FORM A
THIS IS AN AGREEMENT between First Manistique
Corporation (the "Corporation"), whose principal
offices are located at 000 Xxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, and Xxxxxx Xxxxxxxxxx (the
"Executive"), who resides at Xxxxx 0, Xxx 0000,
Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000 dated May 22,
1996.
RECITALS
The Executive is a key executive officer of the
Corporation whose continued dedication, availability,
advice and counsel to the Corporation is deemed
important to the Board of Directors of the Corporation
("Board"), the Corporation and its shareholders. The
services of the Executive, his experience and knowledge
of the affairs of the Corporation and his reputation
and contacts in the industry are extremely valuable to
the Corporation. The Corporation wishes t6lattract and
retain such well-qualified executives, and it is in the
best interests of the Corporation and of the Executive
to secure the continued services of the Executive
notwithstanding any change in control of the
Corporation. The Corporation considers the
establishment and maintenance of a sound and vital
management to be part of its overall corporate strategy
and to be essential to protecting and enhancing the
best interests of this Corporation and its
shareholders. Accordingly, the Board has approved this
Agreement with the Executive and authorized its
execution and delivery on behalf of the Corporation.
AGREEMENT
1. Term of Agreement. "This Agreement will
begin on the date entered above (the "Commencement
Date") and will continue in effect through the third
anniversary of the Commencement Date. However, on the
third anniversary of the Commencement Date, and on each
third anniversary date thereafter, the term of this
Agreement will be extended automatically for three (3)
additional years unless, not later than six (6) months
prior to such anniversary date, the Corporation gives
written notice to the Executive that it has elected not
to extend this Agreement. In addition, if a Change of
Control occurs during the term of this Agreement, this
Agreement will continue in effect for at least thirty-
six (36) months beyond the end of the month in which
any Change of Control occurs.
2. Definitions. The following defined terms
shall have the meanings set forth below, for purposes
of this Agreement:
(a) Change of Control. "Change of Control"
means an occurrence of a nature that would be
required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Without limiting
the inclusiveness of the definition in the
preceding sentence, a Change of Control of the
Corporation shall be deemed to have, occurred if:
(i) Any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities
of the Corporation representing twenty-five
percent (25%) or more of the combined voting
power of the Corporation's then outstanding
securities; or
(ii) At any time a majority of the Board
of Directors of the Corporation is comprised
of other than Continuing Directors (for
purposes of this paragraph, the term
Continuing Director means a director who was
either (A) first elected or appointed as a
Director prior to the date of this Agreement;
or (B) subsequently elected or appointed as a
director if such director was nominated or
appointed by at least a majority of the then
Continuing Directors); or
(iii) Any of the following occur:
(A) Any merger or consolidation of
the Corporation, other than a merger or
consolidation in which the voting
securities of the Corporation
immediately prior to the merger or
consolidation continue to represent
(either by remaining outstanding or
being converted into securities of the
surviving entity) fifty-one percent
(51%) or more of the combined voting
power of the Corporation or surviving
entity immediately after the merger or
consolidation with another entity;
(B) Any sale, exchange, lease,
mortgage, pledge, transfer, or other
disposition (in a single transaction or
a series of related transactions) of all
or substantially all of the assets of
the Corporation which shall include,
without limitation, the sale of assets
or earning power aggregating more than
fifty percent (50%) of the assets or
earning power of the Corporation on a
consolidated basis;
(C) Any liquidation or dissolution
of the Corporation;
(D) Any reorganization, reverse
stock split, or recapitalization of the
Corporation which would result in a
Change of Control; or
(E) Any transaction or series of
related transactions having, directly or
indirectly, the same effect as any of
the foregoing; or any agreement,
contract, or other arrangement providing
for any of the foregoing.
(b) Disability. "Disability" means that, as
a result of Executive's incapacity due to physical
or mental illness, the Executive shall have been
found to be eligible for the receipt of benefits
under the Corporation's long term disability plan.
