EXHIBIT 10.2
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this 21st day of April 2006,
between Peoples Community Bancorp, Inc. (the "Corporation"),
Peoples Community Bank, a Federally chartered savings bank and a
wholly owned subsidiary of the Corporation (the "Bank"), and
Xxxxxxx X. Xxxx (the "Executive"). The Corporation and the Bank
are collectively referred to as the "Employers."
WITNESSETH
WHEREAS, the Employers desire to be ensured of the
Executive's active participation in the business of the
Employers;
WHEREAS, in order to induce the Executive to serve in the
employ of the Employers and in consideration of the Executive's
agreeing to serve in the employ of the Employers, the parties
desire to specify the severance benefits which shall be due the
Executive by the Employers in the event that his employment with
the Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements
herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have
the meanings set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average
Annual Compensation" for purposes of this Agreement shall be
deemed to mean the average level of compensation paid to the
Executive by the Employers or any subsidiary thereof during the
most recent five taxable years preceding the Date of Termination
and which was either (i) included in the Executive's gross income
for tax purposes, including but not limited to Base Salary,
bonuses and amounts taxable to the Executive under any qualified
or non-qualified employee benefit plans of the Employers, or (ii)
deferred at the election of the Executive.
(b) Base Salary. "Base Salary" shall have the meaning set
forth in Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for
"Cause" shall mean termination because of personal 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.
(d) Change in Control of the Corporation. "Change in
Control of the Corporation" shall mean a change in the ownership
of the Corporation, a change in the effective control of the
Corporation or a change in the ownership of a substantial portion
of the assets of the Corporation as provided under Section 409A
of the Code, as amended from time to time, and any IRS guidance,
including Notice 2005-1, and regulations issued in connection
with Section 409A of the Code. In no event, however, shall a
Change in Control be deemed to have occurred as a result of any
acquisition of securities or assets of the Corporation, the Bank,
or a subsidiary of either of them, by the Corporation, the Bank,
or any subsidiary of either of them, or by any employee benefit
plan maintained by any of them.
(e) Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
(f) Date of Termination. "Date of Termination" shall mean
(i) if the Executive's employment is terminated for Cause or for
Disability, the date specified in the Notice of Termination, and
(ii) if the Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given or as
specified in such Notice.
(g) Disability. Termination by the Employers of the
Executive's employment based on "Disability" shall be deemed to
have occurred if the Executive: (i) is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous
period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Employers.
(h) Effective Date. The Effective Date of this Agreement
shall mean the date first above written.
(i) Good Reason. Termination by the Executive of the
Executive's employment for "Good Reason" shall mean termination
by the Executive within twenty-four (24) months following a
Change in Control of the Corporation based on:
(1) Without the Executive's express written consent,
the failure to elect or to re-elect or to appoint or to re-
appoint the Executive to the office of Senior Vice President,
Chief Lending Officer of the Employers or a material adverse
change made by the Employers in the Executive's functions, duties
or responsibilities as Senior Vice President, Chief Lending
Officer of the Employers;
(2) Without the Executive's express written consent, a
reduction by either of the Employers in the Executive's Base
Salary as the same may be increased from time to time or, except
to the extent permitted by Section 3(b) hereof, a reduction in
the package of fringe benefits provided to the Executive, taken
as a whole;
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(3) The principal executive office of either of the
Employers is relocated outside of the West Xxxxxxx, Ohio area or,
without the Executive's express written consent, either of the
Employers require the Executive to be based anywhere other than
an area in which the Employers' principal executive office is
located, except for required travel on business of the Employers
to an extent substantially consistent with the Executive's
present business travel obligations;
(4) Any purported termination of the Executive's
employment for Disability or Retirement which is not effected
pursuant to a Notice of Termination satisfying the requirements
of paragraph (k) below; or
(5) The failure by the Employers to obtain the
assumption of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(j) IRS. IRS shall mean the Internal Revenue Service.
(k) Notice of Termination. Any purported termination of
the Executive's employment by the Employers for any reason,
including without limitation for Cause, Disability or Retirement,
or by the Executive for any reason, including without limitation
for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after
such Notice of Termination is given, except in the case of the
Employers' termination of Executive's employment for Cause, which
shall be effective immediately; and (iv) is given in the manner
specified in Section 10 hereof.
