Document:

rngr_Exhibit_10_3

		

			EXHIBIT 10.3

		

		
			EMPLOYMENT AGREEMENT
		

		
			This EMPLOYMENT AGREEMENT (this “Agreement”), entered into as of July 1, 2017, is made by and between Ranger Energy Services, LLC, a Delaware limited liability company (the “Company”), and Robert Shaw (“Executive”).  The Company and Executive are sometimes hereafter referred to individually as a “Party,” or collectively as the “Parties.”
		

		
			 
		

		
			WHEREAS, the Company and Executive desire to enter into this Agreement in order to set forth the terms of Executive’s employment with the Company during the period beginning on the date hereof and ending as provided herein; and
		

		
			NOW THEREFORE, in consideration of the premises and mutual covenants set forth herein, and other consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive, intending to be legally bound, do hereby agree as follows:
		

		
			1.Employment.  The Company agrees to employ Executive, and Executive hereby accepts employment with the Company, to serve as its Chief Financial Officer, upon the terms set forth in this Agreement for the period beginning on the date hereof and ending on the date two (2) years after the date hereof (the “Initial Employment Period”); provided that, upon the expiration of the Initial  Employment Period, this Agreement shall automatically be extended on the same terms and conditions set forth herein for additional consecutive one‐year periods beginning on the second anniversary of the date hereof, unless the Company or Executive gives the other Party written notice of its or his election not to extend at least ninety (90) days prior to the end of the Initial Employment Period or any additional one-year period (the “Extended Employment Period”) (the Initial Employment Period and any Extended Employment Period shall be referred to collectively herein as the “Employment Period”).   Notwithstanding the foregoing, the Company and Executive understand and agree that the Employment Period is subject to early termination as provided in Section 4 hereof.  A notice of non-extension provided by the Company pursuant to this Section 1 shall not constitute a termination without Cause under Section 4(a)(iv).  The date on which the Employment Period expires or, if the Executive’s employment is terminated for any reason, the effective date of such termination, is referred to herein as the “Termination Date.” 
		

		
			2.Position and Duties.
		

		
			(a)During the Employment Period, Executive shall serve as the Chief Financial Officer of the Company, and each of its operating subsidiaries, whether in existence now, or to be formed or acquired during the term hereof, and shall have the duties, responsibilities and authority customary for such a position in an organization of the size and nature of the Company. Executive shall report directly to the Chief Executive Officer of the Company and to the board of managers (the “Board”) of Ranger Energy Holdings, LLC, a Delaware limited liability company and the sole member of the Company (“Holdings”), and shall devote his commercially reasonable best efforts and business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its affiliates. Executive shall obtain the prior written approval from the Board before joining or participating in any other business opportunities, whether or not for compensation, and whether as an investor, board member, partner, or in any other capacity.
		

		
			(b) Executive acknowledges and agrees that, at all times during the employment relationship, Executive owes fiduciary duties to the Company and its affiliates, including, but not limited to, fiduciary duties of the highest loyalty, fidelity and allegiance, to act at all times in the best interests of the Company and its affiliates, to make full disclosure to the Company of all information that pertains to the Company’s or its affiliates’ business and interests, to do no act which would injure the Company’s or its affiliates’ business, interests, or reputation, and to refrain from using for Executive’s own benefit or for 

		 

 

the benefit of others any information or opportunities pertaining to the Company’s or its affiliates’ business or interests that are entrusted to Executive or that he learned while employed by the Company.  Executive acknowledges and agrees that, upon termination of the employment relationship, Executive shall continue to refrain from using for his own benefit or the benefit of others, or from disclosing to others, any information or opportunities pertaining to the Company’s or its affiliates’ business or interests that were entrusted to Executive during the employment relationship or that he learned while employed by the Company.  In addition, Executive, at all times during the Employment Period, shall strictly adhere to and obey all of the Company’s written rules, policies and procedures, which will be available for viewing and are now in effect, or as are subsequently adopted or modified by the Company, which govern the operation of the Company’s business and the conduct of employees of the Company.
		

		
			3.Base Salary, Bonus and Benefits.
		

		
			(a)Base Salary. During the Employment Period, Executive’s base salary shall initially be two hundred sixty thousand Dollars ($260,000) per year, less any and all lawful deductions and withholdings (the “Base Salary”), which Base Salary shall be payable in regular installments in accordance with the Company’s general payroll practices.  Upon the successful consummation of an initial public offering of the equity securities of the Company or its successor (a “Public Offering”), the Company may assign this Agreement to any such successor and shall cooperate in good faith with Executive to adjust the Base Salary to reflect Executive’s responsibilities following the consummation of the Public Offering.  During the Employment Period, Executive’s Base Salary may be increased by the Board at any time in its sole discretion; provided that the Base Salary may not be decreased below the foregoing amount provided, however, that the Company may unilaterally reduce Executive’s base salary or wages by up to ten percent (10%) if (A) the same percentage reduction applies to all similarly situated employees of the Company, and (B) the Board determines that such reduction is necessary to allow the Company to avoid violating one or more financial covenants contained in its loan agreements or similar financing arrangements, as may be amended from time to time. 
		

