Document:

nib_8k1229ex101.htm

    EXHIBIT
10.1

     

     

     

     

     

    

     

    AMENDED
AND RESTATED

     

    EMPLOYMENT
AGREEMENT

     

    BETWEEN

     

    PEOPLES
BANK SB

     

    AND

     

    NORTHWEST
INDIANA BANCORP

     

    AND

     

    DAVID
A. BOCHNOWSKI

     

     

     

     

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF CONTENTS

     

    
      	 
      	 
      	 
      	
              Page

            
	
              1.

            	
              EMPLOYMENT
      AND TERM.

            	
              1

            
	 
      	
              (a)

            	
              Employment.

            	
              1

            
	 
      	
              (b)

            	
              Term.

            	
              1

            
	
              2.

            	
              DUTIES.

            	
              1

            
	
              3.

            	
              SALARY.

            	
              2

            
	 
      	
              (a)

            	
              Base
      Salary.

            	
              2

            
	 
      	
              (b)

            	
              Salary
      Increases or Decreases.

            	
              2

            
	 
      	
              (c)

            	
              Expenses,
      Automobile and Clubs.

            	
              2

            
	
              4.

            	
              ANNUAL
      BONUSES.

            	
              3

            
	
              5.

            	
              EQUITY
      INCENTIVE COMPENSATION.

            	
              3

            
	
              6.

            	
              OTHER
      BENEFITS.

            	
              3

            
	 
      	
              (a)

            	
              Insurance
      Plans.

            	
              3

            
	 
      	
              (b)

            	
              Vacation.

            	
              4

            
	 
      	
              (c)

            	
              Other.

            	
              4

            
	
              7.

            	
              TERMINATION.

            	
              4

            
	 
      	
              (a)

            	
              Death
      or Disability.

            	
              4

            
	 
      	
              (b)

            	
              Discharge
      for Cause.

            	
              4

            
	 
      	
              (c)

            	
              Termination
      for Other Reasons.

            	
              5

            
	
              8.

            	
              DEFINITIONS.

            	
              5

            
	
              9.

            	
              OBLIGATIONS
      OF THE BANK UPON TERMINATION.

            	
              10

            
	 
      	
              (a)

            	
              Death,
      Disability, Discharge for Cause or Resignation Without Good
      Reason.

            	
              10

            
	 
      	
              (b)

            	
              Discharge
      Without Cause or Resignation with Good Reason.

            	
              10

            
	 
      	
              (c)

            	
              Disability.

            	
              12

            
	 
      	
              (d)

            	
              Level
      of Bonus and Welfare Benefits after a Change of Control.

            	
              12

            
	 
      	
              (e)

            	
              Continuing
      Obligations After Termination.

            	
              12

            
	 
      	
              (f)

            	
              Six
      Month Delay.

            	
              12

            
	
              10.

            	
              CERTAIN
      ADDITIONAL PAYMENTS BY THE BANK.

            	
              13

            
	
              11.

            	
              NO
      SET-OFF OR MITIGATION.

            	
              15

            
	
              12.

            	
              PAYMENT
      OF CERTAIN EXPENSES.

            	
              15

            

    

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      	
              13.

            	
              INDEMNIFICATION
      AND JOINT OBLIGATION.

            	
              16

            
	
              14.

            	
              BINDING
      EFFECT.

            	
              16

            
	
              15.

            	
              NOTICES.

            	
              16

            
	
              16.

            	
              TAX
      WITHHOLDING.

            	
              17

            
	
              17.

            	
              ARBITRATION.

            	
              17

            
	
              18.

            	
              NO
      ASSIGNMENT.

            	
              17

            
	
              19.

            	
              NONSOLICITATION.

            	
              17

            
	
              20.

            	
              EXECUTION
      IN COUNTERPARTS.

            	
              17

            
	
              21.

            	
              JURISDICTION
      AND GOVERNING LAW.

            	
              17

            
	
              22.

            	
              SEVERABILITY.

            	
              17

            
	
              23.

            	
              PRIOR
      UNDERSTANDINGS.

            	
              18

            
	
              24.

            	
              PAYMENTS
      UPON INCOME INCLUSION UNDER SECTION 409A OF THE CODE.

            	
              18

            

    

    

    

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

     

    THIS
AGREEMENT, made and entered into as of December 29, 2008 (the “Effective Date”),
by and between Northwest Indiana Bancorp (the “Company”) and Peoples Bank SB
(together, the “Bank” unless otherwise noted) and David A. Bochnowski (the
“Executive”) but effective as of April 19, 2006.

     

    This
Agreement amends and restates the prior Employment Agreement between the Company
and the Executive dated April 19, 2006 (the “Prior
Agreement”).  It has been amended and restated for compliance with the
final regulations under Section 409A of the Internal Revenue Code of 1986,
as amended.

     

    W I T N E
S S E T H   THAT:

     

    WHEREAS,
the Bank acting through its Board of Directors (“Board”) desires to continue to
employ the Executive as its Chairman and Chief Executive Officer, and the
Executive desires to continue in such employment;

     

    NOW,
THEREFORE, the Bank and the Executive, each intending to be legally bound,
hereby mutually covenant and agree as follows:

     

    1.           Employment and
Term.

     

    (a)           Employment.  The
Bank shall employ the Executive as the Chairman and Chief Executive Officer of
the Bank, and the Executive shall so serve, for the term set forth in
Paragraph 1(b).

     

    (b)           Term.  The
initial term of the Executive’s employment under this Agreement shall commence
as of the Effective Date and end thirty-six calendar months thereafter, subject
to the extension of such term as hereinafter provided and subject to earlier
termination as provided in Paragraph 7, below.  Beginning on the
day immediately after the Effective Date, the term of this Agreement shall be
extended automatically for one (1) additional day for each day which has
then elapsed since the Effective Date, unless, at any time after the Effective
Date, either the Board of Directors of the Bank or the Executive gives written
notice to the other, in accordance with Paragraph 15, below, that such
automatic extension of the term of this Agreement shall cease.  Any
such notice shall be effective immediately upon delivery.  The initial
term of this Agreement, plus any extension by operation of this
Paragraph 1, shall be hereinafter referred to as the “Term.”

     

    2.           Duties.  During
the period of employment as provided in Paragraph 1(b) hereof, the
Executive shall serve as Chairman and Chief Executive Officer of the Bank and
have all powers and duties consistent with such positions, subject to the
reasonable direction of the Board.  The Executive shall also continue
to serve as a member of the Board if elected.  The Executive shall
devote his best efforts to fulfill faithfully, responsibly and to the best of
his ability his duties hereunder; provided, however, that with the approval of
the Board, the Executive may serve, or continue to serve, on the boards of
directors of, and hold any other

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    offices
or positions in, companies or organizations, which, in the Board’s judgment,
will not present any material conflict of interest with the Bank or any of its
subsidiaries or affiliates or divisions, or unfavorably affect the performance
of the Executive’s duties, or will not violate any applicable statute or
regulation.  The Executive shall keep track of his time and expenses
spent on the affairs of the Company and shall so advise the Bank so as to allow
for a proper allocation of the Executive’s salary and expenses between the
Company and the Bank.

     

    3.           Salary.

     

    (a)           Base
Salary.  For
services performed by the Executive for the Bank pursuant to this Agreement
during the period of employment as provided in Paragraph 1(b) hereof, the
Bank shall pay the Executive a base salary at the rate of Three Hundred
Thirty-Five Thousand Dollars ($335,000.00) per year, payable in substantially
equal installments in accordance with the Bank’s regular payroll
practices.  The Executive’s base salary (with any increases under
paragraph (b), below) shall not be subject to reduction, except that prior
to a Change of Control, the Bank may decrease the Executive’s base salary if the
consolidated operating results of the Company are significantly less favorable
than those achieved for the fiscal year ended December 31, 2005, and the
Bank makes similar decreases in the base salaries it pays to the executive
officers of the Bank.  Any compensation which may be paid to the
Executive under any additional compensation or incentive plan of the Bank
(including those under Paragraphs 4, 5 and 6) or which may be otherwise
authorized from time to time by the Board (or an appropriate committee thereof)
shall be in addition to the base salary to which the Executive shall be entitled
under this Agreement.

     

    (b)           Salary Increases or
Decreases.  During
the period of employment as provided in Paragraph 1(b) hereof, the base
salary of the Executive shall be reviewed no less frequently than annually by
the Board to determine whether or not the same should be increased in light of
the duties and responsibilities of the Executive and the performance of the Bank
or decreased under the circumstances permitted in
Section 3(a).  If it is determined that an increase or decrease
is merited, such increase or decrease shall be promptly put into effect and the
base salary of the Executive as so increased or decreased shall constitute the
base salary of the Executive for purposes of Paragraph 3(a).

     

    (c)           Expenses, Automobile and
Clubs.  The
Bank shall pay or reimburse the Executive for all reasonable travel and other
expenses incurred by the Executive in the performance of his services under this
Agreement.  The Bank further agrees to provide the Executive with the
full time use of an automobile of a make and model selected by the Executive,
not more than two years old, commensurate with his position and as approved by
the Compensation Committee of the Board of Directors.  Subject to the
approval of the Board of Directors of the Bank, the Bank shall reimburse the
Executive for all initiation fees and dues associated with membership in
professional, social, civic and service organizations which the Executive joins
or has joined and which membership, in whole or in part, furthers the interests
of or promotes the interests of the Bank or assists the Executive in business
relationships on behalf of the Bank.

     

    
      
         

      

      
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    4.           Annual
Bonuses.  For
each calendar year during the term of employment, the Executive shall be
eligible to receive in cash an annual performance bonus as may be set by
Board.

     

    5.           Equity Incentive
Compensation.  During
the term of employment hereunder the Executive shall be eligible to participate,
in an appropriate manner relative to other senior executives of the Bank, in any
equity-based incentive compensation plan or program approved by the Board from
time to time, including (but not by way of limitation) the Company’s Amended and
Restated 2004 Stock Option and Incentive Plan.

     

    6.           Other
Benefits.

     

    (a)           Insurance
Plans.  The
Bank agrees to continue funding all premiums as they become due pursuant to the
following insurance policies, and any other insurance policies that may in the
future be purchased, under which the Executive is an insured until such time as
the Executive attains the age of sixty-six (66).

     

    
      	
              Company/Policy No.

