EMPLOYMENT AGREEMENT
Exhibit 10.33
Form 10-K
Form 10-K
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of June 26th,
2006, by and between Xxxx X. Xxxxxxx (the “Executive”) and Citizens Banking Corporation, a
Michigan corporation (the “Company”).
WITNESSETH THAT:
The Company has determined that it is in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication of the Executive pending and following
the merger (the “Merger”) of the Company and Republic Bancorp Inc. (“Republic”)
pursuant to the Agreement and Plan of Merger, dated as of June 26th, 2006, between the Company and
Republic (the “Merger Agreement”). Therefore, in order to accomplish these objectives, the
Executive and the Company desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and for
other good and valuable consideration, it is hereby covenanted and agreed by the Executive and the
Company as follows:
1. Effective Date. The “Effective Date” shall mean the date on which the
“Effective Time” (as defined in the Merger Agreement) of the Merger occurs. In the event
that the Effective Time shall not occur, this Agreement shall be null and void ab initio
and of no further force and effect.
2. Employment Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on December 31, 2011 (the
“Employment Period”). The Employment Period shall be divided into two periods, the
“Initial Period” and the “Second Period.” The Initial Period shall commence on the
Effective Date and end on December 31, 2010, and the Second Period shall commence on January 1,
2011 and end on December 31, 2011; provided, however, the Employment Period and the
Second Period will be automatically extended by twelve months on December 31, 2011 and on each
anniversary thereof, unless either party to this Agreement provides written notice of non-renewal
to the other party within 30 days prior to the date of such automatic extension.
3. Position and Duties. (i) During the Initial Period, the Executive shall serve
as the President and Chief Operating Officer of the Company, and, (ii) during the Second Period,
the Executive shall cease serving as the Chief Operating Officer and shall serve as the President
and Chief Executive Officer of the Company, in the case of each of (i) and (ii), with such
authority, power, duties and responsibilities as are commensurate with such positions and as are
customarily exercised by a person holding such positions in a company of the size and nature of the
Company. During the Initial Period, the Executive shall report directly to the Chief Executive
Officer of the Company (the “Initial CEO”) and during the Second Period, the Executive
shall report directly to the Board of Directors of the Company (the “Board”) or its
designee. During the Employment Period, the Executive shall serve as a member of the Board. The
Board shall appoint the Executive to the positions specified above at the times specified above
throughout the Employment Period. During the Employment Period, the Executive shall perform his
duties at the Company’s headquarters.
(b) The Executive agrees that during the Employment Period he shall devote his full business
time, energies and talents to serving in the positions described in Section 3(a) and he shall
perform his duties faithfully and efficiently subject to the directions of the Board.
Notwithstanding the foregoing provisions of this Section 3(b), the Executive may (i) serve as a
director, trustee or officer or otherwise participate in not-for-profit educational, welfare,
social, religious and civic organizations; (ii) serve as a director of any for-profit business, with the prior consent of the Board (which
consent shall not be unreasonably withheld); and (iii) acquire passive investment interests in one
or more entities, to the extent that such other activities do not inhibit or interfere with the
performance of the Executive’s duties under this Agreement, or to the knowledge of the Executive
conflict in any material way with the business or policies of the Company or any subsidiary or
affiliate thereof (the “Affiliated Entities”).
4. Compensation. Subject to the terms of this Agreement, while the Executive is
employed by the Company, the Company shall compensate him for his services as follows:
(a) Base Salary. During the Initial Period, the Executive shall receive an annual
base salary (“Annual Base Salary”) at a rate of not less than 90% of the annual base salary
paid to the Initial CEO (but in no event less than $667,000). During the Second Period, the
Executive’s Annual Base Salary shall be determined by the Compensation Committee of the Board (the
“Compensation Committee”), but in no event shall it be less than the Annual Base Salary at
the end of the Initial Period. The term Annual Base Salary as utilized in this Agreement shall
refer to Annual Base Salary as in effect from time to time, including any increases. Such Annual
Base Salary shall be payable in monthly or more frequent installments in accordance with the
Company’s payroll policies. The Executive’s Annual Base Salary may not be decreased at any time
during the Employment Period.