(c) Cause. "Cause" means (i) the willful
commission by the Executive of a criminal or other
act that causes or will probably cause substantial
economic damage, to the Corporation or a
Subsidiary or substantial injury to the business
reputation of the Corporation or a Subsidiary;
(ii) the commission by the Executive of an act of
fraud in
the performance of such Executive's
duties on behalf of the Corporation or a
Subsidiary; (iii) the continuing willful failure
of the Executive to perform the duties of such
Executive to the Corporation or a Subsidiary
(other than any such failure resulting from the
Executive's incapacity due to physical or mental
illness) after written notice thereof (specifying
the particulars thereof in reasonable detail) and
a reasonable opportunity to be heard and cure such
failure are given to the Executive by the
Nominating and Salary Committee of the Board; or
(iv) the order of a federal or state bank
regulatory agency or a court of competent
jurisdiction requiring the termination of the
Executive's employment. For purposes of this
subparagraph, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that
the action or omission was in the best interest of
the Corporation or a Subsidiary.
(d) Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence of
any one or more of the following without the
Executive's express written consent:
(i) The assignment to Executive of
duties which are materially different from or
inconsistent with the duties,
responsibilities, and status of Executive's
position at any time during the six (6) month
period prior to the Change of Control of the
Corporation, or which result in a significant
reduction in Executive's authority and
responsibility as a senior executive of the
Corporation;
(ii) A reduction by the Corporation in
Executive's base salary or salary grade as of
the day prior to the Change of Control, or
the failure to grant salary increases and
bonus payments on a basis comparable to those
granted to other executives of the
Corporation, or reduction of Executive's most
recent incentive bonus potential prior to the
Change of Control under the Corporation's
Management Bonus Plan, or any successor plan;
(iii) The Corporation requiring
Executive to be based at a location in excess
of forty (40) miles from the location where
Executive is currently based, or in the event
of any relocation of the Executive with the
Executive's express written consent, the
failure of the Corporation or a Subsidiary to
pay (or reimburse the Executive for) all
reasonable moving expenses by the Executive
relating to a change of principal residence
in connection with such relocation and to
indemnify the Executive against any loss
realized in the sale of the Executive's
principal residence in connection with any
such change of residence, all to the effect
that the Executive shall incur no loss on an
after tax basis;
(iv) The failure of the Corporation to
obtain a satisfactory agreement from any
successor to the Corporation to assume and
agree to perform this Agreement, as
contemplated in Paragraph 6 hereof;
(v) Any termination by the Corporation
of Executive's employment that is not
effected pursuant to a Notice of Termination;
(vi) Any termination of Executive's
employment, reduction in Executive's
compensation or benefits, or adverse change
in Executive's location or duties, if such
termination, reduction or adverse change (aa)
occurs within six (6) months before a Change
of Control, (bb) is in contemplation of such
Change in Control, and (cc) is taken to avoid
the effect of this Agreement should such
action occur after such Change in Control;
(vii) The failure of the Corporation
to provide the Executive with substantially
the same fringe benefits (including, without
limitation, Benefit Restoration Plan, health
care, insurance, stock options and paid
vacations) that were provided to him
immediately prior to the Change in Control,
or with a package of fringe benefits that,
though one or more of such benefits may vary
from those in effect immediately prior to
such Change in Control, is substantially
comparable in all material respects to such
fringe benefits taken as a whole.
The existence of Good Reason shall not be
affected by Executive's incapacity due to physical
or mental illness. Executive's continued
employment shall not constitute a waiver of
Executive's rights with respect to any
circumstance constituting Good Reason under this
Agreement.
(e) Notice of Termination. Notice of
Termination" means a written notice indicating the
specific termination provision in this Agreement
relied upon and setting forth in reasonable detail
the facts and circumstances claimed to provide a
basis for termination of the employment under the
provision so indicated. The Executive shall not
be entitled to give a Notice of Termination that
the Executive is terminating employment for Good
Reason more than six (6) months following the
occurrence of the event alleged to constitute Good
Reason, except with respect to an event which
occurred before the Change of Control, in which
case the Notice of Termination must be given
within six (6) months Mowing the Change of
Control.
Any termination by the Corporation for Cause
or due to Executive's Disability, or by Executive
for Good Reason shall be communicated by Notice of
Termination to the other party.
(f) Retirement. "Retirement" means having
reached normal retirement age as defined in the
Corporation's noncontributory pension plan or
taking early retirement in accordance with the
terms of the Corporation's noncontributory pension
plan.
(g) Subsidiary. "Subsidiary," means a
corporation with at least eighty percent (80%) of
its outstanding capital stock owned by the
Corporation.