            	 	
              Type

            	 	
              Benefit Amount

            
	 
      	 	 
      	 	 
      
	
              Assurant
      Employee Benefits

              Group
      Policy #54075

              Certificate
      No. 36

            	 	
              Group
      Life and AD&D

            	 	
              $400,000

            
	 	 	 	 	 
	
              Principal
      Financial Group

              Group
      Policy #N31368

              Location
      09

            	 	
              Group
      Life and AD&D

            	 	
              $148,000

            
	 	 	 	 	 
	
              Mass.
      Mutual Life Insurance

              And
      New York Life Insurance

              Policy
      Nos. 0064748 and 56608619

            	 	
              Endorsement
      Split Dollar Plan

            	 	
              $200,000

            
	 	 	 	 	 
	
              American
      States Life Insurance

              Policy
      No. 0100432728

            	 	
              Individual
      Life Insurance

            	 	
              $500,000

            
	 	 	 	 	 
	
              Valley
      Forge Life Insurance Co.

              Policy
      No. 84040058

            	 	
              Universal
      Life Insurance

            	 	
              $438,659*

            
	 	 	 	 	 
	
              New
      York Life

              Policy
      No. 56612175

            	 	
              Universal
      Life Insurance

            	 	
              $100,000

            
	 
	
              *Death
      Benefit Value as of Feb. 7, 2006

            

    

    

    Notwithstanding
the above, in the event of a Change in Control (as defined in
Paragraph 8(c)) of the Bank, the Bank agrees to immediately pay the
Executive the amount of all such future premiums on the above policies as shall
be reasonably expected to become due, plus any amount as may be necessary under
Paragraph 10, prior to the Executive attaining the age of
sixty-six (66).  In the event such payment is made, the Bank
shall be relieved of its obligation to continue funding premiums as they become
due.

     

    
      
         

      

      
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    (b)           Vacation.  Notwithstanding
anything herein to the contrary, the Executive shall be entitled to a maximum of
six weeks vacation to be taken during such times as may be chosen by the
Executive.  Any vacation time not taken during any calendar year and
any unused vacation days in existence as of the date hereof may be taken with
the consent of the Compensation Committee of the Board, which consent shall not
be unreasonably withheld.  Vacation time for each calendar year shall
be considered earned as of the first day of each calendar year.

     

    (c)           Other.  The
Executive shall be entitled to participate in all of the various retirement,
welfare, fringe benefit and executive perquisite plans, programs and
arrangements of the Bank as they may exist from time to
time.  Notwithstanding the limitations of any health benefit plan
maintained by the Bank, the Bank agrees to pay the costs of any necessary
physical examinations and the costs of all diagnostic testing incurred by the
Executive on his own behalf.

     

    7.           Termination.  Unless
this Agreement is earlier terminated in accordance with the following provisions
of this Paragraph 7, the Bank shall continue to employ the Executive and
the Executive shall remain employed by the Bank during the entire Term of this
Agreement as set forth in Paragraph 1(b).  Paragraph 9
hereof sets forth certain obligations of the Bank in the event that the
Executive’s employment hereunder is terminated.  Certain capitalized
terms used in this Agreement are defined in Paragraph 8,
below.

     

    (a)           Death or
Disability.  Except
to the extent otherwise provided in Paragraph 9, this Agreement shall
terminate immediately (a Date of Termination) in the event of the Executive’s
death or in the event that the Executive becomes disabled.  The
Executive will be deemed to be disabled if he (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 twelve (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 twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Bank.  If any question arises as to whether
the Executive is disabled, upon reasonable request therefor by the Board, the
Executive shall submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such
disability.  In accordance with Paragraph 15, the Bank shall
promptly give the Executive written notice of any such determination of the
Executive’s disability and of any decision of the Bank to terminate the
Executive’s employment by reason thereof.  In the event of disability,
until the Date of Termination, the base salary payable to the Executive under
Paragraph 3(a) hereof shall be reduced dollar-for-dollar by the amount of
disability benefits paid to the Executive in accordance with any disability
policy or program of the Bank.

     

    (b)           Discharge for
Cause.  In
accordance with the procedures hereinafter set forth, the Board may discharge
the Executive from his employment hereunder for Cause.  Except to the
extent otherwise provided in Paragraph 9, this Agreement shall terminate
immediately as of the Date of Termination in the event the Executive is
discharged for Cause.  Any discharge of the Executive for Cause shall
be communicated by a Notice of Termination to the Executive given in accordance
with Paragraph 15 of this Agreement.  For purposes of this
Agreement, a

     

    
      
         

      

      
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    “Notice
of Termination” means a written 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 the Executive’s employment under the provision so indicated and
(iii) specifies the termination date, which may be as early as the date of
the giving of such notice.  In the case of a discharge of the
Executive for Cause, the Notice of Termination shall include a copy of a
resolution duly adopted by the Board at a meeting called and held for such
purpose (after reasonable notice to the Executive and reasonable opportunity for
the Executive, together with the Executive’s counsel, to be heard before the
Board prior to such vote), finding that, in the reasonable and good faith
opinion of the Board, the Executive was guilty of conduct constituting
Cause.  No purported termination of the Executive’s employment for
Cause shall be effective without a Notice of Termination.

     

    (c)           Termination for Other
Reasons.  The
Bank may discharge the Executive for reason other than Cause by giving written
notice to the Executive in accordance with Paragraph 15 at least
thirty (30) days prior to the Date of Termination.  The Executive
may resign from his employment, without liability to the Bank, by giving written
notice to the Bank in accordance with Paragraph 15 at least
thirty (30) days prior to the Date of Termination.  Except to the
extent otherwise provided in Paragraph 9, this Agreement shall terminate
immediately as of the Date of Termination in the event the Executive is
discharged for reasons other than Cause or resigns.

     

    8.           Definitions.  For
purposes of this Agreement, the following capitalized terms shall have the
meanings set forth below:

     

    (a)           “Accrued
Obligations” shall mean, as of the Date of Termination, the sum of (A) the
Executive’s base salary under Paragraph 3(a) through the Date of
Termination to the extent not theretofore paid, (B) the amount of any
bonus, incentive compensation, deferred compensation and other cash compensation
accrued by the Executive as of the Date of Termination to the extent not
theretofore paid and (C) any unused vacation, expense reimbursements
(regardless of whether a claim for such has yet been filed) and other cash
entitlements due the Executive as of the Date of Termination.  For the
purpose of this Paragraph 8(a), dollar amounts shall be deemed to accrue
ratably over the period during which they are earned, but no discretionary
compensation shall be deemed earned or accrued unless it has been specifically
approved by the Board in accordance with the applicable plan, program or
policy.

     

    (b)           “Cause”
shall mean:  (A) the Executive’s commission of an act materially
and demonstrably detrimental to the goodwill of the Bank or any of its
subsidiaries, which act constitutes gross negligence or willful misconduct by
the Executive in the performance of his material duties to the Bank or
(B) the Executive’s conviction of a felony involving moral turpitude, but
specifically excluding any conviction based entirely on vicarious
liability.  No act or failure to act will be considered “willful”
unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that his action or omission was in the best interests
of the Bank.  In addition, no act or omission will constitute Cause
unless the Bank has given detailed written notice thereof to the Executive and,
where remedial action is feasible, he then fails to remedy the act or omission
within a reasonable time after receiving such notice.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (c)           “Change
of Control” shall mean any of the following:

     

    (i)           a
change in the ownership of the Bank or the Company, which shall occur on the
date that any one person, or more than one person acting as a group, acquires
ownership of stock of the Bank or the Company that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Bank or the
Company.  Such acquisition may occur as a result of a merger of the
Company or the Bank into another entity which pays consideration for the shares
of capital stock of the merging Company or Bank.  However, if any one
person, or more than one person acting as a group, is considered to own more
than fifty percent (50%) of the total fair market value or total voting power of
the stock of the Bank or the Company, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of
the Bank or the Company (or to cause a change in the effective control of the
Bank or the Company within the meaning of subsection (ii)).  An
increase in the percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Bank or the Company
acquires its stock in exchange for property will be treated as an acquisition of
stock for purposes of this subsection.  This subsection applies only
when there is a transfer of stock of the Bank or the Company (or issuance of
stock of the Bank or the Company) and stock in the Bank or the Company remains
outstanding after the transaction.

     

    (ii)           a
change in the effective control of the Bank or the Company, which shall occur
only on either of the following dates:

     

    1)           the
date any one person, or more than one person acting as a group acquires (or has
acquired during the 12 month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Bank or the
Company possessing thirty percent (30%) or more of the total voting power of the
stock of the Bank or the Company.

     

    2)           the
date a majority of members of the Company’s board of directors is replaced
during any 12 month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s board of directors before
the date of the appointment or election; provided, however, that this provision
shall not apply if another corporation is a majority shareholder of the
Company.

     

    If any
one person, or more than one person acting as a group, is considered to
effectively control the Bank or the Company, the acquisition of additional
control of the Bank or the Company by the same person or persons is not
considered to cause a change in the effective control of the Bank or the Company
(or to cause a change in the ownership of the Bank or the Company within the
meaning of subsection (i) of this section).

     

    (iii)           a
change in the ownership of a substantial portion of the Bank’s assets, which
shall occur on the date that any one person, or more than one person
acting

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    as a
group, acquires (or has acquired during the 12 month period ending on the date
of the most recent acquisition by such person or persons) assets from the Bank
that have a total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of the Bank
immediately before such acquisition or acquisitions.  For this
purpose, gross fair market value means the value of the assets of the Bank, or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets.  No change in control occurs
under this subsection (iii) when there is a transfer to an entity that is
controlled by the shareholders of the Bank immediately after the
transfer.  A transfer of assets by the Bank is not treated as a change
in the ownership of such assets if the assets are transferred to –

     

    1)           a
shareholder of the Bank (immediately before the asset transfer) in exchange for
or with respect to its stock;

     

    2)           an
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Bank.

     

    3)           a
person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Bank; or

     

    4)           an
entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph
(iii).

     

    For
purposes of this subsection (iii) and except as otherwise provided in paragraph
1) above, a person’s status is determined immediately after the transfer of the
assets.

     

    (iv)           For
purposes of this section, persons will not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.  Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Bank or the Company; provided, however,
that they will not be considered to be acting as a group if they are owners of
an entity that merges into the Bank or the Company where the Bank or the Company
is the surviving corporation.