(l) Retirement. "Retirement" shall mean voluntary
termination by the Executive in accordance with the Employers'
retirement policies, including early retirement, generally
applicable to their salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as Senior
Vice President, Chief Lending Officer, and the Executive hereby
accepts said employment and agrees to render such services to the
Employers on the terms and conditions set forth in this
Agreement. The term of this Agreement shall run from the
Effective Date through and including March 25, 2009, subject to
earlier termination as provided herein. Prior to March 25, 2007
and each March 25 thereafter, the term of this Agreement shall be
extended for a period of one year in addition to the then-
remaining term, provided that the Employers have not given notice
to the Executive in writing at least 60 days prior to such day
that the term of the Agreement shall not be extended further.
Reference herein to the term of this Agreement shall refer to
both such initial term and such extended terms. The Boards of
Directors of the Employers shall review on a periodic basis (and
no less frequently than annually) whether to permit further
extensions of the term of this
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Agreement. As part of such review, the Board of Directors shall
consider all relevant factors, including the Executive's performance
hereunder, and shall either expressly approve further extensions
of the time of this Agreement or decide to provide notice to the
contrary. Effective upon the date of this Agreement, the Change in
Control Severance Agreement among the Employers and Xxxxxxx X. Xxxx,
dated March 25, 2005, shall terminate, with no obligations to the
Executive thereunder on the part of the Employers.
(b) During the term of this Agreement, the Executive shall
perform such executive services for the Employers as may be
consistent with his titles and from time to time assigned to him
by the Employers' Boards of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay the Executive
for his services during the term of this Agreement at a minimum
base salary of $125,000 per year ("Base Salary"), which may be
increased from time to time in such amounts as may be determined
by the Boards of Directors of the Employers and may not be
decreased without the Executive's express written consent. In
addition to his Base Salary, the Executive shall be entitled to
receive during the term of this Agreement such bonus payments as
may be determined by the Boards of Directors of the Employers.
(b) During the term of this Agreement, the Executive shall
be entitled to participate in and receive the benefits of any
pension or other retirement benefit plan, profit sharing, stock
option, employee stock ownership, or other plans, benefits and
privileges given to employees and executives of the Employers, to
the extent commensurate with his then duties and
responsibilities, as fixed by the Boards of Directors of the
Employers. The Employers shall not make any changes in such
plans, benefits or privileges which would adversely affect the
Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executive officers
of the Employers and does not result in a proportionately greater
adverse change in the rights of or benefits to the Executive as
compared with any other executive officer of the Employers.
Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be
deemed to be in lieu of the salary payable to the Executive
pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall
be entitled to paid annual vacation in accordance with the
policies as established from time to time by the Boards of
Directors of the Employers. The Executive shall not be entitled
to receive any additional compensation from the Employers for
failure to take a vacation, nor shall the Executive be able to
accumulate unused vacation time from one year to the next, except
to the extent authorized by the Boards of Directors of the
Employers.
(d) In the event the Executive's employment is terminated
due to Disability or Retirement, the Employers shall provide
continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the
Employers for the Executive immediately prior to his termination.
Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
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(e) The Executive's compensation, benefits and expenses
shall be paid by the Corporation and the Bank in the same
proportion as the time and services actually expended by the
Executive on behalf of each respective Employer.
4. Expenses. The Employers shall reimburse the Executive
or otherwise provide for or pay for all reasonable expenses
incurred by the Executive in furtherance of or in connection with
the business of the Employers, including, but not by way of
limitation, automobile expenses and other traveling expenses, and
all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to
such reasonable documentation and other limitations as may be
established by the Boards of Directors of the Employers. If such
expenses are paid in the first instance by the Executive, the
Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon
prior Notice of Termination, to terminate the Executive's
employment hereunder for any reason, including without limitation
termination for Cause, Disability or Retirement, and the
Executive shall have the right, upon prior Notice of Termination,
to terminate his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is
terminated by the Employers for Cause or (ii) the Executive
terminates his employment hereunder other than for Disability,
Retirement, death or Good Reason, the Executive shall have no
right pursuant to this Agreement to compensation or other
benefits for any period after the applicable Date of Termination.
(c) In the event that the Executive's employment is
terminated as a result of Disability, Retirement or the
Executive's death during the term of this Agreement, the
Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the
applicable Date of Termination, except as provided for in Section
3(d) hereof.
