EXHIBIT 10(r)
CONFIDENTIAL
REPUBLIC BANCORP INC.
February 15, 2001
Xx. Xxxxx X. Xxxxxxx
Senior Vice President and Chief Credit Officer
Republic Bancorp Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Re: Management Retention Agreement
Dear Xxxxx:
The Board of Directors of the Corporation (Board) of Republic Bancorp Inc.
(Corporation) recognizes the possibility of a change in control of the
Corporation and understands that this may give rise to uncertainties and
questions on your part that could be distracting to you in a way that is
detrimental to the Corporation and its stockholders.
Upon recommendation of the Personnel Committee, the Board has determined that
appropriate steps should be taken to reinforce and encourage your continued
attention and dedication to your assigned duties as our Senior Vice President
and Chief Credit Officer, notwithstanding the possibility of a change in control
of the Corporation.
In order to induce you to remain in the employ of the Corporation, and as
consideration for your execution of the release described in Subsection
4(ii)(A), which release is an integral part of this Agreement, the Corporation
agrees that you shall receive the severance benefits set forth in this letter
agreement (Agreement) in the event your employment with the Corporation is
terminated in connection with a "change in control of the Corporation" (as
defined in Section 2) in the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the date hereof and
shall continue in effect while you continue to be employed by the
Corporation, and for such further period as may be required for the
Corporation to perform its obligations hereunder in the event of the
termination of your employment in circumstances giving rise to your
entitlement to benefits as provided in Subsection 4(ii).
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a change in control of the Corporation. For purposes of
this Agreement, a "change in control of the Corporation" shall be deemed
to have occurred upon the purchase or other acquisition by any person,
entity or group of persons, within the meaning of section 13(d) or 14(d)
of the Securities Exchange Act of 1934 (Act), or any comparable successor
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provisions, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of more than 50 percent of either the
outstanding shares of common stock or the combined voting power of the
Corporation's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with respect to
which persons who were stockholders of the Corporation immediately prior
to such reorganization, merger or consolidation do not immediately
thereafter, own more than 50 percent of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Corporation's then outstanding
securities, or a liquidation or dissolution of the Corporation or of the
sale of all or substantially all of the Corporation's assets.
3. Termination Associated with Change in Control.If any of the events
described in Section 2 constituting a change in control of the
Corporation shall have occurred, you shall be entitled to the benefits
provided in Subsection 4(ii) should your employment be terminated during
a period (Termination Benefit Period) beginning 6 months before and
ending 2 years following the effective date of such change in control of
the Corporation, unless such termination is (A) because of your death,
disability or Voluntary Retirement, (B) by the Corporation for Cause, or
(C) by you other than for Good Reason.
(i) Voluntary Retirement. Termination by you of your employment
based on "Voluntary Retirement" shall mean voluntary
termination which you elect in accordance with the
Corporation's retirement policy (including any early
retirement policy adopted before a change in control of the
Corporation) generally applicable to its salaried employees or
in accordance with any retirement arrangement established for
you by the Corporation (and with your consent).
(ii) Cause. Termination by the Corporation of your employment for
"Cause" shall mean termination upon --
(A) the continued failure by you to remedy material and
substantial deficiencies in your performance of the
duties associated with your employment by the
Corporation within 30 days following the date a
written demand is delivered to you by the Board,
which demand specifically identifies such
deficiencies; provided that you need not respond to
such demand in respect of:
(a) any such failure resulting from your
incapacity due to physical or mental
illness, or
(b) any such actual or anticipated failure after
the issuance of a Notice of Termination by
you for Good Reason, as those terms are
defined in Subsections 3(iv) and 3(iii),
respectively; or
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(B) your engagement in conduct which is demonstrably and
materially injurious to the Corporation, monetarily
or otherwise, including but not limited to
embezzlement, theft, fraud or other felony involving
the Corporation or its assets.
