Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made September 30, 2003, by and between Peoples State
Bank, Wausau, Wisconsin, a Wisconsin banking corporation, ("the Bank") and Xxxx
X. Xxxxxx, of Wausau, Wisconsin ("Xx. Xxxxxx").
WITNESSETH:
WHEREAS, the Bank has employed Xx. Xxxxxx for many years and Xx. Xxxxxx
has performed his duties in a highly satisfactory manner; and
WHEREAS, the Bank wished to continue to employ Xx. Xxxxxx and Xx. Xxxxxx
wishes to continue his employment by the Bank on the terms and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the premises, covenants and mutual
agreements contained herein, the Bank and Xx. Xxxxxx agree as follows:
1. Employment. Subject to the earlier termination of this agreement
pursuant to the terms hereof, Xx. Xxxxxx is hereby employed effective as of the
date first written above (the "Commencement Date") as Vice President of the
Bank; provided, however, that Xx. Xxxxxx may be employed in such other capacity
as the Board of Directors of the Bank shall deem appropriate and in the best
interests of the Bank. Xx. Xxxxxx agrees to serve in such capacity or
capacities on the terms and conditions hereinafter set forth.
2. Term. The term of this agreement shall commence on the
Commencement Date and shall end at midnight on the Expiration Date. For
purposes of this agreement, the term "Expiration Date" shall mean the first to
occur of (a) the date of Xx. Xxxxxx'x death, or (b) the later of (1) the first
anniversary of the Commencement Date and (2) the date to which the term of this
agreement has most recently been extended pursuant to the following sentence.
On the first anniversary of the Commencement Date (and on the first anniversary
of each subsequent extension of the term of this agreement), the term of this
agreement shall automatically be extended for one year unless not less than 90
days prior to the Expiration Date of the original or any extended term, either
party gives notice to the other that automatic extensions of the term of this
agreement (and, consequently, the Expiration Date) pursuant to this sentence
shall cease. The term "Term of Employment" shall mean the period beginning on
the Commencement Date and ending on the earlier of the Expiration Date or the
date on which Xx. Xxxxxx'x employment is terminated pursuant to paragraphs 5 or
8.
3. Extent of Services. Xx. Xxxxxx agrees to devote his full-time
attention and efforts (except during vacation periods, periods of illness and
other approved absences as provided for in paragraph 4(c)) to the duties of any
office held by him during the Term of Employment, provided, however, that Xx.
Xxxxxx'x devotion of a reasonable and de minimis portion of his attention or
efforts to the management of his personal affairs during normal business hours
shall not constitute a breach of the foregoing requirement.
4. Compensation and Reimbursement.
(a) Salary. The Bank shall pay to Xx. Xxxxxx a salary based on
an annual amount of $94,000. The Bank may increase Xx. Xxxxxx'x salary
from the amount specified herein during the Term of Employment, but may
not decrease Xx. Xxxxxx'x salary from any previously established amount.
Xx. Xxxxxx'x salary shall be payable at such times and in such
installments as are consistent with the manner in which the salaries of
other executive officers of the Bank are paid.
(b) Incentive Compensation. During the Term of Employment, Xx.
Xxxxxx shall be entitled to receive such additional compensation from the
Bank as may be provided for officers of commensurate position or rank
under the terms of any incentive program from time to time maintained and
in effect at the Bank for executive officers.
(c) Other Benefits. During the Term of Employment, Xx. Xxxxxx
shall be entitled to receive all benefits and perquisites ordinarily
provided to executive officers of the Bank, including coverage under a
director's and officer's liability insurance policy, and Xx. Xxxxxx
shall participate in all employee benefit plans or fringe benefit
programs now or hereafter established or maintained by the Bank
including, but not limited to, group insurance plans, pension benefit
plans, welfare benefit plans, pay practices, and vacation and sick leave
benefits. Xx. Xxxxxx shall be entitled to participate in all plans or
programs maintained by the Bank on terms no less favorable than those
generally available to officers of the Bank and at a level of
participation commensurate with his office.