(d) In the event that (i) the Executive's employment is
terminated by the Employers for other than Cause, Disability,
Retirement or the Executive's death or (ii) such employment is
terminated by the Executive (a) due to a material breach of this
Agreement by the Employers, which breach has not been cured
within fifteen (15) days after a written notice of non-compliance
has been given by the Executive to the Employers, or (b) for Good
Reason, then the Employers shall, subject to the provisions of
Section 6 hereof, if applicable
(A) pay to the Executive a lump sum cash amount within
five business days of the Date of Termination, a cash severance
amount equal to three (3) times the Executive's Average Annual
Compensation paid by the Employers, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice of Termination or (ii) the
date of the Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms of such
employment to benefits substantially similar to
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those described in this subparagraph (B)), at no cost to the
Executive, the Executive's continued participation in all group
insurance, life insurance, health and accident insurance, disability
insurance and other employee benefit plans, programs and arrangements
offered by the Employers in which the Executive was entitled to
participate immediately prior to the Date of Termination
(excluding (x) stock option and restricted stock plans of the
Employers, (y) bonuses and other items of cash compensation
included in Average Annual Compensation and (z) other benefits,
or portions thereof, included in Average Annual Compensation),
provided that in the event that the Executive's participation in
any plan, program or arrangement as provided in this subparagraph
(B) is barred, or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are
materially reduced, the Employers shall arrange to provide the
Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and
arrangements immediately prior to the Date of Termination; and
provided further, that if the provision of any of the benefits
covered by this Section or Section 3(d) would trigger the 20%
excise tax and interest penalties under Section 409A of the
Internal Revenue Code (the "Code"), then the benefit(s) that
would trigger such tax and interest penalties shall not be
provided (the "Excluded Benefits"), and in lieu of the Excluded
Benefits the Employers shall pay to the Executive, in a lump sum
within 30 days following termination of employment or within 30
days after such determination should it occur after termination
of employment, a cash amount equal to the cost to the Employers
of providing the Excluded Benefits.
6. Limitation of Benefits under Certain Circumstances. If
the payments and benefits pursuant to Section 5 hereof, either
alone or together with other payments and benefits which the
Executive has the right to receive from the Employers, would
constitute a "parachute payment" under Section 280G of the Code,
the payments and benefits payable by the Employers pursuant to
Section 5 hereof shall be reduced, in the manner determined by
the Executive, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits
payable by the Employers under Section 5 being non-deductible to
the Employers pursuant to Section 280G of the Code and subject to
the excise tax imposed under Section 4999 of the Code. The
parties hereto agree that the present value of the payments and
benefits payable pursuant to this Agreement to the Executive upon
termination shall be limited to three times the Executive's
Average Annual Compensation. The determination of any reduction
in the payments and benefits to be made pursuant to Section 5
shall be based upon the opinion of independent counsel selected
by the Employers' independent public accountants and paid by the
Employers. Such counsel shall be reasonably acceptable to the
Employers and the Executive; shall promptly prepare the foregoing
opinion, but in no event later than thirty (30) days from the
Date of Termination; and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained
herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of
employment under any circumstances other than as specified in
this Section 6, or a reduction in the payments and benefits
specified in Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the
amount of any benefits hereunder by seeking other employment or
otherwise, nor shall the amount of any such benefits
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be reduced by any compensation earned by the Executive as a result
of employment by another employer after the Date of Termination or
otherwise.
(b) The specific arrangements referred to herein are not
intended to exclude any other benefits which may be available to
the Executive upon a termination of employment with the Employers
pursuant to employee benefit plans of the Employers or otherwise.
8. Withholding. All payments required to be made by the
Employers hereunder to the Executive shall be subject to the
withholding of such amounts, if any, relating to tax and other
payroll deductions as the Employers may reasonably determine
should be withheld pursuant to any applicable law or regulation.
9. Assignability. The Employers may assign this Agreement
and its rights and obligations hereunder in whole, but not in
part, to any corporation, bank or other entity with or into which
the Employers may hereafter merge or consolidate or to which the
Employers may transfer all or substantially all of its assets, if
in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations
of the Employers hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement
or its rights and obligations hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For the purposes of this Agreement, notices
and all other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth below:
To the Employers: Boards of Directors
Peoples Bancorp, Inc.