		
			(b)  Annual Bonus. In addition to Base Salary, Executive shall be eligible to receive a discretionary bonus prorated for 2017, an IPO bonus and a discretionary annual bonus of up to fifty percent (50%) of his Base Salary (the “Annual Bonus”) for subsequent years of the Employment Period, the amount of which shall be determined and paid based on annual Company and individual (i.e., Executive-specific) milestones as determined by the Board that must be met in order for Executive to be eligible to receive the bonus to be agreed upon by the Parties no later than February 28 of each year.  
		

		
			(c) Benefits. During the Employment Period, Executive and his dependents shall be entitled to participate in the Company’s standard employee benefit plans and programs, including sick leave, for which employees of the Company are generally eligible (collectively, the “Benefits”). Executive recognizes that the Benefits shall be governed by the terms and conditions of the applicable benefit plans and programs.  The Company shall not, however, by reason of this Section 3(c) be obligated to institute, maintain or refrain from changing, amending or discontinuing any such benefit plan or program, so long as such changes are similarly applicable to other employees of the Company generally.
		

		
			 (d)  Restricted Equity.  Executive shall receive 50,000 Class C Units and 50,000 Class D Units of Holdings (the “Equity Award”) which represents 1% of the equivalent company value, pursuant to the terms of Restricted Unit Award Agreements that will be entered into by and between Holdings and Executive (the “Restricted Unit Award Agreements”).  If there are any conflicts between the applicable Restricted Unit Award Agreement and this Employment Agreement with respect to the Equity Award, such Restricted Unit Award Agreement shall control.
		

		
			

		 

 

		

		
			(e)Vacation.  During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation during each calendar year (prorated for any partial year), which shall accrue in accordance with the Company’s vacation policies as in effect from time to time. The Company will not pay Executive for any accrued, unused vacation upon the termination of Executive’s employment with the Company for any reason.
		

		
			(f) Expenses. The Company shall reimburse Executive for all reasonable expenses incurred by Executive in the course of performing his duties under this Agreement that are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of such expenses.    
		

		
			(g)Withholding; Deductions. The Company may deduct and withhold from any amounts payable under this Agreement (including, without limitation, any amount paid pursuant to Section 5) such federal, state, local, non-U.S. or other taxes as are required or permitted to be withheld pursuant to any applicable law or regulation.
		

		
			(h)Indemnity.  The Company hereby agrees to indemnify Executive to the fullest extent permitted by applicable law, the Company’s certificate of formation, the Company’s limited liability company agreement or by statute.  In the event of any change after the date of this Agreement in any applicable law, statute or rule that expands the right of a Delaware limited liability company to indemnify a manager, officer, employee, controlling person, agent or fiduciary, it is the intent of the parties hereto that Executive shall enjoy by this Agreement the greater benefits afforded by such change. The Company shall indemnify and hold harmless Executive, to the fullest extent permitted by law if Executive was or is or becomes a party to or witness or other participant in or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding, or alternative dispute resolution mechanism, or in hearing, inquiry or investigation that Executive in good faith reasonably believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other against any and all expenses (including attorneys’ fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any such actions, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement.  The Company shall advance all expenses incurred by Executive in connection with such indemnification, such expenses to be paid by the Company to Executive as soon as practicable but in no event later than twenty-five (25) days after written demand by the Executive to the Company. The Company shall purchase sufficient Directors and Officers liability to protect the Executive. In addition, this clause also covers the Executive for 5 years following the Executives termination.
		

		
			4.Early Termination of the Employment Period.
		

		
			(a) Termination of Employment by the Company Prior to Expiration of Employment Period.  Notwithstanding the provisions of Section 1 hereof, the Company shall have the right to terminate Executive’s employment under this Agreement at any time in accordance with the following provisions:
		

		
			(i)upon Executive’s death;
		

		
			 
		

		
			(ii)upon Executive’s becoming incapacitated or disabled by accident, sickness or other circumstance which creates an impairment (despite reasonable accommodation) that renders him mentally or physically incapable of performing the duties and services required of him hereunder for a period of at least ninety (90) 

		 

 

consecutive days or for ninety (90) non-consecutive business days during any 12-month period;
		

		
			 
		

		
			(iii)for “Cause,” upon a determination by the Board, in its good faith discretion (but, for purposes of clauses (a) and (b), only after the Company has provided Executive written notice of the facts and circumstances and after Executive has had an opportunity to be heard and Executive has failed to cure same within five (5) business days of such notice if cure is reasonably possible) that Executive has engaged in:
		

		
			 
		

			
	
			
				 a.
			

			
	
			
			Executive’s material breach of his obligations under (1) this Agreement, including, without limitation, Sections 6,  7,  8 or 9 of this Agreement, (2) the Restricted Unit Award Agreements or (3) the Second Amended and Restated Liability Company Agreement of Holdings, as may be amended or amended and restated from time to time in accordance with the provisions thereof (the “LLC Agreement”), in each case after written notice and opportunity to cure as set forth above;

		
			 
		

			
	
			
				 b.
			