(d) Expenses. The Bank shall pay or reimburse Xx. Xxxxxx, upon
submission of vouchers by him, for all entertainment, travel, meal, hotel
accommodation, and miscellaneous expenses reasonably incurred by him in
the interest of the Bank's business during the Term of Employment.
5. Termination of Employment.
(a) Termination by the Bank for Good Cause. The Bank may
terminate Xx. Xxxxxx'x employment prior to the Expiration Date for good
cause only upon compliance with the requirements of this paragraph 5(a).
"Good cause" for termination of Xx. Xxxxxx'x employment by the Bank shall
consist only of one or more of the following: (i) the commission of an
act or acts by Xx. Xxxxxx which results in a payment to the Bank or to
PSB Holdings, Inc. ("PSB") of a claim filed by the Bank or PSB under a
blanket banker fidelity bond policy as from time to time and at any time
maintained; (ii) the willful and continuing failure to perform his duties
in accordance with standards or policies established, from time to time,
or at any time, by the Bank, after a written demand for substantial
performance is delivered to Xx. Xxxxxx by the Board which specifically
identifies the manner in which the Board believes that Xx. Xxxxxx has not
substantially performed his duties; (iii) the commission by Xx. Xxxxxx of
any crime of moral turpitude, of dishonesty, of breach of trust, of
theft, of embezzlement, of misapplication of funds, of unauthorized
issuance of obligations or of false entries; (iv) any intentional,
reckless, or negligent act or omission to act by Xx. Xxxxxx which results
in the violation by Xx. Xxxxxx of any policy established by the Bank
which is designed to insure compliance with applicable banking,
securities, employment discrimination or other laws which causes or
results in the Bank's violation of such laws, except any act done by Xx.
Xxxxxx in good faith, as determined in the reasonable discretion of the
Board of Directors of the Bank, or which results in a violation of such
policies or law which is, in the reasonable sole discretion of such
Board, immaterial; (v) any intentional, reckless, or negligent act or
omission to act by Xx. Xxxxxx which results in a violation of an
employment policy maintained by the Bank which is applicable to all other
employees (for example, employment policies relating to the use of drugs
or alcohol) and which, by the terms of such policy, is grounds for
termination of employment, or (vi) Xx. Xxxxxx'x physical or mental
disability, if such disability either results in Xx. Xxxxxx receiving
permanent disability payments pursuant to any group disability insurance
policy or prevents Xx. Xxxxxx from the normal performance of his duties
for a continuous period of at least six months. Upon the occurrence of
any event constituting good cause for which the Bank elects to terminate
Xx. Xxxxxx'x employment prior to the Expiration Date, the Bank shall
provide written notice to Xx. Xxxxxx, which shall state the good cause
for termination, and Xx. Xxxxxx'x termination of employment shall be
effective as of the date specified in such notice. In the event of
termination of Xx. Xxxxxx'x employment in accordance with the conditions
of this paragraph (a), on the effective date of Xx. Xxxxxx'x termination
of employment, the Term of Employment shall end, all of Xx. Xxxxxx'x
obligations pursuant to this agreement (except for those provided in
paragraphs 6 and 7) shall end and the Bank's obligations to pay
compensation or provide benefits to Xx. Xxxxxx pursuant to paragraph 4
shall end.
(b) Termination by the Bank Other Than for Good Cause. The Bank
may terminate Xx. Xxxxxx'x employment prior to the Expiration Date for
any reason other than good cause (as defined in paragraph 5(a)) upon
providing 30 days written notice to Xx. Xxxxxx specifying the effective
date of Xx. Xxxxxx'x termination of employment. If the Bank terminates
Xx. Xxxxxx'x employment other than for good cause under paragraph 5(a),
the Term of Employment and all of Xx. Xxxxxx'x obligations pursuant to
this agreement (except for those provided in paragraphs 6 and 7) shall
end on the effective date of Xx. Xxxxxx'x termination of employment and
the Bank shall provide, for a period beginning on the effective date of
Xx. Xxxxxx'x termination of employment, as a severance benefit to Xx.
