Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made April 10, 2003, by and between Peoples State Bank,
Wausau, Wisconsin, a Wisconsin banking corporation, ("the Bank") and Scott M.
Cattanach, of Wausau, Wisconsin ("Mr. Cattanach").
WITNESSETH:
WHEREAS, the Bank has employed Mr. Cattanach for many years and Mr.
Cattanach has performed his duties in a highly satisfactory manner; and
WHEREAS, the Bank wished to continue to employ Mr. Cattanach and
Mr. Cattanach 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 Mr. Cattanach agree as follows:
1. Employment. Subject to the earlier termination of this agreement
pursuant to the terms hereof, Mr. Cattanach is hereby employed effective as of
the date first written above (the "Commencement Date") as Vice President of the
Bank; provided, however, that Mr. Cattanach 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. Mr. Cattanach 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 Mr. Cattanach's death, or (b) the later of (1) the
third 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 third 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 Mr. Cattanach's employment is terminated pursuant to
paragraphs 5 or 8.
3. Extent of Services. Mr. Cattanach agrees to devote his full-time
attention and efforts (except during vacation periods, periods of illness and
other approved absences as
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provided for in paragraph 4(c)) to the duties of any office held by him during
the Term of Employment, provided, however, that Mr. Cattanach's 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 Mr. Cattanach a salary based
on an annual amount of $102,000. The Bank may increase Mr. Cattanach's
salary from the amount specified herein during the Term of Employment,
but may not decrease Mr. Cattanach's salary from any previously
established amount. Mr. Cattanach's 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,
Mr. Cattanach 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, Mr. Cattanach
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 Mr. Cattanach
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. Mr. Cattanach 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 Mr. Cattanach,
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 Mr. Cattanach's 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 Mr. Cattanach's employment by the
Bank shall consist only of one or more of (i) the commission of an act or
acts by Mr. Cattanach 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
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banker fidelity bond policy as from time to time and at any time
maintained; (ii) the wilful 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 Mr. Cattanach by the Board which specifically
identifies the manner in which the Board believes that Mr. Cattanach has
not substantially performed his duties; (iii) the commission by
Mr. Cattanach 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
Mr. Cattanach which results in the violation by Mr. Cattanach 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 Mr. Cattanach 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
Mr. Cattanach 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) Mr. Cattanach's physical or mental disability, if
such disability either results in Mr. Cattanach receiving permanent
disability payments pursuant to any group disability insurance policy or
prevents Mr. Cattanach 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
Mr. Cattanach's employment prior to the Expiration Date, the Bank shall
provide written notice to Mr. Cattanach, which shall state the good cause
for termination, and Mr. Cattanach's termination of employment shall be
effective as of the date specified in such notice. In the event of
termination of Mr. Cattanach's employment in accordance with the
conditions of this paragraph (a), on the effective date of
Mr. Cattanach's termination of employment, the Term of Employment shall
end, all of Mr. Cattanach's 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
Mr. Cattanach pursuant to paragraph 4 shall end.
(b) Termination by the Bank Other Than for Good Cause. The Bank
may terminate Mr. Cattanach's employment prior to the Expiration Date for
any reason other than good cause (as defined in paragraph 5(a)) upon
providing written notice to Mr. Cattanach specifying the effective date
of Mr. Cattanach's termination of employment. If the Bank terminates
Mr. Cattanach's employment other than for good cause under paragraph
5(a), the Term of Employment and all of Mr. Cattanach's obligations
pursuant to this agreement (except for those provided in paragraphs 6 and
7) shall end on the effective date of Mr. Cattanach's termination of
employment and the Bank shall provide, for a period beginning on the
effective date of Mr. Cattanach's
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termination of employment, as a severance benefit to Mr. Cattanach 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 Mr. Cattanach's termination of employment, have
been paid to Mr. Cattanach, 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 Mr. Cattanach becomes eligible for coverage under
the health insurance plan of another employer of Mr. Cattanach, coverage
for Mr. Cattanach, under the same terms then available to executive
officers of the Bank, under any group health insurance program in which
Mr. Cattanach was a participant on the effective date of Mr. Cattanach's
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). Mr. Cattanach 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, Mr. Cattanach 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 Mr. Cattanach violates
the provisions of paragraphs 6 or 7.
(c) Termination by Mr. Cattanach. Mr. Cattanach 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 Mr. Cattanach under this agreement
and all obligations of Mr. Cattanach 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 Mr. Cattanach's termination of employment.
6. Restrictive Covenant. Mr. Cattanach 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
Mr. Cattanach's termination of employment:
(a) he will not, within a radius of 25 miles of the principal
office of the Bank in Wausau, Wisconsin, directly or indirectly, perform
services as the principal financial officer or principal accounting
officer of any depository institution doing business as a bank, savings
and loan association or any holding company which owns such depository
institution, or on behalf of any other entity which competes for the
Bank's retail or commercial loan business (each a "Financial
Institution"); and
(b) 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.
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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 Mr. Cattanach by the provisions of this
paragraph 6; provided, however, that an aggregate beneficial ownership interest
of Mr. Cattanach 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. Mr. Cattanach further agrees that
the restrictions set forth in this agreement are reasonably necessary to
protect the reasonable interests of the Bank.
7. Confidential Information. Mr. Cattanach 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 Mr. Cattanach
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) Mr. Cattanach's
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, Mr. Cattanach 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 Mr. Cattanach for Good Reason.
Mr. Cattanach's employment may be terminated by Mr. Cattanach during the
Term of
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Employment for Good Reason if, (i) within 60 days of the date of
occurrence of a triggering event, Mr. Cattanach 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), Mr. Cattanach
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 Mr. Cattanach of any duties
inconsistent in any respect with the duties or responsibilities
then held by Mr. Cattanach (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
Mr. Cattanach;
(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 Mr. Cattanach, unless the Bank agrees to
fully compensate Mr. Cattanach for any such reduction;
(iii) Mr. Cattanach 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
Mr. Cattanach's 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
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(vi) the Bank's or PSB's request that Mr. Cattanach perform
an illegal, or wrongful act in violation of the Bank's code of
conduct policies.
(d) Severance Benefit on Termination by Mr. Cattanach for Good
Reason. Upon termination of Mr. Cattanach's employment by Mr. Cattanach
pursuant to paragraph 8(b) 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
Mr. Cattanach under this agreement and all obligations of Mr. Cattanach
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
Mr. Cattanach 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) Mr. Cattanach's 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 Mr. Cattanach 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 Mr. Cattanach 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 Mr.
Cattanach's then current base salary;
(ii) until Mr. Cattanach becomes eligible for coverage under
the health insurance plan of another employer of Mr. Cattanach,
coverage for Mr. Cattanach, under the same terms then available to
executive officers of the Bank, under any group health insurance
program in which Mr. Cattanach was a participant on the effective
date of Mr. Cattanach's 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 Mr. Cattanach 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.
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(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
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promulgated thereunder), together with the present value of all
other benefits payable by the Bank to Mr. Cattanach 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 Mr. Cattanach's "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 Mr. Cattanach 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 Mr. Cattanach under this
paragraph 8 of this Agreement, the Bank shall deliver to Mr.
Cattanach 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 Mr. Cattanach, 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
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Mr. Cattanach, his heirs, assigns or legal representatives; provided,
however, that the obligations of Mr. Cattanach 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 Mr. Cattanach 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 Mr. Cattanach have caused this
instrument to be executed as of the date first written above.
PEOPLES STATE BANK
By: DAVID A. SVACINA
David A Svacina
As its President
SCOTT M. CATTANACH
Scott M. Cattanach
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