Exhibit 99.2
PEOPLES STATE BANK
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this 30th day of January, 2003, by and between
PEOPLES STATE BANK, a state-chartered commercial bank, located in Wausau,
Wisconsin (the "Bank"), and Xxxxx X. Xxxxx (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Bank, the Bank is
willing to provide to the Executive a deferred compensation opportunity
together with matching contributions by the Bank.
AGREEMENT
The Executive and the Bank agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 "Cause" shall mean (i) the commission of an act or acts by
Executive 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
intentional 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
Executive by the Board of Directors of the Bank (the "Board") which
specifically identifies the manner in which the Board believes that Executive
has not substantially performed his duties; (iii) the commission by Executive
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 Executive which results in the violation by Executive
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 Executive in good faith, as determined in the reasonable discretion of
the Board, or which results in a violation of such policies or law which is, in
the reasonable sole discretion of such Board, immaterial; and (v) any
intentional, reckless, or negligent act or omission to act by Executive 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.
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1.2 "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.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Compensation" means the total salary and bonus paid to the
Executive during a calendar year.
1.5 "Deferral Account" means the Bank's accounting of the Executive's
accumulated Deferrals plus accrued interest.
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1.6 "Deferrals" means the amount of the Executive's Compensation which
the Executive elects to defer according to this Agreement.
1.7 "Disability" means the Executive's physical or mental disability,
if such disability either results in Executive receiving permanent disability
payments pursuant to any group disability insurance policy or prevents
Executive from the normal performance of his duties for a continuous period of
at least six months.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Return on Equity" for any calendar year means a percentage equal
to the quotient determined by dividing (i) the Bank's net income for such year,
determined without regard to unrealized gains or losses on investment
securities of the Bank on a consolidated basis by (ii) the equity of the Bank
as determined by the common stock, surplus, and undivided profits as reported
on the balance sheet of the Bank on the last day of such year.
1.10 "XXX Interest" means, with respect to each calendar year, interest
at an annual rate equal to the remainder of (i) the Return on Equity for such
calendar year minus (ii) 400 basis points.
1.11 "Termination of Employment" means the Executive's termination of
employment at the Bank for any reason.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Executive shall make an initial deferral
election under this Agreement by filing with the Bank a signed Election Form
within 30 days after the date of this Agreement. The Election Form shall set
forth the amount of Compensation to be deferred and shall be effective to defer
only Compensation earned after the date the Election Form is received by the
Bank. The minimum amount of deferral which may be deferred annually is $5,000.
The maximum amount which may be deferred is 80% of base salary.
2.2 Election Changes.
2.2.1 Generally. Any deferral election under this Agreement shall
remain in effect until a subsequent election has been filed in accordance
with the terms of this Agreement. The Executive may modify the amount of
Compensation to be deferred annually by filing a new Election Form with
the Bank not less than 10 business days prior to the beginning of the
calendar year in which the Compensation is to be deferred.
2.2.2 Hardship. If an unforeseeable financial emergency arising
from the death of a family member, divorce, sickness, injury, catastrophe
or similar event outside the
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control of the Executive occurs, the Executive, with the consent of the
Bank, may reduce deferrals under this Agreement for the remainder of the
calendar year.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Bank shall establish a Deferral
Account on its books for the Executive and shall credit to the Deferral Account
the amounts provided in Sections 3.1.1 through 3.1.4.
3.1.1 Deferrals. The Compensation deferred by the Executive
pursuant to Section 2.1 as of the date the Compensation would have
otherwise been paid to the Executive.
3.1.2 Matching Contributions. A contribution by the Bank (and
credited to the Deferral Account at the same time as the amounts credited
to the Deferral Account under Section 3.1.1), in an amount equal to 20%
of the compensation deferred by the Executive, subject to an annual
maximum matching contribution of 3% of the Executive's base salary.