Xxxxxx and as liquidated damages for breach by the Bank of its otherwise
applicable obligations hereunder, (i) a monthly cash payment equal to the
amount which would, except for Xx. Xxxxxx'x termination of employment,
have been paid to Xx. Xxxxxx, if then living, as salary under paragraph
4(a) for the remainder of the current or any extended term of this
agreement, but in no event shall such payments be for a period of less
than 12 months, and (ii) until Xx. Xxxxxx becomes eligible for coverage
under the health insurance plan of another employer of Xx. Xxxxxx,
coverage for Xx. Xxxxxx, under the same terms then available to executive
officers of the Bank, under any group health insurance program in which
Xx. Xxxxxx was a participant on the effective date of Xx. Xxxxxx'x
termination of employment or under such successor plan or program as
maintained after such date for the benefit of the Bank's employees but in
no event longer than the period for which payments are made pursuant to
clause (i). Xx. Xxxxxx shall not, by virtue of his severance benefit and
liquidated damages rights, acquire any right, title or interest in
particular assets of the Bank, and such rights shall be no greater than
the right of any unsecured general creditor of the Bank. Despite any
other provision of this agreement, Xx. Xxxxxx shall not be entitled to
any severance benefit or liquidated damages, and the Bank shall not be
obligated to pay any such benefit or damages, if Xx. Xxxxxx violates the
provisions of paragraphs 6 or 7.
(c) Voluntary Termination by Xx. Xxxxxx. Xx. Xxxxxx may
terminate his employment at any time upon providing 30 days prior written
notice to the Bank stating the effective date of his termination. In any
such event, all obligations of the Bank to Xx. Xxxxxx under this
agreement and all obligations of Xx. Xxxxxx to the Bank (except those
provided for in paragraphs 6 and 7) shall cease and the Term of
Employment shall end on the effective date of Xx. Xxxxxx'x termination of
employment.
6. Restrictive Covenant. Xx. Xxxxxx agrees, subject to the provisions
of paragraph 8, that during the Term of Employment and during the one-year
period which ends on the first anniversary of the effective date of Xx.
Xxxxxx'x termination of employment:
(a) he will not, within a radius of 25 miles of the principal
office of the Bank in Wausau, Wisconsin or any branch or subsidiary
office or operation of the Bank, directly or indirectly, perform services
for, or on behalf of, any depository institution doing business as a
bank, savings and loan association, or any other entity which competes
for the Bank's retail or commercial loan business (each a "Financial
Institution") if such services are the same or substantially similar to
the services he performed for the Bank during the 12-month period
immediately preceding his termination of employment; and
(b) he will not, directly or indirectly, solicit loans, deposits
or other business on behalf of any Financial Institution from any person,
corporation, limited liability company, partnership or other entity or
organization:
(i) who was a customer of the Bank on the date of his
termination of employment or within the one year period ending on
the date of his termination of employment;
(ii) was identified to management of the Bank by him, or by
management of the Bank to him, as a potential customer of the Bank
within the six-month period ending on the date of his termination
of employment, or
(iii) was solicited by him for loans, deposits or other
business on behalf of any Financial Institution at any time during
the one-year period ending on the date of his termination of
employment; and
(c) he will not, directly or indirectly, for himself or for any
other person induce or attempt to induce any customer of the Bank to
cease doing business with the Bank, or in any way interfere with the
relationship between any customer of the Bank and the Bank.
For purposes of this paragraph 6, the term "directly or indirectly" includes
(a) any sale through any medium and (b) the direct or indirect ownership,
management, operation, control, service as a director for, or association or
employment with, any Financial Institution if such Financial Institution is
engaged in the activities prohibited to Xx. Xxxxxx by the provisions of this
paragraph 6 and Xx. Xxxxxx'x activities or services for such Financial
Institution involve the activities and services which are the same or
substantially similar to those services performed by him for the Bank;
provided, however, that an aggregate beneficial ownership interest of
Xx. Xxxxxx of less than 5% of the equity interests in any Financial Institution
(or affiliate thereof) whose stock is registered pursuant to the provision of
the Securities Exchange Act of 1934 shall be deemed not to constitute a
violation of this provision. Xx. Xxxxxx further agrees that the restrictions
set forth in this agreement are reasonably necessary to protect the reasonable
interests of the Bank.
