EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (“Agreement”) is made and entered into as of this 26th day
of September, 2006, (the “Effective Date”) by and among Peoples Bancorp (“the
Company”), the holding company of Peoples Federal Savings Bank of DeKalb County
(“Peoples”) and First Savings Bank (“First Savings”), and Xxxxx Xxxxxx
(“Executive”), with reference to the following:
WHEREAS,
Executive is currently employed by Peoples, which is a wholly owned subsidiary
of the Company;
WHEREAS,
the Company, Peoples, and First Savings desire to provide for the employment
of
the Executive by Peoples;
WHEREAS,
the Executive is willing to commit himself to serving the Company on the
terms
and conditions herein provided;
NOW,
THEREFORE, IN CONSIDERATION OF the recitals set forth above and the mutual
promises, covenants, agreements, conditions and undertakings hereinafter
set
forth, the adequacy and receipt of which consideration is hereby acknowledged,
the parties hereto agree as follows:
1.
Term.
This
Agreement shall have a term of two (2) years, commencing as of the Effective
Date set forth above (the “Term”). Where used herein, “Term” shall refer to the
entire period of employment of Executive by the Company from and after the
Effective Date of this Agreement, whether for the period provided above and
as
extended or terminated earlier as hereinafter provided.
2.
Position and Duties.
(a)
During the Term, Executive shall be employed on a full-time basis to serve
as
Chief Financial Officer of the Company and perform the duties customarily
performed by such officer of a savings association, including the general
supervision and operation of the financial affairs of Peoples, subject to
the
direction of and the powers vested by law in the Board of Directors of the
Company (the “Board”) and Peoples’ shareholders, the Company. Except as provided
for herein, the duties and position of Executive as Chief Financial Officer
hereunder may be changed only by the mutual written agreement of the parties
hereto. The parties may mutually agree to extend Executive’s full-time status
for additional 12-month periods following the Effective Date.
(b)
During the Term hereof, Executive shall perform the services herein contemplated
to be performed by Executive faithfully, diligently and to the best of
Executive’s ability in compliance with instructions and policies of the Board,
Peoples Federal Charter and Bylaws and with all applicable laws and
regulations.
3.
Compensation.
(a)
Base
Salary.
For
executive’s services rendered hereunder, Peoples shall pay or cause to be paid a
base salary to Executive at the rate of $98,000 per annum, payable in conformity
with Peoples’ normal payroll periods and procedures. During the Term,
Executive’s base salary shall be reviewed at least once every twelve (12) months
and shall be increased (but not reduced) at any time, and from time to time,
as
shall be substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other executives of Peoples,
provided that Executive’s Base Salary shall be increased by a percentage no less
than the annual increase of the cost of living index for the Fort Xxxxx,
Indiana
metropolitan area. Moreover, if Executive’s cost of health insurance coverage
provided by Peoples exceeds $5,000 on an annual basis after the first 12-month
period of the Term, Executive’s base salary for such second 12-month period
shall be increased by an amount no less than the excess of such cost over
$5,000.
Any increase in base salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The term “Base Salary” as
utilized in this Agreement shall refer to base salary as so
increased.
(b)
Discretionary
Bonus.
In
addition to Executive’s Base Salary provided for under Paragraph 4(a) above, the
Executive shall participate in an equitable manner with all other senior
management executives of Peoples in discretionary bonuses that the Board
may
award from time to time to Peoples’ senior management executives. No other
compensation provided for in this Agreement shall be deemed a substitute
for the
Executive’s right to participate in such discretionary bonuses.
(c)
Stock
Awards.
The
Executive shall be eligible for consideration for stock option grants by
the
Company pursuant to any stock option plan adopted by the Company, for so
long as
Executive shall be employed by the Peoples.
(d)
Other
Benefits.
The
Executive will eligible to participate in or receive benefits under any employee
benefit plans of Peoples which are available to senior executives and key
management employees of Peoples, subject to and on a basis consistent with
the
terms, conditions and overall administration of such plans and arrangements.
Nothing paid to Executive under any such plan or arrangement will be deemed
to
be in lieu of other compensation to which the Executive is entitled under
this
Agreement.
4.
Vacation and Sick Leave.