Notwithstanding the above, you shall not be deemed to have
been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by
the affirmative vote of a majority of the Board at a meeting
of the Board called and held for such purpose (after at least
10 business days' notice to you and an opportunity for you to
be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth
above in clauses (A) or (B), specifying the particulars
thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean, without your express written
consent, the occurrence after a change in control of the
Corporation of any of the following circumstances unless, in
the case of paragraphs (A), (E), (F) or (G), such
circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as defined
in Subsections 3(iv) and 3(v), respectively, given in respect
thereof:
(A) the assignment to you of any duties inconsistent with
your status as a senior executive officer;
(B) a reduction in your annual base compensation as in
effect on the date hereof or as the same may be
increased from time to time;
(C) any requirement that you be based anywhere other than
in Michigan, provided that if the principal executive
offices of the Corporation or its successor owner are
relocated and you request assignment to such location
in a senior executive capacity, the denial of such
request shall also constitute Good Reason;
(D) the failure by the Corporation or its successor
owner, without your consent, to pay to you any
portion of your base or incentive compensation when
due;
(E) the failure by the Corporation or its successor owner
to continue to provide you with health, life
insurance, disability, vacation and retirement
benefits substantially equivalent to those provided
to its other key executives;
(F) the failure of the Corporation to obtain a
satisfactory agreement from any successor to assume
and agree to perform this Agreement, as contemplated
in Section 5; or
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(G) any purported termination of your employment which is
not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below
(and, if applicable, the requirements of Subsection
(ii) above); for purposes of this Agreement, no such
purported termination shall be effective.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall
not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any termination of your employment by
the Corporation, by its successor owner or by you shall be
communicated by written Notice of Termination to the other
party hereto in accordance with Section 7. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for termination of your employment under the provision so
indicated.
(v) Date of Termination "Date of Termination" shall mean 30 days
after Notice of Termination is given.
4. Compensation Upon Termination. Upon termination of your employment during
a Termination Benefit Period associated with a change in control of the
Corporation, you shall be entitled to the following benefits:
(i) If your employment shall be terminated by the Corporation or
its successor owner for Cause or by you other than for Good
Reason, disability, death or Voluntary Retirement, the
Corporation shall pay you your full base compensation and
continue to provide you with life, disability, accident,
health insurance, vacation, retirement and other benefits,
through the Date of Termination at the rate or on the terms in
effect at the time Notice of Termination is given, and the
Corporation shall have no further obligations to you under
this Agreement. If it is not known at the time that such
termination is taking place during a Termination Benefit
Period but it is afterwards established that it did take place
during such a Period, then the Corporation shall promptly
provide to you any compensation and/or benefits due under this
Subsection (i) to the extent they were not previously provided
(or the reasonable cash value of coverage or benefits, if it
is no longer possible to provide specific coverage or
benefits).
(ii) If your employment shall be terminated either (a) by the
Corporation or its successor owner other than for Cause,
voluntary Retirement, death or disability or (b) by you for
Good Reason, then you shall be entitled to the benefits
provided under paragraphs (A), (B), (C) and, if applicable,
(D), below:
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February 15, 2001
(A) The Corporation (or successor owner) shall pay you as
severance pay a lump sum severance payment equal to 2
times your annual base compensation, as being paid to
you at the time of termination; provided that if the
sum of payments under paragraphs (A) and (B) of this
subsection (ii) would equal or exceed 3 times your
"base amount" under Section 280G of the Internal
Revenue Code (Code), then payment under this
paragraph (A) shall be reduced (but not below zero)
until the sum of payments under paragraphs (A) and
(B) is equal to the product of 2.99 multiplied by
such base amount. As a condition precedent to the
payments provided for under paragraphs (A), (B)
and/or (C), you shall be required to execute a
release in the form attached as Exhibit A.
(B) The Corporation shall maintain at its sole expense
your medical and dental plan insurance coverage for a
period of one year following the Date of Termination.
