EXHIBIT 10.14
(Form 10.K)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of February 11, 2002, by and
between Xxxxxxx X. Xxxxxxx (the "Executive") and Citizens Banking Corporation, a
Michigan corporation (the "Company"),
WITNESSETH THAT:
WHEREAS, the parties desire to enter into this Agreement pertaining to
the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Executive and the
Company as follows:
1. Employment. Subject to the terms of this Agreement, the Company
hereby agrees to employ the Executive as its President and Chief Executive
Officer during the Agreement Term (as defined below), with such authority,
power, responsibilities and duties customarily exercised by a person holding
such positions in a company of the size and nature of the Company. Executive
shall also hold the titles of Chairman, President and Chief Executive Officer of
Citizens Bank, a subsidiary of the Company (the "Bank"). In his positions with
the Company and the Bank, the Executive shall only report directly to the Board
of Directors of the Company (the "Board"). Executive shall also become a member
of the Board at the next regularly scheduled meeting of the Board. The Executive
shall commence his employment with the Company on February 25, 2002 (the
"Effective Date"). The "Agreement Term" shall be the period beginning on the
Effective Date and ending on the third anniversary of the Effective Date;
provided, however, the Agreement Term will be automatically extended by twelve
months on the first anniversary of the Effective Date and on each anniversary
thereof, unless one 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.
2. Performance of Duties. The Executive agrees that during his
employment with the Company, he shall devote his full business time, energies
and talents to serving in the positions described in Section 1 and that he shall
perform his duties faithfully and efficiently subject to the directions of the
Board. Notwithstanding the foregoing provisions of this Section 2, 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.
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3. Compensation. Subject to the terms of this Agreement, during the
Agreement Term, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:
(a) Base Salary. The Executive shall receive an annual base salary of
$525,000 payable in monthly or more frequent installments in accordance with the
Company's payroll policies (such annual base salary as adjusted pursuant to this
Section 3(a) shall hereinafter be referred to as "Base Salary"). The Executive's
Base Salary shall be reviewed, and may be increased but not decreased, annually,
by the Board pursuant to its normal performance review policies for senior
executives, with the first such review occurring not later than December 2002.
(b) Restricted Stock Award. The Company shall make an award to the
Executive as of the Effective Date of 20,000 restricted shares of the Company's
common stock under and subject to the terms and conditions of the Stock
Compensation Plan (the "Stock Plan"), a copy of which is attached hereto as
Exhibit A. The Executive shall vest in 20% of such shares on the 90th day
following the Effective Date and 20% on each of the first four anniversaries of
the Effective Date. The foregoing award of restricted stock shall be evidenced
by a restricted stock award agreement which is attached hereto as Exhibit B and
made a part of this Agreement.
(c) Initial Option Award. The Company shall make an award to the
Executive under the Stock Plan within 90 days of the Effective Date of a
nonqualified option to purchase 225,000 shares of the Company's common stock at
a per share price equal to the fair market value of the common stock on the
grant date (which will be the Effective Date) and an exercise period equal to
ten (10) years (the "Initial Option"), subject to the following:
(i) The grant of the Initial Option is conditioned upon, and cannot be
exercised unless, shareholders of the Company at the next meeting of
such shareholders vote to approve the Stock Plan for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). If such approval is not obtained, the grant of the Initial
Option shall be null and void, and Executive's rights with respect
thereto shall terminate in full. The Company shall use its commercially
reasonable efforts to obtain shareholder approval of the Stock Plan for
purposes of Code Section 162(m) at the next meeting of shareholders of
the Company.
(ii) Subject to the foregoing subsection 3(c)(i), the Initial Option shall
vest and become exercisable on the fifth anniversary of the Effective
Date or sooner based upon the Company's performance, in accordance with
the option vesting formula utilized for other Company executives under
the Stock Plan as provided in the Executive's stock option agreement.
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(iii) The foregoing award of the Initial Option shall be evidenced by a stock
option agreement which is attached hereto as Exhibit C and made a part
of this Agreement.
(d) Subsequent Option Award. In 2003, the Executive shall be entitled
to receive a nonqualified option to purchase an additional 225,000 shares of the
Company's common stock under the Stock Plan or a successor thereto, such award
to be made by the Board (or the appropriate committee thereof) not later than
May 31, 2003 (the "Subsequent Option"). The Subsequent Option (i) shall have a
per share exercise price equal to the fair market value of the common stock on
the date of grant, (ii) shall have an exercise period equal to ten (10) years,
(iii) shall vest and become exercisable on the fifth anniversary of the date of
grant or sooner based upon the Company's performance, in accordance with the
option vesting formula utilized for other Company executives under the Stock
Plan at that time, and (iv) if the employment of the Executive is terminated by
the Company without Cause (other than as a result of an Employment Order), shall
vest, become immediately exercisable and shall expire, if not exercised, at the
earlier of the third anniversary of such termination of employment or the
"expiration date" set forth in the applicable stock option agreement. Any
remaining terms shall be determined by the Company in accordance with the terms
of the Stock Plan or successor thereto on a basis consistent with awards granted
to other senior executives.
(e) Annual Incentive Payments. 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 successor thereto
(the "Incentive Plan"), a copy of which is attached hereto as Exhibit D. The
Executive's target Incentive Payment for 2002 shall be 50% of his salary range
midpoint for such year, such target percentage for 2003 to be reviewed by the
Board not later than February 2003. Notwithstanding any provision contained in
this Section 3(e) or in the Incentive Plan, the minimum guaranteed Incentive
Payment payable to the Executive for the period commencing on the Effective Date
and ending on December 31, 2002 shall be $200,000.
(f) Supplemental Pension Benefits. The Executive shall be entitled to
supplemental pension benefits pursuant to a Supplemental Executive Retirement
Plan ("SERP") which is attached hereto as Exhibit E and made a part of this
Agreement.
(g) Employee Benefits, Fringe Benefits and Perquisites. 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, a leased American-made automobile
selected by the Executive, and life insurance and AD&D coverage (commencing at
the end of the 30 day waiting period). Notwithstanding any provision contained
herein, at the time that the Executive is eligible to participate in the
Company's group health plan, neither he nor any of his dependents will be
subject to any pre-existing condition provision contained in such plan.
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(h) Other Benefits. The Company shall reimburse the Executive for the
initiation fees and annual dues associated with the Executive maintaining
membership in one country club within 30 miles of Flint, Michigan.
Alternatively, the Company may choose, at its option, to pay such initiation
fees and dues directly. The Company shall also reimburse the Executive for COBRA
payments made with respect to healthcare benefits during the 90-day waiting
period for participation in the Company's group health plan and for any life
insurance and AD&D coverage payments made by the Executive to extend insurance
coverage (if available) under his prior employment plans during the 30 day
insurance waiting period under the Company's plans. 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 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 3(h).
(i) Relocation Benefits. Executive understands that, as a condition of
his employment by the Company, he is required, within 15 months following the
Effective Date, to relocate his residence within 50 miles of the Company's
headquarters in Flint, Michigan. In connection with such relocation, he shall be
entitled to reimbursement for reasonable expenses incurred in moving his
principal residence (including, but not limited to, loading, transportation and
unloading) to the Flint, Michigan area, in accordance with the Company's
relocation policy for senior executives, including two house hunting trips for
Executive and his spouse and closing costs associated with the purchase of his
principal residence within a 50 mile radius of Flint, Michigan. The Company will
purchase the Executive's principal residence in Columbus, Ohio at its fair
market value as determined by the average of two independent appraisals obtained
by the Company and pay all closing costs associated with such purchase.
Executive shall receive a monthly relocation allowance of $2,000 for housing and
transportation, for a period commencing on the Effective Date and ending upon
the earlier of the establishment of his principal residence as contemplated by
this Section 3(i) or 15 months after the Effective Date. Executive shall receive
a relocation bonus of $20,000 to be paid at the time Executive has established
his principal residence within a 50 mile radius of Flint, Michigan. 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 Executive from time to time by
reason of the receipt of any payment (except the relocation bonus) under this
Section 3(i).
(j) Change In Control. Upon the execution of this Agreement, the
Executive and the Company shall also execute a Change in Control Agreement which
is attached hereto as Exhibit F (the "Change in Control Agreement") and made a
part of this Agreement.
(k) Expense Reimbursement. 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.
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4. Indemnification. Upon the execution of this Agreement, the Executive
and the Company shall also execute an Indemnification Agreement which is
attached hereto as Exhibit G and made a part of this Agreement.
5. Termination of Employment. Upon termination of the Executive's
employment for any reason, the Executive or, in the event of death, the
Executive's estate shall be entitled to the Executive's Base Salary pro rated
through the date of termination. Any annual Incentive Payment earned by the
Executive for a prior award period, but not yet paid to the Executive, and any
employee benefits to which the Executive is entitled by reason of his employment
shall be paid to the Executive or his estate at such time as is provided by the
terms of the applicable Company plan or policy. If the Executive's employment is
terminated during the Agreement Term, the Executive's right to additional
payments and benefits under this Agreement for periods after his date of
termination shall be determined in accordance with the following provisions of
this Section 5.
(a) Death. If Executive's employment is terminated by reason of his
death, the Executive's spouse and eligible dependents, shall be eligible for
continued participation in all medical, dental, vision and hospitalization
insurance plans in which they were participating at the time of the Executive's
death for 18 months after the Executive's date of death, which shall run
concurrently with their COBRA rights. For the 18-month period described in this
Section 5(a), the Executive's spouse and eligible dependents shall pay no
portion of the premium or cost for such coverage.