During
the Term hereof, Executive shall be entitled to paid vacation and paid sick
leave, the amount and term of which shall be determined in accordance with
the
policies of Peoples as in effect from time to time, but in no event shall
the
vacation period be less than three weeks per year.
5.
Group Medical, Life Insurance and Other Benefits.
The
Executive shall participate in any plan that Peoples maintains for the benefit
of its executives if the plan relates to (i) pension, profit sharing or
other retirement benefits, (ii) medical insurance or the reimbursement of
medical or dependent care expenses, or (iii) other group benefits,
including disability and life insurance plans.
6.
Business Expenses.
Executive
shall be entitled to reimbursement by Peoples for any and all ordinary and
necessary business expenses reasonably incurred by Executive in the performance
of Executive’s duties and in acting for Peoples during the Term of this
Agreement, provided that Executive furnishes to Peoples, for review and approval
by the Chairman of the Board, adequate records and other documentation as
may be
required for the substantiation of such expenditures as a business expense
of
the Bank
7.
Termination for Cause.
(a)
The
Board may for cause terminate Executive’s employment at any time during the Term
of this Agreement. In such event, all rights of Executive under this Agreement
shall terminate and Executive shall have no right to receive compensation
or
other benefits for any period after the effective date of such termination
for
cause. Termination for cause shall be defined as the Executive’s dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of
any
law, rule or regulation (other than traffic violations or similar offenses)
or
final cease-and-desist order, or material breach of any provision of this
Agreement.
(b)
Notwithstanding the foregoing, no termination for cause shall be effective
with
respect to the Executive unless and until there shall have been delivered
to him
a copy of a resolution, finding that in the good faith opinion of the Board
of
Directors of Peoples (the “Board”), the Executive’s actions and/or
2
failure
to act justifies termination for cause and specifying the particulars thereof
in
detail. Reasonable notice shall be provided to the Executive and he shall
receive an opportunity, together with counsel, to be heard before the Board.
The
Executive shall not have the right to receive compensation or other benefits
for
any period after a termination for cause, except that benefits previously
vested
or accrued shall be unaffected by such termination.
8.
Events of Termination; Payments to Executive.
The
provisions of this Paragraph 9 shall apply upon the occurrence of an Event
of
Termination (as herein defined).
(a)
As
used in this Agreement, an “Event of Termination” shall mean and include any one
or more of the following: (i) the termination by Peoples of the Executive’s
employment hereunder for any reason other than for cause (as defined in
Paragraph 7 hereinabove) during the Term; or (ii) the Executive’s
resignation or constructive termination from Peoples employ, upon any
(A) material change in the Executive’s function, duties, or
responsibilities, which change would cause the Executive’s position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof (and any such material change shall be deemed a continuing
breach of this Agreement), (B) Relocation of the principal place at which
Executive’s duties are to be performed to a location outside a thirty (30) mile
radius around the principal location at which Executive’s duties are performed
immediately prior to the termination of employment, (C) material reduction
in the benefits and perquisites to the Executive from those being provided
as of
the Effective Date of this Agreement except for any changes that are generally
applicable to senior executives and key management employees or expressly
contemplated by this Agreement (any such reduction to be deemed a continuing
breach of this Agreement), or (D) or any other material breach of this
Agreement by Peoples. Upon the occurrence of any event described in clauses
(A),
(B), (C) or (D) above, the Executive shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less
than
sixty (60) days prior written notice given within a reasonable period of
time
not to exceed, except in case of a continuing breach, four calendar months
after
the later of the (i) occurrence of the event giving rise to said right to
elect termination or (ii) actual knowledge of such event by the Executive.
In the case of a continuing breach, the Executive may give such sixty (60)
days
prior notice at any time. Either of Executive’s sixty (60) days prior notice of
his Date of Termination shall be referred to as “Notice of Termination.” The
date specified in Executive’s Notice of Termination to the Bank of his last date
of employment shall be the “Date of Termination.”