			
	
			
			continued failure by Executive to perform the duties and services required of Executive pursuant to this Agreement, after written notice and opportunity to cure as set forth above;

		
			 
		

			
	
			
				 c.
			

			
	
			
			an act or acts of fraud, dishonesty or disloyalty with respect to the Company’s business, operations or customers, including, but not limited to, falsification of records of the Company or misappropriation of funds of the Company; 

		
			 
		

			
	
			
				 d.
			

			
	
			
			insubordination or failure to follow the lawful instructions of the Board; 

		
			 
		

			
	
			
				 e.
			

			
	
			
			any willful or reckless misconduct or gross negligence by Executive in the performance of his duties under this Agreement;

		
			 
		

			
	
			
				 f.
			

			
	
			
			any breach of fiduciary duty or duty of loyalty to the Company or its affiliates; 

		
			 
		

			
	
			
				 g.
			

			
	
			
			acceptance of employment or work with another employer or business other than the Company or its affiliates or the performance of work or services for any such other employer or business;

		
			 
		

			
	
			
				 h.
			

			
	
			
			any act attempting to secure or securing any personal profit or benefit not fully disclosed to and approved by the Board in connection with any transaction entered into on behalf of the Company or its affiliates;

		
			 
		

			
	
			
				 i.
			

			
	
			
			habitual drug or alcohol abuse; 

		
			 
		

			
	
			
				 j.
			

			
	
			
			a conviction (by plea of nolo contendere, guilty or otherwise) of any (1) felony, (2) of a crime of theft, fraud, or dishonesty, or (3) crime involving moral turpitude; or 

		
			 
		

			
	
			
				 k.
			

			
	
			
			a conviction for a violation of federal or state securities laws or other laws applicable to the business of the Company or its affiliates; or

		
			 
		

		
			

		 

 

		

		
			 
		

			
	
			
				 l.
			

			
	
			
			conduct on the part of Executive, even if not in connection with the performance of his duties contemplated under this Agreement, that could result in serious prejudice to the interests of the Company or its affiliates, as determined by the Company in its sole discretion, and Executive fails to cease such conduct within twenty-four (24) hours upon receipt of notice to cease such conduct.

		
			 
		

		
			(iv)In the sole discretion of the Board without Cause; provided, however, that in the case of termination without Cause, the Company must provide Executive with sixty (60) days prior written notice of such termination.
		

		
			 
		

		
			(b) Termination of Employment by Executive Prior to Expiration of Employment Period.  Notwithstanding the provisions of Section 1 hereof, Executive shall have the right to terminate his employment under this Agreement at any time for any reason or for no reason; provided, that in the event of a termination under this Section 4(b) Executive must provide the Company with sixty (60) days prior written notice of such termination.
		

		
			 
		

		
			(c) Notice of Termination.  If the Company desires to terminate Executive’s employment hereunder as provided in Section 4(a) hereof or Executive desires to terminate Executive’s employment hereunder as provided in Section 4(b) hereof, Executive shall do so by giving written notice to the Board and the Company shall do so by giving written notice to Executive that it or he has elected to terminate Executive’s employment hereunder and stating the effective date and reason, if any (including the applicable section of this Agreement), for such termination.  In the event of such termination, the provisions of Sections 6 through 8 hereof shall continue to apply in accordance with their terms regardless of the reason for termination. Any question as to whether and when there has been a termination of Executive’s employment, and the cause of such termination, shall be determined conclusively by the Board in its sole discretion.
		

		
			5.Effect of Termination on Compensation.
		

		
			 
		

		
			(a)  Termination Upon Death of Executive.  In the event of Executive’s death during the Employment Period, all of Executive’s rights and benefits provided for in this Agreement will terminate on the date of death; provided, however, that (i) Executive’s estate will be paid Executive’s pro rata Base Salary as earned through the Termination Date, (ii) Executive shall be entitled to any unpaid and earned Annual Bonus for any calendar year of the Company that ended prior to the Termination Date (in the amount theretofore awarded by the Board) on the date that such Annual Bonus would otherwise have been payable, and (iii) any extended health benefits provided by the Company in respect of Executive’s spouse and dependents shall continue as provided by state or federal law, and the Company shall provide a stipend to Executive’s spouse and/or dependents in the amount of the continuation coverage (or COBRA) premiums.
		

		
			 
		

		
			(b) Termination by the Company Upon Disability of Executive. If Executive’s employment hereunder is terminated by the Company pursuant to Section 4(a)(ii) of this Agreement, all of Executive’s rights and benefits provided for in this Agreement will terminate as of such date; provided, however, that (i) Executive will be paid Executive’s pro rata Base Salary as earned through the Termination Date, (ii) Executive shall be entitled to receive any unpaid and earned Annual Bonus for any calendar year of the Company that ended prior to the Termination Date (in the amount theretofore awarded by the Board) on the date that such Annual Bonus would otherwise have been payable, and (iii) any extended health benefits provided by the Company in respect of Executive’s spouse and dependents shall continue as provided by state or federal law, and the Company shall provide a stipend to Executive’s spouse and/or dependents in the amount of the continuation coverage (or COBRA) premiums. 
		