(C) In lieu of --
(i) shares of common stock of the Corporation
(Corporation Shares) issuable upon exercise of
options currently outstanding or hereafter
granted to you --
including but not limited to options
issued under one or more Option Plans of
the Corporation as well tandem options
issued under its Voluntary Management
Stock Accumulation Program
but excluding options which had become
vested or otherwise exercisable by you
prior to termination of your employment --
(which unvested/non-exercisable options shall
be canceled upon the making of the payment
referred to below), and/or
(ii) shares of restricted stock of the Corporation
(Restricted Shares), including but not limited
to shares granted under the Corporation's
Incentive Stock Plan (formerly known as the
Restricted Stock Plan), which you are entitled
to receive upon lapse of restrictions that
still apply at the time of termination of your
employment (which rights shall be canceled upon
the making of the payment referred to below),
you shall receive an amount in cash equal to the
product of (I) the excess of the amount which is the
greater of --
(a) the average of the high bid price and the low ask
price of Corporation Shares at the close of
trading as reported on the NASDAQ market system
on or nearest the Date of Termination, or
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February 15, 2001
(b) the highest per share price for Corporation
Shares actually paid in connection with any
change in control of the Corporation,
times (II) the full number of Corporation Shares and
Restricted Shares which you were entitled to acquire,
whether or not you had previously become entitled to
acquire same, reduced by amounts that you would have
been required to pay in exercising options.
If it is not known at the time that such termination
is taking place during a Termination Benefit Period
but it is afterwards established that it did take
place during such a Period, then the Corporation
shall promptly pay you the cash amounts due under
this Subsection (ii) to the extent they were not
previously paid.
(D) If it shall be determined that payments to you
pursuant to this Agreement or any other payment or
benefit from the Corporation, any Affiliate, any
shareholder of the Corporation or any other person
would be subject to the excise tax imposed by Section
4999 of the Code or any similar tax payable under any
United States federal, state, local or other law,
then you shall receive a Tax Gross-Up Payment with
respect to all such excise taxes and similar taxes.
As used in this paragraph (D) --
"Affiliate" means any Person directly or indirectly
controlling, controlled by, or under direct or
indirect common control with the Corporation. For
purposes of this definition, the term "control" when
used with respect to any Person means the power to
direct or cause the direction of management or
policies of such Person, directly or indirectly,
whether through the ownership of voting securities,
by contract, or otherwise.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated
organization, association, corporation, institution,
public benefit corporation, entity or government
instrumentality, division, agency, body or
department.
"Taxes" means the incremental United States federal,
state and local income, excise and other taxes
payable by you with respect to any applicable item of
income.
"Tax Gross-Up Payment" means an amount payable to you
such that, after payment of Taxes on such amount,
there remains a balance sufficient to pay the Taxes
being reimbursed.
(E) The payments provided for in paragraphs (A) and (C),
above, shall be made to you, net of applicable
withholding taxes, not later than the fifteenth
business day following the Date of Termination (or
such later date as may be required for observation of
time periods prescribed in the
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February 15, 2001
release required by paragraph (A), above). The
payment provided for in paragraph (D), above, shall
be made not later than the fifteenth business day
following the date on which Ernst & Young and your
tax preparer have concurred in the amount of such
payment; provided that if they have not concurred by
a date which is one week prior to the due date of the
Taxes in question, then the Corporation shall
promptly pay to you an estimate, as determined in
good faith by the Corporation, of the minimum amount
of such paragraph (D) payment and shall pay the
remainder of such payment (together with interest at
the rate provided in Section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be
determined. In the event that the amount of the
estimated payment exceeds the amount subsequently
determined to have been due under paragraph (D), such
excess shall constitute a loan by the Corporation to
you, payable on the fifth day after demand by the
Corporation (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(iii) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Corporation, or
otherwise, except as specifically provided in this Section 4.
