.2 shall be made to the Employee in one lump sum within ten (10) days of the Employee’s
termination of employment.


 


10.3       BENEFIT
CONTINUATION. In addition to the payment provided in Section 10.2, the Employee will also be paid, in a lump sum within 10
days of the Employee’s termination of employment, an amount equal to the monthly COBRA premium that Employee would be required
to pay to continue the benefits the Employee has in effect as of her termination date under the Company’s or the Bank’s
medical, dental and life insurance plans, multiplied by 36.


 


10.4       OTHER
TERMINATION. Notwithstanding any other provision of this Agreement to the contrary, the Employee may voluntarily terminate
employment under this Agreement within twelve (12) months following a Change in Control of the Bank or Company, and the Employee
shall be entitled to receive the payments and benefit continuation described in Sections 10.2 and 10.3 of this Agreement, upon
the occurrence of any of the following events, or within ninety (90) days thereafter, which have not been consented to in advance
by the Employee in writing: (a) the requirement that the Employee move her primary personal residence, or perform the Employee’s
principal executive functions more than forty (40) miles from the Employee’s primary office as of the date of the Change
in Control or, to a County other than Charles, Calvert, Saint Mary’s, Prince George’s or Anne Arundel Counties in the
State of Maryland as of the date of the Change in Control; (b) a reduction of ten percent (10.00%) or more in the Employee’s
base compensation as in effect on the date of the Change in Control or as the same may be increased from time to time; (c) the
failure of the Bank to continue to provide the Employee with compensation and benefits provided for under this Agreement, as the
same may be increased from time to time, or with benefits substantially similar to those provided under any of the employee benefit
plans in which the Employee now or hereafter becomes a participant, or the taking of any action by the Bank which would directly
or indirectly reduce any such benefits or deprive the Employee of any material fringe benefit provided by the Bank at the time
of the Change in Control; (d) the assignment to the Employee of duties and responsibilities materially different from those normally
associated with the Employee’s position as referenced in Section l; (e) a failure to elect or re-elect the Employee to the
Company Board of Directors if Employee is serving on the Company Board of Directors as of the date of the Change in Control; (f)
a material diminution or reduction in the Employee’s responsibilities or authority (including reporting responsibilities)
in connection with her employment with the Bank and the Company; or (g) the Company or Bank materially reduce the Employee’s
incentive compensation opportunities and employee benefits to a level that is less than is provided to other employees of comparable
rank within the Company or Bank.


 






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11.       CHANGE
IN CONTROL BEST PAYMENTS DETERMINATION.


 


Notwithstanding any
other provision of this Agreement to the contrary, if payments made or benefits provided pursuant to Sections 10.2 and 10.3 of
the Agreement or otherwise from the Bank, the Company or any affiliate of the Bank or the Company are considered “parachute
payments” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) (such payments
hereinafter referred to as the “Total Payments”), then such payments or benefits shall be reduced to the greatest amount
that may be paid to the Employee under Section 280G of the Code without causing any loss of deduction to the Company or its
affiliates under such section (hereinafter referred to as the “Reduced Payments”), however, the payments or benefits
shall not be reduced if the net after tax benefit to the Employee of receiving the Total Payments exceeds the net after tax benefit
of receiving the Reduced Payments by at least $50,000. “Net after tax benefit” for purposes of this Agreement
shall mean the sum of the present value of (i) the Total Payments or Reduced Payments (as applicable) less (ii) the amount
of federal, state and local income and payroll taxes payable with respect to the foregoing calculated at the maximum marginal tax
rates expected for each year in which the foregoing shall be paid to Employee (based upon the rates in effect as set forth in the
Code and under state and local laws at the time of termination of Employee’s employment with the Bank), less (iii) the
amount of excise taxes imposed with respect to the payments and benefits described in (i) above by Section 4999 of the
Code. The determination as to whether and to what extent payments are required to be reduced in accordance with this Section 11
shall be made at the Bank’s expense by an accounting firm, consulting firm, or law firm experienced in such matters. Any
reduction in payments required by this Section 11 shall occur in the following order: (i) any cash severance, (ii) any
other cash amount payable to Employee and treated entirely as a “parachute payment”, (iii) any benefit valued
entirely as a “parachute payment,” (iv) the acceleration of vesting of any equity award that is treated entirely as
a “parachute payment”, (v) the acceleration of vesting of any equity awards that are time-vested options, and
(vi) the acceleration of vesting of any other time-vested equity awards. Within any such category of payments and benefits,
a reduction shall occur first with respect to amounts that are not “deferred compensation” within the meaning of Section 409A
of the Code and then with respect to amounts that are. In the event that acceleration of compensation from equity awards is to
be reduced, such acceleration of vesting shall be canceled, subject to the immediately preceding sentence, in the reverse order
of the date of grant.


 


12.       NO
MITIGATION. In the event of any termination of employment under this Agreement, the Employee shall be under no obligation to
seek other employment or to otherwise mitigate damages, and there shall be no offset against any amounts due to the Employee under
this Agreement for any reason, including, without limitation, on account of any remuneration attributable to subsequent employment.
Any amounts due under this Agreement are in the nature of severance payments or liquidated damages, or both, and are not in the
nature of a penalty.