     

    (d)           
“Date of Termination”  shall mean (A) in the event of a discharge
of the Executive by the Board for Cause, the date specified in such Notice of
Termination, (B) in the event of a discharge of the Executive without Cause
or a resignation by the Executive, the date specified in the written notice to
the Executive (in the case of discharge) or the Bank (in the case of
resignation), which date shall be no less than thirty (30) days from
the date of such written notice, (C) in the event of the Executive’s death,
the date of the Executive’s death, (D) in the event of termination of the
Executive’s employment by reason of disability pursuant to Paragraph 7(a),
the date the Executive receives written notice of such termination, and (E) upon
termination of this Agreement due to a Change in Control, the date of such
Change in Control.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (e)           “Good
Reason” shall mean any of the following:  (A) the failure to
re-elect the Executive as Chairman and Chief Executive Officer and as a member
of the Board of Directors with full voting rights, (B) assignment of duties
inconsistent with the Executive’s position, authority, duties or
responsibilities, or any other action by the Bank which results in a substantial
diminution of such position, authority, duties or responsibilities, (C) any
substantial failure by the Bank to comply with any of the provisions of this
Agreement or (D) the Bank’s giving notice to the Executive to stop further
operation of the evergreen feature described in Paragraph 1 above;
provided, however, that actions taken by the Board of Directors of the Bank
under subparagraphs (A) and (B) by reason of the Executive’s inability to
perform the responsibilities contemplated by those sections because of a
physical or mental injury or disease shall not be deemed “Good
Reason.”  In addition, resignation by the Executive for any reason
during the one (1)-year period immediately after a Change of Control shall
be deemed to be a resignation for Good Reason.

     

    (f)           The
Executive shall have a “Termination of Employment” if there is a termination of
services provided by the Executive to the Bank, whether voluntarily or
involuntarily, other than by reason of death or disability, as determined by the
Board in accordance with Treas. Reg. §1.409A-1(h).  In determining
whether an Executive has experienced a Termination of Employment, the following
provisions shall apply:

     

    1)           To
the extent the Executive provides services to the Bank or Company (the
“Employer”) solely as an employee, except as otherwise provided in part (3) of
this subsection, a Termination of Employment shall occur when the Executive has
experienced a termination of employment with the Employer.  The
Executive shall be considered to have experienced a termination of employment
when the facts and circumstances indicate that the Executive and the Employer
reasonably anticipate that either (i) no further services will be performed for
the Employer after a certain date, or (ii) that the level of bona fide services
the Executive will perform for the Employer after such date (whether as an
employee or as an independent contractor) will permanently decrease to less than
50% of the average level of bona fide services performed by the Executive
(whether as an employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services to the Employer if the
Executive has been providing services to the Employer less than 36
months).

     

    If the
Executive is on military leave, sick leave, or other bona fide leave of absence,
the employment relationship between the Executive and the Employer shall be
treated as continuing intact, provided that the period of such leave does not
exceed 6 months, or if longer, so long as the Executive retains a right to
reemployment with the Employer under an applicable statute or by
contract.  If the period of a military leave, sick leave, or other
bona fide leave of absence exceeds 6 months and the Executive does not retain a
right to reemployment under an applicable statute or by contract, the employment
relationship shall be considered to be terminated for purposes of this Agreement
as of the first day immediately following the

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    end of
such 6-month period.  In applying the provisions of this paragraph, a
leave of absence shall be considered a bona fide leave of absence only if there
is a reasonable expectation that the Executive will return to perform services
for the Employer. 

     

    2)           If
the Executive provides services to the Employer as an independent contractor,
except as otherwise provided in part (3) of this subsection, a Termination of
Employment shall occur upon the expiration of the contract (or in the case of
more than one contract, all contracts) under which services are performed for
the Employer, provided that the expiration of such contract(s) is determined by
the Board to constitute a good-faith and complete termination of the contractual
relationship between the Executive and the Employer. 

     

    3)           If
the Executive provides services to the Employer as both an employee and an
independent contractor, a Termination of Employment generally shall not occur
until the Executive has ceased providing services for the Employer as both as an
employee and as an independent contractor, as determined in accordance with the
provisions set forth in parts (1) and (2) of this subsection,
respectively.  Similarly, if the Executive either (i) ceases providing
services for the Employer as an independent contractor and begins providing
services for the Employer as an employee, or (ii) ceases providing services for
the Employer as an employee and begins providing services for the Employer as an
independent contractor, the Executive will not be considered to have experienced
a Termination of Employment until the Executive has ceased providing services
for the Employer in both capacities, as determined in accordance with the
applicable provisions set forth in parts (1) and (2) of this
subsection.

     

    Notwithstanding
the foregoing provisions in this part (3), if the Executive provides services
for the Employer as both an employee and as a director, to the extent permitted
by Treas. Reg. §1.409A-1(h)(5) the services provided by the Executive as a
director shall not be taken into account in determining whether the Executive
has experienced a Termination of Employment as an employee, and the services
provided by the Executive as an employee shall not be taken into account in
determining whether the Executive has experienced a Termination of Employment as
a director.

     

    4)           For
the purpose of determining whether the Executive has experienced a Termination
of Employment, the term “Employer” shall mean:

     

    (I)           The
entity for which the Executive performs services and with respect to which the
legally binding right to compensation deferred or contributed under this
Agreement arises; and

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (II)           All
other entities with which the entity described above would be aggregated and
treated as a single employer under Code Section 414(b) (controlled group of
corporations) and Code Section 414(c) (a group of trades or businesses, whether
or notincorporated, under common control), as applicable.  In order to
identify the group of entities described in the preceding sentence, an ownership
threshold of at least 50% shall be substituted for the 80% minimum ownership
threshold that appears in, and otherwise must be used when applying, the
applicable provisions of (A) Code Section 1563 for determining a controlled
group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2
for determining the trades or businesses that are under common control under
Code Section 414(c).

     

    Any
reference in this Agreement to a “termination of employment,” severance from
employment, separation from employment, resignation or discharge otherwise
entitling the Executive to payment hereunder shall be deemed to mean a
Termination of Employment.

     

    9.           Obligations of the Bank Upon
Termination.  The
following provisions describe the obligations of the Bank to the Executive under
this Agreement upon termination of his employment.  However, except as
explicitly provided in this Agreement, nothing in this Agreement shall limit or
otherwise adversely affect any rights which the Executive may have under
applicable law, under any other agreement with the Bank or any of its
subsidiaries, or under any compensation or benefit plan, program, policy or
practice of the Bank or any of its subsidiaries.

     

    (a)           Death, Disability, Discharge
for Cause or Resignation Without Good Reason.  In
the event of the death or disability of the Executive, or upon the Executive’s
Termination of Employment by reason of his discharge by the Bank for Cause, or
upon the Executive’s Termination of Employment by reason of his resignation
other than for Good Reason, the Bank shall pay to the Executive, or his heirs or
estate in the event of the Executive’s death, all Accrued Obligations in a lump
sum in cash within thirty (30) days after the Date of Termination;
provided, however, that any portion of the Accrued Obligations which consists of
bonus, deferred compensation or incentive compensation, shall be determined and
paid in accordance with the terms of the relevant plan as applicable to the
Executive.  In addition to the foregoing, in the event this Agreement
terminates by reason of the death of the Executive, then within thirty (30)
days of the death of the Executive, the Bank shall pay to the Executive’s heirs
or estate in a lump sum in cash an amount equal to the sum of the Executive’s
then-current annual base salary and the amount of the most recent annual bonus
received by the Executive.

     

    (b)           Discharge Without Cause or
Resignation with Good Reason.  In
the event of the Executive’s Termination of Employment by reason of the
discharge of the Executive by the Bank without Cause, or by reason of the
resignation of the Executive for Good Reason, then the Bank shall pay to
Executive, or his heirs or estate in the event of the Executive’s death, in
addition to the compensation and benefits described in paragraph (a), the
following benefits:

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (i)           A
cash bonus for the year of termination equal to the most recent annual bonus
received by the Executive,

     

    (ii)           Payment
in a lump sum of an amount equal to three (3) times the Executive’s
then-current base salary as in effect prior to the termination,

     

    (iii)           Payment
in a lump sum of an amount equal to three (3) times the most recent annual
bonus received by the Executive,

     

    (iv)           Continuation,
for a period of three (3) years after the Date of Termination, of welfare
benefits and senior executive perquisites at least equal to those which would
have been provided if the Executive’s employment had continued for that
time,

     

    (v)           A
payment equal to that described in Paragraph 6(a) as necessary to fund the
future premiums on such insurance policies as shall be reasonably expected to
become due prior to the Executive reaching the age of sixty-six (66);
and

     

    (vi)           Outplacement
services, at the expense of the Bank, from a provider reasonably selected by the
Executive.

     

    The
amounts payable under paragraphs (b)(i), (ii), (iii) and (v) shall be paid no
later than thirty (30) days after the Date of Termination.  To the
extent any benefits or perquisites provided under paragraph (b)(iv) provide for
reimbursements of expenses incurred by the Executive, or in-kind benefits, the
following conditions must be satisfied:

     

    (1)           The
benefit or perquisite must provide an objectively determinable nondiscretionary
definition of the expenses eligible for reimbursement or of the in-kind benefits
to be provided;

     

    (2)           The
benefit or perquisite must provide for the reimbursement of expenses incurred or
for the provision of the in-kind benefits during an objectively and specifically
prescribed period;

     

    (3)           The
benefit or perquisite must provide that the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during the Executive’s taxable year
may not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year;

     

    (4)           The
reimbursement of an eligible expense must be made on or before the last day of
the Executive’s taxable year following the taxable year in which the expense was
incurred; and

     

    (5)           The
right to reimbursement or in-kind benefit must not be subject to liquidation or
exchange for another benefit.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (c)           Disability.  In
the event of the disability of the Executive, then the Bank shall pay to the
Executive in addition to the compensation and benefits described in paragraph
(a), the following benefits:

     

    (i)           A
cash bonus for the year of termination equal to the most recent annual bonus
received by the Executive, payable within thirty (30) days after the Date of
Termination;

     

    (ii)           Cash
compensation during each year between the Date of Termination and the earlier of
the date upon which the Executive attains age seventy (70) or the death of
the Executive equal to sixty-six percent (66%) of both the then current
base salary and the most recent annual bonus received by the Executive, payable
at such time as compensation is payable to employees of the Bank generally;
and

     

    (iii)           Continuation
of welfare benefits and senior executive perquisites at least equal to those
which would have been provided if the Executive’s employment had continued for
that time as the cash compensation in (ii) continues (payable in accordance with
the same rules as apply to those benefits payable under Section
9(b)(iv)).

     

    Notwithstanding
the foregoing, the payments due under this section following the Date of
Termination shall be offset dollar-for-dollar by the amount of disability
payments paid to the Executive for periods following the Date of Termination in
accordance with any disability policy or program of the Bank.