(iv) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits
payable to you under any plan or agreement relating to
retirement benefits.
5. Successors; Binding Agreement.
(i) The Corporation shall obtain the agreement of any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation 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. If the form
of such succession is (a) an acquisition of the assets or
securities of the Corporation by an entity that is owned or
controlled, directly or indirectly, by a third "person" (as
such term is used in Section 2) or (b) a merger with such an
entity, then the Corporation shall also obtain from such
person (as well as from such entity) an express assumption of
and agreement 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.
(ii) This Agreement shall inure to the benefit of, and be
enforceable by, your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise
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February 15, 2001
provided herein, shall be paid in accordance with the terms of
this Agreement to the beneficiary designated by you on a form
provided by the Administrator (provided that you may change
such beneficiary from time to time by filing a new form); or,
if there is no such beneficiary, to your estate.
6. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, shall be settled by binding arbitration
in Xxxxxx County, Michigan in accordance with the laws of the State of
Michigan by three arbitrators, one of whom shall be appointed by the
Corporation or its successor owner, one by you (or in the event of your
prior death, your beneficiary) and the third of whom shall be promptly
appointed by the first two arbitrators. Arbitrators appointed by the
parties shall be named within 10 business days following service of the
demand for arbitration (Service). The arbitration shall be conducted as a
de novo review in accordance with the Commercial Arbitration Rules of the
American -- ---- Arbitration Association (Association). Each party shall
instruct its/his selected arbitrator to complete selection of the third
arbitrator within 25 business days following Service. The parties shall
specifically request the Association to require that the designated
arbitrators schedule a hearing no later than 45 business days following
Service, that the hearing be closed within 75 business days following
Service and that the arbitrators issue their award not later than 100
business days following Service. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered or certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth on the
first page of this Agreement, provided that all notice to the Corporation
shall be directed to the attention of the Board with a copy to the
Secretary of the Corporation, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
8. 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 you and such officer as may be specifically
designated by the Personnel Committee. No waiver by either party hereto
at any time of any breach by the other party hereto of, or in compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
No oral agreements or representations with respect to the subject matter
hereof have been made by either party which are not expressly set forth
in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Michigan, except to the extent preempted by Federal law. All
references to sections of the Exchange Act or the Code shall be deemed
also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. Nothing contained in this
Agreement shall be deemed to create an employment contract between you
and the Corporation for any fixed period of time or to
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February 15, 2001
change in any respect the nature or extent of your rights to continue in
the employ of the Corporation (subject to the Corporation's obligations
to perform its required obligations under this Agreement).
9. Validity. The invalidity or unenforceability or 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.
10. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Corporation the enclosed copy of this letter which will
then constitute our agreement on this subject.
Sincerely,
REPUBLIC BANCORP INC.
By /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Its Chairman of the Board
Agreed to this 15th day of February, 2001
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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EXHIBIT A
AGREEMENT TO RELEASE ALL CLAIMS
1. In consideration for a severance payment and other benefits under the
Management Retention Agreement dated February 15, 2001, and to which I
would not otherwise be entitled, and for other good, valuable and
separate consideration, I, Xxxxx X. Xxxxxxx, individually, on behalf of
myself and on behalf of my respective heirs, legal representatives and
assigns, do hereby forever and fully release and discharge Republic
Bancorp Inc. (Republic), its predecessors, subsidiaries, successors,
affiliates, distributors, dealers, directors, officers, agents and
employees (Released Parties) from all actions, causes of action, claims,
demands, damages (including compensatory, exemplary, statutory and
punitive damages), attorneys' fees, costs, debts, sums of money, bills,
covenants, contracts, liens, controversies, agreements, promises and
executions of any kind, in law, equity or otherwise, which I,
individually or in any representative capacity have or have ever had (as
an employee (including officer), participant in any pension or welfare
plan, or shareholder) against the Released Parties because of or arising
out of any employment-related or shareholder-related matter and/or event
occurring on or before the date I sign this Agreement to Release All
Claims (Release). This Release includes specifically, but not by way of
limitation, any and all claims of discrimination, wrongful discharge,
breach of contract, fraud, promissory estoppel, misrepresentation,
retaliation, all claims under or in connection with the Age
Discrimination in Employment Act (ADEA), the Older Workers Benefit
Protection Act, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act of 1974,
the Michigan Xxxxxxx-Xxxxxx Civil Rights Act, the Michigan Person's With
Disabilities Civil Rights Act, the Americans with Disabilities Act, any
other Michigan and federal statutes and the common law of the State of
Michigan and the United States, actions based on tort, public policy,
defamation, or injuries incurred on the job or incurred as a result of
loss of employment, and any and all claims and demands of every
conceivable kind based upon or in connection with or involving Employee's
employment and the termination of such employment.