(b) Termination for Cause or Voluntary Resignation. If the Executive's
employment is terminated by the Company for Cause or if the Executive
voluntarily resigns from the employ of the Company, other than pursuant to a
Constructive Discharge (as described in paragraph (d) of this Section 5), all
payments and benefits to which the Executive would otherwise be entitled under
this Agreement shall immediately cease, except as otherwise specifically
provided above in this Section 5 with respect to his pro rated Base Salary
through the date of termination, his annual Incentive Payment, if any, earned
for a prior award period and his previously earned employee benefits. For
purposes of this Agreement, the term "Cause" shall mean:
(i) the Executive is convicted of (i) a felony or (ii) any crime involving
moral turpitude resulting in reputational harm causing material injury
to the Company; or
(ii) a reasonable determination by a majority vote of directors at a meeting
at which a quorum was present, that, in carrying out his duties, the
Executive has engaged in gross neglect or gross misconduct, resulting
in economic harm to the Company;
(iii) theft or embezzlement from the Company or any subsidiary; or
(iv) repeated violations of material Company policies, as may be adopted by
the Board from time to time, provided that the Company has given the
Executive
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written notice of each such violation and the Executive fails to cure
or is unable to cure each such violation within 10 days after such
respective notice.
(c) Termination Without Cause. If the Company terminates the Executive
without Cause:
(i) The Executive shall be entitled to a lump sum payment, within 60 days
following termination of his employment, of (A) three times his then
current Base Salary, plus (B) three times the average annual Incentive
Bonus paid to or earned by the Executive (whichever is larger) during
the three previous fiscal years during the Agreement Term or, if there
have not been three previous fiscal years during the Agreement Term,
such fewer number of fiscal years as shall have occurred during the
Agreement Term, or, if the Company terminates the Executive without
Cause prior to January 1, 2003, $600,000;
(ii) The Executive and his eligible dependents shall be entitled to
continued participation, at no cost to the Executive or his eligible
dependents, in all medical, dental, vision and hospitalization
insurance coverage, until the earlier of 18 months following
termination of employment or the date on which he receives equivalent
coverage and benefits from a subsequent employer. The time period
described in this Section 5(c)(ii) shall run concurrently with the
COBRA rights of the Executive and his eligible dependents.
(iii) All outstanding unvested stock options granted to the Executive prior
to his termination of employment shall vest, become immediately
exercisable and shall expire, if not exercised, at the earlier of the
third anniversary of such termination of employment or the "expiration
date" set forth in the applicable stock option agreement.
(iv) All outstanding unvested restricted shares of the Company's stock
awarded to the Executive prior to his termination of employment shall
vest immediately upon the Executive's termination of employment.
(d) Constructive Discharge. A Constructive Discharge by the Company
shall be treated for all purposes of this Agreement as a termination by the
Company without Cause. If (x) the Executive provides written notice to the
Company of the occurrence of Good Reason (as defined below) within a reasonable
time after the Executive has knowledge of the circumstances constituting Good
Reason, which notice shall specifically identify the circumstances which the
Executive believes constitute Good Reason; (y) the Company fails to correct the
circumstances within 30 days after such notice; and (z) the Executive resigns
within ninety days after the date of delivery of the notice referred to in
clause (x) above, then the Executive shall be considered to have been subject to
a Constructive Discharge by the Company. For purposes of this Agreement, "Good
Reason" shall mean, without the Executive's express written consent (and except
in consequence of a prior termination of the Executive's employment), the
occurrence of any of the following circumstances:
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(i) A reduction by the Company in the Executive's Base Salary to an amount
that is less than required under Section 3(a).
(ii) The failure of the Executive to be elected or reelected to any of the
positions described in Section 1 or his removal from any such position.
(iii) A material diminution in the Executive's duties. In the event of a
Change of Control (as defined in the Change in Control Agreement), the
mere fact that the Company ceases to be publicly traded or is a
subsidiary of another corporation shall not constitute Good Reason
under this clause (iii).
(iv) A change in the Executive's reporting relationship such that the
Executive no longer reports directly to the Board.
(v) Any adverse amendment (not required by law) to or termination of the
SERP by the Company without the written consent of the Executive.
(vi) A breach by the company of any of its material obligations to the
Executive under this Agreement.
(e) Termination Due to Employment Order. It shall be grounds for
termination of this Agreement by the Company if the Executive is prohibited from
substantially fulfilling his obligations under this Agreement as a result of an
injunction or other order that (i) was obtained from a court of competent
jurisdiction by any former employer of the Executive, and (ii) has been or will
be in effect for a period of at least 60 days (an "Employment Order"). If the
Company terminates the Executive due to an Employment Order:
(i) The Executive shall be entitled to a lump sum payment, within 60 days
following termination of his employment, of (A) 1.5 times his then
current Base Salary, plus (B) 1.5 times the average annual Incentive
Bonus paid to or earned by the Executive (whichever is larger) during
the three previous fiscal years during the Agreement Term or, if there
have not been three previous fiscal years during the Agreement Term,
such fewer number of fiscal years as shall have occurred during the
Agreement Term, or, if the Company terminates the Executive due to an
Employment Order prior to January 1, 2003, $300,000;
(ii) The Executive and his eligible dependents shall be entitled to
continued participation, at no cost to the Executive or his eligible
dependents, in all medical, dental, vision and hospitalization
insurance coverage, until the earlier of 18 months following
termination of employment or the date on which he receives equivalent
coverage and benefits from a subsequent employer. The time period
described in this Section 5(e)(ii) shall run concurrently with the
COBRA rights of the Executive and his eligible dependents.
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(iii) One-half of all outstanding unvested stock options granted to the
Executive prior to his termination of employment shall vest, become
immediately exercisable and shall expire, if not exercised, at the
earlier of the third anniversary of such termination of employment or
the "expiration date" set forth in the applicable stock option
agreement. The remaining one-half of such stock options shall
terminate.
(iv) One-half of all outstanding unvested restricted shares of the Company's
stock awarded to the Executive prior to his termination of employment
shall vest immediately upon the Executive's termination of employment.
The remaining one-half of such restricted shares shall be forfeited.
(f) Non-renewal of Agreement by the Company. The normal expiration of
this Agreement at the end of the Agreement Term shall be treated for all
purposes of this Agreement as a termination by the Company without Cause, if:
(i) The Company provides written notice to the Executive of non-renewal of
the Agreement Term in accordance with Section 1;
(ii) The Executive continues to serve the Company in accordance with this
Agreement for the remainder of the Agreement Term; and
(iii) The Executive's employment with the Company is terminated after the
expiration of this Agreement and prior to age 65 for any reason other
than disability.
(g) No Mitigation; No Offset. In the event of any termination of
employment under this Section 5, the Executive shall be under no obligation to
seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration received by the
Executive from any subsequent employer, except as provided in Sections 5(c)(ii)
or 5(e)(ii).
(h) Nature of Payments. Any amounts due under this Section 5 are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty.
(i) Effect of Termination on Other Positions. If, on the date of his
termination of employment with the Company, the Executive is a member of the
Board of Directors of the Company or any of the Company's subsidiaries, or holds
any other position with the Company, the Bank or other subsidiaries of the
Company, the Executive shall be deemed to have resigned from all such positions
as of the date of his termination of employment with the Company. Executive
agrees to execute such documents and take such other actions as the Company may
request to reflect such resignation.
(j) Benefit Plans. If, for any period during which the Executive is
entitled to continued benefits under this Agreement, the Company reasonably
determines that the Executive cannot participate in any benefit plan because he
is not actively performing
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services for the Company, then, in lieu of providing benefits under any such
plan, the Company shall provide comparable benefits or the cash equivalent of
the cost thereof (after taking into account all tax consequences thereof to the
Executive and the Executive's dependents as the case may be) to the Executive
and, if applicable, the Executive's dependents through other arrangements.
(k) Other Severance Arrangements. Except as may be otherwise
specifically provided in the Change In Control Agreement, the Executive's rights
under this Section 5 shall be in lieu of any benefits that may be otherwise
payable to or on behalf of the Executive pursuant to the terms of any severance
pay arrangement of the Company or any subsidiary or any other similar
arrangement of the Company or any subsidiary providing benefits upon involuntary
termination of employment (including, without limitation, any executive
management separation plan). In the event of a change in control as defined
under the Change In Control Agreement, the benefits provided under the Change In
Control Agreement shall be in lieu of any severance benefits that may be
otherwise payable under this Agreement.
(l) Return of Company Property. Upon his termination of employment with
the Company 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 its subsidiaries
or affiliates or containing any trade secrets relating to the Company or its
subsidiaries or affiliates 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 5(l).
(m) Adverse Actions. Executive agrees that following his termination of
employment with the Company for any reason until the second anniversary of such
termination of employment without the prior written consent of the Company the
Executive shall not, in any manner, solicit, request, advise or assist any other
person or entity to (a) undertake any action that would be reasonably likely to,
or is intended to, result in a Change in Control (as defined in the Change in
Control Agreement), or (b) seek to control in any material manner the Board.
(n) Mutual Nondisparagement. Each party agrees that, following the
Executive's termination of employment, such party will not make any public
statements which materially disparage the other party. Notwithstanding the
foregoing, nothing in this Section 5(n) shall prohibit any person from making
truthful statements when required by order of a court or other governmental or
regulatory body having jurisdiction.
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6. Confidential Information. The Executive agrees that, during his
employment by 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 its
subsidiaries or affiliates, 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.
7. Nonsolicitation. For the three 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
its subsidiaries or affiliates 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 its subsidiaries or
affiliates, 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.