(b)
Upon
the occurrence of an Event of Termination, on the Date of Termination, as
defined in this Paragraph 9, Peoples shall pay the Executive, or, in the
event
of his subsequent death, his beneficiary or beneficiaries as he may have
designated, or his estate, if no beneficiary designation has been made, or
if no
beneficiaries survive the Executive, as severance pay or liquidated damages,
or
both, a sum equal to (i) the amount of Base Salary of the Executive for
each year or portion thereof during the remaining Term of this Agreement,
plus
(ii) bonuses in an amount equal to the last bonus received, divided by 12,
and multiplied by the number of years remaining in the Term of this Agreement,
as well as (iii) health and/or medical benefits as provided under Paragraph
6 and retirement benefits under Paragraph 6 of this Agreement, provided,
however, that if Peoples is not in compliance with its minimum capital
requirements or if such payments would cause Peoples’ capital to be reduced
below its minimum capital requirements, such payments shall be deferred until
such time as Peoples is in capital compliance. Such health benefit payments
shall be made as incurred, and such salary, bonus and retirement benefit
payments shall be made in a lump sum within ten (10) days of the Date of
Termination unless Peoples elects to make such payments under the Peoples’
current payment procedures during the remaining Term of Employment under
this
Agreement, which election may only be made if consistent with Treas. Reg.
§
1.409A-2(a)(5)(iv).
(c)
The
payments provided under this Paragraph 9 upon an Event of Termination shall
be
in lieu of any other payments or damages recoverable in any causes of action
by
Executive related to this
3
Agreement.
As a condition to receipt of payments hereunder, the Executive shall execute
a
Release and Settlement Agreement pursuant to which the Executive shall waive
any
and all claims resulting from employment at or termination from Peoples other
than payments or benefits which are expressly provided for in this
Agreement.
9.
Termination as a Result of a Change of Control.
(a)
Change
of Control.
For
purposes of this Agreement and except as provided in Paragraph 11(c) below
relating to supervisory transactions, the term “Change of Control” shall mean
the occurrence of any of the following events:
(i)
Any
“person” (as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company
or a corporation owned directly or indirectly by the shareholders of the
Company
in substantially the same proportions as their ownership of stock in the
Company, becomes after the date hereof the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of the securities
of
the Company representing fifty percent (50%) or more of the total voting
power
represented by the Company then outstanding securities that vote generally
in
the election of directors (“Voting Securities”);
(ii)
Any
“person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or indirectly
by the
shareholders of the Company in substantially the same proportions as their
ownership of stock in the Company, becomes after the date hereof the “beneficial
owner” (as defined in Rule 13 d-3 under the Exchange Act), directly or
indirectly, of twenty-five percent (25%) or more of the Voting Securities
of The
Company, and, within a period of twelve (12) months of such acquisition of
beneficial ownership, individuals who at the beginning of such period constitute
the Board of Directors of the Company, or any new director whose election
or
nomination was approved by a vote of at least two-thirds of the directors
of the
Company then still in office who were directors at the beginning of such
period,
or whose election or nomination was previously so approved, cease for any
reason
to constitute at least sixty percent (60%) of the directors of the
Company;
(iii)
The
merger or consolidation of the Company with any other corporation, other
than a
merger or consolidation in which the shareholders of the Company immediately
prior thereto continue to own, directly or indirectly, Voting Securities
representing at least seventy-five percent (75%) of the total voting power
of
the entity surviving such merger or consolidation; or
(iv) The
complete liquidation of the Company or Peoples or sale or disposition by
the
Company or Peoples (in one transaction or a series of transactions) of all
or
substantially all of the Company’s or Peoples’ assets.
(b)
Severance
Payment.
If
Executive’s employment with Peoples is terminated as a result of a Change of
Control of the Company, Executive shall be entitled to receive as his sole
and
exclusive remedy a severance payment equal to 2.0 times Executive’s Base Salary,
as provided for in Paragraph 3(a) of this Agreement; plus the amount of any
bonus compensation earned by Executive during the 2 years immediately preceding
the Change of Control, health benefits under Paragraph 6(a) and retirement
benefits under Paragraph 6(b), as well as rights to any vested options, less
any
amounts required to be deducted by Peoples for federal and state taxes or
other
applicable requirements. The severance payment hereunder shall be paid to
Executive upon the effectiveness of Executive’s termination of employment from
Peoples and the termination of this Agreement. In the event a severance payment
is paid to Executive under this Paragraph 9(b), this Agreement shall be
terminated and Peoples shall have no further obligation to Executive under
this
Agreement, except as provided herein.