(b) Annual Incentive Payment. With respect to each fiscal year of the Company ending
during the Initial Period, the Executive shall be eligible to receive an annual incentive payment
(the “Incentive Payment”) as determined in accordance with the Company’s Management
Incentive Plan or any substitute or successor plan thereto (the “Incentive Plan”) with a
target of not less than 90% of the target annual incentive payment of the Initial CEO with respect
to the applicable fiscal year (the “Target Incentive Payment”). With respect to each
fiscal year ending during the Second Period, the Executive’s Incentive Payment shall be determined
by the Compensation Committee in its sole discretion, but in no event shall the target annual
incentive payment with respect to the Second Period be less than that in effect with respect to the
Executive during the Initial Period.
(c) Annual Equity Incentive Awards. During the Initial Period, the Executive’s annual
equity incentive awards shall be no less than 90% of the value of those awarded to the Initial CEO
and shall have terms and conditions no less favorable than those applicable to the Initial CEO,
other than any such terms relating to vesting prior to the expiration of the Initial Period. With
respect to each fiscal year ending during the Second Period, the Executive shall receive equity
incentive awards as determined by the Compensation Committee in its sole discretion.
(d) Employee Benefits, Fringe Benefits and Perquisites. During the Employment Period,
the Executive shall be provided with employee benefits, fringe benefits and perquisites on a basis
no less favorable than such benefits and perquisites are provided by the Company from time to time
to the Company’s other senior executives, including, but not limited to, five weeks’ vacation, life
insurance and accidental death and dismemberment insurance, but excluding any supplemental
retirement benefits to which the Initial CEO may be entitled, in each case, subject to the terms of
the applicable plan (after taking into account the provisions of Section 6.6(b) of the Merger
Agreement).
(e) Other Benefits. During the Employment Period, the Company shall reimburse the
Executive for the initiation fees and annual dues associated with the Executive maintaining
membership in one country club within the State of Michigan. Alternatively, the Company may
choose, at its option, to pay such initiation fees and dues directly. The Executive will receive a
tax gross-up payment in an amount that, after all Federal, state and local income taxes thereon,
shall equal the aggregate amount of additional Federal, state and local income taxes payable by the
Executive from time to time by reason of the receipt of such reimbursements (or direct payment of
initiation fees and dues for country club membership) under this Section 4(e).
(f) Expense Reimbursement. During the Employment Period, the Company will reimburse
the Executive for all reasonable expenses incurred by him in the performance of his duties in accordance with the Company’s policies applicable to senior executives. In
addition, the Company shall reimburse the Executive for reasonable attorney’s fees incurred by him
in the negotiation of this Agreement.
(g) Indemnification. The Executive shall be entitled to be indemnified by the Company
with respect to his services to the Company under this Agreement following the Effective Time
pursuant to an indemnification agreement to be entered into between the Executive and the Company,
which shall contain terms no less favorable to the Executive than those applicable to the Initial
CEO.
(h) Change in Control Agreement. Notwithstanding anything to the contrary herein,
following the Effective Date, the Company shall enter into a change in control agreement with the
Executive in a form substantially similar to that provided to other senior executives of the
Company (the “Change in Control Agreement”). Upon a termination of the Executive’s
employment entitling the Executive to benefits under this Agreement and the Change in Control
Agreement, the Executive shall be entitled to the better of the benefit provided herein or in the
Change in Control Agreement on a benefit by benefit basis; provided, however, that
in no event shall the Executive be entitled to duplicate benefits.