7. Confidential Information. Xx. Xxxxxx agrees that during the Term
of Employment and for a two year period following the termination of his
employment he will not reveal to any individual who is not then either employed
by, retained by, or on the Board of Directors of PSB, or any of its
subsidiaries, without the consent of PSB or the Bank, any confidential or
proprietary information of PSB or the Bank, the revealing of which would
adversely affect the business of PSB or the Bank, unless Xx. Xxxxxx discloses
such matters in response to a subpoena or to discovery proceedings concerning a
matter in litigation or based on advice of counsel acceptable to the Bank that
such disclosure is appropriate or necessary under applicable law or regulation.
8. Change of Control. In the event of a Change of Control, the
following provisions of this agreement shall apply notwithstanding any other
terms or conditions of this agreement:
(a) Upon a Change of Control, the "Term of Employment" for
purposes of paragraph 2 shall mean the period equal in length to the Term
of Employment then remaining on the date immediately prior to the Change
of Control, but in no event for a period of less than 12 months, and the
"Expiration Date" shall mean the first to occur of (i) Xx. Xxxxxx'x
death, or (ii) his termination pursuant to paragraph 5, or (iii) his
termination pursuant to paragraph 8(b). Notwithstanding any other
provision of this agreement or any incentive compensation plan then in
effect, Xx. Xxxxxx shall be awarded, for each fiscal year ending during
the Employment Period following the Change in Control, an annual bonus
(the "Annual Bonus") in cash at least equal to his average annual bonus
under any bonus plan with respect to performance during each of the three
full calendar years prior to the effective date of the Change in Control,
regardless of when such bonus was actually paid (the "Recent Annual
Bonus") and each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded but such amount shall be offset by any
amount accrued under any other incentive compensation plan maintained
after the Change of Control.
(b) Termination of Employment by Xx. Xxxxxx for Good Reason.
Xx. Xxxxxx'x employment may be terminated by Xx. Xxxxxx during the Term
of Employment for Good Reason if, (i) within 60 days of the date of
occurrence of a triggering event, Xx. Xxxxxx notifies the Bank in writing
of his intention to treat such event as Good Reason, (ii) within 30 days
following receipt of such notice provided for in (i), the Bank fails to
cure the triggering event and (iii) within 30 days following the
expiration of the 30 day period described in (ii), Xx. Xxxxxx voluntarily
terminates his employment by giving written notice to the Bank.
(c) Good Reason. For purposes of this agreement, "Good Reason"
shall mean the occurrence of one or more of the following events
subsequent to the public announcement of, or actual knowledge of the Bank
or PSB of, any actual or proposed transaction which results, directly or
indirectly, within 270 days of the date of such announcement or
knowledge, in a Change of Control (each of which shall be a "triggering
event"):
(i) the assignment to Xx. Xxxxxx of any duties inconsistent
in any respect with the duties or responsibilities then held by Xx.
Xxxxxx (except if his status, title, or authority has been
increased), or any other action by the Bank which results in a
diminution in such duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Bank promptly after
receipt of notice thereto given by Xx. Xxxxxx;
(ii) any failure by the Bank to comply with any of the
provisions of paragraph 4 of this agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Bank promptly after receipt
of notice thereof given by Xx. Xxxxxx, unless the Bank agrees to
fully compensate Xx. Xxxxxx for any such reduction;
(iii) Xx. Xxxxxx is required to locate his office more than
25 miles from the then current location of the his principal
office, excluding business travel reasonably consistent with the
amount of travel required of him prior to such relocation;
(iv) any purported termination by the Bank of Xx. Xxxxxx'x
employment otherwise than as expressly permitted by this agreement;
(v) any failure of 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 to
assume expressly and agree to perform this agreement in the same
manner and to the same extent that the Bank would be required to
perform it if no such succession had taken place; or
(vi) the Bank's or PSB's request that Xx. Xxxxxx perform an
illegal, or wrongful act in violation of the Bank's code of conduct
policies.