8. Noncompetition. The Executive agrees that he will not engage in
Competition (as defined below) while he is employed by the Company. In the event
that the Executive engages in Competition within the three-year period
immediately following the termination of his employment with the Company for any
reason, (i) his Initial Option shall be immediately forfeited to the extent not
previously exercised and (ii) he shall forfeit (or, in the case of prior payment
to the Executive, shall repay together with interest at the Applicable Federal
Rate, determined in accordance with Section 1274(d) of the Internal Revenue Code
or any successor provision thereto) a pro rata portion of the severance payment
provided for in Section 5(c)(i). Such pro rata portion shall be based upon (x)
the number of days remaining between the first day on which the Executive
engages in Competition and the third anniversary of his last day of employment
by the Company, divided by (y) 1095. The Company's sole remedy for the breach of
this Section following his termination of employment shall be as set forth in
the preceding two sentences. 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
its subsidiaries or affiliates now or hereafter operate 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 its
subsidiaries or
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affiliates. 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 such state. 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.
9. Equitable Remedies. The Executive acknowledges that the Company
would be irreparably injured by a violation of Section 5(m), 6 or 7 or the first
sentence of Section 8 (Competition while employed by the Company) 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 5(m), 6 or 7 or the
first sentence of Section 8. 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.
10. Assistance with Claims. 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 its subsidiaries and affiliates 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 its affiliates in the prosecution of any claims that may be made by
the Company or any subsidiary or affiliate 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. 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. Executive also agrees, unless precluded by law, to promptly inform the
Company if Executive is asked to assist in any investigation (whether
governmental or private) of the Company or any subsidiary or affiliate (or their
actions), regardless of whether a lawsuit has then been filed against the
Company or any subsidiary or affiliate with respect to such investigation. The
Company agrees to reimburse Executive for all of 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 Executive's
services.
11. Assignability, Binding Nature. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors, heirs
(in the case of the Executive) and assigns. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
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assumes the liabilities, obligations and duties of the Company, as contained in
this Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in the
preceding sentence, it shall take whatever action it legally can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive
other than his rights to compensation and benefits, which may be transferred
only by will or operation of law.
12. Amendment. This Agreement, including any Exhibit made a part
hereof, may be amended or canceled only by mutual agreement of the parties in
writing without the consent of any other person. So long as the Executive lives,
no person, other than the parties hereto, shall have any rights under or
interest in this Agreement or the subject matter hereof except that in the event
of the Executive's disability so as to render him incapable of such action, his
legal representative may be substituted for purposes of such amendment.
13. 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. Any action to enforce this
Agreement shall be brought within the State of Michigan, in a court of competent
jurisdiction.
14. 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).
15. 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.
16. Compliance with Law. Notwithstanding any provision contained in
this Agreement to the contrary, in the event the FDIC, Office of the Comptroller
of the Currency or the Federal Reserve Board commences an appropriate
proceeding, action or order challenging the payment to Executive of any benefit
hereunder, or in the event any such payment hereunder is otherwise prohibited by
law, such benefit payment shall be suspended until such time as the challenge is
fully and finally resolved and the applicable regulatory authority does not
object to the payments or until such payments are otherwise permitted by law. In
the event that any challenge to the payments required by this Agreement is
initiated by a regulatory authority or other person, the Company shall notify
Executive of such challenge and shall promptly proceed to attempt to resolve
such
12
challenge in a manner that enables the Company to make to Executive all payments
required hereunder.
17. 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:
Xxxxxxx X. Xxxxxxx
Xxxxx, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
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.
18. Executive's Representations. Executive hereby represents and
warrants to the Company that (i) except to the extent previously disclosed to
the Company in writing, the execution delivery and performance of this Agreement
by Executive does not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound; (ii) except to the extent
previously disclosed to the Company in writing, Executive is not a party to or
bound by an employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity which would interfere in any material
respect with the performance of his duties hereunder; and (iii)
13
Executive shall not use any confidential information or trade secrets in
connection with the performance of his duties hereunder.
19. Company's Representations. The Company represents and warrants that
it is fully authorized and empowered to enter into this Agreement, that the
Agreement has been duly authorized by all necessary corporate action, that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization or any
applicable law or regulation and that this Agreement is enforceable in
accordance with its terms.
20. 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.
21. Entire Agreement. Except as otherwise noted herein, this Agreement,
including the Exhibits thereto, constitutes the entire agreement between the
parties concerning the subject matter hereof and supersedes all prior and
contemporaneous agreements, if any, between the parties relating to the subject
matter hereof.
22. 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.
14
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.
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Executive
CITIZENS BANKING CORPORATION
By: /s/ Xxxx X. Xxxxx Xx.
-----------------------------------
Its: Chairman of the Candidate Evaluation
Committee
15
EXHIBIT A
STOCK COMPENSATION PLAN
CITIZENS BANKING CORPORATION
STOCK COMPENSATION PLAN
EFFECTIVE JANUARY 18, 2002
I. GENERAL PROVISIONS
1.01 PURPOSE. The Plan, which was adopted by the Company's Board on the
Effective Date, is intended to attract and retain highly competent, effective
and loyal Employees and Non-Employee Directors so as to further the growth and
profitable operation of the Company and its Affiliates by encouraging Employees
and Non-Employee Directors of the Company and its Affiliates to acquire an
ownership interest in the Company through Options, Restricted Stock Awards,
Restricted Stock Units and Performance Awards, thus identifying their interests
with those of shareholders and encouraging them to make greater efforts on
behalf of the Company and its Affiliates to achieve the Company's long-term
business plans and objectives.
1.02 PARTICIPANTS. Participants in the Plan shall be such Employees
(including Employees who are directors) and Non-Employee Directors of the
Company and its Affiliates as the Committee may select from time to time. The
Committee may grant Options, Restricted Stock Awards, Restricted Stock Units and
Performance Awards to an individual upon the condition that the individual
become an Employee or Non-Employee Director of the Company or of an Affiliate,
provided that the Option, Restricted Stock Award, Restricted Stock Unit or
Performance Award shall be deemed to be granted only on the date that the
individual becomes an Employee or Non-Employee Director.
1.03 DEFINITIONS. As used in this Plan, the following terms have the
meaning described below:
(a) "AFFILIATE" OR "AFFILIATES" means a corporation or other
entity that is affiliated with the Company and includes any parent or subsidiary
of the Company, as defined in Code Sections 424(e) and (f), respectively.
(b) AGREEMENT" means the written agreement that sets forth the
terms of a Participant's Option, Restricted Stock Award, Restricted Stock Unit
or Performance Award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "BUSINESS COMBINATION" means (1) any reorganization,
merger, share exchange or consolidation of the Company, or (2) any sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company.
(e) "CASHLESS EXERCISE PROCEDURE" means delivery to the
Company by a Participant exercising an Option of a properly executed exercise
notice, acceptable to the Company, together with irrevocable instructions to the
Participant's broker to deliver to the Company sufficient cash to pay the
exercise price and any applicable income and employment withholding taxes, in
accordance with a written agreement between the Company and the brokerage firm.
(f) "CAUSE" means (1) with respect to any Participant who is a
party to a written employment agreement with the Company or any Affiliate,
"Cause" as defined in such employment agreement, or (2) with respect to any
Participant who is not a party to a written employment agreement with the
Company or any Affiliate, personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or receipt of a final cease-and-desist order. In
determining willfulness, no act or failure to act on a Participant's part shall
be considered "willful" unless done or omitted to be done by the Participant not
in good faith and without reasonable belief that the Participant's action or
omission was in the best interests of the Company.
(g) "CHANGE IN CONTROL" means the occurrence of any of the
following events:
(1) If any "person" (as such term is used in Sections
13(d) and 14(d) under the Exchange Act in effect on the date hereof), or group
of persons acting in concert, other than the Company or any Affiliate or any
employee benefit plan of the Company or an Affiliate becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of either the
Common Stock or the combined voting power of all classes of the Company's Voting
Stock. Notwithstanding the immediately preceding sentence, (A) the beneficial
ownership condition in this Section 1.03(g)(1) shall not be deemed satisfied if
the attainment of the applicable percentage of beneficial ownership is the
result of an acquisition of Common Stock or Voting Stock by the Company which,
by reducing the number of shares outstanding increases the proportionate number
of shares beneficially owned by any person; provided, however, that if a person
shall become the beneficial owner of 20% or more of the outstanding Common Stock
or Voting Stock then outstanding by reason of share purchases by the Company and
shall, after such share purchases become the beneficial owner of any additional
Common Stock or Voting Stock other than by a purchase from the Company, then the
beneficial ownership condition in this Section 1.03(g)(1) shall be deemed to
have been satisfied; (B) the following acquisitions shall not constitute a
Change in Control: (i) any acquisition directly from the Corporation, or (ii)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of Section 1.03(g)(3)(B).
(2) If the Incumbent Directors cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election or
nomination for
2
election by the Company's shareholders was approved by a vote of at least a
majority of the directors then comprising the Incumbent Directors (either by a
specific vote or by approval of the proxy statement of the Corporation in which
such person is named as a nominee for director, without written objection to
such nomination) shall be considered to be an Incumbent Director; provided
further, that any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies by
or on behalf of a person other than the Board shall not be considered an
Incumbent Director.