 






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13.       MISCELLANEOUS
PROVISIONS.


 


13.1       CONFLICTING
AGREEMENTS. The Employee hereby represents and warrants that the execution of this Agreement and the performance of the Employee’s
obligations hereunder will not breach or be in conflict with any other agreement to which the Employee is a party or is bound,
and that the Employee is not now subject to any covenants against competition or similar covenants which would affect the performance
of the Employee’s obligations under this Agreement.


 


13.2       WITHHOLDING.
All payments made under this Agreement shall be net of any tax or other amounts required to be withheld under applicable law.


 


13.3       ARBITRATION.
The Bank and the Employee agree that any claim, dispute or controversy arising under or in connection with this Agreement (including,
without limitation, any such claim, dispute or controversy arising under any federal, state or local statute, regulation or ordinance
or any of the Bank’s employee benefit plans, policies or programs) shall be resolved solely and exclusively by binding arbitration.
The arbitration shall be held in the County of Charles, Maryland (or at such other location as shall be mutually agreed upon by
the parties). The arbitration shall be conducted in accordance with the Commercial Arbitration Rules (the “Rules”)
of the American Arbitration Association (the “AAA”) in effect at the time of the arbitration, except that the arbitrator
shall be selected by alternatively striking from a list of five arbitrators supplied by the AAA. All fees and expenses of the arbitration,
excluding a transcript, shall be borne equally by the parties. Each party will pay for the fees and expenses of its own attorneys,
experts, witnesses, and preparation and presentation of proofs and post-hearing briefs (unless the Employee prevails on a claim
for which attorney’s fees are recoverable under the Agreement). Any action to enforce or vacate the arbitrator’s award
shall be governed by the Federal Arbitration Act, if applicable, and otherwise by applicable state law. If either the Bank or the
Employee pursues any claim, dispute or controversy against the other in a legal proceeding, other than the arbitration provided
for herein, the responding party shall be entitled to dismissal or injunctive relief regarding such action and recovery of all
costs, losses and attorneys’ fees related to such action. Notwithstanding the provisions of this paragraph, either party
may seek injunctive relief in a court of competent jurisdiction, whether or not the case is then pending before the panel of arbitrators.
Following the court’s determination of the injunction issue, the case shall continue in arbitration as provided herein.


 


13.4       INDEMNIFICATION
FOR ATTORNEYS’ FEES. In the event any dispute or controversy arising under or in connection with the Employee’s
termination of employment or this Agreement is resolved in favor of the Employee, whether by judgment, arbitration or settlement,
the Employee shall be entitled to the payment of: (i) all legal fees and expenses incurred by the Employee in resolving such dispute
or controversy, and (ii) any back-pay, including salary, bonuses and any other cash compensation, fringe benefits and any compensation
and benefits due to the Employee under this Agreement.


 


13.5       ASSIGNMENT;
SUCCESSORS AND ASSIGNS, ETC.


 


(a)       This
Agreement is personal to the Employee and shall not be assignable by the Employee without the prior written consent of the Bank,
other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by
the Employee’s legal representatives.


 






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(b)       This
Agreement shall inure to the benefit of and be binding upon the Bank and its successors and permitted assigns.


 


(c)       The
Bank may not assign this Agreement or any interest herein without the prior written consent of the Employee and, without such consent,
any attempted transfer or assignment shall be null and void and of no effect; provided, however, that the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Bank expressly to assume and to agree to perform this Agreement in the same manner and to the same extent
that the Bank would have been required to perform it if no such succession had taken place. As used in this Agreement, “the
Bank” shall mean both the Bank and the Company, as defined above, and any successor that assumes and agrees to perform this
Agreement, by operation of law or otherwise.


 


13.6       ENFORCEABILITY.
If any portion or provision 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.


 


13.7       REDUCTIONS;
REGULATORY REQUIREMENTS. Notwithstanding anything to the contrary contained in this Agreement, any and all payments and benefits
to be provided to the Employee under this Agreement are subject to reduction to the extent required by applicable statutes, regulations,
rules and directives of federal, state and other governmental and regulatory bodies having jurisdiction over the Bank and its affiliates.
The Employee is aware and acknowledges that the Federal Deposit Insurance Corporation has the power to preclude the Bank or its
affiliates from making payments to the Employee under this Agreement under certain circumstances. The Employee agrees that neither
the Bank nor its affiliates shall be deemed to be in breach of this Agreement if it is precluded from making a payment otherwise
payable hereunder by reason of regulatory requirements binding on the Bank or its affiliates, as the case may be.


 


13.8       WAIVER.
No waiver of any provision of this Agreement 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.


 






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13.9       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 registered or certified mail, postage prepaid, and addressed to the Employee at the Employee’s last
known address on the books of the Bank or, in the case of the Bank, at its main office, attention of the Chief Executive Officer
of the Board of Directors.