(i) Satisfaction of Obligations under the Prior Agreement. In full satisfaction of
the Executive’s rights and the Company’s obligations under the Change in Control Severance
Agreement between Republic and the Executive dated as of March 10th, 2004 (the “Prior
Agreement”), the Executive shall be entitled to receive the amount determined under Section
4(a)(ii) of the Prior Agreement (the “Prior Agreement Payment”) as if the Executive
experienced a “Qualifying Termination” (as defined in the Prior Agreement) as of immediately
following the Effective Time. The Prior Agreement Payment shall be paid in a lump sum in cash on
March 12, 2007, or on such earlier date as shall not give rise to the imposition of the additional
tax under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The
Executive’s right to receive the Prior Agreement Payment is contingent upon the Executive’s
execution and non-revocation of the release substantially in the form attached as Annex I to the
Prior Agreement (the “Release”). In no event shall the Executive be entitled to the Prior
Agreement Payment until the revocation period set forth in the Release has expired. For the
avoidance of doubt, and notwithstanding anything herein to the contrary, the Prior Agreement
Payment shall not be taken into account in computing any benefits under any plan, program or
arrangement of the Company or Republic or any of their respective affiliates and will not be
subject to deferral.
5. Termination
of Employment. (a) Death or Disability. The Executive’s
employment shall terminate automatically upon the Executive’s death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth below), it may provide
the Executive with written notice in accordance with Section 23 of this Agreement of its intention
to terminate the Executive’s employment. In such event, the Executive’s employment with the
Company shall terminate effective on the 30th day after receipt of such notice by the Executive
(the “Disability Effective Date”), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, “Disability” shall mean the absence of the Executive from
the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Executive or
the Executive’s legal representative.
(b) Cause. The Company may terminate the Executive’s employment during the Employment
Period either with or without Cause. For purposes of this Agreement, “Cause” shall mean:
(i) the continued failure of the Executive to perform substantially the Executive’s
duties with the Company or one of the Affiliated Entities (other than any such failure
resulting from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has not substantially performed the
Executive’s duties;
(ii) the Executive is convicted of, or pleads guilty or nolo
contendere to a charge of commission of (A) a felony or (B) any crime involving
moral turpitude resulting in reputational harm causing material injury to the Company; or
(iii) the willful engaging by the Executive in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall
be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in clauses (i), (ii) or (iii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive’s employment may be terminated during the Employment
Period by the Executive with or without Good Reason. For purposes of this Agreement, “Good
Reason” shall mean in the absence of the written consent of the Executive:
(i) the failure of the Company to appoint or reappoint the Executive to the positions
set forth in Section 3(a) of the Agreement at the times specified in Section 3(a) of the
Agreement or the removal of the Executive from any of such positions, other than, in the
case of each of the foregoing, if such failure or removal is for Cause or due to the
Executive’s death or Disability;
(ii) the assignment to the Executive of any duties inconsistent with the Executive’s
positions (including status, offices and titles), authority, duties or responsibilities as
contemplated by Section 3(a) of this Agreement, or any other action by the Company which
results in a diminution in such positions, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith
and which is remedied by the Company within 30 days after receipt of notice thereof given
by the Executive;
(iii) any failure by the Company to comply with any of the provisions of Section 4 of
this Agreement, other than an isolated, insubstantial or inadvertent failure not occurring
in bad faith and which is remedied by the Company within 30 days after receipt of notice
thereof given by the Executive;
(iv) any change in the Executive’s reporting relationship other than as contemplated
in Section 3(a) or any requirement by the Company that the Executive’s services be rendered
primarily at a location or locations other than the Company’s corporate headquarters in the
lower peninsula of Michigan;
(v) any failure by the Company to comply with Section 17(b) of this Agreement;
(vi) any failure to elect or reelect the Executive to the Board other than any such
failure for Cause or due to the Executive’s death or Disability; or
(vii) the Company’s delivery of notice of non-renewal of the Employment Period as
provided for in Section 2 of this Agreement other than for Cause or due to the Executive’s death or
Disability.
(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 23 of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, 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) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than 30 days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive with or without Good Reason,
the date of receipt of the Notice of Termination or any later date specified therein within 30 days
of such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the date on which the Company
notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of death of the Executive
or the Disability Effective Date, as the case may be.