4
(c)
Upon
the occurrence of a Change in Control, the Executive will be entitled to
any
benefits granted to him pursuant to any stock option or any other benefit
plan
of Peoples whether or not such benefits have vested in accordance with Paragraph
4(d). Vested and/or accrued but unvested rights of Executive under Peoples’
Retirement Plan, or any supplemental plan, and Executive’s health and/or medical
benefits provided under Paragraph 6 of this Agreement shall not be affected
by a
Change in Control.
(d)
Notwithstanding the preceding paragraphs of this Paragraph 9, the payments
or
benefits to be made or afforded to Executive under this Agreement when
aggregated with any other “golden parachute” amounts (defined under Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”) as compensation
that becomes payable or accelerated due to a Change in Control payable under
any
other plans, agreements or policies of Peoples or the Company, shall be reduced
to the highest amount permissible under Sections 280G and 4999 of the Code
before the Executive becomes subject to the excess parachute payment excise
tax
under Section 4999 of the Code and Peoples or the Company loses all or part
of
its compensation deduction for such payments. The Executive shall determine
the
allocation of the reduction required hereby among the benefits to which the
Executive is entitled.
(e)
Compliance
with Law and Regulation.
The
parties hereto expressly acknowledge and agree that any payments made to
Executive pursuant to this Agreement or otherwise are subject to and conditioned
upon compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
10.
Other Termination.
(a)
Disability.
In the
event that Executive shall fail, because of illness, incapacity or injury,
to
render the services contemplated by this Agreement for three (3) consecutive
calendar months, or for shorter periods aggregating four (4) months in any
twelve (12) month period, Executive’s employment hereunder may be terminated by
written notice from Peoples to Executive. In the event that Executive’s
employment is terminated under this Paragraph 10(A), Executive shall receive
the
difference between any disability payments provided by Peoples’ insurance plans
and his Base Salary as set forth in Paragraph 4(a) hereof which he would
have
received during the remaining Term of this Agreement, plus the amount of
any
bonus compensation payable to Executive under Section 4(b) hereof for any
number
of years remaining in the Term of this Agreement, prorated as appropriate.
Such
termination shall not affect any rights which Executive may have pursuant
to any
insurance or other death benefit, retirement or stock award plans or
arrangements of Peoples, or any stock option plans or options thereunder,
which
rights shall continue to be governed by the provisions of such plans and
arrangements.
(b)
Death.
If
Executive’s employment is terminated by reason of Executive’s death, this
Agreement shall terminate without further obligations of Peoples to Executive
(or Executive’s heirs or legal representatives) under this Agreement, other than
for payment of (i) Executive’s Base Salary which he was receiving at the
time of death, prorated through the date of termination; (ii) the amount of
any bonus compensation payable to Executive at the time of his death under
Section 4(b) above, prorated through the date of termination; (iii) any
compensation previously deferred by Executive; (iv) any accrued vacation
and/or sick leave pay; (v) any vested and/or accrued but unvested rights in
any stock options and (vi) any amounts due pursuant to the terms of any
applicable welfare benefit plan. All of the foregoing amounts shall be paid
to
Executives estate or beneficiary, as applicable, in a lump sum in cash within
thirty (30) days after the date of termination or earlier as required by
applicable law.
11.
Regulatory Provisions.
(a)
Suspension
and Removal Orders.
If
Executive is suspended and/or temporarily prohibited from participating in
the
conduct of Peoples’ affairs by notice served under Section 8(e)(3) or 8(g)(1) of
the Federal Deposit Insurance Act (12 U.S.C. Section 181 8(e)(3) and (g)(1)),
Peoples’ obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the
notice
are dismissed, Peoples may in its discretion: (i) pay Executive all or part
of the
5
compensation
withheld while its obligations under this Agreement were suspended; and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended. If Executive is removed and/or permanently prohibited from
participating in the conduct of Peoples’ affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
Section 181 8(e)(4) or (g)(1)), all obligations of Peoples under this Agreement
shall terminate as of the effective date of the order, but vested rights
of the
parties shall not be affected.
(b)
Termination
by Default.
If
Peoples is in default (as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1813(x)(1)), all obligations under this
Agreement shall terminate as of the date of default, but vested rights of
the
parties shall not be affected.
(c)
Supervisory
Assistance or Merger.