3.1.3 Additional Contributions. A contribution by the Bank made on
or before March 1 of each calendar year of an amount equal to the
contribution for the immediately preceding plan year under the Bank's
profit sharing and Section 401(k) plan or plans as from time to time in
effect which would have been made to the Executive's account had the
Compensation deferred pursuant to Section 2.1 during such plan year been
paid to Executive during such plan year.
3.1.4 Interest. On each March 1, up to and including the Basic
Initial Payment Date (as defined in Section 4.1), interest at a rate
equal to the XXX Interest for the immediately preceding calendar year
earned through December 31 based on the average balance in the Deferral
Account as of the last day of each calendar quarter of such prior year;
provided, however, that:
(i) On March 1 of the year following the year in which the
Executive has incurred a Termination of Employment prior to
December 31, the interest rate to be credited hereunder shall be a
rate equal to (a) the XXX Interest for the immediately preceding
calendar year multiplied by a percentage, the numerator of which is
the number of days in the preceding year that the Executive was
employed and the denominator of which is 365 and (b) at a rate
equal to 8% per annum multiplied by a percentage, the numerator of
which is the number of days in the preceding year that the
Executive was not employed by the Bank and the denominator of which
is 365, and
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(ii) if the Executive has specified an Initial Payment Date other
than the Executive's Basic Initial Payment Date, then interest at
the rate of 8% per annum shall be credited under this Section 3.1.4
on each March 1 following such Basic Initial Payment Date.
3.2 Statement of Account. The Bank shall provide to the Executive,
within 120 days after each calendar year-end, a statement setting forth the
Deferral Account balance.
ARTICLE 4
DISTRIBUTION OF DEFERRAL ACCOUNT
4.1 Initial Payment Date. The "Initial Payment Date" shall mean the
later of (i) the March 1 following the last day of the calendar year in which
occurs the Executive's Termination of Employment (the "Basic Initial Payment
Date") or (ii) the March 1 specified by the Executive as the Initial Payment
Date in a written election filed with the Bank not less than one year prior to
his Termination of Employment, but in no event shall such "Initial Payment
Date" be later than the first March 1 subsequent to the year in which the
Executive's 65th birthday occurs.
4.2 Ending Balance.
4.2.1 Ending Balance. "Ending Balance" means the balance of the
Deferral Account determined as of the Initial Payment Date reduced by (i)
the unvested portion (as determined pursuant to Section 4.1.2) of the
contributions made by the Company pursuant to Section 3.1.2 and any XXX
Interest which has been credited to such contributions and (ii) if the
Executive's Termination of Employment was for Cause, the sum of (a) all
contributions by the Bank pursuant to Sections 3.1.2 and (b) any interest
in excess of a rate of 4% per annum which has been credited pursuant to
Section 3.1.4 on the deferrals of the Executive credited pursuant to
Section 3.1.1 and Bank contributions credited pursuant to Section 3.1.2;
provided, however, that clause (i) and (ii) shall not be applied
cumulatively.
4.2.2 Vesting. The unvested portion of the contributions made by
the Bank pursuant to Section 3.1.2 and any XXX Interest which has been
credited to such contributions shall be determined by subtracting from
such contributions and interest an amount equal to the product of (i) all
contributions made by the Company pursuant to Section 3.1.2 and all XXX
Interest which has been credited to such contributions, multiplied by
(ii) the Executive's Vesting Credit Points, not in excess of 1. The
Executive shall earn .2 Vesting Credit Points as of each December 31 on
which he is employed. Notwithstanding any other provision of this
Agreement, upon the occurrence of a Change of Control, the Executive
shall be fully vested in the contributions made by the Bank pursuant to
Section 3.1.2 and any XXX Interest which has been credited to such
contributions.
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4.3 Distribution. On the Initial Payment Date, distribution of the
Ending Balance shall be made in cash in accordance with the following:
4.3.1 Automatic Form of Payment. In 120 monthly installments
beginning on the Initial Payment Date in an amount equal to the amount
necessary to amortize the repayment of a loan in an amount equal to the
Ending Balance in 120 monthly payments at an interest rate of 8% per
annum with payments being made on the first day of each monthly period.