		
			

		 

 

		

		
			 
		

		
			(c) Termination by the Company for Cause.  If Executive’s employment hereunder is terminated by the Company for Cause pursuant to Section 4(a)(iii) of this Agreement, all of Executive’s rights and benefits provided for in this Agreement will terminate as of such date; provided, however, that (i) Executive will be paid Executive’s pro rata Base Salary as earned through the Termination Date, and (ii) extended health benefits shall continue at Executive’s expense as provided by state or federal law.
		

		
			 
		

		
			(d)  Termination by the Company Without Cause.  If Executive’s employment hereunder is terminated by the Company without Cause pursuant to the provisions set forth in Section 4(a)(iv), all of Executive’s rights and benefits provided for in this Agreement will terminate as of such date; provided, however, that (i) Executive will be paid Executive’s pro rata Base Salary as earned through the Termination Date, (ii) Executive shall be entitled to any unpaid and earned Annual Bonus for any calendar year of the Company that ended prior to the Termination Date (in the amount theretofore awarded by the Board) on the date that such Annual Bonus would otherwise have been payable, (iii) extended health benefits shall continue for 12 months at the Company’s expense as provided by state or federal law and (iv) the Company shall pay Executive severance equal to twelve (12) months of the Base Salary (as determined on the Termination Date).  The severance pay provided for in this Section 5(d) will be paid in installments in accordance with the Company’s normal payroll practices.
		

		
			 
		

		
			(e) Termination of Employment by Executive.  If Executive terminates his employment with the Company pursuant to Section 4(b) of this Agreement, all of Executive’s rights and benefits provided for in this Agreement will terminate as of such date; provided, however, that Executive shall receive those amounts described in Section 5(d)(i)-(iii), and should Executive terminate his employment with the Company for Good Reason, he shall also receive those amounts described in Sections 5(d)(iv). “Good Reason” shall mean (i) a breach by the Company of any of its material obligations under this Agreement, (ii) a material diminution of Executive’s job duties or responsibilities with respect to the Company, (iii) the Company’s permanent reassignment of Executive’s principal office location to a location more than fifty (50) miles from Executive’s then principal office location, or (iv) the adjustment of the Executives’ salary following the Company’s IPO,  but only after Executive has notified Company of same in writing and Company has not remedied same within thirty (30) days of such notice.
		

		
			 
		

		
			(f) Expiration of Employment Period. If either the Company or Executive provides the notice of intent not to extend the Agreement and thus elects to allow an Employment Period to expire under its own terms under Section 1 hereof, all of Executive’s rights, compensation and benefits provided for in this Agreement will terminate as of the date of the expiration of the Employment Period. 
		

		
			 
		

		
			(g) Waiver and Release of Claims. Except for (i) the continuation of health benefits under state or federal law at Executive’s (or his spouse and dependent’s) expense (for which statutory and eligibility requirements must be met) and (ii) the payment of Base Salary through the Termination Date, Executive shall not be entitled to receive any payments, benefits or other compensation under this Section 5 (including but not limited to any Annual Bonus or severance pay) unless and until Executive has executed and delivered to the Company a non-revocable waiver and release, in form and substance acceptable to the Company in its sole discretion, of all claims he has, or may have, known or unknown, against the Company, its subsidiaries and affiliates and their respective predecessors and successors, and any of the current or former directors, managers, officers, employees, owners, investors, shareholders, partners, members, representatives, or agents of any of the foregoing, which arise out of or relate to his employment, separation therefrom, any agreement between the Parties, the LLC Agreement, the Restricted Unit Award Agreements or any other matter or facts or events occurring through the date of Executive’s signature on such waiver and release.
		

		
			
		

		
			

		 

 

		

		
			(h)  Impact of Termination of Employment on Equity Award.  The Parties acknowledge and agree that all provisions affecting the Equity Award as a result of any termination of Executive’s employment shall be as set forth in the Restricted Unit Award Agreements and the LLC Agreement.
		

		
			 
		

		
			6.Confidential Information. The Company agrees and Executive acknowledges that prior to and during the Employment Period he shall be provided trade secrets, confidential and proprietary information intended to be kept in confidence concerning the Business of the Company and its affiliates (collectively, “Confidential Information”) that is the property of the Company and its affiliates, the use and knowledge of which gives the Company a competitive advantage, including, without limitation, information and knowledge pertaining to products, services, inventions, discoveries, improvements, innovations, designs, ideas, trade secrets, manufacturing, advertising, marketing, distribution and sales methods and forecasts, operating procedures, financial statements and other financial information, supplier, vendor, customer and client lists and relationships between the Company and its affiliates and customers, clients, vendors, suppliers, lessors and others who have business dealings with them, and the substance of any agreements with such persons and parties.  Therefore, Executive agrees that he shall not at any time during or after the Employment Period, directly or indirectly, regardless of when he obtained such Confidential Information, disclose, directly or indirectly, to any person or entity or use for his own purposes or the benefit of any third party, including any subsequent employer, any Confidential Information without the prior written consent of the Company.  Confidential Information does not include information which (i) is in the public domain or is generally known or available, or hereafter becomes part of the public domain or is generally known or available through no violation of this Agreement; (ii) is lawfully acquired by the Executive from any third party not bound, to the actual knowledge of the Executive, by an obligation of confidence to the Company; or (iii) is required, pursuant to judicial action or governmental regulations or other requirements, to be disclosed by the Executive, provided that the Executive has notified the Company as such request for disclosure and cooperates with the Company in the event the Company elects to contest and avoid such disclosure. Executive shall deliver to the Company at the Termination Date, or immediately at any other time the Board may request, all property, memoranda, notes, plans, records, reports, electronic mail, computer files, printouts, software and other documents and data (and copies thereof, regardless of the media on which such are contained) constituting or relating to the Confidential Information, Work Product (as defined below), property or the business of the Company or its affiliates which he may then possess or have under his control. All Confidential Information and documents relating to the Company as described above shall be the exclusive property of the Company, and Executive shall use his commercially reasonable best efforts to prevent any publication or disclosure thereof.  
		