     

    (d)           Level of Bonus and Welfare
Benefits after a Change of Control.  If
the Executive’s employment terminates for any reason after a Change of Control,
the phrase “most recent annual bonus” as used in paragraphs (b)(i) and
(iii) and (c) shall be replaced by the phrase “most recent annual bonus received
by the Executive prior to the Change of Control,” and the phrase “would have
been provided if the Executive’s employment had continued for that time” as used
in paragraph (b)(iv) and (c)(iii) shall be replaced by the phrase “were
provided to the Executive immediately prior to the Change of Control;” provided,
however, that this paragraph (d) shall not apply to (b)(i) and (iii) and
(c) or to (b)(iv) and (c)(iii) if the benefits the Executive would receive under
(b)(i) and (iii) and (c) or (b)(iv) and (c)(iii) would be greater without the
application of this paragraph (d).

     

    (e)           Continuing Obligations After
Termination.  If
the Executive’s employment with the Bank terminates for any reason, the Bank’s
obligations and the Executive’s obligations under Paragraphs 9 through 19
shall continue after termination of the employment relationship.

     

    (f)           Six Month
Delay. To
the extent the Executive is a “specified employee” (as defined below) as of his
Termination of Employment, payments due to the Executive as a result of his
Termination of Employment shall begin no sooner than six months after the
Executive’s Termination of Employment; provided, however, that any payments not
made during the six month period described in this subsection (f) shall be made
in a single lump sum as soon as administratively practicable after the
expiration of such six month period.  For purposes of this Agreement,
the term “specified employee” shall have the meaning set forth in

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Treasury
Reg. Section 1.409A-1(i) and shall include, without limitation, (1) an officer
of the Bank or the Company having annual compensation greater than $130,000 (as
adjusted for inflation under the Code), (2) a five percent owner of the Bank or
the Company, or (3) a one percent owner of the Bank or the Company having annual
compensation of more than $150,000.  The determination of whether the
Executive is a “specified employee” shall be made by the Bank in good faith
applying the applicable Treasury regulations.

     

    10.           Certain Additional Payments
by the Bank.  The
Bank agrees that:

     

    (a)           Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Bank to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Paragraph 10) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), or if any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, being hereinafter collectively
referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

     

    (b)           Subject
to the provisions of paragraph (c), below, all determinations required to
be made under this Paragraph 10, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the
accounting firm which is then serving as the auditors for the Bank (the
“Accounting Firm”), which shall provide detailed supporting calculations both to
the Bank and the Executive within fifteen (15) business days of the receipt
of notice from the Executive that there has been a Payment, or such earlier time
as is requested by the Bank.  In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Executive shall appoint a nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder).  All
fees and expenses of the Accounting Firm shall be borne solely by the
Bank.  Any Gross-Up Payment, as determined pursuant to this
Paragraph 10, shall be paid by the Bank to the Executive within
five (5) days of the receipt of the Accounting Firm’s
determination.  If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive’s applicable
federal income tax return would not result in the imposition of a negligence or
similar penalty.  Any good faith determination by the Accounting Firm
shall be binding upon the Bank and the Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Bank should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event that the Bank exhausts its remedies pursuant
to paragraph (c), below, and the Executive thereafter is required to make a
payment of

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the Bank
to or for the benefit of the Executive.

     

    (c)           The
Executive shall notify the Bank in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Bank of a Gross-Up
Payment.  Such notification shall be given as soon as practicable but
no later than thirty (30) business days after the Executive is informed in
writing of such claim and shall apprise the Bank of the nature of such claim and
the date on which such claim is requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the thirty (30)-day period
following the date on which Executive gives such notice to the Bank (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due).  If the Bank notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:

     

    (i)           Give
the Bank any information reasonably requested by the Bank relating to such
claim,

     

    (ii)           Take
such action in connection with contesting such claim as the Bank shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Bank,

     

    (iii)           Cooperate
with the Bank in good faith in order effectively to contest such claim,
and

     

    (iv)           Permit
the Bank to participate in any proceedings relating to such claim;

     

    provided,
however, that the Bank shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.  Without limiting the foregoing provisions of this
paragraph (c), the Bank shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner; and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Bank shall determine;
provided, however, that if the Bank directs the Executive to pay such claim and
sue for a refund, the Bank shall advance the amount of such payment to the
Executive on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which
such

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    contested
amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Bank’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

     

    (d)           If,
after the receipt by the Executive of an amount advanced by the Bank pursuant to
paragraph (c), above, the Executive receives any refund with respect to
such claim, the Executive shall (subject to the Bank’s complying with the
requirements of said paragraph (c)) promptly pay to the Bank the amount of
such refund (together with any interest paid or credited thereon, after taxes
applicable thereto).  If, after the receipt by the Executive of an
amount advanced by the Bank pursuant to said paragraph (c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Bank does not notify the Executive in writing of its intent
to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid; and the amount of such advance shall offset, to the
extent thereof, the amount of the Gross-Up Payment required to be
paid.

     

    (e)           Notwithstanding
anything contained in this Paragraph 10 to the contrary, if the present value of
the payments made under this Agreement, without taking into account the Gross-Up
Payment, is no greater than one hundred and five percent (105%) of the amount
payable to the Executive assuming the Executive’s payments under this Agreement
were limited to the maximum amount that could be payable without application of
the excise tax imposed by Section 4999 of the Code (the “Section 4999 Limit”),
the Executive’s payments shall be limited to the Section 4999
Limit.

     

    (f)           For
purposes of complying with Section 409A of the code, any Gross-Up Payment
will be made by the end of the Executive’s taxable year next following
Executive’s taxable year in which the Executive remits the related
taxes.  In addition, any reimbursement of expenses incurred due to a
tax audit or litigation addressing the existence or amount of a tax liability,
whether Federal, state, local, or foreign, must be made by the end of the
Executive’s taxable year following the Executive’s taxable year in which the
taxes that are the subject of the audit or litigation are remitted to the taxing
authority, or where as a result of such audit or litigation no taxes are
remitted, the end of the Executive’s taxable year following the Executive’s
taxable year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation.

     

    11.           No Set-Off or
Mitigation.  The
Bank’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, bankers right of set-off, counterclaim, recoupment, defense or other
claim, right or action which the Bank may have against the Executive or
others.  In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other
employment.

     

    12.           Payment of Certain
Expenses.  The
Bank agrees to pay promptly as incurred, to the fullest extent permitted by law,
all legal fees and expenses which the Executive may

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    reasonably
incur as a result of any contest by the Bank, the Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest initiated by the Executive about
the amount of any payment due pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable federal rate provided for in
Section 7872(f)(2)(A) of the Code.

     

    13.           Indemnification and Joint
Obligation.  To
the fullest extent permitted by law, the Bank shall indemnify the Executive
(including the advancement of expenses) for any judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys’ and experts’ fees,
incurred by the Executive in connection with the defense of any lawsuit or other
claim to which he is made a party by reason of being an officer, director or
employee of the Bank or any of its subsidiaries.  The Company and the
Bank are jointly and severally liable to provide the payment of all
compensation, payments and/or benefits due to the Executive or his beneficiaries
under this Agreement or any of the plans, programs or arrangements referred to
hereby.

     

    14.           Binding
Effect.  This
Agreement shall be binding upon and inure to the benefit of the heirs and
representatives of the Executive and the successors and assigns of the Bank and
the Company.  The Bank and the Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
substantial portion of its assets, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Bank and the
Company would be required to perform this Agreement if no such succession had
taken place.  Regardless of whether such an agreement is executed,
this Agreement shall be binding upon any successor of the Bank and the Company
in accordance with the operation of law, and such successor shall be deemed the
“Bank” or the “Company,” as appropriate, for purposes of this
Agreement.

     

    15.           Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or by
recognized commercial delivery service or if mailed within the continental
United States by first class certified mail, return receipt requested, postage
prepaid, addressed as follows:

     

    
      	 	
              If
      to the Board or the Bank, to:

               

              Peoples
      Bank SB

              9204
      Columbia Avenue

              Munster,
      Indiana  46321

              Attention:  Corporate
      Secretary

               

            
	 	
              If
      to the Executive, to:

               

              David
      A. Bochnowski

              10203
      Cherrywood Lane

              Munster,
      Indiana  46321

            

    

    

    Such
addresses may be changed by written notice sent to the other party at the last
recorded address of that party.

     

    
      
         

      

      
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    16.           Tax
Withholding.  The
Bank shall provide for the withholding of any taxes required to be withheld by
federal, state or local law with respect to any payment in cash, shares of stock
and/or other property made by or on behalf of the Bank to or for the benefit of
the Executive under this Agreement or otherwise.  The Bank may, at its
option: (a) withhold such taxes from any cash payments owing from the Bank
to the Executive, (b) require the Executive to pay to the Bank in cash such
amount as may be required to satisfy such withholding obligations and/or
(c) make other satisfactory arrangements with the Executive to satisfy such
withholding obligations.

     

    17.           Arbitration.  Except
as to any controversy or claim which the Executive elects, by written notice to
the Bank, to have adjudicated by a court of competent jurisdiction, any
controversy or claim arising out of or relating to this Agreement or the breach
hereof shall be settled by arbitration at a mutually agreed site in accordance
with the laws of the State of Indiana.  The arbitration shall be
conducted in accordance with the rules of the American Arbitration
Association.  The costs and expenses of the arbitrator(s) shall be
borne by the Bank.  The award of the arbitrator(s) shall be binding
upon the parties.  Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.

     

    18.           No
Assignment.  Except
as otherwise expressly provided herein, this Agreement is not assignable by any
party and no payment to be made hereunder shall be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or other
charge.

     

    19.           Nonsolicitation.  The
Executive covenants that upon his Date of Termination, he shall not, for a
period of one (1) year following the Date of Termination directly recruit
any person who is an employee of the Bank; solicit, encourage or induce any such
employee to leave the Bank’s employ or solicit, encourage or induce any customer
of the Bank to cease doing business with the Bank.

     

    20.           Execution in
Counterparts.  This
Agreement may be executed by the parties hereto in two (2) or more
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.

     

    21.           Jurisdiction and Governing
Law.  This
Agreement shall be construed and interpreted in accordance with and governed by
the laws of the State of Indiana, without regard to the conflict of laws
provisions of such laws.