(3) If there shall be consummated a Business
Combination, other than (A) a merger or consolidation effected to implement a
reorganization of the Company's ownership wherein the Company shall become a
wholly-owned subsidiary of another corporation and the shareholders of the
Company shall become shareholders of such other corporation without any material
change in each shareholder's proportionate ownership of such other corporation
from that owned in the Company prior to such merger or consolidation; and (B) a
Business Combination following which: (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Common Stock and outstanding Voting Stock immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 65% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the Surviving
Corporation in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding Common Stock
and Voting Stock, as the case may be; (ii) no person or entity beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the Surviving Corporation or the combined voting power
of the then outstanding voting securities of the Surviving Corporation
(excluding any person or entity who beneficially owned 20% or more of the
outstanding Common Stock or Voting Stock prior to such Business Combination, the
Surviving Corporation and any employee benefit plan (or related trust) of the
Company or the Surviving Corporation); and (iii) at least a majority of the
members of the board of directors of the Surviving Corporation were Incumbent
Directors immediately prior to the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination.
(4) Approval by the shareholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company.
(h) "CODE" means the Internal Revenue Code of 1986, as
amended.
(i) "COMMITTEE" means the Board acting as a whole, or a
committee of two or more "non-employee directors" (as defined in Rule 16b-3
under the Exchange Act) who also constitute "outside directors" (as defined
under Code Section 162(m) if applicable at the time) if designated by the Board
to administer the Plan. The fact that a Committee member shall fail to qualify
under Rule 16b-3 under the Exchange Act or
3
Code Section 162(m) shall not invalidate any grant or award made by the
Committee, if the grant or award is otherwise validly granted under the Plan.
(j) "COMMON STOCK" means shares of the Company's authorized
and unissued common stock, or reacquired shares of such common stock.
(k) "COMPANY" means Citizens Banking Corporation and any
successor thereto.
(l) "DISABILITY" means disability as defined in Section 22(e)
of the Code.
(m) "EFFECTIVE DATE" means January 18, 2002, the date on which
the Board adopted the Plan.
(n) "EMPLOYEE" means an employee of the Company or Affiliate,
who has an "employment relationship" with the Company or an Affiliate, as
defined in Treasury Regulation 1.421-7(h); and the term "employment" means
employment with the Company, or an Affiliate of the Company.
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended from time to time and any successor thereto.
(p) "FAIR MARKET VALUE" means, with respect to a share of
Common Stock on the Grant Date, the average of the high and low sale prices of
Common Stock on the Nasdaq Stock Market ("NSM") as reported in The Wall Street
Journal for the Grant Date. In the event that there were no Common Stock
transactions on such date, the Fair Market Value shall be determined as of the
immediately preceding date on which there were Common Stock transactions. Unless
otherwise specified in the Plan, "Fair Market Value" for purposes of determining
the value of Common Stock on the date of exercise means the average of the high
and low sale prices of such Common Stock on the NSM on the last date preceding
the exercise on which there were Common Stock transactions, as reported in The
Wall Street Journal. If the Common Stock is not listed for trading on the NSM on
the relevant date, (1) the average of the high and low sale prices on the
securities exchange (or, if there is more than one, the principal such exchange)
on which the Common Stock is traded as reported in The Wall Street Journal for
the relevant date; (2) if the shares are not listed for trading on any
securities exchange or the NSM on such date but bid and ask information is
reported by Nasdaq or another generally accepted reporting service, the average
of the high bid and low asked prices of the shares, as so reported by Nasdaq or,
if not reported by Nasdaq, another generally accepted reporting service, for the
relevant date; (3) if none of the foregoing is applicable, the fair market value
of a share as of the relevant date, as determined by the Committee.
(q) "GRANT DATE" means the date on which the Committee
authorizes an individual Option, Restricted Stock Award, Restricted Stock Unit
or Performance Award, or such later date as shall be designated by the
Committee.
4
(r) "INCENTIVE STOCK OPTION" means an Option that is intended
to meet the requirements of Section 422 of the Code and is designated as such in
the Agreement evidencing the grant.
(s) "INCUMBENT DIRECTORS" means the members of the Board on
the Effective Date.
(t) "NON-EMPLOYEE DIRECTOR" means a director of the Company or
an Affiliate who is not an Employee.
(u) "NONQUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option.
(v) "OPTION" means either an Incentive Stock Option or a
Nonqualified Stock Option.
(w) "PARTICIPANT" means the individuals described in Section
1.02.
(x) "PERFORMANCE AWARD" means a performance award granted
pursuant to Article IV.
(y) "PLAN" means the Citizens Banking Corporation Stock
Compensation Plan, the terms of which are set forth herein, as amended from time
to time.
(z) "RESTRICTED PERIOD" means the period of time during which
Common Stock subject to a Restricted Stock Award or Restricted Stock Unit is
subject to transfer restrictions that make it nontransferable.
(aa) "RESTRICTED STOCK" means Common Stock that is subject to
a Restricted Period, pursuant to Article III.
(bb) "RESTRICTED STOCK AWARD" means an award of Common Stock
that is subject to a Restricted Period, granted pursuant to Article III.
(cc) "RESTRICTED STOCK UNIT" means a right granted pursuant to
Article III to receive Restricted Stock or an equivalent value in cash pursuant
to the terms of the Plan and the related Agreement.
(dd) "RETIREMENT" means a Participant's voluntary cessation of
employment or status as a Non-Employee Director following the Participant's 65th
birthday.
(ee) "SURVIVING CORPORATION" means the corporation resulting
from a Business Combination referred to in Section 1.03(g)(3)(B) of the Plan,
including, without
5
limitation, the surviving corporation in a merger involving the Company and a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries.
(ff) "VOTING STOCK" means the securities ordinarily having the
right to vote in the election of directors to the Board.
1.04 ADMINISTRATION. (a) The Plan shall be administered by the
Committee, in accordance with Rule 16b-3 under the Exchange Act and Code Section
162(m), if applicable. The Committee, at any time and from time to time, subject
to Sections 2.02 and 7.07, may grant Options, Restricted Stock Awards,
Restricted Stock Units and Performance Awards to such Employees and Non-Employee
Directors and for such number of shares of Common Stock as it shall designate.
The Committee shall interpret the Plan, prescribe, amend, and rescind rules and
regulations relating to the Plan, and make all other determinations necessary or
advisable for its administration. The decision of the Committee on any question
concerning the interpretation of the Plan or its administration with respect to
any Option, Restricted Stock Award, Restricted Stock Unit or Performance Award
granted under the Plan shall be final and binding upon all Participants.
(b) The Committee may delegate to one or more officers or
managers of the Company or a committee of such officers or managers, the
authority, subject to such terms and limitations as the Committee shall
determine, to grant Options, Restricted Stock Awards, Restricted Stock Units and
Performance Awards to, or to cancel, modify, waive rights with respect to,
alter, discontinue or terminate Options, Restricted Stock Awards, Restricted
Stock Units or Performance Awards held by Participants who are not officers or
directors of the Company for purposes of Section 16 of the Exchange Act.
1.05 STOCK. The total number of shares of Company Common Stock
available for grants and awards under this Plan shall be 7,000,000; provided,
however, that the number of shares subject to Restricted Stock Awards,
Restricted Stock Units and Performance Awards under this Plan shall not exceed
2,000,000. The maximum number of shares of Common Stock that may be subject to
Option grants under the Plan to any salaried employee during any two-year period
shall not exceed 500,000 shares. Shares subject to any portion of a terminated,
forfeited, cancelled or expired Option, Restricted Stock Award, Restricted Stock
Unit or Performance Award granted hereunder may again be subjected to grants and
awards under the Plan as of the date of such termination, forfeiture,
cancellation or expiration. All amounts in this Section 1.05 shall be adjusted,
as applicable, in accordance with Article VI.
II. STOCK OPTIONS
2.01 GRANT OF OPTIONS. The Committee may grant Options to Participants
and, to the extent Options are granted, shall determine the general terms and
conditions of exercise, including any applicable vesting or performance
requirements, which shall be
6
set forth in a Participant's Agreement. The Committee may designate any Option
granted as either an Incentive Stock Option or a Nonqualified Stock Option, or
the Committee may designate a portion of an Option as an Incentive Stock Option
and the remainder as a Nonqualified Stock Option. No Option shall have an
exercise period that extends beyond 10 years from the Grant Date. Any
Participant may hold more than one Option, Restricted Stock Award, Restricted
Stock Unit or Performance Award under the Plan and any other plan of the Company
or Affiliate.
2.02 INCENTIVE STOCK OPTIONS. Any Option intended to constitute an
Incentive Stock Option shall comply with the requirements of this Section 2.02
and shall only be granted to an Employee. No Incentive Stock Option shall be
granted with an exercise price below its Fair Market Value on the Grant Date. An
Incentive Stock Option shall not be granted to any Participant who owns (within
the meaning of Code Section 424(d)) stock of the Company or any Affiliate
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or a Affiliate unless, at the Grant Date, the exercise
price for the Option is at least 110% of the Fair Market Value of the shares
subject to the Option and the Option, by its terms, is not exercisable more than
5 years after the Grant Date. The aggregate Fair Market Value of the underlying
Common Stock (determined at the Grant Date) as to which Incentive Stock Options
granted under the Plan (including a plan of an Affiliate) may first be exercised
by a Participant in any one calendar year shall not exceed $100,000. To the
extent that an Option intended to constitute an Incentive Stock Option shall
violate the foregoing $100,000 limitation (or any other limitation set forth in
Code Section 422), the portion of the Option that exceeds the $100,000
limitation (or fails any other Code Section 422 requirement) shall be deemed to
constitute a Nonqualified Stock Option.
2.03 OPTION PRICE. The Committee shall determine the per share exercise
price for each Option granted under the Plan, but no Option shall be granted
with an exercise price below 100% of the Fair Market Value of Common Stock on
the Grant Date.