 


13.10       AMENDMENT.
This Agreement may be amended or modified only by a written instrument signed by the Employee and a duly authorized representative
of the Bank.


 


13.11       NO
EFFECT ON LENGTH OF SERVICE. Nothing in this Agreement shall be deemed to prohibit the Bank from terminating the Employee’s
employment before the end of the Term with or without notice for any reason. This Agreement shall determine the relative rights
and obligations of the Bank and the Employee in the event of any such termination. In addition, nothing in this Agreement shall
require the termination of the Employee’s employment at the expiration of the Term. Any continuation of the Employee’s
employment beyond the expiration of the Term shall be on an “at-will” basis, unless the parties agree otherwise.


 


13.12 SOURCE OF PAYMENTS.
The Bank shall make in a timely manner all payments provided for under this Agreement in cash or check from its general funds.
The Company, however, unconditionally guarantees payment and the provision of all amounts and benefits due to the Employee under
this Agreement. If the Bank does not timely pay or provide such amounts and benefits, the Company shall pay or provide such amounts
and benefits.


 


13.13       ENTIRE
AGREEMENT; EFFECT ON PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties pertaining to its
subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations, prior draft agreements, and
discussions of the parties, whether oral or written.


 


13.14       COUNTERPARTS
AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to
the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile
signatures.


 


13.15       GOVERNING
LAW. This is a Maryland contract and shall be construed under and be governed in all respects by the laws of the State of Maryland,
without giving effect to its conflicts of law principles.


 


13.16       NOT
CONTRIVED AGAINST DRAFTER. This Agreement has been negotiated and prepared by the parties and their respective legal counsel,
and no provision of this Agreement shall be construed more strictly against one party as the drafter.


 


14.       EFFECT
OF CODE SECTION 409A.


 


14.1       This
Agreement will be construed and administered to preserve the exemption from Section 409A of the Code of payments that qualify as
a short-term deferral or that qualify for the two-times separation pay exception. With respect to any amount that is subject to
Section 409A of the Code, it is intended, and this Agreement will be so construed, that any such amount payable under this Agreement
and the Company’s, Bank’s or Employee’s exercise of authority or discretion hereunder shall comply with the provisions
of Code Section 409A and the treasury regulations relating thereto (“Section 409A”) so as not to subject Employee to
the payment of interest and additional tax that may be imposed under Section 409A. Solely as necessary to comply with Section 409A,
for purposes of this Agreement, “termination of employment” or “employment termination” or similar
terms shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code. If a payment
is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year
in which the designated date occurs. If the time period for making any payment commences in one calendar year and ends in the succeeding
calendar year, then the payment shall not be paid (or commence) until the succeeding calendar year, and in no event shall the Employee,
directly or indirectly, designate the calendar year of payment.


 






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14.2       If
Employee is a “specified employee” on Employee’s separation from service, any payment that is subject to Section
409A and that is payable to Employee in connection with Employee’s separation from service, shall not be paid earlier than
six months after such separation from service, and to the extent any such payment is delayed, will be paid, without interest, on
the first payroll date after the expiration of such six-month period (if Employee dies after the date of Employee’s separation
from service but before any payment has been made, such remaining payments that were or could have been delayed will be paid to
Employee’s estate without regard to such six-month delay).


 


14.3       References
in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department
of the Treasury under Internal Revenue Section 409A.


 


14.4       To
the extent that any payment of or reimbursement by Bank to the Employee of eligible expenses under this Agreement constitutes a
 “deferral of compensation” within the meaning of Section 409A (a “Reimbursement”) (i) the Employee must
request the Reimbursement (with substantiation of the expense incurred) no later than 90 days following the date on which the Employee
incurs the corresponding eligible expense; (ii) subject to any shorter time period provided in any Company expense reimbursement
policy or specifically provided otherwise in this Agreement, the Company shall make the Reimbursement to the Employee on or before
the last day of the calendar year following the calendar year in which the Employee incurred the eligible expense; (iii) the Employee’s
right to Reimbursement shall not be subject to liquidation or exchange for another benefit; (iv) the amount eligible for Reimbursement
in one calendar year shall not affect the amount eligible for Reimbursement in any other calendar year; and (v) except as specifically
provided otherwise in this Agreement, the period during which the Employee may incur expenses that are eligible for Reimbursement
is limited to five calendar years following the calendar year in which the Termination Date occurs.


 




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


  








	ATTEST:	 	COMMUNITY BANK OF THE CHESAPEAKE
	 	 	 
	 	 	 
	/s/ Marlene Smith	 	/s/ William J. Pasenelli
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	ATTEST:	 	THE COMMUNITY FINANCIAL CORPORATION (As Guarantor)
	 	 	 
	 	 	 
	/s/ Marlene Smith	 	/s/ William J. Pasenelli
	 	 	Chief Executive Officer
	 	 	 
	 	 	 
	WITNESS:	 	EMPLOYEE:
	 	 	 
	 	 	 
	/s/ Marlene Smith	 	/s/ Christy Lombardi
	 	 	Christy Lombardi


 


 












 


 



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