(d) Severance Benefit on Termination by Xx. Xxxxxx for Good
Reason. Upon termination of Xx. Xxxxxx'x employment by Xx. Xxxxxx
pursuant to paragraph 8(a) or by the Bank for a reason other than good
cause subsequent to the public announcement of, or the Bank's or PSB's
actual knowledge of, any actual or proposed transaction which results,
directly or indirectly, within 270 days of the date of such announcement
or knowledge, in a Change of Control, all obligations of the Bank to
Xx. Xxxxxx under this agreement and all obligations of Xx. Xxxxxx to the
Bank (except those provided for in paragraph 7) shall cease and the Term
of Employment shall end (the "Date of Termination") and:
(i) subject to paragraph 8(f), the Bank shall pay to Xx.
Xxxxxx in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
(A) the sum of (1) Xx. Xxxxxx'x base salary under
paragraph 4(a) through the Date of Termination and any
accrued incentive compensation to the extent not theretofore
paid, and (2) the product of (a) an amount equal to any
incentive compensation earned by Xx. Xxxxxx for the most
recently completed fiscal year during the Term of Employment,
if any and (b) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365; and
(B) the amount equal to the amount of base salary to
which Xx. Xxxxxx would have been entitled pursuant to
paragraph 4(a) had his termination of employment not
occurred, but in no event an amount less than 100% of Xx.
Xxxxxx'x then current base salary;
(ii) until Xx. Xxxxxx becomes eligible for coverage under
the health insurance plan of another employer of Xx. Xxxxxx,
coverage for Xx. Xxxxxx, under the same terms then available to
executive officers of the Bank, under any group health insurance
program in which Xx. Xxxxxx was a participant on the effective date
of Xx. Xxxxxx'x termination of employment or under such successor
plan or program as maintained after such date for the benefit of
the Bank's employees; and
(iii) to the extent not theretofore paid or provided, the
Bank shall timely pay or provide to Xx. Xxxxxx any other amounts or
benefits required to be paid or provided or which he is eligible to
receive under any plan, program, policy or practice or contract or
agreement of the Bank and its affiliated companies.
(e) Definition of Change of Control. For the purpose of this
agreement, a "Change of Control" shall be deemed to have occurred:
(i) when any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) of the Exchange Act, excluding
any employee benefit plan sponsored or maintained by PSB or any
subsidiary of PSB (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act, as amended from
time to time), of securities of PSB or the Bank representing 30% or
more of the combined voting power of the Bank's or PSB's then
outstanding securities with respect to the election of the
directors of the Bank or PSB; or
(ii) when, during any period of 24 consecutive months, the
individuals who, at the beginning of such period, constitute the
Board of Directors of the PSB (the "Incumbent Directors") cease for
any reason other than death to constitute at least a majority
thereof, provided, however, that a director who was not a director
at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director)
if such director was elected by, or on the recommendation of or
with the approval of, at least a majority of the directors who then
qualified as Incumbent Directors either actually (because they were
directors at the beginning of such 24-month period) or by prior
operation of this provision; or
(iii) the occurrence of a transaction requiring stockholder
approval of the acquisition of the Bank by an entity other than PSB
or a 50% or more owned subsidiary of PSB or shareholder approval of
the acquisition of PSB through purchase of assets, or by merger,
consolidation or otherwise, except in the case of a transaction
pursuant to which, immediately after the transaction, PSB's
shareholders immediately prior to the transaction own at least 60%
of the combined voting power of the surviving entity's then
outstanding securities with respect to the election of the
directors of such entity solely be reason of such transaction; or
(iv) the liquidation or dissolution of the Bank or PSB.
(f) Limitation on Benefits.