Peoples Community Bank
0000 Xxxx Xxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxx 00000
To the Executive: Xxxxxxx X. Xxxx
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000
11. Amendment; Waiver. No provisions of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by
the Executive and such officer or officers as may be specifically
designated by the Boards of Directors of the Employers to sign on
their behalf; provided, however, that if the Employers determine,
after a review of the final regulations issued under Section 409A
of the Code and all applicable IRS guidance, that this Agreement
should be further amended to avoid triggering the tax and
interest penalties imposed by Section 409A of the Code, the
Employers may amend this Agreement to the extent necessary to
avoid triggering the tax and interest penalties imposed by
Section. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition
or provision of this Agreement to be
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performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the United States where applicable and otherwise
by the substantive laws of the State of Ohio.
13. Nature of Obligations. Nothing contained herein shall
create or require the Employers to create a trust of any kind to
fund any benefits which may be payable hereunder, and to the
extent that the Executive acquires a right to receive benefits
from the Employers hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Employers.
14. Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
17. Regulatory Actions. The following provisions shall be
applicable to the parties to the extent that they are required to
be included in employment agreements between a savings
association and its employees pursuant to Section 563.39(b) of
the Regulations Applicable to All Savings Associations, 12 C.F.R.
Section 563.39(b), or any successor thereto, and shall be controlling
in the event of a conflict with any other provision of this
Agreement, including without limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or
temporarily prohibited from participating in the conduct of the
Employers' affairs pursuant to notice served under Section
8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act
("FDIA") (12 U.S.C. Sections 1818(e)(3) and 1818(g)(1)), the Employers'
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, the Employers may, in
their discretion: (i) pay the Executive all or part of the
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.
(b) If the Executive is removed from office and/or
permanently prohibited from participating in the conduct of the
Employers' affairs by an order issued under Section 8(e)(4) or
Section 8(g)(1) of the FDIA (12 U.S.C. Sections 1818(e)(4) and (g)(1)),
all obligations of the Employers under this Agreement shall
terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of
termination shall not be affected.
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(c) If the Bank is in default, as defined in Section
3(x)(1) of the FDIA (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 Executive and the Employers as of the
date of termination shall not be affected.
(d) All obligations under this Agreement shall be
terminated pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the
extent that it is determined that continuation of the Agreement
for the continued operation of the Employers is necessary): (i)
by the Director of the Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance
Corporation ("FDIC") enters into an agreement to provide
assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the FDIA (12 U.S.C. Section 1823(c)); or
(ii) by the Director of the OTS, or his/her designee, at the time
the Director or his/her designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the
Bank is determined by the Director of the OTS to be in an unsafe
or unsound condition, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
18. Regulatory Prohibition. Notwithstanding any other
provision of this Agreement to the contrary, any payments made to
the Executive pursuant to this Agreement, or otherwise, are
subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section 1828(k))
and the regulations promulgated thereunder, including 12 C.F.R.
Part 359.
19. Payment of Costs and Legal Fees and Reinstatement of
Benefits. In the event any dispute or controversy arising under
or in connection with the Executive's termination is resolved in
favor of the Executive, whether by judgment, arbitration or
settlement, the Executive shall be entitled to the payment of (a)
all legal fees incurred by the Executive in resolving such
dispute or controversy, and (2) any back-pay, including Base
Salary, bonuses and any other cash compensation, fringe benefits
and any compensation and benefits due to the Executive under this
Agreement.
20. Entire Agreement. This Agreement embodies the entire
agreement between the Employers and the Executive. All prior
agreements between the Employers and the Executive with respect
to the matters agreed to herein are hereby superseded and shall
have no force or effect. Notwithstanding the foregoing, nothing
contained in this Agreement shall affect the agreement of even
date being entered into between the Corporation and the
Executive.
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IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
Attest: PEOPLES COMMUNITY BANCORP, INC.
/s/Xxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxxxx
______________________ _________________________________
Xxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
Attest: PEOPLES COMMUNITY BANK
/s/Xxxx X. Xxxxxxxx By: /s/Xxxxx X. Xxxxxxxx
______________________ _________________________________
Xxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
EXECUTIVE
By: /s/Xxxxxxx X. Xxxx
_________________________________
Xxxxxxx X. Xxxx
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