3. Eligibility for Severance Benefits. Subject
to Paragraph 5, the Executive shall receive the
Severance Benefits described in Paragraph 4 if the
Executive's employment is terminated during the term of
this Agreement, and
(a) The termination occurs within thirty-six
(36) months after a Change of Control, unless the
termination is (i) because of Executive's death or
Disability, (ii) by the Corporation for Cause, or
(iii) by the Executive other than for Good Reason; or
(b) The Corporation terminates the
employment within six (6) months before a Change
of Control, in contemplation of such Change of
Control, and to avoid the effect of this Agreement
should such action occur after such Change of
Control.
4. Severance Benefits. Subject to Paragraph 5,
the Executive shall receive the following Severance
Benefits (in addition to accrued compensation and
vested benefits) if eligible under Paragraph 3:
(a) A lump sum cash amount equal to
Executive's annual base salary at the highest
annual rate in effect during the twelve (12) month
period immediately prior to the Change of Control
or, if greater, at the rate in effect at the time
Notice of Termination is given (or on the date the
employment is terminated if no Notice of
Termination is required), multiplied by 3;
(b) One hundred percent (100%) of
Executive's incentive bonus potential under the
Corporation's Management Bonus Plan in effect at
the time Notice of Termination is given (or on the
date the employment is terminated if no Notice of
Termination is required) or, if greater, the
average bonus paid to Executive over the preceding
three (3) year period, multiplied by 3;
(c) For a three (3) year period after the
date the employment is terminated, the Corporation
will arrange to provide `to Executive at the
Corporation's expense, with:
(i) Health care coverage equal to that
in effect for Executive prior to the
termination (or, if more favorable to
Executive, that furnished generally to
salaried employees of the Corporation),
including, but not limited to, hospital,
surgical, medical, dental, prescription and
dependent coverages. Upon the expiration of
the health care benefits required to be
provided pursuant to this subparagraph 4(c),
the Executive shall be entitled to the
continuation of such benefits under the
provisions of the Consolidated Omnibus Budget
Reconciliation Act. Health care benefits
otherwise receivable by Executive pursuant to
this subparagraph 4(c) shall be reduced to
the extent comparable benefits are actually
received by Executive from a subsequent
employer during the three (3) year period
following the date the employment is
terminated and any such benefits actually
received by Executive shall be reported to
the Corporation;
(ii) Life and accidental death and
dismemberment insurance coverage (including
supplemental coverage purchase opportunity
and double indemnity for accidental death)
equal (including policy terms) to that in
effect at the time Notice of Termination is
given (or on the date the employment is
terminated if no Notice of Termination is
required) or, if more favorable to Executive,
equal to that in effect at the date the
Change of Control occurs; and
(iii) Disability insurance coverage
(including policy terms) equal to that in
effect at the time Notice of Termination is
given (or on the date employment is
terminated if no Notice of Termination is
required) or, if more favorable to Executive,
equal to that in effect immediately prior to
the Change of Control;
provided, however,
that no income replacement benefits will be
payable under such disability policy with
regard to the three (3) year period following
a termination of employment provided that the
payments payable under subparagraphs 4(a) and
(b) above have been made;
(d) The Executive will be entitled to
receive retirement benefits as provided herein, so
that the total retirement benefits the Executive
receives from the Corporation will approximate the
total retirement benefits the Executive would have
received under all retirement plans (which shall
not include severance plans) and other employment
contracts of the Corporation in which the
Executive participates were the Executive hilly
vested under such retirement plans and entitled to
all benefits payable under such other employment
contracts and had the Executive continued in the
employ of the Corporation for thirty-six (36)
months following the date of his termination or
until his retirement, if earlier (provided that
such additional period shall be inclusive of and
shall not be in addition to any period of service
credited under any severance plan of the
Corporation). The benefits specified in this
subparagraph will include all ancillary benefits,
such as early retirement and survivor rights and
benefits available at retirement. The amount
payable to the Executive or his beneficiaries
under this subparagraph shall equal the excess of
(1) the benefits that would be paid to the
Executive or his beneficiaries, under all
retirement plans and other employment contracts of
the Corporation in which the Executive
participates if (A) the Executive were fully
vested under such plans and entitled to all
benefits payable under such other employment
contracts; (B) the thirty-six (36) month period
(or the period until his Retirement, if less)