6. Obligations
of the Company upon Termination. (a) Good Reason; Other Than for
Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the
Executive’s employment other than for Cause, death or Disability or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) any annual Incentive Payment
earned by the Executive for a prior award period, but not yet paid to the
Executive, (3) the product of (x) the Target Incentive Payment and (y) a fraction,
the numerator of which is the number of days that have elapsed in the fiscal year
of the Company in which the Date of Termination occurs as of the Date of
Termination, and the denominator of which is 365 (the “Pro-Rata Bonus”),
(4) any accrued vacation pay to the extent not theretofore paid and (5) any
business expenses incurred by the Executive that are unreimbursed as of the Date of
Termination (the sum of the amounts described in clauses (1), (2), (3), (4) and (5)
shall be hereinafter referred to as the “Accrued Obligations”); and
B. the amount equal to the product of (1) three, and (2) the sum of
(x) the Executive’s Annual Base Salary and (y) the Target Incentive Payment (the
product of (1) and (2), the “Severance Payment”); and
(ii) All stock options, restricted stock, restricted stock units and other
equity-based compensation awards outstanding as of the Date of Termination and held by the
Executive shall vest in full and all restrictions thereon shall lapse, and all stock
options shall remain exercisable for the remainder of their full term (or, with respect to
stock options granted prior to the Effective Date, such shorter period as would not be
considered an extension and renewal of an option for purposes of Section 409A of the Code
and the regulations thereunder) (collectively, the “Equity Benefits”); and
(iii) the Executive’s club membership shall be transferred to the Executive at no cost
to the Executive, who immediately following the transfer shall become subject to the
monthly dues charges of the club; and
(iv) during the three-year period following the Date of Termination, the Executive and
his eligible dependents shall continue to be covered, at the Company’s cost, by the
medical, dental and life insurance benefit plans that are in effect on the Date of
Termination and that cover executive officers. Any such non-cash benefit that is tied to
compensation shall be based on the Executive’s Severance Payment divided by three; and
(v) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and the Affiliated Entities through the Date of
Termination, to the extent not paid or provided (such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”).
Notwithstanding the foregoing provisions of this Section 6(a), to the extent required in order to
comply with Section 409A of the Code, cash amounts and the benefits that would otherwise be payable
or provided under this Section 6(a) during the six-month period immediately following the Date of
Termination shall instead be paid or provided, with interest on any delayed cash payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on
the first business day after the date that is six months following the Executive’s “separation from
service” within the meaning of Section 409A of the Code; provided, however, that,
with respect to the provision of healthcare benefits, the Company shall take such action as is
necessary to ensure that there is not a lapse in coverage.
(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of the Equity Benefits and the Other Benefits.
Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(b) shall include death benefits as
in effect on the date of the Executive’s death with respect to senior executives of the Company and
their beneficiaries.
(c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of the Equity Benefits and the Other Benefits. Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination, provided,
that to the extent required in order to comply with Section 409A of the Code, amounts and benefits
to be paid or provided under this sentence of Section 6(c) shall be paid, with Interest, or
provided to the Executive on the first business day after the date that is six months following the
Executive’s “separation from service” within the meaning of Section 409A of the Code. With respect
to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits as in effect at any time thereafter generally with respect to senior
executives of the Company.
(d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment without Good Reason during the
Employment Period, this Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive (i) the Accrued Obligations (other than the
Pro-Rata Bonus) and (ii) the Other Benefits.
(e) Effect of Termination on Other Positions. If, on the Date of Termination, the
Executive is a member of the Board or the board of directors of any of the Company’s subsidiaries,
or holds any other position with the Company or its subsidiaries, the Executive shall be deemed to
have resigned from all such positions as of the date of his termination of employment with the
Company. The Executive agrees to execute such documents and take such other actions as the Company
may request to reflect such resignation.
7. No Mitigation; No Offset. The Company’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, counterclaim, recoupment, defense or other claim, right or action which the Company
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. The Company agrees to pay as incurred, to
the full extent permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any provision of this Agreement
or any guarantee of performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus in each case Interest on any
delayed payment.
8. Certain Additional Payments by the Company. 4) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment or distribution by
the Company 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 Section 8) (a “Payment”) would be subject to
the excise tax imposed by Section 4999 of the Code or 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, are 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
Payments.