2.04 PAYMENT FOR OPTION SHARES. The purchase price for shares of Common
Stock to be acquired upon exercise of an Option granted hereunder shall be paid
in full in cash or by personal check, bank draft or money order at the time of
exercise; provided, however, that in lieu of such form of payment, the Committee
may permit a Participant to pay such purchase price in whole or in part by
tendering shares of Common Stock that have been held at least six months, which
are freely owned and held by the Participant independent of any restrictions,
hypothecations or other encumbrances, duly endorsed for transfer (or with duly
executed stock powers attached), or in any combination of the above. If shares
of Common Stock are tendered in payment of all or part of the exercise price,
they shall be valued for such purpose at their Fair Market Value on the date of
exercise. At the discretion of the Committee, as set forth in a Participant's
Option Agreement, the purchase price may be paid by using the Cashless Exercise
Procedure if the relevant agreement between the Company and the Participant's
broker referred to in the definition of such term has been executed by the
Company and such broker.
7
2.05 ACCELERATION. The Committee may, in its discretion, accelerate a
Participant's right to exercise an Option.
III. RESTRICTED STOCK AWARDS AND UNITS
3.01 TERMS OF RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS. The
Committee shall have the authority to grant Restricted Stock Awards and
Restricted Stock Units to such Participants and for such number of shares of
Common Stock as it shall designate. Such Awards and Units shall be evidenced by
an Agreement that shall specify the terms thereof, including the Restricted
Period, the number of shares of Common Stock subject to the Award or Unit, and
such other provisions, which may include, among other things, vesting and
performance goals, as the Committee shall determine.
3.02 TRANSFERABILITY. Except as provided in this Article III of the
Plan, the shares of Common Stock subject to a Restricted Stock Award or
Restricted Stock Unit may not be transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of (a) the applicable Restricted
Period or for such period of time as shall be established by the Committee and
specified in the applicable Agreement, or (b) upon the earlier satisfaction of
other conditions as specified by the Committee and set forth in the applicable
Agreement. Prior to the end of the Restricted Period, all rights with respect to
the Common Stock subject to a Restricted Stock Award or Restricted Stock Unit
granted to a Participant shall be exercisable during the Participant's lifetime
only by the Participant or the Participant's legal representative.
3.03 OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any shares of Common Stock subject to a Restricted Stock Award
or Restricted Stock Unit as it may deem advisable including, without limitation,
restrictions under applicable federal or state securities laws, and shall legend
any certificates representing such shares to give appropriate notice of such
restrictions.
3.04 CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 3.03, any certificate representing shares of
Common Stock subject to a Restricted Stock Award or Restricted Stock Unit shall
bear the following legend:
The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer set forth in the Citizens
Banking Corporation Stock Compensation Plan (the "Plan"), rules and
administrative guidelines adopted pursuant to such Plan and an
Agreement dated , . A copy of the Plan, such rules and such
Agreement may be obtained from the Secretary of the Company.
3.05 REMOVAL OF RESTRICTIONS. Except as otherwise provided under the
Plan, if the Restricted Period has elapsed or been waived by the Committee with
respect to all or
8
a portion of the Restricted Shares represented by a certificate, the holder
thereof shall be entitled to have the legend required by Section 3.04 removed
from such stock certificate with respect to the shares as to which the
Restricted Period has elapsed. Any certificate evidencing the remaining shares
shall bear the legend required by Section 3.04. The Committee shall have the
discretion to waive the applicable Restricted Period with respect to all or any
part of the Common Stock subject to a Restricted Stock Award or Restricted Stock
Unit. The Company shall have the right to retain any certificate representing
shares of Common Stock subject to a Restricted Stock Award or Restricted Stock
Unit until such time as all conditions and/or restrictions applicable to such
shares of Common Stock have been satisfied.
3.06 VOTING AND DIVIDEND RIGHTS. During the Restricted Period,
Participants shall be considered record owners of any shares of Common Stock
subject to any Restricted Stock Award or Restricted Stock Unit held by them for
purposes of determining who is entitled to vote or receive dividends with
respect to such shares. If any dividends or distributions are paid in shares of
Common Stock during the Restricted Period, the dividend or other distribution
shares shall be subject to the same restrictions on transferability as the
shares of Common Stock with respect to which they were paid.
IV. PERFORMANCE AWARDS
4.01 PERFORMANCE AWARDS. The Committee is authorized to grant
Performance Awards to eligible Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (a) may be denominated or payable in
cash or shares of Common Stock (including, without limitation, Restricted
Stock), and (b) shall confer on the holder thereof rights valued as determined
by the Committee and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance period, as the Committee shall establish. Subject
to the terms of the Plan, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award, and the other terms and conditions of any
Performance Award, including the effect upon such Award of termination of the
Participant's employment and/or directorship, shall be determined by the
Committee.
V. TERMINATION OF EMPLOYMENT AND SERVICES
5.01. OPTIONS.
(a) Unless otherwise provided in the applicable Agreement, if,
prior to the date that an Option first becomes exercisable, a Participant's
status as an Employee and Non-Employee Director is terminated for any reason,
the Participant's right to exercise the Option shall terminate and all rights
thereunder shall cease as of the close of business on the date of such
termination.
9
(b) For any Nonqualified Stock Option unless otherwise
provided in the applicable Agreement and for any Incentive Stock Option, if, on
or after the date that the Option first becomes exercisable, a Participant's
status as an Employee and Non-Employee Director is terminated (1) for Cause, any
unexercised portion of the Option (whether then exercisable or not) shall, as of
the time of the Cause determination, immediately terminate, (2) due to death or
Disability, then the Option, to the extent that it is exercisable on the date of
termination, shall be exercisable only until the earlier of the one year
anniversary of such termination or the "expiration date" set forth in the
applicable Agreement, (3) for any other reason (except as provided in the next
sentence), then the Option, to the extent that it is exercisable on the date of
termination, shall be exercisable only until the earlier of the three month
anniversary of such termination or the "expiration date" set forth in the
applicable Agreement. For any Nonqualified Stock Option, unless otherwise
provided in the applicable Agreement, if, on or after the date that the Option
first becomes exercisable, a Participant's status as an Employee and
Non-Employee Director is terminated due to Retirement, or if a Participant is a
party to a Change in Control Agreement with the Company (as amended and restated
on November 28, 2000) and such Participant's status as an Employee and
Non-Employee Director is terminated involuntarily or constructively in
accordance with paragraph 3 thereof, then the Option, to the extent that it is
exercisable on the date of termination, shall be exercisable until the
"expiration date" set forth in the applicable Agreement. The Committee, at its
discretion, may designate in the applicable Agreement a different
post-termination period for exercise of a Nonqualified Stock Option and may
extend the exercise period of any Option, but in no event may the
post-termination exercise period exceed the tenth anniversary of the Grant Date;
it being understood that the extension of the exercise term for an Incentive
Stock Option may cause such Option to become a Nonqualified Stock Option.
(c) Shares subject to Options that are not exercised within
the time allotted for exercise shall expire and be forfeited by the Participant
as of the close of business on the date they are no longer exercisable.
5.02 RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS. Unless
otherwise provided in the applicable Agreement, if the status as an Employee and
Non-Employee Director of a Participant holding a Restricted Stock Award or
Restricted Stock Unit terminates for any reason other than Retirement, death or
Disability prior to the lapse of the Restricted Period, any shares of Common
Stock subject to a Restricted Stock Award or Restricted Stock Unit as to which
the Restricted Period has not yet lapsed or been waived shall be forfeited by
the Participant; provided, however, that the Committee, in its sole discretion,
may waive or change the remaining restrictions or add additional restrictions
with respect to any Restricted Stock Award or Restricted Stock Unit that would
otherwise be forfeited, as it deems appropriate. Unless otherwise provided in
the applicable Agreement, if the status as an Employee and Non-Employee Director
of a Participant holding a Restricted Stock Award or Restricted Stock Unit
terminates due to Retirement, death or Disability, any remaining Restricted
Period with respect to Restricted Stock Awards or Restricted Stock Units held by
such Participant shall lapse as of the date of such termination.
10
5.03 PERFORMANCE AWARDS. Unless otherwise provided in the applicable
Agreement, if the status as an Employee and Non-Employee Director of a
Participant holding a Performance Award terminates for any reason other than
Retirement, death or Disability prior to satisfaction of the performance
requirements of such Award, such Award automatically shall be forfeited by the
Participant to the extent such requirements are not satisfied; provided,
however, that the Committee, in its sole discretion, may waive or change the
remaining requirements or add additional requirements with respect to any
Performance Award or portion thereof that would otherwise be forfeited, as it
deems appropriate. Unless otherwise provided in the applicable Agreement, if the
status as an Employee and Non-Employee Director of a Participant holding a
Performance Award terminates due to Retirement, death or Disability, the
performance requirements of such Award shall be deemed to have been fully
satisfied.
5.04 OTHER PROVISIONS. Neither the transfer of a Participant from one
corporation or division to another corporation or division among the Company and
any of its Affiliates nor a leave of absence under the Company's leave policy
shall be deemed to constitute a termination of status as a Participant for
purposes of the Plan, except that no new awards or grants may be made to a
Participant during a leave of absence.
VI. ADJUSTMENTS AND CHANGE IN CONTROL
6.01 ADJUSTMENTS.
(a) If the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other corporate transaction or event affects the
Common Stock such that an adjustment is appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (1) the number and type of shares of Common
Stock which thereafter may be made the subject of Options, Restricted Stock
Awards, Restricted Stock Units and Performance Awards, (2) the number and type
of shares of Common Stock subject to outstanding Options, Restricted Stock
Awards, Restricted Stock Units and Performance Awards, and (3) the exercise
price with respect to any Option; provided, however, in each case, that with
respect to Incentive Stock Options any such adjustment shall be made in
accordance with Section 422 of the Code or any successor provision thereto to
the extent that such Option is intended to remain an Incentive Stock Option.