Nothing in this Waiver and General Release shall constitute a waiver of
any claim or right of Employee that may arise from events occurring after
the date the Waiver and General Release is executed by Employee, or of
the right to file a charge with or participate in an investigation
conducted by the Equal Employment Opportunity Commission.
This Agreement is not intended to release --
* any accrued claims for compensation or for welfare plan benefits
and/or vested pension benefits that have accrued but remain unpaid
as of the date hereof,
* any claim under the Management Retention Agreement dated February
15,2001,
* any claim to indemnification arising under Republic's articles of
incorporation or bylaws or under any express agreement to which
Republic and I are parties, or
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February 15, 2001
* any direct claim in a securities law or corporate law cause of
action against any one or more Released Parties, based on acts or
omissions taking place or first discovered subsequent to the date
of this Release, or, if initiated before the date of this Release,
in which I am a passive party, not involved in any way in the
production of documents, evidence, or ideas used in the
development of that claim, provided my own acts or omissions as an
employee, officer, director or agent of any Released Party are not
in issue.
2. In further consideration of the severance payment, other benefits, and
other good, valuable and separate consideration, I promise that I will
not begin any legal, equitable or administrative proceeding against any
or all of the Released Parties for any claim of the kind described in
paragraph 1 arising on or before the date I sign this Release, and that
this Release will serve as a defense to and a basis for an injunction
against any legal, equitable or administrative proceeding I or my heirs,
legal representatives or assigns begin against the Released Parties for
any such claim arising on or before the date I sign this Release.
3. In further consideration of the severance payment, other benefits, and
other good, valuable and separate consideration, I promise and agree to
waive reinstatement to any position with any of the Released Parties and
further promise and agree not to apply for a position in the future with
any Released Party that was previously my employer.
4. In further consideration of the severance payment, other benefits, and
other good, valuable and separate consideration, I promise and agree that
neither I nor anyone acting on my behalf will disclose the terms of this
Release. I understand that such nondisclosure is a material consideration
for the Released Parties having entered into this Release.
5. This Release, and all of its terms and provisions, shall be construed in
accordance with the laws of Michigan. If any provision of this Release
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision in this Release,
and this Release shall be construed as though the invalid or
unenforceable provision was never included.
6. I acknowledge that I have been advised to consult with an attorney before
signing this Release.
7. I acknowledge that my employer has given me a period of 21 days within
which to consider signing this Release.
8. I understand that for seven days after I sign this Release I may revoke
it, and that this Release shall not become effective or enforceable until
the seven day period has expired.
9. I HAVE CAREFULLY READ THIS RELEASE, I HAVE HAD THE OPPORTUNITY TO DISCUSS
ITS PROVISIONS WITH AN ATTORNEY, I FULLY UNDERSTAND THIS RELEASE, AND I
FREELY AND VOLUNTARILY SIGN IT.
10. I have signed this Release on ____________, ____.
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February 15, 2001
THIS IS A RELEASE -- READ BEFORE SIGNING
In the presence of:
[specimen]
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