(b) Subject to the provisions of Section 8(c), all determinations required to be made under
this Section 8, 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 a nationally recognized certified public accounting firm reasonably acceptable to the
Company as may be designated by the Executive (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive within 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 Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the
Company to the Executive or directly to the Internal Revenue Service, in the sole discretion of the
Company, within five days of the later of (i) the due date for the payment of any Excise Tax, and
(ii) the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm
shall be binding upon the Company 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 Company
should have been made (“Underpayment”), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8(c) and
the Executive thereafter is required to make a payment of 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 Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the Company 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 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company 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 Company any information reasonably requested by the Company relating to
such claim,
(ii) take such action in connection with contesting such claim as the Company 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
Company,
(iii) cooperate with the Company in good faith in order effectively to contest such
claim, and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including all professional fees and 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 limitation
on the foregoing provisions of this Section 8(c), the Company 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 pay the tax claimed to the appropriate taxing
authority on behalf of the Executive and direct the Executive to xxx 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 Company shall determine; provided, however, that, if
the Company pays such claim and directs the Executive to xxx for a refund, the Company 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 payment or with
respect to any imputed income in connection with such payment; and provided,
further, 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 contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which the 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 a payment by the Company of an amount on the
Executive’s behalf pursuant to Section 8(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 8(c)) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Executive’s behalf pursuant to Section 8(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then the amount of such payment shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. Return of Company Property. Upon his termination of employment for any reason, the
Executive shall promptly return to the Company any keys, credit cards, passes, confidential
documents or material, or other property
belonging to the Company, and the Executive shall also
return all writings, files, records, correspondence, notebooks, notes and other documents and
things (including any copies thereof) containing confidential information or relating to the
business or proposed business of the Company or the Affiliated Entities or containing any trade
secrets relating to the Company or the Affiliated Entities except any personal diaries, calendars,
rolodexes or personal notes or correspondence. For purposes of the preceding sentence, the term
“trade secrets” shall have the meaning ascribed to it under the Uniform Trade Secrets Act. The
Executive agrees to represent in writing to the Company upon termination of employment that he has
complied with the foregoing provisions of this Section 9.
10. Mutual Nondisparagement. The Executive and the Company each agree that, following
the Executive’s termination of employment, neither the Executive, nor the Company, including its
executive officers and directors, will make any public statements which materially disparage the
other party. Notwithstanding the foregoing, nothing in this Section 10 shall prohibit any person
from making truthful statements when required by order of a court or other governmental or
regulatory body having jurisdiction.
11. Confidential Information. The Executive agrees that, during his employment with
the Company and at all times thereafter, he shall hold in a fiduciary capacity for the benefit of
the Company all secret or confidential information, knowledge or data relating to the Company or
any of the Affiliated Entities, and their respective businesses, which shall have been obtained by
the Executive during the Executive’s employment by the Company or during his consultation with the
Company after his termination of employment, and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in violation of this
Agreement). Except in the good faith performance of his duties for the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise be required by law
or legal process, communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it.
12. Nonsolicitation. For the two-year period following his termination of employment
with the Company, the Executive shall not solicit any individual who is, on the date of his
termination of employment, employed by the Company or the Affiliated Entities to terminate or
refrain from renewing or extending such employment or to become employed by or become a consultant
to any other individual or entity other than the Company or the Affiliated Entities, and the
Executive shall not initiate discussion with any such employee for any such purpose or authorize or
knowingly cooperate with the taking of any such actions by any other individual or entity on behalf
of the Executive’s employer.
13. Noncompetition. The Executive agrees that, while he is employed by the Company
and during the two-year period thereafter, he will not engage in Competition (as defined below).
The Executive shall be deemed to be engaging in “Competition” if he directly or indirectly,
owns, manages, operates, controls or participates in the ownership, management, operation or
control of or is connected as an officer, employee, partner, director, consultant or otherwise
with, or has any financial interest in, any business engaged in the financial services business (a
“Competing Business”) in any state in which the Company or the Affiliated Entities as of
the Effective Date operates a commercial banking or other material financial services business
which is a material part of such business and is in material competition with the business
conducted by the Company at the time of the termination of his employment with the Company or the
Affiliated Entities. Notwithstanding the foregoing sentence, the Executive shall not be deemed to
be engaging in Competition under the circumstances described in the foregoing sentence if the
Executive (i) does not own or control the Competing Business, (ii) does not serve as a director or
a consultant to the Competing Business, and (iii) does not have any management or operational
responsibility for the Competing Business in any state in which the Company or the Affiliated
Entities operates a material business as of the Effective Date. Ownership for personal investment purposes only of less
than 2% of the voting stock of any publicly held corporation shall not constitute a violation
hereof.