     

    22.           Severability.  If
any provision of this Agreement shall be adjudged by any court of competent
jurisdiction to be invalid or unenforceable for any reason, such judgment shall
not affect, impair or invalidate the remainder of this
Agreement.  Furthermore, if the scope of any restriction or
requirement contained in this Agreement is too broad to permit enforcement of
such restriction or requirement to its full extent, then such restriction or
requirement shall be enforced to the maximum extent permitted by law, and the
Executive consents and agrees that any court of competent jurisdiction may so
modify such scope in any proceeding brought to enforce such restriction or
requirement.  Nothing herein shall be construed as requiring the Bank
to make any payment which would be prohibited under 12 C.F.R. 359.  In
the event a payment required under the terms of this Agreement cannot lawfully
be made because of the limitations of

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    12 C.F.R. 359,
the obligation to make such payment shall be deferred until such time as the
limitations of 12 C.F.R. 359 shall no longer apply.  Upon
deferring any payment required under this Agreement due to the limitations of 12
C.F.R. 359, the Bank shall provide the Executive with a legal opinion of counsel
addressing the exact provisions of 12 C.F.R. 359 which pose the barrier to
payment.

     

    23.           Prior
Understandings.  This
Agreement embodies the entire understanding of the parties hereto and supersedes
all other oral or written agreements or understandings between them regarding
the subject matter hereof.  No change, alteration or modification
hereof may be made except in a writing, signed by each of the parties
hereto.  The headings in this Agreement are for convenience of
reference only and shall not be construed as part of this Agreement or to limit
or otherwise affect the meaning hereof.

     

    24.           Payments upon Income
Inclusion under Section 409A of the Code.  Upon
the inclusion of any amount into the Executive’s income as a result of the
failure of this Agreement to comply with the requirements of Section 409A of the
Code, a payment not to exceed the amount that shall be included in income shall
be made as soon as is administratively practicable following the discovery of
the failure of the Agreement to comply with Section 409A of the Code and
the regulations promulgated thereunder.

     

    (Signature
Page Follows)

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, each of the Company and the Bank have caused this Agreement to
be executed by its duly authorized officer and the Executive has signed this
Agreement, effective as of the date first written above.

     

    

    
      	 
      	
              PEOPLES
      BANK SB

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      James L. Wieser
	 
      	
              Name:

            	James
      L. Wieser
	 
      	
              Title:

            	Chairman
      of Compensation Committee of the Board of Directors
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              NORTHWEST
      INDIANA BANCORP

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      James L. Wieser
	 
      	
              Name:

            	James
      L. Wieser
	 
      	
              Title:

            	Chairman
      of Compensation Committee of the Board of Directors
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              DAVID
      A. BOCHNOWSKI

            
	 
      	 
      	 
      
	 
      	/s/
      David A. Bochnowski
	 
      	
              10203
      Cherrywood Lane

            
	 
      	
              Munster,
      Indiana  46321

            

    

    

    
 

     

    19nib_8k1229ex102.htm

    EXHIBIT
10.2

    

     

    EMPLOYMENT
AGREEMENT

     

    This
Agreement, made and dated as of December 29, 2008, by and between Peoples Bank
SB, an Indiana savings bank (“Employer”) and Joel Gorelick, a resident of Lake
County, Indiana (“Employee”), but effective as of July 20,
2006.

     

    This
Agreement amends and restates the prior Employment Agreement between the
Employer and the Employee dated July 20, 2006 (the “Prior
Agreement”).  It has been amended and restated for compliance with the
final regulations under Section 409A of the Internal Revenue Code of 1986,
as amended.

     

    W I T N E
S S E T H

     

    WHEREAS,
Employee is employed by Employer as its President and Chief Administrative
Officer and has made valuable contributions to the profitability and financial
strength of Employer;

     

    WHEREAS,
Employer desires to encourage Employee to continue to make valuable
contributions to Employer’s business operations and not to seek or accept
employment elsewhere;

     

    WHEREAS,
Employee desires to be assured of a secure compensation from Employer for his
services over a defined term;

     

    WHEREAS,
Employer desires to assure the continued services of Employee on behalf of
Employer on an objective and impartial basis and without distraction or conflict
of interest in the event of an attempt by any person to obtain control of
Employer or NorthWest Indiana Bancorp (the “Holding Company”), the Indiana
corporation which owns all of the issued and outstanding capital stock of
Employer;

     

    WHEREAS,
Employer recognizes that when faced with a proposal for a change of control of
Employer or the Holding Company, Employee will have a significant role in
helping the Boards of Directors assess the options and advising the Boards of
Directors on what is in the best interests of Employer, the Holding Company, and
its shareholders, and it is necessary for Employee to be able to provide this
advice and counsel without being influenced by the uncertainties of his own
situation;

     

    WHEREAS,
Employer desires to provide fair and reasonable benefits to Employee on the
terms and subject to the conditions set forth in this Agreement;

     

    WHEREAS,
Employer desires reasonable protection of its confidential business and customer
information which it has developed over the years at substantial expense and
assurance that Employee will not compete with Employer for a reasonable period
of time after termination of his employment with Employer, except as otherwise
provided herein; and

     

    WHEREAS,
Employer’s Board of Directors has approved this Agreement.

     

    NOW,
THEREFORE, in consideration of these premises, the mutual covenants and
undertakings herein contained and the continued employment of Employee by
Employer as its President and Chief Administrative Officer, Employer and
Employee, each intending to be legally bound, covenant and agree as
follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           Upon
the terms and subject to the conditions set forth in this Agreement, Employer
employs Employee as Employer’s President and Chief Administrative Officer, and
Employee accepts such employment.

     

    2.           Employee
agrees to serve as Employer’s President and Chief Administrative Officer and to
perform such duties in that office as may reasonably be assigned to him by
Employer’s Chief Executive Officer; provided, however, that such duties shall be
performed in or from the offices of Employer currently located at Munster,
Indiana, and shall be of the same character as those previously performed by
Employee and generally associated with the office held by
Employee.  Employee also agrees to continue to serve as a member of
the Board of Directors of Employer and NorthWest Indiana Bancorp if
elected.  Employee shall render services to Employer as President and
Chief Administrative Officer in substantially the same manner and to
substantially the same extent as Employee rendered his services to Employer
before the date hereof.  While employed by Employer, Employee shall
devote substantially all his business time and efforts to Employer’s business
during regular business hours and shall not engage in any bank or bank-related
business for any other person.  For purposes of this Agreement,
“bank-related business” shall mean the sale of insurance and securities
products, personal financial and tax planning, trust services and any for-profit
business conducted by Employer during the term of this Agreement other than
making loans and accepting deposits.

     

    3.           The
term of this Agreement shall begin on the date hereof (the “Effective Date”) and
shall end on the date which is three years following such date; provided,
however, that such term shall be extended automatically for an additional year
on each anniversary of the Effective Date, unless either party  hereto
gives written notice to the other party not to so extend within ninety (90) days
prior to such anniversary, in which case no further automatic extension shall
occur and the term of this Agreement shall end two years subsequent to the
anniversary as of which the notice not to extend for an additional year is given
(such term, including any extension thereof shall herein be referred to as the
“Term”).  Notwithstanding the foregoing, this Agreement shall
automatically terminate (and the Term of this Agreement shall thereupon end)
without notice when Employee attains 65 years of age.

     

    4.           Employee
shall receive an annual salary of $202,000 (“Base Compensation”) payable at
regular intervals in accordance with Employer’s normal payroll practices now or
hereafter in effect.  Employer may consider and declare increases in
the salary it pays Employee and thereby increases in his Base Compensation at
the time or times it considers such increases for other executive officers of
the Employer.  Prior to a Change of Control, Employer may also declare
decreases in the salary it pays Employee if the operating results of Employer
are significantly less favorable than those for the fiscal year ending December
31, 2005, and Employer makes similar decreases in the salary it pays to all
other executive officers of Employer.  After a Change in Control,
Employer shall consider and declare salary increases based upon the following
standards:

     

    Inflation;

     

    Adjustments to the salaries of other
senior management personnel; and

     

    Past performance of Employee and the
contribution which Employee makes to the business and profits of Employer during
the Term.

     

    Any and
all increases or decreases in Employee’s salary pursuant to this section shall
cause the level of Base Compensation to be increased or decreased by the amount
of each such increase or decrease for purposes of this Agreement.  The
increased or decreased level of Base Compensation as provided in this section
shall become the level of Base Compensation for the remainder of the Term of
this Agreement until there is a further increase or decrease in Base
Compensation as provided herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.           Employee,
as of the date hereof, is entitled to the insurance benefits described on Exhibit A
hereto.  So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all present and future
employee benefit, retirement, and compensation plans generally available to
employees of Employer, consistent with his Base Compensation and his position as
President and Chief Administrative Officer of Employer, including, without
limitation, Employer’s or the Holding  Company’s stock option and
incentive plan, Employees’ Savings and Profit Sharing Plan, and hospitalization,
major medical, dental, disability and group life insurance plans, each of which
Employer agrees to continue in effect on terms no less favorable than those
currently in effect as of the date hereof (as permitted by law) during the Term
of this Agreement unless prior to a Change of Control the operating results of
Employer are significantly less favorable than those for the fiscal year ending
December 31, 2005, and any changes made to these programs are applicable to all
other executive officers of Employer, and unless (either before or after a
Change of Control) changes in the accounting, legal, or tax treatment of such
plans would adversely affect Employer’s operating results or financial condition
in a material way, and the Board of Directors of Employer or the Holding Company
concludes that modifications to such plans need to be made to avoid such adverse
effects.  Notwithstanding the limitations of any health benefit plan
maintained by the Employer, the Employer agrees to pay the costs of any
necessary physical examinations and the costs of all diagnostic testing incurred
by the Employee on his own behalf.

     

    6.           So
long as Employee is employed by Employer pursuant to this Agreement, Employee
shall receive reimbursement from Employer for all reasonable business expenses
incurred in the course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement. Employee shall
attend, upon the prior approval of the Employer’s Chief Executive Officer, those
professional meetings, conventions, and/or similar functions that he deems
appropriate and useful for purposes of keeping abreast of current developments
in the industry and/or promoting the interests of Employer.  So long
as Employee is employed by Employer pursuant to this Agreement, Employer shall
provide Employee with the full time use of an automobile of a make and model
selected by the Employee, not more than three years old, commensurate with his
position and as approved by the Compensation Committee of the Employer’s Board
of Directors.  Employer shall pay or reimburse Employee for
maintenance and insurance costs relating to such automobile and shall reimburse
Employee on a pro rata basis based on business use for costs of gasoline for
such automobile.  So long as Employee is employed by Employer pursuant
to the terms of this Agreement, Employer shall continue in effect vacation
policies applicable to Employee no less favorable from his point of view than
those written vacation policies in effect on the date hereof.  Any
vacation time not taken during any calendar year may be taken at any time during
the next three succeeding calendar years, at the conclusion of which any unused
vacation time will expire, unless otherwise agreed to by the Employer’s
Compensation Committee.  So long as Employee is employed by Employer
pursuant to this Agreement, Employee shall be entitled to office space and
working conditions no less favorable from his point of view than were in effect
for him on the date hereof.