(b) The foregoing adjustments shall be made by the Committee
or, if such adjustment is required by the Board, then by the Board at the
recommendation of the Committee. Any such adjustment shall provide for the
elimination of any fractional share
11
that might otherwise become subject to an Option, Restricted Stock Award,
Restricted Stock Unit or Performance Award.
6.02 CHANGE IN CONTROL. Upon the occurrence of a Change in Control, or
if the Committee determines in its sole discretion that a Change in Control has
occurred, then (a) any Option granted hereunder immediately shall become
exercisable in full, regardless of any installment provision applicable to such
Option; (b) any remaining Restricted Period on any shares of Common Stock
subject to a Restricted Stock Award or Restricted Stock Unit granted hereunder
immediately shall lapse; and (c) the performance requirements for a Performance
Award granted hereunder shall be deemed to have been satisfied in full.
6.03 MERGER. If the Company is a party to any merger, consolidation,
reorganization, or sale of substantially all of its assets, each holder of
outstanding Option, Restricted Stock Award, Restricted Stock Unit or Performance
Award, to the extent that such Option, Award or Unit remains outstanding
thereafter, shall be entitled to receive, in lieu of the shares of Common Stock
to which such holder would otherwise be entitled, upon the exercise of such
Option or the lapse of the Restricted Period on shares of Common Stock subject
to a Restricted Stock Award or Restricted Stock Unit or the satisfaction of the
performance requirements for a Performance Award, the securities and/or property
which a shareholder owning the number of shares subject to the holder's Option,
Restricted Stock Award, Restricted Stock Unit or Performance Award would be
entitled to receive pursuant to such merger, consolidation, reorganization or
sale of assets.
VII. MISCELLANEOUS
7.01 PARTIAL EXERCISE/FRACTIONAL SHARES. The Committee may permit, and
shall establish procedures for, the partial exercise of Options granted under
the Plan. No fractional shares shall be issued in connection with the exercise
or payment of a grant or award under the Plan; instead, the Fair Market Value of
the fractional shares shall be paid in cash, or at the discretion of the
Committee, the number of shares shall be rounded down to the nearest whole
number of shares, and any fractional shares shall be disregarded.
7.02 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of
the Plan, the Committee may impose such conditions on a Restricted Stock Award,
Restricted Stock Unit, Performance Award or the exercise of an Option
(including, without limitation, the right of the Committee to limit the time of
exercise to specified periods) as may be required to satisfy the requirements of
Rule 16b-3 of the Exchange Act (as such rule may be in effect at such time).
7.03 RIGHTS PRIOR TO ISSUANCE OF SHARES. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option, Restricted
Stock Award, Restricted Stock Unit or Performance Award until the issuance of
such shares. No
12
adjustment shall be made for dividends or other rights with respect to such
shares for which the record date is prior to the date the shares are issued.
7.04 NON-ASSIGNABILITY. No Option, Restricted Stock Award, Restricted
Stock Unit or Performance Award shall be transferable by a Participant except by
will or the laws of descent and distribution. During the lifetime of a
Participant, an Incentive Stock Option shall be exercised only by the
Participant. No transfer of an Option, Restricted Stock Award, Restricted Stock
Unit or Performance Award shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of the
will or such evidence as the Company may deem necessary to establish the
validity of the transfer and the acceptance by the transferee of the terms and
conditions of the Option, Restricted Stock Grant Award, Restricted Stock Unit or
Performance Award.
7.05 SECURITIES LAWS.
(a) Anything to the contrary herein notwithstanding, the
Company's obligation to sell and deliver Common Stock pursuant to the exercise
of an Option, or deliver Common Stock pursuant to a Restricted Stock Award,
Restricted Stock Unit or Performance Award is subject to such compliance with
federal and state laws, rules and regulations applying to the authorization,
issuance or sale of securities as the Company deems necessary or advisable. The
Company shall not be required to sell or deliver Common Stock unless and until
it receives satisfactory assurance that the issuance or transfer of such shares
shall not violate any of the provisions of the Securities Act of 1933, the
Exchange Act, any other applicable federal laws, or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder or those of any
stock exchange or stock market on which the Common Stock may be listed or
traded, the provisions of any state laws governing the sale of securities, or
that there has been compliance with the provisions of such acts, rules,
regulations and laws.
(b) The Committee may impose such restrictions on any shares
of Common Stock subject to or underlying an Option, Restricted Stock Award,
Restricted Stock Unit or Performance Award as it may deem advisable, including,
without limitation, restrictions (i) under applicable federal securities laws,
(ii) under the requirements of any stock exchange or other recognized trading
market upon which such shares of Common Stock are then listed or traded, or
(iii) under any blue sky or state securities laws applicable to such shares. No
shares shall be issued until counsel for the Company has determined that the
Company has complied with all requirements under appropriate securities laws.
7.06 WITHHOLDING AND TAXES. The Company shall have the right to
withhold from a Participant's compensation or require a Participant to remit
sufficient funds to satisfy applicable withholding for income and employment
taxes upon the exercise of an Option, the lapse of a Restriction Period or the
satisfaction of the performance requirements relating to a Performance Award. A
Participant may use the Cashless Exercise Procedure or may tender previously
acquired shares of Common Stock that have been held at least six months to
satisfy the withholding obligation in whole or in part,
13
such shares being valued for such purpose at Fair Market Value; provided that
the Company shall not withhold from exercise more shares than are necessary to
satisfy the established requirements of federal, state and local tax withholding
obligations.
7.07 TERMINATION AND AMENDMENT.
(a) The Board may terminate the Plan, or the granting of
Options, Restricted Stock Awards, Restricted Stock Units or Performance Awards
under the Plan, at any time. No new grants or awards shall be made under the
Plan after the tenth anniversary of the Effective Date.
(b) The Board may amend or modify the Plan at any time and
from time to time.
(c) No amendment, modification or termination of the Plan
shall adversely affect any Option, Restricted Stock Award, Restricted Stock Unit
or Performance Award previously granted under the Plan in any material way
without the consent of the Participant holding the Option, Restricted Stock
Award, Restricted Stock Unit or Performance Award.
(d) An Agreement relating to an Option shall not be amended to
change the exercise price of the Option evidenced by such Agreement, other than
pursuant to Article VI.
7.08 EFFECT ON EMPLOYMENT OR SERVICES. Neither the adoption of the Plan
nor the granting of any Option, Restricted Stock Award, Restricted Stock Unit or
Performance Award pursuant to the Plan shall be deemed to create any right in
any individual to be retained or continued in the employment or services of the
Company or an Affiliate.
7.09 USE OF PROCEEDS. The proceeds received from the sale of Common
Stock pursuant to the Plan shall be used for general corporate purposes of the
Company.
7.10 APPROVAL OF PLAN. The Plan shall be subject to the approval of the
holders of at least a majority of the Common Stock of the Company present and
entitled to vote at a meeting of shareholders of the Company held within 12
months after adoption of the Plan by the Board. No Option, Restricted Stock
Award, Restricted Stock Unit or Performance Award granted under the Plan may be
exercised or paid out in whole or in part unless the Plan has been approved by
the shareholders as provided herein. If not approved by shareholders within 12
months after approval by the Board, the Plan and any Options, Restricted Stock
Awards, Restricted Stock Units or Performance Awards granted under the Plan
shall be rescinded.
7.11 GOVERNING LAW. The Plan and all actions taken under the Plan shall
be governed and construed in accordance with Michigan law.
14
THIS PLAN is hereby executed as of January 18, 2002 in accordance with
the Board resolutions adopted on such date.
CITIZENS BANKING CORPORATION
By: ___________________________
Its: __________________________
15
EXHIBIT B
RESTRICTED STOCK AWARD AGREEMENT
RESTRICTED STOCK AGREEMENT
(EMPLOYEE VERSION)
THIS RESTRICTED STOCK AGREEMENT is made the __ day of February __,
2002, by and between Citizens Banking Corporation ("Company") and the
undersigned ("Grantee"), pursuant to the Citizens Banking Corporation Stock
Compensation Plan ("Plan"). Capitalized terms not defined in this Agreement
shall have the meanings respectively ascribed to them in the Plan.
WHEREAS, the Company desires to encourage the Grantee to make greater
efforts on behalf of the Company and its Affiliates to achieve the Company's
long-term business plans and objectives and to further identify the interests of
Grantee with the interests of the Company's shareholders;
WHEREAS, the Company desires to grant this restricted stock award to
the Grantee pursuant to the Plan, a copy of which is attached hereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed between the parties as
follows:
1. GRANT OF RESTRICTED STOCK AWARD. Subject to the terms and conditions
hereof, including without limitation the restrictions set forth in Section 2(a)
of this Agreement, the Company hereby grants to the Grantee a total of 20,000
shares of the Company's Common Stock.
2. RESTRICTIONS ON TRANSFER OF SHARES SUBJECT TO AWARD.
(a) The shares under the award shall not be transferred,
pledged, assigned, or otherwise alienated or hypothecated until the occurrence
of the events set forth in this Section 2, at which time such restrictions shall
lapse. Except as set forth below, the restrictions on such shares shall lapse as
follows, if the Grantee is still employed with the Company or an Affiliate on
such dates:
Percentage of Award
Period After Grant Date As to Which Restrictions Lapse
----------------------- ------------------------------
90 days 20%
One year 40%
Two years 60%
Three years 80%
Four years 100%
Restrictions shall be deemed to lapse at the close of business on such date.