14. Equitable Remedies. The Executive acknowledges that the Company would be
irreparably injured by a violation of Section 10, 11, 12 or 13 and he agrees that the Company, in
addition to any other remedies available to it for such breach or threatened breach, shall be
entitled to a preliminary injunction, temporary restraining order, or other equivalent relief,
restraining the Executive from any actual or threatened breach of Section 10, 11, 12 or 13. If a
bond is required to be posted in order for the Company to secure an injunction or other equitable
remedy, the parties agree that said bond need not be more than a nominal sum. In no event shall an
asserted violation of the provisions of Section 10, 11, 12 or 13 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this Agreement.
15. Assistance with Claims. The Executive agrees that, consistent with the
Executive’s business and personal affairs, during and after his employment by the Company, he will
assist the Company and the Affiliated Entities in
the defense of any claims, or potential claims
that may be made or threatened to be made against any of them in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a “Proceeding”), and will assist
the Company and the Affiliated Entities in the prosecution of any claims that may be made by the
Company or the Affiliated Entities in any Proceeding, to the extent that such claims may relate to
the Executive’s employment or the period of Executive’s employment by the Company. The Executive
agrees, unless precluded by law, to promptly inform the Company if Executive is asked to
participate (or otherwise become involved) in any Proceeding involving such claims or potential
claims. The Executive also agrees, unless precluded by law, to promptly inform the Company if the
Executive is asked to assist in any investigation (whether governmental or private) of the Company
or the Affiliated Entities (or their actions), regardless of whether a lawsuit has then been filed
against the Company or the Affiliated Entities with respect to such investigation. The Company
agrees to reimburse the Executive for all of the Executive’s reasonable out-of-pocket expenses
associated with such assistance, including travel expenses and any attorneys’ fees and shall pay a
reasonable per diem fee for the Executive’s services.
16. Arbitration. (a) Except as provided in Section 14 of this Agreement, any and all
controversies, disputes or claims arising between the parties to this Agreement, including any
purported controversies, disputes or claims not arising under contract, that have not been resolved
within twenty (20) days after notice is given in writing of the controversy, dispute or claim shall
be submitted for arbitration in accordance with the rules of the American Arbitration Association
in effect as of the date hereof. Arbitration shall take place at an appointed time and place in
Flint, Michigan. Each party hereto shall select one arbitrator, and the two so designated shall
select a third arbitrator. If either party shall fail to designate an arbitrator within fifteen
(15) calendar days after arbitration is requested, or if the two arbitrators shall fail to select a
third arbitrator within thirty (30) calendar days after arbitration is requested, then such
arbitrator shall be selected by the American Arbitration Association, or any successor thereto,
upon application of either party. The arbitration shall be instead of any civil litigation; this
means that the Executive and the Company are each waiving any rights to a jury trial.
(b) Except as provided in Section 14 of this Agreement, arbitration under this provision
shall be the sole and exclusive forum and remedy for resolution of controversies, disputes and
claims of any kind or nature, whether or not presently known or anticipated, including any
purported controversies, disputes or claims not arising under contract, between the parties to this
Agreement, and no recourse shall be had to any other judicial or other forum for any such
resolution. The award of the arbitrators may grant any relief that a court of general jurisdiction
has authority to grant, including, without limitation, an award of damages and/or injunctive
relief. All costs and expenses of arbitration shall be borne by the Company. Any award of the
majority of arbitrators shall be binding and not subject to judicial appeal or review of the award,
including without limitation any proceedings under sections 9 and 10 of the Federal Arbitration
Act, 9 U.S.C. § 1 et seq., or any comparable provision for review of an arbitral award under any
comparable statute or law of any jurisdiction, all rights to which are hereby expressly waived by
the parties. The Executive and the Company knowingly and voluntarily agree to this arbitration
provision. Subject to the preceding sentence, the United States District Court for the District of
Michigan and the courts of the State of Michigan shall have sole and exclusive jurisdiction solely for the
purpose of entering judgment upon any award by the majority of arbitrators.