4.3.2 Death Benefit. In the event that the Executive dies before
receiving payment of the entire amount to which he is entitled under this
Agreement, the unpaid balance shall be paid in a lump sum or in
installments, as specified in the Executive's most recent election in
accordance with the provisions of Section 4.3.4, to the Beneficiary of
such Participant. If a Beneficiary dies after the Executive's death, but
before receiving the entire payment of the Beneficiary's portion of the
amount to which the Executive was entitled under this Agreement, the
portion of the unpaid balance which such Beneficiary would have received
if he had not died shall be paid in a lump sum to such Beneficiary's
estate unless the Executive designated otherwise.
4.3.3 Elective Forms of Distribution. The Executive may elect, (i)
before the first day of each calendar year, (ii) subject to the
provisions of Section 4.3.4, and (iii) prior to his Termination of
Service, that payment of the Executive's Ending Balance shall be made in
one of the following forms:
(i) in 60 monthly installments beginning on the Initial Payment
Date in an amount equal to the amount necessary to amortize the
repayment of a loan in an amount equal to the Ending Balance in 60
monthly payments at an interest rate of 8% per annum with payments
being made on the first day of each monthly period; or
(ii) in a lump sum, payable on the Initial Payment Date.
Any election filed pursuant to this Section 4.3.3 shall be effective as
of the first day of the first calendar year which begins next subsequent
to the calendar year in which such election has been made.
4.3.4 Early Distribution Upon Voluntary Termination of Employment.
Notwithstanding any other provision of this Agreement, in the event the
Executive incurs a voluntary Termination of Employment and is
subsequently employed by another bank, savings and loan association,
credit union, bank holding company, or other financial institution of any
kind, then, within 60 days of the Bank acquiring knowledge of such
employment, the Bank shall, in lieu of any other amounts which may
otherwise have become due the Executive under this Agreement, distribute
the Voluntary Termination
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Value of the Executive's Deferral Account in 60 monthly installments in
an amount equal to the amount necessary to amortize the repayment of a
loan in an amount equal to the Voluntary Termination Value of the
Executive's Deferral Account in 60 monthly payments at the interest rate
being paid by the Bank on 5-year certificates of deposit as of the date
immediately preceding the initial monthly installment (the "CD Rate")
with payments being made on the first day of each monthly period. For
purposes of this Section 4.3.4, the term "Voluntary Termination Value of
the Executive's Deferral Account" means (i) an amount equal to the
Executive's Deferral Account as of the December 31 on which he was last
employed by the Bank (including interest credited on the subsequent March
1) and (ii) interest on the amount determined in (i) at a rate of equal
to the CD Rate from such December 31 through the day next preceding the
date on which the initial monthly installment is made to the Executive.
4.4 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Executive) that the Executive has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Bank shall
distribute to the Executive all or a portion of the Deferral Account balance as
determined by the Bank, but in no event shall the distribution be greater than
is necessary to relieve the financial hardship.
ARTICLE 5
BENEFICIARIES
5.1 Beneficiary Designations. The Executive shall designate a
Beneficiary by filing a written designation with the Bank. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
received by the Bank during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the
Beneficiary predeceases the Executive or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive dies
without a valid Beneficiary designation, all payments shall be made to the
Executive's estate.
ARTICLE 6
MISCELLANEOUS
6.1 No Assignment. Executive's rights and any amounts payable
hereunder may not be voluntarily or involuntarily sold or assigned, and shall
not be subject to any attachment, levy or garnishment.
6.2 No Right of Employment. This Agreement is not a contract of
employment and does not limit in any way the right of the Bank to discharge
Executive with or without cause, subject, however to the terms of any
employment agreement then in effect.
6.3 Unsecured Claims. The Bank shall not be obligated to reserve or
otherwise set aside funds for the payment of its obligations hereunder, and the
rights of Executive under this
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Agreement shall be an unsecured claim against the general assets of the Bank.