(i) Notwithstanding any other provision of this agreement,
the present value of all amounts payable pursuant to this paragraph
8 which would constitute "parachute payments" (as such term is
defined in Section 280G of the Internal Revenue Code of 1986 as
amended (the "Code"), and any regulations promulgated thereunder),
together with the present value of all other benefits payable by
the Bank to Xx. Xxxxxx under any other plans and the Bank which
would also constitute "parachute payments," shall in no event equal
or exceed an amount (the "Testing Amount") equal to 3 times Xx.
Xxxxxx'x "base amount" (as such term is defined in Section 280G of
the Code and any regulations promulgated thereunder), it being the
intention of the parties that no payment made pursuant to this
agreement shall constitute an "excess parachute payment" (as such
term is defined in Section 280G of the Code and any regulations
promulgated thereunder). In the event that the present value of
the payments provided for in this paragraph 8 together with the
present value of such other amounts, without taking into account
this paragraph (f), equals or exceeds the Testing Amount, then the
amount of the payments provided for in this paragraph 8 and under
such plans shall be reduced, beginning with the payments which are
last in time, until the present value of all such payments is less
than the Testing Amount. For purposes of this paragraph 8, present
value shall be determined in the manner provided in Section 280G of
the Code and the regulations promulgated thereunder.
(ii) It is the intention of the parties that the provisions
of this paragraph 8 be construed to reduce the amounts otherwise
payable hereunder only to the extent necessary to avoid the
disallowance of the deduction by the Bank for any such amounts or
the imposition of an excise tax on Xx. Xxxxxx for any such amounts,
under federal income tax law as it currently exists or may
hereafter be amended.
(iii) In the event the provisions of this paragraph 8
require any reduction in the amount to be paid to Xx. Xxxxxx under
this paragraph 8 of this Agreement, the Bank shall deliver to Xx.
Xxxxxx concurrently with such payment a statement signed by a
partner or principal of its independent accounting firm setting
forth the basis for and computation of such reduction and
certifying that such computation is made in good faith.
9. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under
this agreement shall not be deemed to have been given unless delivered in
person or mailed, postage prepaid by certified mail addressed, in the
case of Xx. Xxxxxx, to his last known residence as specified by him in a
notice to the Bank, or, in the case of the Bank to its principal office.
(b) Benefits and Obligations. This agreement shall be binding
upon, shall inure to the benefit of the Bank and its successors or
assigns, and, as provided for herein, PSB, and shall be enforceable by
the Bank and its respective successors and assigns, and Xx. Xxxxxx, his
heirs, assigns or legal representatives; provided, however, that the
obligations of Xx. Xxxxxx contained herein may not be delegated or
assigned.
(c) Entire Agreement; Amendment. This agreement constitutes the
entire agreement between the parties with respect to the subject matter
hereof and may only be amended by an agreement in writing signed by all
of the parties hereto.
(d) Waiver. The failure of any party hereto to insist, in any
one or more instances, upon performance of any of the terms and
conditions of this agreement, shall not be construed as a waiver or
relinquishment of any right granted hereunder or of the future
performance of any such term, covenant or condition.
(e) Severability. In the event that any portion of this
agreement may be held to be invalid or unenforceable for any reason, the
parties hereto agree that said invalidity or unenforceability, shall not
effect the other portions of this agreement and that the remaining
covenants, terms and conditions or portions thereof shall remain in full
force and effect and any court of competent jurisdiction may so modify
the objectionable provision as to make it valid and enforceable.
(f) Governing Laws. This agreement shall be governed by and
construed in accordance with the internal laws of the State of Wisconsin
without reference to conflicts or law principles.
(g) Captions. The captions contained in this agreement are for
the convenience of the Bank and Xx. Xxxxxx and shall not be deemed or
construed as in any way limiting or extending the language of the
provisions to which such captions refer.
IN WITNESS WHEREOF, the Bank and Xx. Xxxxxx have caused this instrument
to be executed as of the date first written above.
PEOPLES STATE BANK
By: XXXXX X. XXXXXXXX
Xxxxx X. Xxxxxxxx
As its President
XXXX X. XXXXXX
Xxxx X. Xxxxxx