		
			 
		

		
			7.Inventions and Patents. Executive acknowledges that all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) that relate to the Company’s or its affiliates’ actual or anticipated business that are conceived, developed or made by Executive while employed by the Company or any of its affiliates (“Work Product”) belong to the Company or such affiliate (as the case may be). Any copyrightable work falling within the definition of Work Product shall be deemed a “work made for hire” as such term is defined in 17 U.S.C. Section 101, and ownership of all right, title and interest therein shall vest in the Company or its affiliates. To the extent that any Work Product is not deemed to be a “work made for hire” under applicable law or all right, title and interest in and to such Work Product has not automatically vested in the Company or its affiliates, Executive hereby irrevocably assigns, transfers and conveys, to the full extent permitted by applicable law, all right, title and interest in and to the Work Product on a worldwide basis to the Company or such affiliate (as the case may be), without further consideration.  Executive will promptly disclose such Work Product to the Company and perform all actions requested by the Company (whether during or after employment) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).
		

		
			

		 

 

		

		
			8.Non-Solicitation; Non-Competition.
		

		
			(a)Executive acknowledges, and the Company agrees, that in the course of Executive’s employment with the Company, Executive will be provided and become familiar with the Company’s and its affiliates’ trade secrets and Confidential Information. Executive further acknowledges that having access to and knowledge of the Confidential Information of the Company and its affiliates is essential to the performance of his duties with the Company and that such information is an extremely valuable and unique asset of the Company and its affiliates that gives them a competitive advantage over persons or entities that do not possess such information and knowledge. Therefore, Executive agrees that in consideration for the Company’s promise to provide him Confidential Information and trade secrets of the Company and its affiliates, in addition to other consideration provided herein, Executive will not, during the Employment Period and for a period of [eighteen (18) months] (such period, the “Restricted Period”) thereafter, directly or indirectly contact or solicit vendors, suppliers, customers or clients of the Company or its affiliates with whom Executive had direct or indirect contact or about whom Executive received proprietary, confidential or otherwise non-public information for the purpose of providing services relating to well servicing, well workover, fluid management and well completion services and related engineering consulting services for the oil and gas industry and equipment rentals related thereto (the “Business”) or interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Company or any of its affiliates and any vendor, supplier, customer or client of the Company or any of its affiliates or in any way encourage them to terminate or otherwise alter their relationship with the Company or any affiliate.  Executive further agrees that during the Employment Period and the Restricted Period, he shall not, directly or indirectly, provide any products or services related to the Business to the Company’s or its affiliates’ customers and clients, or prospective customers and clients with whom Executive had direct or indirect contact or about whom Executive received proprietary, confidential or otherwise non-public information, nor utilize the contacts, goodwill and rapport he established with any customers and clients to take away or divert business or income away from the Company or its affiliates to other persons or entities.  For purposes of this Section 8, “customers and clients” shall mean and include those customers, clients and prospective customers and clients who contacted or were contacted by the Company or its affiliates to do business with the Company or such affiliates.
		

		
			(b)Executive further agrees that in consideration for the Company’s promise to provide him Confidential Information and trade secrets of the Company and its affiliates, in addition to other consideration provided herein, he will not, during the Employment Period or the Restricted Period, directly or indirectly recruit, solicit, hire or retain (as an independent contractor, employee or otherwise) or attempt to recruit, solicit, hire or retain any employee, independent contractor, or former (within the then-preceding eighteen (18) month period) employee or independent contractor of the Company or its affiliates, or encourage any employee or independent contractor of the Company or its affiliates to leave the employ or engagement of the Company or its affiliates, as the case may be.
		

		
			(c)In addition, except for services and duties performed pursuant to this Agreement by Executive for or on behalf of the Company and its affiliates during the Employment Period, Executive agrees that, during the Employment Period and the Restricted Period, Executive will not for any reason whatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any other person, company, partnership, corporation, business or other entity of whatever nature, engage in, make loans to, own, operate, manage, control, become financially interested in or otherwise have any connection with, whether as an officer, director, manager, employee, independent contractor, advisor, sales representative, consultant, shareholder, owner, partner, member or in any other capacity, the Business within North America (the “Territory”) and anywhere outside of the Territory where the Company or its affiliates have made sales or significant sales efforts with respect to their goods or services relating to the Business during the Employment Period or the Restricted Period; provided, however, that the passive ownership by Executive of less than one percent (1%) of any class of equity securities of any corporation, if such equity 

		 

 

securities are listed on a national securities exchange or are quoted on NASDAQ, will not be deemed to be a breach of this Section 8.
		