All amounts due Executive or Beneficiaries under this Agreement shall be paid
out of the general assets of the Bank.
6.4 Claims Procedure. The claims procedure set forth in the Bank's
principal retirement plan qualified under Section 401(a) of the Code, or any
successor to such plan is incorporated herein by this reference as the claims
procedure for this Agreement.
6.5 Agreement Administrator. The administrator and named fiduciary of
the Agreement shall be the Bank. The Board shall have all powers necessary to
administer this Agreement, including all powers of interpretation and the
effectiveness of elections.
6.6 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of (i) the Executive and his personal representatives and heirs and
any other person or persons or organization or organizations succeeding to any
of his rights or benefits hereunder, and (ii) the Bank and its successors and
assigns.
6.7 Amendment and Termination. This Agreement may not be amended
without the written consent of the Bank and Executive, provided, however, that
Bank may amend or terminate this Agreement at any time with respect to future
deferrals or Bank contributions otherwise provided for herein, but any such
amendment or termination shall be without prejudice to Executive's right with
respect to any amounts previously credited or the interest rate to be credited
on such previously accrued amounts.
6.8 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the amounts to be paid under this Agreement or
otherwise in connection with Executive's Compensation.
6.9 Applicable Law. The Agreement and all rights hereunder shall be
governed by the internal laws of the state of Wisconsin without application of
the principles of conflicts of law, except to the extent preempted by the laws
of the United States of America.
IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have
signed this Agreement.
Executive: Bank:
PEOPLES STATE BANK
XXXXX X. XXXXX By XXXXX X. XXXXXXX
Xxxxx X. Xxxxx Title Xxxxx X. Xxxxxxx
As Its Executive Vice President
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EXHIBIT 1
TO
PEOPLES STATE BANK
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION
I elect to defer my Compensation received under this Agreement with the Bank,
as follows:
AMOUNT OF DEFERRAL
[INITIAL AND COMPLETE ONE]
_____ I elect to defer ____% of my
Compensation.
_____ I elect to defer $______ of my
Compensation.
_____ I elect not to defer any of my
Compensation.
I understand that I may change the amount and duration of my deferrals by
filing a new election form with the Bank; provided, however, that any
subsequent election will not be effective until the calendar year following the
year in which the new election is received by the Bank.
Signature _________________________________
Date _________________________________
Received by the Bank this ________ day of ___________________, 200__.
By _________________________________
Title ______________________________
BENEFICIARY DESIGNATION
PEOPLES STATE BANK
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
I designate the following as beneficiary of benefits under this Agreement
payable following my death:
Primary: _________________________________________________________________
__________________________________________________________________________
Contingent: ______________________________________________________________
__________________________________________________________________________
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE
TRUSTEE(S) AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
Signature _________________________________
Date ______________________________________
Received by the Bank this ________ day of ___________________, 200__.
By _______________________________________
Title ____________________________________
PEOPLES STATE BANK
EXECUTIVE DEFERRED COMPENSATION AGREEMENT
DESIGNATION OF ELECTION
I, ____________________________, hereby make the following elections
pursuant to Section 4.3.3 of the Executive Deferred Compensation Agreement
dated _________________________, 200_ between Peoples State Bank and me (the
"Agreement").
1. FORM OF PAYMENT
(box) My Deferral Account shall be paid in 120 monthly installments in
accordance with the terms of the Agreement (the Automatic Form of
Payment).
(box) My Deferral Account shall be paid in 60 monthly installments in
accordance with the terms of the Agreement.
(box) My Deferral Account shall be paid in a lump sum in accordance with
the terms of the Agreement.
2. COMMENCEMENT DATE (OPTIONAL)
(box) The Initial Payment Date of my Deferral Account shall be March 1,
_________ (you may not specify a March 1 later than the first March
1 following the year in which you reached age 65).
All terms used herein and which are defined in the Agreement shall have
the respective meanings ascribed thereto in the Agreement.
Date: ____________, 20__. Signature:_______________________