     

    7.           Subject
to the respective continuing obligations of the parties, including but not
limited to those set forth in subsections 9(a), 9(b), 9(c) and 9(d) hereof,
Employee’s employment by Employer may be terminated prior to the expiration of
the Term of this Agreement as follows:

     

    (a)           Employer,
by action of its Board of Directors and upon written notice to Employee, may
terminate Employee’s employment with Employer immediately for
cause.  For purposes of this subsection 7(a), “cause” shall be defined
as (a) the Employee’s commission of an act materially and demonstrably
detrimental to the goodwill of the Employer or any of its subsidiaries, which
act constitutes gross negligence or willful misconduct by the Employee in the
performance of his material duties to the Employer not authorized, directed or
expressly ratified by Employer’s Board of Directors or its Chief Executive
Officer, or (b) the Employee’s

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    conviction
of a felony involving moral turpitude, but specifically excluding any conviction
based entirely on vicarious liability.  No act or failure to act will
be considered “willful” unless it is done, or omitted to be done, by the
Employee in bad faith or without reasonable belief that his action or omission
was in the best interests of the Employer.  In addition, no act or
omission will constitute “cause” unless the Employer has given detailed written
notice thereof to the Employee and, where remedial action is feasible, he then
fails to remedy the act or omission within a reasonable time after receiving
such notice.

     

    (b)           Employer,
by action of its Board of Directors may terminate Employee’s employment with
Employer without cause at any time; provided, however, that the “date of
termination” for purposes of determining benefits payable to Employee under
subsection 8(b) hereof shall be the date which is 60 days after Employee
receives written notice of such termination.

     

    (c)           Employee,
by written notice to Employer, may terminate his employment with Employer
immediately for cause. For purposes of this subsection 7(c), “cause” shall be
defined as (i) any action by Employer’s Board of Directors to remove the
Employee as President and Chief Administrative Officer of Employer, except where
the Employer’s Board of Directors properly acts to remove Employee from such
office for “cause” as defined in subsection 7(a) hereof, (ii) any action by
Employer’s Board of Directors to materially limit, increase, or modify
Employee’s duties as President and Chief Administrative Officer of Employer,
including any action relating to his office or work environment which results in
a material diminution of his position and/or duties, (iii) any failure of
Employer to obtain the assumption of the obligation to perform this Agreement by
any successor or the reaffirmation of such obligation by Employer, as
contemplated in section 21 hereof; or (iv) any material breach by Employer of a
term, condition or covenant of this Agreement.

     

    (d)           Employee,
upon sixty (60) days written notice to Employer, may terminate his employment
with Employer without cause.

     

    (e)           Employee’s
employment with Employer shall terminate in the event of Employee’s death or
disability.  For purposes hereof, “disability” means the Employee (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 twelve (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 twelve (12) months,
receiving income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of the
Employer.

     

    8.           In
the event of the Employee’s Termination of Employment with Employer pursuant to
section 7 hereof, compensation shall continue to be paid by Employer to Employee
as follows:

     

    (a)           In
the event of Termination of Employment pursuant to subsection 7(a) or in the
event of Termination of Employment pursuant to subsection 7(d) other than during
the one year period immediately following a Change of Control, compensation
provided for herein (including Base Compensation) shall continue to be paid, and
Employee shall continue to participate in the employee benefit, retirement, and
compensation plans and other perquisites as provided in sections 5 and 6 hereof,
through the date of termination specified in the notice of
termination.  Any benefits payable under insurance, health, retirement
and bonus plans as a result of Employee’s participation in such plans through
such date shall be paid when due under those

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    plans.  The
date of termination specified in any notice of termination pursuant to
subsection 7(a) shall be no later than the last business day of the month in
which such notice is provided to Employee.

     

    (b)           In
the event of Termination of Employment pursuant to subsection 7(b) or 7(c) other
than during the one year period immediately following a Change of Control,
compensation provided for herein (including Base Compensation) shall continue to
be paid, and Employee shall continue to participate in the employee benefit,
retirement, and compensation plans and other perquisites as provided in sections
5 and 6 hereof, through the date of termination specified in the notice of
termination.  Any benefits payable under insurance, health, retirement
and bonus plans as a result of Employee’s participation in such plans through
such date shall be paid when due under those plans.  In addition,
Employee shall be entitled to continue to receive from Employer his Base
Compensation at the rate in effect at the time of termination for the remaining
Term of the Agreement, payable at such time and in such manner as employees of
the Employer are paid generally.  In addition, during such period,
Employer will maintain in full force and effect for the continued benefit of
Employee each employee welfare benefit plan and each employee pension benefit
plan (as such terms are defined in the Employee Retirement Income Security Act
of 1974, as amended) in which Employee was entitled to participate immediately
prior to the date of his termination, unless an essentially equivalent and no
less favorable benefit is provided by a subsequent employer of
Employee.  If the terms of any employee welfare benefit plan or
employee pension benefit plan of Employer do not permit continued participation
by Employee, Employer will arrange to provide to Employee a benefit
substantially similar to, and no less favorable than, the benefit he was
entitled to receive under such plan at the end of the period of
coverage.  Any such substitute benefit shall be provided at the same
time as the benefit it replaces.

     

    (c)           In
the event of the Employee’s death or disability pursuant to subsection 7(e),
compensation provided for herein (including Base Compensation) shall continue to
be paid, and Employee shall continue to participate in the employee benefit,
retirement, and compensation plans and other perquisites as provided in sections
5 and 6 hereof, (i) in the event of Employee’s death, through the date of death,
or (ii) in the event of Employee’s disability, through the date of proper notice
of disability as required by subsection 7(e).  Any benefits payable
under insurance, health, retirement and bonus plans as a result of Employer’s
participation in such plans through such date shall be paid when due under those
plans.  In addition, in the event this Agreement terminates because of
Employee’s disability, Employee shall be entitled to receive his Base
Compensation for a period of 12 months following such termination payable at the
same time and in the same manner as other employees are paid generally, reduced
dollar for dollar by the amount of disability payments paid to Employee for
periods following such termination in accordance with any disability policy or
program of Employer.

     

    (d)           In
the event of Termination of Employment pursuant to subsection 7(b), 7(c), or
7(d) within one year after a Change of Control, compensation provided for herein
(including Base Compensation) shall continue to be paid, and Employee shall
continue to participate in the employee benefit, retirement, and compensation
plans and other perquisites as provided in sections 5 and 6 hereof, through the
date of termination specified in the notice of termination.  Any
benefits payable under insurance, health, retirement and bonus plans as a result
of Employee’s participation in such plans through such date shall be paid when
due under those plans.  In addition, Employee shall be entitled to
receive from Employer an amount equal to three (3) times his Base Compensation
at the rate in effect at the time of termination payable in a lump sum within
thirty (30) days after his Termination of Employment.  In addition,
for three years after such Termination of Employment, Employer will maintain in
full force and effect for the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    continued
benefit of Employee each employee welfare benefit plan and each employee pension
benefit plan (as such terms are defined in the Employee Retirement Income
Security Act of 1974, as amended) in which Employee was entitled to participate
immediately prior to the date of his termination, unless an essentially
equivalent and no less favorable benefit is provided by a subsequent employer of
Employee.  If the terms of any employee welfare benefit plan or
employee pension benefit plan of Employer do not permit continued participation
by Employee, Employer will arrange to provide to Employee a benefit
substantially similar to, and no less favorable than, the benefit he was
entitled to receive under such plan at the end of the period of
coverage.  Any such substitute benefit shall be provided at the same
time as the benefit it replaces.

     

    (e)           The
Employee shall have a “Termination of Employment” if there is a termination of
services provided by the Employee to the Employer, whether voluntarily or
involuntarily, other than by reason of death or disability, as determined by the
Employer’s Board of Directors in accordance with Treas. Reg.
§1.409A-1(h).  In determining whether an Employee has experienced a
Termination of Employment, the following provisions shall apply:

     

    (1)           To
the extent the Employee provides services to the Employer solely as an employee,
except as otherwise provided in part (3) of this subsection, a Termination of
Employment shall occur when the Employee has experienced a termination of
employment with the Employer.  The Employee shall be considered to
have experienced a termination of employment when the facts and circumstances
indicate that the Employee and the Employer reasonably anticipate that either
(i) no further services will be performed for the Employer after a certain date,
or (ii) that the level of bona fide services the Employee will perform for the
Employer after such date (whether as an employee or as an independent
contractor) will permanently decrease to less than 50% of the average level of
bona fide services performed by the Employee (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the
full period of services to the Employer if the Employee has been providing
services to the Employer less than 36 months).

     

    If the
Employee is on military leave, sick leave, or other bona fide leave of absence,
the employment relationship between the Employee and the Employer shall be
treated as continuing intact, provided that the period of such leave does not
exceed 6 months, or if longer, so long as the Employee retains a right to
reemployment with the Employer under an applicable statute or by
contract.  If the period of a military leave, sick leave, or other
bona fide leave of absence exceeds 6 months and the Employee does not retain a
right to reemployment under an applicable statute or by contract, the employment
relationship shall be considered to be terminated for purposes of this Agreement
as of the first day immediately following the end of such 6-month
period.  In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if there is a
reasonable expectation that the Employee will return to perform services for the
Employer. 

     

    (2)           If
the Employee provides services to the Employer as an independent contractor,
except as otherwise provided in part (3) of this subsection, a Termination of
Employment shall occur upon the expiration of the contract (or in the case of
more than one contract, all contracts) under which services are performed for
the Employer, provided that the expiration of such contract(s) is determined by
the Employer’s Board of Directors to constitute a good-faith and complete
termination of the contractual relationship between the Employee and the
Employer. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (3)           If
the Employee provides services to the Employer as both an employee and an
independent contractor, a Termination of Employment generally shall not occur
until the Employee has ceased providing services for the Employer as both as an
employee and as an independent contractor, as determined in accordance with the
provisions set forth in parts (1) and (2) of this subsection,
respectively.  Similarly, if the Employee either (i) ceases providing
services for the Employer as an independent contractor and begins providing
services for the Employer as an employee, or (ii) ceases providing services for
the Employer as an employee and begins providing services for the Employer as an
independent contractor, the Employee will not be considered to have experienced
a Termination of Employment until the Employee has ceased providing services for
the Employer in both capacities, as determined in accordance with the applicable
provisions set forth in parts (1) and (2) of this subsection.