(c) Nothing herein shall bar the right of either party to this Agreement to seek and obtain
injunctive relief from a court of competent jurisdiction in accordance with Section 14 above.
Furthermore, claims for unemployment insurance benefits, for workers’ compensation insurance
benefits, and for benefits under any employee benefit plan(s) governed by the Employee Retirement
Income Security Act of 1974, as amended, shall be resolved pursuant to the claims procedures under
such benefit plans, notwithstanding this agreement to arbitrate.
17. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive. This Agreement and any
rights and benefits hereunder shall inure to the benefit of and be enforceable by the Executive’s
legal representatives, heirs or legatees. This Agreement and any rights and benefits hereunder
shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(b) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to satisfy all of the obligations under this Agreement in the
same manner and to the same extent that the Company would be required to satisfy such obligations
if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
18. Amendment. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors and legal
representatives. If any compensation or benefits provided by this Agreement may result in the
application of Section 409A of the Code, the Company shall, in consultation with the Executive,
modify the Agreement in the least restrictive manner necessary in order to exclude such
compensation from the definition of “deferred compensation” within the meaning of such Section 409A
or in order to comply with the provisions of Section 409A, other applicable provision(s) of the
Code and/or any rules, regulations or other regulatory guidance issued under such statutory
provisions and without any diminution in the value of the payments or benefits to the Executive
and, in the case of healthcare benefits, without any lapse in coverage.
19. Withholding. The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
20. Applicable Law. The provisions of this Agreement shall be construed in accordance
with the internal laws of the State of Michigan, without regard to the conflict of law provisions
of any state.
21. Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable provision were omitted
(but only to the extent that such provision cannot be appropriately reformed or modified).
22. Waiver of Breach. No waiver by any party hereto of a breach of any provision of
this Agreement by any other party, or of compliance with any condition or provision of this
Agreement to be performed by such other party, will operate or be construed as a waiver of any
subsequent breach by such other party of any similar or dissimilar provisions and conditions at the
same or any prior or subsequent time. The failure of any party hereto to take any action by reason
of such breach will not deprive such party of the right to take action at any time while such
breach continues.
23. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid, or prepaid overnight courier to the parties at the
addresses set forth below (or such other addresses as shall be specified by the parties by like
notice):
to the Company:
Citizens Banking Corporation
One Citizens Banking Center
000 Xxxxx Xxxxxxx Xx.
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel and Secretary
or to the Executive:
At the most recent address maintained
by the Company in its personnel records.
with a copy to:
Xxxxxx X. Xxxx
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP
000 Xxxxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000-0000
Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP
000 Xxxxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000-0000
Each party, by written notice furnished to the other party, may modify the applicable delivery
address, except that notice of change of address shall be effective only upon receipt. Such
notices, demands, claims and other communications shall be deemed given in the case of delivery by
overnight service with guaranteed next day delivery, the next day or the day
designated for
delivery; or in the case of certified or registered U.S. mail, five days after deposit in the U.S.
mail; provided, however, that in no event shall any such communications be deemed
to be given later than the date they are actually received.
24. Survivorship. Upon the expiration or other termination of this Agreement, the
respective rights and obligations of the parties hereto shall survive such expiration or other
termination to the extent necessary to carry out the intentions of the parties under this
Agreement.
25. Entire Agreement. From and after the Effective Date, this Agreement shall
supersede any other employment, severance or change of control agreement between the Executive and
the Company or Republic with respect to the subject matter hereof, including the Prior Agreement.
26. Counterparts. This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and all of which taken together constitute one and the same
agreement. IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has caused
these presents to be executed in its name and on its behalf, all as of the day and year first above
written.
| XXXX X. XXXXXXX | ||||||
| CITIZENS BANKING CORPORATION | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