following the date of his termination were added
to his credited service under such plans and
contracts, (C) the terms of such plans were those
most favorable to the Executive which were in
effect at any time during the period commencing
prior to the Change of Control and ending on the
date of Notice of Termination (or on the date
employment is terminated if no Notice of
Termination is required), and (D) the Executive's
highest average annual compensation as defined
under such retirement plans and other employment
contracts were calculated as if the Executive had
been employed by the Corporation for a thirty-six
(36) month period (or the period until his
Retirement, if earlier) following the date of his
termination and bad the Executive's compensation
during such period been equal to the Executive's
compensation used to calculate his benefit under
subparagraphs 4(a) and 4(b); over (2) the benefits
that are payable to the Executive or his
beneficiaries under all retirement plans and other
employment contracts of the Corporation in which
the Executive participates. These Special
Retirement Benefits are to be provided on an
unfunded basis, are not intended to meet the
qualification requirements of Section 401 of the
Internal Revenue Code and shall be payable solely
from the general assets of the Corporation. These
Special Retirement Benefits shall be payable at
the time and in the manner provided in the
applicable retirement plans and other employment
contracts to which they relate;
(e) The Corporation shall pay all fees for
outplacement services for the Executive up to a
maximum equal to fifteen percent (15%) of the
Executive's base salary used to calculate his
benefit under subparagraph 4(a) plus provide a
travel expense account of up to $5000 to reimburse
job search travel;
(f) In computing and determining Severance
Benefits under subparagraphs 4(a), (b), (c), (d)
and (e) above, a decrease in Executive's salary,
incentive bonus potential, or insurance benefits
shall be disregarded if such decrease occurs
within six (6) months before a Change of Control
is in contemplation of such Change of Control, and
is taken to avoid the effect of this Agreement
should such action be taken after such Change of
Control; in such event, the salary , incentive
bonus potential, and/or insurance benefits used to
determine Severance Benefits shall be that in
effect immediately before the decrease that is
disregarded pursuant to this subparagraph 4(f);
(g) Executive shall not be required to
mitigate the amount of any payment provided for in
this Paragraph 4 by seeking other employment or
otherwise, nor shall the amount of any payment
provided for in this Paragraph 4 be reduced by any
compensation earned by Executive as the result of
employment by another employer after the date the
employment is terminated, or otherwise, with the
exception of a reduction in health insurance
coverage as provided in subparagraph 4(c)(i).
The payments provided in subparagraphs 4(a) and
(b) above shall be made not later than thirty (30)
business days following the date the employment
terminates.
5. Tax Gross-Up. If any payments or other
benefit paid or provided under Paragraph 4 or the
acceleration of stock option vesting or the payment or
distribution of consideration in satisfaction of any
share appreciation rights are subject to excise tax
pursuant to Section 4999 of the Internal Revenue Code
of 1986, as amended, the Corporation shall pay to the
Executive such additional compensation as is necessary
(after taking into account all Federal, state and local
income taxes payable by the Executive as a result of
the receipt of such compensation) to place the
Executive in the same after-tax position he would have
been in had no such excise tax (or any interest or
penalties thereon) been paid or incurred. The
Corporation shall pay such additional compensation at
the time when the Corporation withholds such excise tax
from any payments to the Executive. The calculation of
the tax gross-up shall be approved by the Corporation's
independent certified public accounting firm engaged by
the Corporation immediately prior to the Change in
Control.
6. Successors; Binding Agreements. This
Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
Executive's rights and benefits under this Agreement
may not be assigned, except that if Executive dies
while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement, to
the beneficiaries designated by the Executive to
receive benefits under this Agreement in a writing on
file with the Corporation at the time of the
Executive's death or, if there is no such beneficiary,
to Executive's estate. The Corporation win 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
Corporation (or of any division or Subsidiary thereof
employing Executive) to expressly assume and agree to
perform this Agreement in the same manner and to the
same extent that the Corporation would be required to
perform it if no such succession had taken place.
Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and
shall entitle
Executive to compensation from the
Corporation in the same amount and on the same terms to
which Executive would be entitled hereunder if
Executive terminated the employment for Good Reason
following a Change of Control.