     

    Notwithstanding
the foregoing provisions in this part (3), if an Employee provides services for
the Employer as both an employee and as a director, to the extent permitted by
Treas. Reg. §1.409A-1(h)(5) the services provided by the Employee as a director
shall not be taken into account in determining whether the Employee has
experienced a Termination of Employment as an employee, and the services
provided by the Employee as an employee shall not be taken into account in
determining whether the Employee has experienced a Termination of Employment as
a director.

     

    (4)           For
the purpose of determining whether the Employee has experienced a Termination of
Employment, the term “Employer” shall mean:

     

    (i)           The
entity for which the Employee performs services and with respect to which the
legally binding right to compensation deferred or contributed under this
Agreement arises; and

     

    (ii)           All
other entities with which the entity described above would be aggregated and
treated as a single employer under Code Section 414(b) (controlled group of
corporations) and Code Section 414(c) (a group of trades or businesses, whether
or not incorporated, under common control), as applicable.  In order
to identify the group of entities described in the preceding sentence, an
ownership threshold of at least 50% shall be substituted for the 80% minimum
ownership threshold that appears in, and otherwise must be used when applying,
the applicable provisions of (A) Code Section 1563 for determining a controlled
group of corporations under Code Section 414(b), and (B) Treas. Reg. §1.414(c)-2
for determining the trades or businesses that are under common control under
Code Section 414(c).

     

    (f)           To
the extent the Employee is a “specified employee” (as defined below) as of his
Termination of Employment, payments due to the Employee as a result of his
Termination of Employment shall begin no sooner than six months after the
Employee’s Termination of Employment; provided, however, that any payments not
made during the six month period described in this subsection (f) shall be made
in a single lump sum as soon as within fifteen (15) days after the expiration of
such six month period.  For purposes of this Agreement, the term
“specified employee” shall have the meaning set forth in Treasury Reg. Section
1.409A-1(i) and shall include, without limitation, (1) an officer of the
Employer or the Holding Company having annual compensation greater than $130,000
(as adjusted for inflation under the Code), (2) a five percent owner of the
Employer or the Holding Company, or (3) a one percent owner of the Employer or
the Holding Company having annual compensation of more than
$150,000.  The

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    determination
of whether the Employee is a “specified employee” shall be made by the Employer
in good faith applying the applicable Treasury regulations.

     

    9.           In
order to induce Employer to enter into this Agreement, Employee hereby agrees as
follows:

     

    (a)           While
Employee is employed by Employer and for a period of three years after
termination of such employment for reasons other than those set forth in
subsections 7(b) or (c) of this Agreement, Employee shall not divulge or furnish
any trade secrets (as defined in IND. CODE § 24-2-3-2) of Employer or any
confidential information acquired by him while employed by Employer concerning
the policies, plans, procedures or customers of Employer to any person, firm or
corporation, other than Employer or upon its written request, or use any such
trade secret or confidential information directly or indirectly for Employee’s
own benefit or for the benefit of any person, firm or corporation other than
Employer, since such trade secrets and confidential information are confidential
and shall at all times remain the property of Employer.

     

    (b)           For
a period of three years after termination of Employee’s employment by Employer
for reasons other than those set forth in subsections 7(b) or (c) of this
Agreement, Employee shall not directly or indirectly provide banking or
bank-related services to, or solicit the banking or bank-related business of,
any customer of Employer at the time of such provision of services or
solicitation which Employee served either alone or with others while employed by
Employer in any city, town, borough, township, village or other place in which
Employee performed services for Employer while employed by it, or assist any
actual or potential competitor of Employer to provide banking or bank-related
services to, or solicit the banking or bank-related business of, any such
customer.

     

    (c)           While
Employee is employed by Employer and for a period of one year after termination
of Employee’s employment by Employer for reasons other than those set forth in
subsections 7(b) or (c) of this Agreement, Employee shall not, directly or
indirectly, as principal, agent, or trustee, or through the agency of any
corporation, partnership, trade association, agent or agency, engage within a
radius of fifteen (15) miles of Employer’s main office in any banking or
bank-related business which competes with the business of Employer as conducted
during Employee’s employment by Employer.

     

    (d)           If
Employee’s employment by Employer is terminated for reasons other than those set
forth in subsections 7(b) or (c) of this Agreement, Employee will turn over
immediately thereafter to Employer all business correspondence, letters, papers,
reports, customers’ lists, financial statements, credit reports or other
confidential information or documents of Employer or its affiliates in the
possession or control of Employee, all of which writings are and will continue
to be the sole and exclusive property of Employer or its
affiliates.

     

    If
Employee’s employment by Employer is terminated during the Term of this
Agreement for reasons set forth in subsections 7(b) or (c) of this Agreement,
Employee shall have no obligations to Employer with respect to trade secrets,
confidential information or noncompetition under this section 9.

     

    10.           Any
termination of Employee’s employment with Employer as contemplated by section 7
hereof, except in the circumstances of Employee’s death, shall be communicated
by written “Notice of Termination” by the terminating party to the other party
hereto.  Any “Notice of Termination” pursuant to subsections 7(a),
7(c) or 7(e) shall indicate the specific provisions of this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.           For
purposes of this Agreement, a “Change of Control” shall mean any of the
following:

     

    (a)           a
change in the ownership of the Employer or the Holding Company, which shall
occur on the date that any one person, or more than one person acting as a
group, acquires ownership of stock of the Employer or the Holding Company that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Employer or the Holding Company.  Such acquisition may occur as
a result of a merger of the Holding Company or the Employer into another entity
which pays consideration for the shares of capital stock of the merging Holding
Company or Employer.  However, if any one person, or more than one
person acting as a group, is considered to own more than fifty percent (50%) of
the total fair market value or total voting power of the stock of the Employer
or the Holding Company, the acquisition of additional stock by the same person
or persons is not considered to cause a change in the ownership of the Employer
or the Holding Company (or to cause a change in the effective control of the
Employer or the Holding Company (within the meaning of subsection
(b)).  An increase in the percentage of stock owned by any one person,
or persons acting as a group, as a result of a transaction in which the Employer
or the Holding Company acquires its stock in exchange for property will be
treated as an acquisition of stock for purposes of this
subsection.  This subsection applies only when there is a transfer of
stock of the Employer or the Holding Company (or issuance of stock of the
Employer or the Holding Company) and stock in the Employer or the Holding
Company remains outstanding after the transaction.

     

    (b)           a
change in the effective control of the Employer or the Holding Company, which
shall occur only on either of the following dates:

     

    (1)           the
date any one person, or more than one person acting as a group acquires (or has
acquired during the 12 month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Employer or the
Holding Company possessing thirty percent (30%) or more of the total voting
power of the stock of the Employer or the Holding Company.

     

    (2)           the
date a majority of members of the Holding Company’s board of directors is
replaced during any 12 month period by directors whose appointment or election
is not endorsed by a majority of the members of the Holding Company’s board of
directors before the date of the appointment or election; provided, however,
that this provision shall not apply if another corporation is a majority
shareholder of the Holding Company.

     

    If any
one person, or more than one person acting as a group, is considered to
effectively control the Employer or the Holding Company, the acquisition of
additional control of the Employer or the Holding Company by the same person or
persons is not considered to cause a change in the effective control of the
Employer or the Holding Company (or to cause a change in the ownership of the
Employer or the Holding Company within the meaning of subsection (a) of this
section).

     

    (c)           a
change in the ownership of a substantial portion of the Employer’s assets, which
shall occur on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the 12 month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Employer that have a total gross fair market value equal to or more than forty
percent (40%) of the total gross fair market value of all of the assets of the
Employer immediately before such acquisition or acquisitions.  For
this purpose, gross fair market value means the value of the assets of the
Employer, or the value of the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    assets
being disposed of, determined without regard to any liabilities associated with
such assets.  No change in control occurs under this subsection (c)
when there is a transfer to an entity that is controlled by the shareholders of
the Employer immediately after the transfer.  A transfer of assets by
the Employer is not treated as a change in the ownership of such assets if the
assets are transferred to –

     

    (1)           a
shareholder of the Employer (immediately before the asset transfer) in exchange
for or with respect to its stock;

     

    (2)           an
entity, 50 percent or more of the total value or voting power of which is owned,
directly or indirectly, by the Employer.

     

    (3)           a
person, or more than one person acting as a group, that owns, directly or
indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Employer; or

     

    (4)           an
entity, at least 50 percent of the total value or voting power of which is
owned, directly or indirectly, by a person described in paragraph
(c).

     

    For
purposes of this subsection (c) and except as otherwise provided in paragraph
(1) above, a person’s status is determined immediately after the transfer of the
assets.

     

    (d)           For
purposes of this section, persons will not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.  Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Employer or the Holding Company; provided,
however, that they will not be considered to be acting as a group if they are
owners of an entity that merges into the Employer or the Holding Company where
the Employer or the Holding Company is the surviving corporation.

     

    12.           If
Employee is suspended and/or temporarily prohibited from participating in the
conduct of Employer’s affairs by a notice served under section 8(3)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(3) and (g)(1)),
Employer’s 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, Employer shall (i) pay Employee 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.

     

    13.           If
Employee is removed and/or permanently prohibited from participating in the
conduct of Employer’s affairs by an order issued under section 8(e)(4) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)),
all obligations of Employer under this Agreement shall terminate as of the
effective date of the order, but vested rights of the parties to the Agreement
shall not be affected.

     

    14.           If
Employer is in default (as defined in section 3(x)(1) of the Federal Deposit
Insurance Act), all obligations under this Agreement shall terminate as of the
date of default, but this provision shall not affect any vested rights of
Employer or Employee.

     

    15.           All
obligations under this Agreement may be terminated except to the extent
determined that the continuation of the Agreement is necessary for the continued
operation of Employer: (i) by the Director of the Indiana Department of
Financial Institutions, or his or her designee (the “Director”), at
the

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    time the
Federal Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of Employer under the authority contained in Section
13(c) of the Federal Deposit Insurance Act; or (ii) by the Director at the time
the Director approves  a supervisory merger to resolve problems
related to operation of Employer or when Employer is determined by the Board to
be in an unsafe and unsound condition.  Any rights of the parties that
have already vested, however, shall not be affected by such action.