Notwithstanding the foregoing, the restrictions set forth above also shall lapse
as follows: (1) the restrictions set forth above shall immediately lapse upon
the Grantee's death or termination of employment due to Disability or
Retirement; (2) the restrictions set forth above shall immediately lapse upon a
Change in Control of the Company; (3) the restrictions set forth above shall
immediately lapse as to one-half of all outstanding unvested restricted stock
subject to this award in the event of a termination of employment by the Company
due to an Employment Order, as such term is defined in the Employment Agreement
between Company and Grantee dated February __, 2002 ("Employment Agreement") and
whether or not that employment agreement is in effect when employment terminates
under this subsection, the remaining one-half of such outstanding unvested
restricted stock being forfeited, (4) the restrictions set forth above shall
immediately lapse upon the termination of the Grantee by the Company for any
reason other than Cause (including Constructive Discharge but excluding
termination due to an Employment Order) as such terms are defined in the
Employment Agreement, whether or not that employment agreement is in effect when
employment terminates under this subsection, or (5) action by the Committee to
waive the remaining restricted period in its sole discretion. Upon the lapse of
such restrictions, the shares under the restricted stock award granted hereunder
shall be freely transferable. If the Grantee's employment with the Company or
its Affiliates terminates other than under the circumstances described in the
next preceding sentence, any portion of the restricted stock award as to which
such restrictions have not lapsed at the time of such termination shall be
forfeited.
(b) Until the lapse of all restrictions provided in Section 2(a) on the
shares subject to this restricted stock award, any certificate evidencing the
shares subject to the award shall carry the following restrictive legend:
The sale or other transfer of the shares of stock represented
by this certificate, whether voluntary, involuntary or by
operation of law, is subject to certain restrictions on
transfer set forth in the Citizens Banking Corporation Stock
Compensation Plan (the "Plan"), rules and administrative
guidelines adopted pursuant to such Plan and an Agreement
dated ___________, ___. A copy of the Plan, such rules and
such Agreement may be obtained from the Secretary of the
Company.
The Company shall also have the right to place stop transfer instructions on
shares which are subject to the restrictions described in Section 2(a). Grantee
shall be entitled to removal of such legend and stop transfer instructions at
the time or times provided by, and in accordance with, Section 3.05 of the Plan.
3. NON-ASSIGNABILITY OF AWARD. The award hereby granted shall not be
transferable. No purported assignment or transfer of this award, or of the
rights represented thereby, whether voluntary or involuntary, by operation of
law or otherwise, shall vest in the purported assignee or transferee any
interest or right whatsoever. For the avoidance of doubt, the parties
acknowledge that this Section 3 applies to the award itself, not to the shares
subject to the award, and that the transferability of the shares subject to the
award shall be governed by Section 2 of this Agreement.
2
4. ADJUSTMENTS. In the event of any stock dividend, reclassification,
subdivision or combination, or similar transaction affecting the shares covered
by this award, the rights of the Grantee are subject to adjustment as provided
in Section 6.01 of the Plan to the extent deemed necessary by the Committee.
5. RIGHTS AS SHAREHOLDER. Subject to the restrictions and risk of
forfeiture set forth in Section 2, the Grantee shall have all rights of a
shareholder (including voting and dividend rights) with respect to the shares
subject to the award commencing on the date on which the shares subject to the
award are issued.
6. WITHHOLDING. The Grantee authorizes the Company to withhold from his
or her compensation to satisfy any income and employment tax withholding
obligations in connection with the award. If the Grantee is no longer employed
by the Company at the time any applicable taxes are due and must be remitted by
the Company, the Grantee agrees to pay applicable taxes to the Company, and the
Company may delay removal of the restrictive legend until proper payment of such
taxes has been made by the Grantee. The Grantee may satisfy such obligations
under this Section 6 by any method authorized under Section 7.06 of the Plan.
7. NOTICES. Every notice relating to this Agreement shall be in writing
and if given by mail shall be given by registered or certified mail with return
receipt requested. All notices to the Company shall be delivered to the
President of the Company at the Company's headquarters. All notices by the
Company to the Grantee shall be delivered to the Grantee personally or addressed
to the Grantee at the Grantee's last residence address as then contained in the
records of the Company or such other address as the Grantee may designate.
Either party by notice to the other may designate a different address to which
notices shall be addressed. Any notice given by the Company to the Grantee at
the Grantee's last designated address shall be effective to bind any other
person who shall acquire rights hereunder.
8. GOVERNING LAW. This Agreement (a) shall be governed by and construed
in accordance with the laws of the State of Michigan without giving effect to
conflict of laws, and (b) is not valid unless it has been manually signed by the
Grantee and the Company.
9. PROVISIONS OF PLAN CONTROLLING. The provisions hereof are subject to
the terms and provisions of the Plan. In the event of any conflict between the
provisions of this Agreement and the provisions of the Plan, the provisions of
the Plan shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GRANTEE CITIZENS BANKING CORPORATION
__________________________________ By: ____________________________________
__________________________, President
3
EXHIBIT C
NONQUALIFIED STOCK OPTION AGREEMENT
NONQUALIFIED STOCK OPTION AGREEMENT
(EMPLOYEE VERSION)
THIS AGREEMENT is entered into as of February __, 2002 ("Grant Date"),
by and between Citizens Banking Corporation ("Company") and the undersigned
("Optionee"), pursuant to the Citizens Banking Corporation Stock Compensation
Plan ("Plan"). The Company hereby grants to the Optionee a Nonqualified Stock
Option to purchase 225,000 shares of Common Stock, subject to the terms and
conditions contained in the Plan and as hereinafter provided (the "Option").
Capitalized terms not defined in this Agreement shall have the meanings
respectively ascribed to them in the Plan.
1. EXERCISE PRICE. The Option shall be exercisable at $______ per
share.
2. OPTION EXERCISE.
(a) Vesting. The Option shall become exercisable in full at the close of
business on the fifth anniversary of the Grant Date. Notwithstanding the
foregoing, the Option also shall become exercisable as follows: (1) the Option
shall become exercisable to the extent provided in the attached SCHEDULE A, if
the performance goals specified therein are met within the prescribed time
periods, (2) the Option shall become exercisable in full upon a Change in
Control of the Company (as defined in the Change in Control Agreement between
the Company and the Optionee dated February __, 2002); (3) one-half of the
Option shall become exercisable upon termination of the Optionee by the Company
due to an Employment Order, as such term is defined in the Employment Agreement
between Company and Optionee dated February __, 2002 ("Employment Agreement"),
whether or not that employment agreement is in effect when employment terminates
under this subsection, and (4) the Option shall become exercisable in full upon
termination of the Optionee by the Company for any reason other than Cause
(including Constructive Discharge but excluding termination due to an Employment
Order), as such terms are defined in the Employment Agreement, whether or not
that employment agreement is in effect when employment terminates under this
subsection.
If the Company is a party to any merger, consolidation, reorganization, or sale
of substantially all of its assets, Optionee shall, in connection with such
transaction, to the extent that the Option is not cancelled, cashed-out or
previously exercised, be entitled to receive upon exercise of the Option, in
lieu of shares of Common Stock to which the Optionee would otherwise be
entitled, the securities or property which a shareholder owning the number of
shares of Common Stock for which the Option is then exercisable would be
entitled to receive pursuant to such transaction. Any provision of this
Agreement to the contrary notwithstanding, the Option shall expire and no longer
be exercisable after close of business on the date which is the tenth
anniversary of the Grant Date (the "Expiration Date").
(b) Notice. The Option may be exercised only by delivery to
the President of the Company of a written and duly executed notice in the form
attached hereto accompanied by payment in the form or forms permitted by Section
2(c) below.
(c) Payment Terms. The purchase price for shares of Common
Stock to be acquired upon exercise of the Option shall be paid in full at the
time of exercise (1) in cash; (2) by personal check, bank draft or money order;
(3) by tendering shares of Common Stock that have been held at least six months
and which are freely owned and held by the Optionee independent of any
restrictions, hypothecations or other encumbrances, duly endorsed for transfer
(or with duly executed stock powers attached); (4) through the Cashless Exercise
Procedure by delivery to the Company of a properly executed exercise notice,
acceptable to the Company, together with irrevocable instructions to the
Optionee's broker to deliver to the Company sufficient cash to pay the exercise
price and any applicable income and employment withholding taxes, in accordance
with a written agreement between the Company and the applicable brokerage firm;
or (5) any combination of the above.
3. TERMINATION OF EMPLOYMENT.
(a) If, prior to the date that the Option first becomes
exercisable, Optionee' s employment is terminated for any reason, Optionee's
right to exercise the Option shall terminate and all rights thereunder shall
cease as of the close of business on the date of such termination.
(b) If, on or after the date that the Option first becomes
exercisable, Optionee's employment is terminated (1) for Cause (as defined in
the Employment Agreement), any unexercised portion of the Option (whether then
exercisable or not) shall, as of the time of the Cause determination,
immediately terminate, (2) due to death or Disability, then the Option, to the
extent that it is exercisable on the date of termination, shall be exercisable
only until the earlier of the one year anniversary of such termination or the
Expiration Date, (3) due to Retirement, or if Optionee is a party to a Change in
Control Agreement with the Company (dated ____________________, 2002) and
Optionee's employment is terminated involuntarily or constructively in
accordance with paragraph 3 thereof, then the Option, to the extent that it is
exercisable on the date of termination, shall be exercisable until the
Expiration Date, or (4) for any other reason, then the Option, to the extent
that it is exercisable on the date of employment termination, shall be
exercisable only until the earlier of the thirty six month anniversary of such
termination or the Expiration Date.