		
			 (d)If, at the time of enforcement of this Section 8, a court or other tribunal shall hold that the duration, geography or scope restrictions stated herein are unreasonable under circumstances then existing, the Parties agree that the maximum duration, geography or scope reasonable under such circumstances shall be substituted for the stated duration, geography or scope and that the court or other tribunal shall reform the restrictions contained herein to cover the maximum duration, geography and scope permitted by law. 
		

		
			9.Non-Disparagement. Each Party agrees that it or he shall not, either during the Employment Period and after the termination thereof, whether in writing or orally, malign, denigrate, impugn, attack or disparage the other Party, its or his affiliates or their respective predecessors and successors, or any of the current or former directors, managers, officers, employees, owners, investors, shareholders, partners, members, representatives, or agents of any of the foregoing, with respect to any of their respective past or present activities, products or services, or otherwise publish (whether in writing or orally) statements that tend to portray any of the aforementioned Parties in an unfavorable light or take any unethical or deceitful action that would materially interfere with any existing or potential business relationship or contractual arrangement of such Party that is detrimental to the best interests of such Party.   Notwithstanding the above, this provision shall not apply to any testimony given under oath pursuant to any pending or threatened legal proceeding or management-employee discussions, internal feedback, coaching or performance reviews.
		

		
			10. Remedies. Executive acknowledges that a violation by Executive of any of the covenants contained in Section 6,  7,  8 or 9 would cause irreparable damage to the Company in an amount that would be material but not readily ascertainable, and that any remedy at law (including the payment of damages) would be inadequate.  Accordingly, Executive agrees that, notwithstanding any provision of this Agreement to the contrary, the Company shall be entitled (without the necessity of showing economic loss or other actual damage) to injunctive relief (including temporary restraining orders, preliminary injunctions and/or permanent injunctions) in any court of competent jurisdiction for any actual or threatened breach of any of the covenants set forth in Section 6,  7,  8 or 9 in addition to any other legal or equitable remedies it may have.  The preceding sentence shall not be construed as a waiver of the rights that the Company may have for damages under this Agreement or otherwise, and all of the Company’s rights shall be unrestricted.  If Executive breaches any of the covenants contained in Section 6,  7,  8, or 9 of this Agreement, the Company will have the right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by Executive as the result of such breach. This right and remedy will be in addition to, and not in lieu of, any other rights and remedies available to the Company under any other agreement between the Company and its affiliates, on the one hand, and Executive, on the other hand, at law or in equity.
		

		
			11.  Business Opportunities  Executive agrees, while he is employed by the Company, to offer or otherwise make known or available to it, as directed by the Board and without additional specific compensation or consideration therefor, any business prospects, contracts or other business opportunities that Executive may discover, find, develop or otherwise have available to Executive with respect to the Business, and further agrees that any such prospects, contacts or other business opportunities shall be the property of the Company.  
		

		
			12. Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by any means which provides a receipt upon delivery and addressed as follows:
		

		
			

		 

 

		

		
			 
		

			
					
						 

					
					
						If to the Company to:

					
					
						Ranger Energy Services, LLC

					
						800 Gessner, Suite 1000

					
						Houston, TX 77024

					
						 

				
	
					
						 

					
					
						If to Executive to:

					
					
						Robert Shaw

					
						1319 Glenhilshire Dr.

					
						Houston TX 77055

					
						 

				

		
			 
		

		
			 
		

		
			or to such other address as either Party may furnish to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.
		

		
			 
		

		
			13.  Governing Law; EXCLUSIVE VENUE.  This Agreement shall be governed by and interpreted under the INTERNAL laws of the state of TEXAS without regard to conflicts of law.  In the event of a dispute involving this Agreement OR EXECUTIVE’s EMPLOYMENT WITH THE COMPANY, the parties irrevocably agree that exclusive venue for such dispute shall lie in any court of competent jurisdiction in Harris County, Texas, and the parties waive any claim that such forum is inappropriate or inconvenient.
		

		
			14.  Complete Agreement.  This Agreement, together with the Restricted Unit Award Agreements and the LLC Agreement, embodies the complete agreement and understanding between the Parties and supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way. Any equity awarded to Executive in connection with his employment hereunder will be subject to the terms and conditions of the applicable Restricted Unit Award Agreement and the LLC Agreement.
		

		
			15.  Successor and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company and their respective successors, heirs and permitted assigns. This Agreement is personal to Executive and shall not be assignable by Executive, except for the assignment by will or the laws of descent and distribution of any accrued pecuniary interest of Executive, and any assignment in violation of this Agreement shall be void.  Except as noted in Section 3(a) hereof with respect to a Public Offering, this Agreement may only be assigned by the Company with Executive’s permission in writing.
		