     

    16.           (a)        
  Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Employer to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
“Payment”) would be nondeductible (in whole or part) by the Employer for Federal
income tax purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), then the aggregate present value of amounts
payable or distributable to or for the benefit of the Employee pursuant to this
Agreement (such amounts payable or distributable pursuant to this Agreement are
hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced
Amount.  The “Reduced Amount” shall be an amount, not less than zero,
expressed in present value which maximizes the aggregate present value of
Agreement Payments without causing any Payment to be nondeductible by the
Employer because of Section 280G of the Code.  For purposes of this
Section 16, present value shall be determined in accordance with Section
280G(d)(4) of the Code.

     

    (b)           All
determinations required to be made under this Section 16 shall be made by the
Employer’s independent auditors, or at the election of such auditors by such
other firm or individuals of recognized expertise as such auditors may select
(such auditors or, if applicable, such other firm or individual, are hereinafter
referred to as the “Advisory Firm”) and such services shall be paid for by the
Employer. The Advisory Firm shall within ten business days of the date of
termination of the Employee’s employment by the Employer or the Holding Company
resulting in benefit payments hereunder (the “Date of Termination”), or at such
earlier time as is requested by the Employer, provide to both the Employer and
the Employee an opinion (and detailed supporting calculations) that the Employer
has substantial authority to deduct for federal in­come tax purposes the
full amount of the Agreement Payments and that the Employee has substantial
authority not to report on his or her federal income tax return any excise tax
imposed by Section 4999 of the Code with respect to the Agreement
Payments.  Any such determination and opinion by the Advisory Firm
shall be binding upon the Employer and the Employee.  The Agreement
Payments shall be eliminated or reduced consistent with the requirements of this
Section 16 by eliminating or reducing those Agreement Payments in a manner that
produces the greatest economic advantage to the Employee and if elimination of
reduction of two or more specific Agreement Payments produce the same economic
advantage, they shall be adjusted or reduced pro rata.  Within five
business days of the determination pursuant to the immediately preceding
sentence of this Agreement, the Employer shall pay to or distribute to or for
the benefit of the Employee such amounts as are then due the Employee under this
Agreement.  The Employer and the Employee shall cooperate fully with
the Advisory Firm, including without limitation providing to the Advisory Firm
all information and materials reasonably requested by it, in connection with the
making of the determinations required under this Section 16.

     

    (c)           As
a result of uncertainty in application of Section 280G of the Code at the time
of the initial determination by the Advisory Firm hereunder, it is possible that
Agreement Payments will have been made by the Employer which should not have
been made (“Overpayment”) or that additional Agreement Payments will not have
been made by the Employer which should have been made (“Underpayment”), in each
case, consistent with the calculations required to be made
hereunder.  In the event that the Advisory Firm, based upon the
assertion by the Internal Revenue Service against the Employee of a deficiency
which the Advisory Firm believes has a high probability of success, determines
that an Overpayment has been made, any such Overpayment paid or distributed by
the Employer to or for

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the
benefit of Employee shall be treated for all purposes as a loan ab initio which
the Employee shall repay to the Employer together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no such loan shall be deemed to have been made and no
amount shall be payable by the Employee to the Employer if and to the extent
such deemed loan and payment would not either reduce the amount on which the
Employee is subject to tax under Section 1 and Section 4999 of the Code or
generate a refund of such taxes.  In the event that the Advisory Firm,
based upon controlling precedent or other substantial authority, determines that
an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Employer to or for the benefit of the Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the
Code.

     

    17.           If
a dispute arises regarding the termination of Employee pursuant to section 7
hereof or as to the interpretation or enforcement of this Agreement and Employee
obtains a final judgment in his favor pursuant to an arbitration award or in a
court of competent jurisdiction or his claim is settled by Employer prior to the
rendering of an arbitration award or a judgment by such a court, all reasonable
legal fees and expenses incurred by Employee in contesting or disputing any such
termination or seeking to obtain or enforce any right or benefit provided for in
this Agreement or otherwise pursuing his claim shall be paid by Employer, to the
extent permitted by law.

     

    18.           Should
Employee die after termination of his employment with Employer while any amounts
are payable to him hereunder, this Agreement shall inure to the benefit of and
be enforceable by Employee’s executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall be paid in
accordance with the terms of this Agreement to Employee’s devisee, legatee or
other designee or, if there is no such designee, to his estate.

     

    19.           For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been given when delivered
or mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

     

    

    
      	 
      	
              If
      to Employee:

            	
              Joel
      Gorelick

            
	 
      	 
      	
              8589
      W. 85th Street

            
	 
      	 
      	
              Schererville,
      IN 46375

            
	 
      	 
      	 
      
	 
      	
              If
      to Employer:

            	
              Peoples
      Bank, SB

            
	 
      	 
      	
              9204
      Columbia Avenue

            
	 
      	 
      	
              Munster,
      IN 46321

            
	 
      	 
      	
              Attn:  David
      A. Bochnowski

            

    

    

    or to
such address as either party hereto may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

     

    20.           The
validity, interpretation, and performance of this Agreement shall be governed by
the laws of the State of Indiana, except as otherwise required by mandatory
operation of federal law.

     

    21.           Employer
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of Employer, by agreement in form and substance satisfactory to Employee
to expressly assume and agree to perform this Agreement in the same manner and
same extent that Employer would be required to perform it if no such succession
had taken place.  Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be a material intentional
breach of this Agreement and shall entitle Employee to terminate his employment
with Employer pursuant to subsection 7(c) hereof. As used in this
Agreement,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Employer”
shall mean Employer as hereinbefore defined and any successor to its business or
assets as aforesaid.

     

    22.           Except
as to any controversy or claim which the Employee elects, by written notice to
the Employer, to have adjudicated by a court of competent jurisdiction, any
controversy or claim arising out of or relating to this Agreement or the breach
hereof shall be settled by arbitration at a mutually agreed site in accordance
with the laws of the State of Indiana.  The arbitration shall be
conducted in accordance with the rules of the American Arbitration
Association.  The costs and expenses of the arbitrator(s) shall be
borne by the Employer.  The award of the arbitrator(s) shall be
binding upon the parties.  Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction.

     

    23.           No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by Employee and
Employer.  No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
dissimilar provisions or conditions at the same or any prior subsequent
time.  No agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.

     

    24.           The
invalidity or unenforceability of any provisions 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.

     

    25.           This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
agreement.

     

    26.           This
Agreement is personal in nature and neither party hereto shall, without consent
of the other, assign or transfer  this Agreement or any rights or
obligations hereunder except as provided in section 17 and section 20
above.  Without limiting the foregoing, Employee’s right to receive
compensation hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other than a transfer by
his will or by the laws of descent or distribution as set forth in section 17
hereof, and in the event of any attempted assignment or transfer contrary to
this paragraph, Employer shall have no liability to pay any amounts so attempted
to be assigned or transferred.

     

    27.           Upon
the inclusion of any amount into the Employee’s income as a result of the
failure of this Agreement to comply with the requirements of Section 409A of the
Code, a payment not to exceed the amount that shall be included in income shall
be made as soon as is administratively practicable following the discovery of
the failure of the Agreement to comply with Section 409A of the Code and
the regulations promulgated thereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have caused the Agreement to be executed and
delivered as of the day and year first above set forth.

     

    
      	 
      	
              PEOPLES
      BANK SB

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      David A. Bochnowski
	 
      	 
      	
              David
      A. Bochnowski, Chairman and Chief Executive Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              “Employer”

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	/s/
      Joel Gorelick
	 
      	
              Joel
      Gorelick

            
	 
      	 
      	 
      
	 
      	
              “Employee”

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
undersigned, NorthWest Indiana Bancorp, sole shareholder of Employer, agrees
that if it shall be determined for any reason that any obligations on the part
of Employer to continue to make any payments due under this Agreement to
Employee is unenforceable for any reason, NorthWest Indiana Bancorp, agrees to
honor the terms of this Agreement and continue to make any such payments due
hereunder to Employee pursuant to the terms of this Agreement.

     

    
      	 
      	
              NORTHWEST
      INDIANA BANCORP

            
	 
      	 
      	 
      
	 
      	
              By:

            	/s/
      David A. Bochnowski
	 
      	 
      	
              David
      A. Bochnowski, Chairman and Chief Executive
  Officer

            

    

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
A

    

    

    Benefits
Provided and Paid by Peoples Bank for Joel Gorelick

    

    

    
      	
              
                Company

              

            	 	
              
                Benefit
      Type

              

            	 	
              
                Coverage

              

            	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
              Principal
      Financial Group

            	 	
              Group
      Life Insurance

            	 	
              $  91,000.00

            	 	 
      
	
              Policy
      No. N31368-9

            	 	
              AD&D
      Insurance

            	 	
              $  91,000.00

            	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
              Assurant
      Employee Benefits

            	 	
              Group
      Life Insurance

            	 	
              $400,000.00

            	 	
              (maximum
      benefit under insurance plan)

            
	
              Policy
      No. 54075/Cert. #48

            	 	
              AD&D
      Insurance

            	 	
              $400,000.00

            	 	
              (maximum
      benefit under insurance plan)

            
	 
      	 	 
      	 	 
      	 	 
      
	
              Assurant
      Employee Benefits

            	 	
              Short-Term
      Disability

            	 	
              $       400.00

            	 	
              /week
      beginning 14th day of disability maximum
      benefit under Plan)**

            
	
              Policy
      No. 54075/Cert. #48

            	 	
              Long-Term
      Disability

            	 	
              $         5,000

            	 	
              /month
      beginning 27th week of disability (maximum
      benefit under Plan)

            
	 
      	 	 
      	 	 
      	 	 
      
	
              Mass
      Mutual Life Insurance
Policy No. 0064755

            	 	
              Endorsement
      Split Dollar Plan

            	 	
              $150,000.00

            	 	 
      
	
              New
      York Life Insurance
Policy
      No. 56608626

            	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      
	
              New
      York Life Insurance

              Policy
      No. 56612181

            	 	
              Endorsement
      Split Dollar Plan

            	 	
              $  75,000.00

            	 	 
      

    

    

    
      	
              **

            	
              Note
      to short-term disability.  The Bank funds a separate
      supplemental disability plan that would pay Joel his weekly wages over the
      $400 insurance benefit for a maximum period of 26 weeks.  This
      would entitle him to 100% of his pre-weekly disability earnings for a
      maximum disability period of 26
weeks.

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