7. Withholding of Taxes. The Corporation may
withhold from any amounts payable under this Agreement
all federal, state, city, or other taxes as required by
law.
8. Notice. For the purpose of this Agreement,
notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed
to have been duly given when delivered or mailed by
United States registered mail, return receipt
requested, postage prepaid, addressed to the respective
addressees set forth on the first page of this
Agreement, or at such other addresses as the parties
may designate in writing.
9. Miscellaneous. No provision of this
Agreement may be modified, waived, or discharged unless
such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer as may
be specifically designated by the Board of Directors of
the Corporation. The validity, interpretation,
construction, and performance of this Agreement shall
be governed by the laws of the State of Michigan.
10. Employment Rights. This Agreement shall not
confer upon Executive any right to continue in the
employ of the Corporation or its subsidiaries and shall
not in any way affect the right of the Corporation or
its subsidiaries to dismiss or otherwise terminate
Executive's employment at any time with or without
cause.
11. No Vested Interest. Neither Executive nor
Executive's beneficiary shall have any right, title, or
interest in any benefit under this Agreement prior to
the occurrence of the right to the payment thereof, or
in any property of the Corporation or its subsidiaries
or affiliates.
12. Prior Agreements. This Agreement contains
the understanding between the parties hereto with
respect to Severance Benefits in connection with a
Change of Control of the Corporation and supersedes any
such prior agreement between the Corporation (or any
predecessor of the Corporation) and Executive. If
there is any discrepancy or conflict between this
Agreement and any plan, policy, or program of the
Corporation regarding any term or condition of
Severance Benefits in connection with a Change of
Control of the Corporation, the language of this
Agreement shall govern.
13. Validity. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement, which shall remain in full force and
effect.
14. Counterparts. This Agreement may be executed
in several counterparts, each of which shall be deemed
to be an original but all of which together shall
constitute one and the same instrument.
15. Arbitration. The sole and exclusive method
for resolving any dispute arising out of this Agreement
shall be arbitration in accordance with this paragraph.
Except as provided otherwise in this paragraph,
arbitration pursuant to this paragraph shall be
governed by the Commercial Arbitration Rules of the
American Arbitration Association. A party wishing to
obtain arbitration of an issue shall deliver written
notice to the other party, including a description of
the issue to be arbitrated. Within fifteen (15) days
after either party demands arbitration, the Corporation
and the Executive shall each appoint an arbitrator.
Within fifteen (15) additional days, these two
arbitrators shall appoint the third arbitrator by
mutual agreement; if they fail to agree within said
fifteen (15) day period, then the third arbitrator
shall be selected promptly pursuant to the rules of the
American Arbitration Association for Commercial
Arbitration. The arbitration panel shall hold a
hearing in Xxxxxxxxxxx County, Michigan, within ninety
(90) days after the appointment of the third
arbitrator. The fees and expenses of the arbitrator,
and any American Arbitration Association fees, shall be
paid by the Corporation. Both the Corporation and the
Executive may be represented by counsel and may present
testimony and other evidence at the hearing. Within
ninety (90) days after commencement of the hearing, the
arbitration panel will issue a written decision; the
majority vote of two of the three arbitrators shall
control. The majority decision of the arbitrators
shall be final and binding on the parties, and shall be
enforceable in accordance with law. Judgment may be
entered on the arbitrators' award in any court having
jurisdiction. The Executive shall be entitled to seek
specific controversy arising under or in connection
with this Agreement. The Corporation will reimburse
Executive for all reasonable attorney fees incurred by
Executive as the result of any arbitration with regard
to any issue under this Agreement (or any judicial
proceeding to compel or to enforce such arbitration);
(i) which is initiated by Executive if the Corporation
is found in such proceeding to have violated this
Agreement substantially as alleged by Executive; or
(ii) which is initiated by the Corporation, unless
Executive is found in such proceeding to have violated
this Agreement substantially as alleged by the
Corporation.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the day and year written above.
FIRST MANISTIQUE CORPORATION:
By: /s/ Xxxx Xxxxxxxx
---------------------------------------
Xxxx Xxxxxxxx, Chairman of the
Compensation Committee
EXECUTIVE:
/s/ Xxxxxx Xxxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxxx, Executive Vice President