All
obligations under this Agreement shall be terminated, except to the extent
that
it is determined that continuation of the Agreement is necessary for the
continued operation of Peoples: (i) by the Director of the Office of Thrift
Supervision (the “Director”) or his or her designee, at the time that the
Federal Deposit Insurance Corporation or the Office of Thrift Supervision
enters
into an agreement to provide assistance to or on behalf of Peoples under
the
authority contained in Section 13(c) of the Federal Deposit Insurance Act
(12
U.S.C. Section 1823(c)); or (ii) by the Director or his or her designee, at
the time that the Director or his or her designee approves a supervisory
merger
to resolve problems related to the operation of Peoples or when Peoples is
in an
unsafe or unsound condition. All rights of the parties that have already
vested,
however, shall not be affected by such action.
12.
Disclosure or Use of Trade Secrets/Non-Compete Agreement.
During
the Term hereof, Executive will have access to and become acquainted with
what
Executive and Peoples acknowledge are trade secrets of Peoples. Executive
shall
not use or disclose any trade secrets or, directly or indirectly, cause them
to
be used or disclosed in any manner, during the Term hereof or for a period
of
one (1) year after the termination of this Agreement, except as may be required
or requested by Peoples, by court order or under applicable law or regulation.
While Executive is employed by Peoples and for a period of one year after
termination of Executive’s employment by Peoples for cause or by the Executive,
Executive shall not directly or indirectly engage in any bank or bank-related
business which competes with the business of Peoples as conducted during
Executive’s employment by Peoples for any financial institution, including, but
not limited to, banks, savings associations and credit unions within a 00-xxxx
xxxxxx xx Xxxxxx, Xxxxxxx.
13.
Return of Documents.
Executive
expressly agrees that all manuals, documents, files, reports, studies or
other
materials used and/or developed by Executive for Peoples during the Term
of this
Agreement or prior thereto while Executive was employed by Peoples are solely
the property of Peoples, and that Executive has no right, title or interest
therein. Upon termination of this Agreement, Executive or Executive’s
representative shall promptly deliver possession of all such materials
(including any copies thereof) to Peoples.
14.
Notices.
All
notices, demands or other communications hereunder shall be in writing and
shall
be deemed to have been duly given if delivered in person, or sent by United
States mail, certified or registered, with return receipt requested, if to
Executive, addressed to Executive at the last residence address of Executive
as
shown in the records of Peoples, and if to Peoples, addressed to the President
at Peoples’ principal office.
15.
Governing Law and Jurisdiction.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Indiana. Each of the parties hereto consents to the jurisdiction
of
the Indiana or federal courts, as the case
6
may
be,
for the enforcement of this Agreement and matters pertaining to the transactions
and activities contemplated hereby.
16.
Attorneys’ Fees.
In
the
event that a dispute arises with respect to this Agreement, the prevailing
party
in such dispute shall be entitled to recover all expenses, including, attorneys’
fees and court costs.
17.
Benefit of Agreement.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that
Executive may not assign any interest in this Agreement without the prior
written consent of Peoples.
18.
Captions.
Captions
and paragraph heading used in this Agreement are for convenience only and
shall
not be used in interpreting or construing this Agreement.
19.
Entire Agreement.
This
Agreement contains the entire agreement of the parties with respect to the
employment of Executive by Peoples, and it expressly supersedes any and all
other agreements, either oral or written, relating thereto
20.
Severability.
Should
any provision of this Agreement for any reason be declared invalid, void
or
unenforceable by a court of competent jurisdiction, the validity and binding
effect of any remaining portions of this Agreement shall remain in full force
and effect as if this Agreement had been executed with such invalid, void
or
unenforceable provisions eliminated; provided, however, that the remaining
provisions still reflect the intent of the parties to this
Agreement.
21.
Amendments.
This
Agreement may not be amended or modified except by a written agreement signed
by
Executive and Peoples. This Agreement and any amendment thereof may be executed
in counterparts.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
|
By:
|
/s/ Xxxxxxx X. Xxxxxxx, III | ||
|
PEOPLES
FEDERAL SAVINGS BANK OF DEKALB COUNTY
|
|||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxx, III | ||
| President | |||
|
EXECUTIVE
|
|||
| /s/ Xxxxxx X. Xxxxxx | |||
|
Xxxxxx
X. Xxxxxx
|
|||
7