		
			16.  Noncontravention; Prior Agreements and Information.  Executive represents, warrants and covenants that as of the date hereof: (i) Executive has the full right, authority and capacity to enter into this Agreement and perform Executive’s obligations hereunder, (ii) Executive is not bound by any agreement that conflicts with or prevents or restricts the full performance of Executive’s duties and obligations to the Company hereunder during or after the Employment Period, and (iii) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which Executive is subject.  Executive represents and warrants that his service as an Executive of the Company and his performance of his duties hereunder will not and do not violate any prior agreement Executive made with any previous employer or company with whom he did business.  Executive further agrees that he has not previously, and will not in the future, disclose to the Company any confidential and proprietary information or trade secrets belonging to any previous employer, and acknowledges that the Company has instructed him not to disclose to it any confidential and proprietary information or trade secrets belonging to any previous employer.  Executive agrees acknowledges that he will not enter into any agreement, whether written or oral, conflicting with the provisions of this Agreement.
		

		
			

		 

 

		

		
			17.  Amendment.  Except as otherwise expressly provided herein, this Agreement may be amended only by written agreement between the Company (with the written approval of the Board) and Executive, and any provision hereof may be waived only in writing by the Party who is so waiving (which waiver, if being made by the Company, shall require written approval of the Board).
		

		
			18.  Counterparts; Facsimile Signature.  This Agreement may be executed in one or more counterparts, all of which together shall constitute but one agreement.  Any Party may execute and deliver this Agreement by facsimile signature or by electronic portable document format (.pdf) and the other Party will be entitled to rely upon such facsimile or electronic portable document format (.pdf) signature as conclusive evidence that this Agreement has been duly executed by such Party.
		

		
			19.  No Waiver.  No failure or delay on the part of the Company or Executive in enforcing or exercising any right or remedy hereunder shall operate as a waiver thereof.  It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by that same party.
		

		
			20.  Representations and Warranties; Advice of Counsel.  Prior to execution of this Agreement, Executive was advised by the Company of Executive’s right to seek independent advice from an attorney of Executive’s own selection regarding this Agreement and Executive acknowledges that he has had sufficient opportunity to do so.  Executive acknowledges that Executive has entered into this Agreement knowingly and voluntarily and with full knowledge and understanding of the provisions of this Agreement after being given the opportunity to consult with counsel.  Executive further represents that in entering into this Agreement, Executive is not relying on any statements or representations made by any of the Company, its affiliates or any of their respective directors, managers, officers, Executives, owners, investors, shareholders, partners, members, representatives, or agents that are not expressly set forth herein, and that Executive is relying only upon Executive’s own judgment and any advice provided by Executive’s attorney.
		

		
			21.  Cooperation.  Executive agrees that, upon reasonable notice and without the necessity of the Company obtaining a subpoena or court order, during the Restricted Period and for one (1) year thereafter Executive shall provide reasonable cooperation in connection with any suit, action or proceeding (or any appeal from any suit, action or proceeding), and any investigation and/or defense of any claims asserted against the Company, its affiliates or their respective predecessors and successors, or any of the current or former directors, managers, officers, employees, owners, investors, shareholders, partners, members, representatives, or agents of any of the foregoing, which relates to events occurring during Executive’s employment or relationship with the Company or its affiliates as to which Executive may have relevant information (including, but not limited, to furnishing relevant information and materials to the Company or its designee and/or providing truthful testimony at depositions and at trial), provided that with respect to such cooperation occurring following termination of employment, the Company shall reimburse Executive for expenses reasonably incurred in connection therewith, and further provided that any such cooperation occurring after the termination of Executive’s employment shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Executive’s business or personal affairs.
		

		
			22.  Immunity.  Nothing herein will prevent Executive from (i) making a good faith report of possible violations of applicable law to any governmental agency or entity; or (ii) making disclosures that are protected under whistleblower protections of applicable law.  Executive understands and agrees that he shall not be held criminally or civilly liable under any federal or state trade secret law or breach this Agreement for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law.  Executive further understands that he shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made 

		 

 

in a complaint or other document filed in a lawsuit or other proceeding, provided such filing is made under seal.  Finally, Executive understands that, if he files a lawsuit for retaliation by the Company or its affiliates for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney and use the trade secret information in the court proceeding, provided Executive files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
		

		
			23.  No Construction Against Drafter. No provision of this Agreement or any related document will be construed against or interpreted to the disadvantage of any Party hereto by any court or other governmental or judicial authority by reason of such Party having or being deemed to have structured or drafted such provision.
		

		
			24.  Severability.  If any provision or clause of this Agreement, or portion thereof, shall be held by any court or other tribunal of competent jurisdiction to be illegal, invalid or unenforceable in such jurisdiction, the remainder of such provision shall not be thereby affected and shall be given full effect, without regard to the invalid portion.  It is the intention of the Parties that, if any court or other tribunal construes any provision or clause of this Agreement, or any portion thereof, to be illegal, void or unenforceable because of the duration of such provision or the area matter covered thereby, such court or other tribunal shall reduce the duration, area or matter of such provision, and, in its reduced form, such provision shall then be enforceable and shall be enforced.
		

		
			25.  Section 409A.  This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) to the extent any amount payable hereunder is deferred compensation subject to Code Section 409A, and will be interpreted accordingly.  Notwithstanding anything herein to the contrary, (i) if at the time of Executive’s termination of employment with the Company  Executive is a “specified Executive” as defined in Section 409A of the Code and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) and such payments shall be paid to Executive in a single lump sum as soon as practicable (and in all events within fifteen (15) days) after the date that is six (6) months following Executive’s termination of employment with the Company  (or the earliest date as is permitted under Section 409A of the Code without any accelerated or additional tax) and (ii) if any other payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Board, that is reasonably expected not to cause such an accelerated or additional tax.  To the fullest extent permitted under Code Section 409A, each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code, and references herein to Executive’s “termination of employment” shall refer to Executive’s separation from service with the Company within the meaning of Section 409A of the Code.  To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(l)(iv).  Additionally, to the extent that Executive’s receipt of any in-kind benefits from the Company or its affiliates must be delayed pursuant to this Section 25 due to Executive’s status as a “specified Executive,” Executive may elect to instead purchase and receive such benefits during the period in which the provision of benefits would otherwise be delayed by paying the Company (or its affiliates) for the fair market value of such benefits (as determined by the Company in good faith) during such period.  Any amounts paid by Executive pursuant to the preceding sentence shall be reimbursed to Executive (with interest thereon) as described above on the date that is six (6) months following Executive’ separation from service. To extent any amount 

		 

 

payable under this Agreement is deferred compensation subject to Code Section 409A, and the period during which Executive has to execute and or revoke a release prior to payment straddles a calendar year the payment shall not commence or be paid until the second calendar year. The Company shall consult with Executive in good faith regarding the implementation of the provisions of this Section 25; provided that neither the Company nor any of its Executives or representatives shall have any liability to Executive with respect thereto.
		

		
			[signature page follows]
		

		
			

		 

 

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

		
			Ranger Energy Services, LLC, a Delaware limited liability company
		

		
			 
		

		
			 
		

		
			                                                      By:__/s/ Darron Anderson____________________
		

		
			                                                      Name: Darron Anderson
		

		
			                                                      Title:   President and Chief Executive Officer
		

		
			 
		

		
			 
		

		
			 
		

		
			                                                                     _/S/ Rob Shaw ________________________
		

		
			                                                    Rob ShawExhibit 10.1

 

EXECUTION
COPY

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT (the
“Agreement”) is entered into this 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”), WILLIAM J. PASENELLI
(the “Employee”), and THE COMMUNITY FINANCIAL CORPORATION (the “Company”), solely as guarantor of
the Bank’s obligations hereunder, and is effective as of the date hereof (the “Effective Date”).

 

WHEREAS, the parties
desire by this writing to set forth the continuing employment relationship between the Bank and the Employee; and

 

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

 

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 as the Chief Executive Officer of the Bank and the President
and Chief Executive Officer of 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”). 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 his 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 $440,000 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 his responsibilities
under this Agreement; provided, however, that the Employee may:

 

 

    2

     

    

 

(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
his 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

 

 

    3

     

    

 

(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 his 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 his 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 his 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

 

 

    4

     

    

 

period of Disability which is prior to the
Employee’s termination of employment pursuant to this Section 7.

 

8.           TERMINATION
WITHOUT CAUSE. The Board may, by written notice to the Employee, immediately terminate his 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 his 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 his 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.

 

10.1         DEFINITION
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

 

 

    5

     

    

 

(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);

 

(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.

 

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

 

 

    6

     

    

 

a Change in Control, then Employee shall be
paid an unreduced lump sum severance benefit equal to the sum of the following items:

 

(a)        Three
(3) 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)        Three
(3) 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 his 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 his 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 his employment with the Bank and the Company; or (g) the Company or Bank

 

 

    7

     

    

 

materially reduce the Employee’s incentive
compensation opportunities and employee benefits to a level that is less than is provided to other employees of comperable rank
within the Company or Bank.

 

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 this
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.

 

 

    8

     

    

 

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

 

 

    9

     

    

 

of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Employee’s legal representatives.

 

(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.

 

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.

 

 

    10

     

    

 

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

 

    11

     

    

 

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.

 

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 include rules, regulations, and guidance of general application issued by the Department of the
Treasury under Internal Revenue Section 409A of the Code.

 

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.

 

    12

     

    

 

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/ Christy Lombardi	 	/s/ Michael L. Middleton
	 	 	Chairman of the Board of Directors
	 	 	 
	ATTEST:	 	THE COMMUNITY FINANCIAL CORPORATION
	 	 	(As Guarantor)
	 	 	 
	/s/ Christy Lombardi	 	/s/ Michael L. Middleton
	 	 	Chairman of the Board of Directors
	 	 	 
	WITNESS:	 	EMPLOYEE:
	 	 	 
	/s/ Christy Lombardi	 	/s/ William J. Pasenelli
	 	 	William J. Pasenelli

 

    13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00283-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00283-of-00352.parquet"}]]