4. OPTIONEE'S AGREEMENT. The Optionee agrees to all the terms stated in
this Agreement, as well as to the terms of the Plan, a copy of which is attached
hereto and of which the Optionee acknowledges receipt. To the extent any
provision of this Agreement conflicts with the terms of the Plan, the terms of
the Plan shall control. Pursuant to the Plan, the Committee is vested with
conclusive authority to administer the Plan (which includes, among other things,
the authority to determine the terms and conditions of this Agreement and the
Option).
5. WITHHOLDING. The Optionee consents to withholding from his or her
compensation of all applicable payroll and income taxes with respect to the
Option. If the Optionee is no longer employed by the Company at the time any
applicable taxes with respect to the Option are due and must be remitted by the
Company, the Optionee agrees to pay applicable taxes to the Company, and the
Company may delay issuance of a certificate until proper payment
2
of such taxes has been made by the Optionee. The Optionee may satisfy such
obligations under this Section 5 by any method authorized under Section 7.06 of
the Plan.
6. RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder of the Company with respect to any of the shares covered by the
Option until the issuance of such shares. No adjustment shall be made for
dividends or other rights with respect to such shares for which the record date
is prior to the date such shares are issued.
7. NON-TRANSFERABILITY OF OPTION. The Option shall not be transferred
in any manner other than by will, the laws of descent and distribution or any
other manner permitted by the Plan at the time of such purported transfer. No
transfer of the Option shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and such evidence as the
Company may deem necessary to establish the validity of the transfer and the
acceptance by the transferee of the terms and conditions of the Option.
8. ADJUSTMENTS. The number of shares of Common Stock to which the
Option is subject and the exercise price are subject to adjustment in accordance
with Section 6.01 of the Plan. Such adjustment will be determined by the
Committee, in its sole discretion.
9. NO RIGHT TO EMPLOYMENT. The granting of the Option does not confer
upon the Optionee any right to be retained as an Employee.
10. AMENDMENT AND TERMINATION OF OPTION. Except as otherwise provided
in this Agreement or in the Plan, the Company may not, without the consent of
the Optionee, amend, modify or terminate this Agreement if such amendment,
modification or termination would adversely affect the Option in any material
way.
11. NOTICES. Every notice relating to this Agreement shall be in
writing and if given by mail shall be given by registered or certified mail with
return receipt requested. All notices to the Company or the Committee shall be
sent or delivered to the President of the Company at the Company's headquarters.
All notices by the Company to the Optionee shall be delivered to the Optionee
personally or addressed to the Optionee at the Optionee's last residence address
as then contained in the records of the Company or such other address as the
Optionee may designate. Either party by notice to the other may designate a
different address to which notices shall be addressed. Any notice given by the
Company to the Optionee at the Optionee's last designated address shall be
effective to bind any other person who shall acquire rights hereunder.
12. APPLICABLE LAW. This Agreement (a) shall be governed by and
construed in accordance with the laws of the State of Michigan without giving
effect to conflict of laws, and (b) is not valid unless it has been manually
signed by the Optionee and the Company.
IN WITNESS WHEREOF, this Agreement has been executed as of February __,
2002, by the parties set forth below.
3
OPTIONEE: CITIZENS BANKING CORPORATION
____________________________________ By:_________________________
Its: President
4
NOTICE OF EXERCISE
President
Citizens Banking Corporation
One Citizens Banking Center
000 Xxxxx Xxxxxxx Xx.
Xxxxx, Xxxxxxxx 00000
An Option was granted to me on , to purchase
shares of Citizens Banking Corporation common stock at a price of $ per
share (the "Option"). I hereby elect to exercise the Option with respect to
shares. Payment of the exercise price is being made as follows (check
all that apply):
- Cash delivered with this notice.
- Certified check, bank draft or money order delivered with this
notice.
- I am tendering shares of Common Stock that I currently own. I
certify that I have owned such shares for at least the six
months prior to the date of this notice.
- Subject to Section 2.04(b) of the Stock Compensation Plan, I
am making a "cashless exercise" and have given the designated
broker the irrevocable instructions required by the applicable
agreement between the broker and Citizens Banking Corporation.
The stock certificate for the shares acquired upon exercise should be issued to:
(name)
--------------------------------------
(address)
--------------------------------------
(Social Security No.)
--------------------------------------
Dated: , (signature)
---------------------------
(print name)
--------------------------
5
CITIZENS BANKING CORPORATION
2002 OPTION GRANT
VESTING SCHEDULE*
------------------------------- ----------------------------
Four Quarter Diluted
Earnings Per Share % Vesting
------------------------------- ----------------------------
------------------------------- ----------------------------
2.25 0%
------------------------------- ----------------------------
2.30 9%
------------------------------- ----------------------------
2.35 17%
------------------------------- ----------------------------
2.40 26%
------------------------------- ----------------------------
2.45 34%
------------------------------- ----------------------------
2.50 43%
------------------------------- ----------------------------
2.54 50%
------------------------------- ----------------------------
2.59 59%
------------------------------- ----------------------------
2.64 67%
------------------------------- ----------------------------
2.69 76%
------------------------------- ----------------------------
2.74 84%
------------------------------- ----------------------------
2.79 93%
------------------------------- ----------------------------
2.83 100%
------------------------------- ----------------------------
*The options will become 100% vested on the fifth (5th) anniversary of the ten
year option grant, or earlier as outlined in the above Option vesting schedule
upon the Earnings Per Share ("EPS") targets set forth therein being met. In
determining vesting under the above schedule, the "% vesting" shall be based
upon the highest rolling four quarter average diluted EPS for Citizens Banking
Corporation for each consecutive four quarter period completed. For this
purpose, the highest attained EPS shall, at the discretion of the Compensation
and Human Resources Committee, exclude extraordinary gains and losses not
related to normal business operations.
6
EXHIBIT D
MANAGEMENT INCENTIVE PLAN
CITIZENS BANKING CORPORATION
MANAGEMENT INCENTIVE PLAN
I. PURPOSE:
1. Ensure achievement of strategic goals.
2. Strengthen links between pay and performance.
3. Align management more closely with shareholder.
II. ELIGIBILITY:
Senior Vice Presidents and above and certain other officers based upon
corporate responsibility who are not participants in another
established incentive plan with payment amounts determined by
performance in relation to goal. Awards will be pro-rated based on
months served for staff members with less than 12 months of service in
a Plan Year. Staff members become eligible to participate in the plan
by virtue of promotion or new hire. A staff member who terminates
employment before the Plan Year is not eligible to receive an award.
III. PERFORMANCE MEASUREMENT FACTORS:
Individual bonus awards will be based on corporate and individual
performance.
- *Providing the stock buy back program continues-
- Upon reaching 96.5% of EPS, the factor will pay out at 50%.
- Upon reaching 98.25% of EPS, the factor will pay out at 75%.
- Upon reaching 100% of EPS, the factor will pay out at 100%.
- Achievement over 100% of plan will result in a factor pay out
multiplier prorated at 10% for every 1% by which Earnings Per
Share exceeds the Plan Goal with a maximum pay out percent of 150%
For example:
-
PERCENT OF TARGET PAYOUT PERCENT EPS FACTOR*
----------------- -------------- -----------
100% 100% 60%
101% 110% X 60%
102% 120% 60%
- Should the buy back program be discontinued-
- Net income will be recalculated on a comparable basis and paid out
at either 50%, 75%, 100% or more accordingly.
- Direct Contribution, Key Success Factors and Special Initiatives
should be achieved at 100% for pay out and may be multiplied by a
performance factor of 100% to 150% at the discretion of the CEO.
- Special initiatives are defined as producing revenue enhancement
or expense reduction.
IV. PARTICIPATION RATE:
The participation rate for individual positions is benchmarked from
market data research provided by various surveys and consultants.
V. AWARD DETERMINATION:
EXECUTIVE MANAGEMENT
-- -----
| 60% 25% |
| --- -- |
Salary Midpoint x | EPS | Direct Contribution and Performance | |
Participation Rate x X | Payout + | or Key Success Factor X Factor | |
Service Factor | Percent | + Special Initiatives (100% TO 150%) | |
| | | |
| --- -- |
| (96.50% 15% |
| TO 150%) |
-- -----
CBC SENIOR MANAGEMENT
-- -----
| 60% 40% |
| --- -- |
Salary Midpoint x | EPS | Performance | |
Participation Rate x X | Payout + | Key Success Factor X Factor | |
Service Factor | Percent | (100% TO 150%) | |
| --- -- |
| (96.50% |
| TO 150%) |
-- -----
The incentive award for the Chairman, President and CEO will be
determined by the Compensation and Human Resources Committee of
Citizens Banking Corporation Board of Directors.
A special award fund (Discretionary) equal to 15% of the aggregate
incentive award will be available for individual awards as determined
by the Chairman, President and CEO. Awards from this fund are made to
staff members who are not participants in the Management Incentive
Plan.
Awards for the Discretionary Fund will be made only in recognition of
exemplary achievements. Distribution of all available amounts in this
fund is not mandatory.
VI. AWARD LIMITATIONS:
No awards will be made unless the corporation meets or exceeds 96.5% of
the Earnings Per Share Goal (EPS).
VII. AWARD PAYMENTS:
All awards earned under Management Incentive Plan will be paid as soon
as practical following approval by the Compensation and Human Resources
Committee.
VIII. ADDITIONAL PROVISIONS:
The Management Incentive Plan shall be administered by the Compensation
and Human Resources Committee of the Corporation.
Participation in the Management Incentive Plan shall not be construed
as giving any employee the right to continued employment with the
corporation for the full or for any subsequent period.
IX. DISCRETIONARY GUIDELINES:
OBJECTIVES: Recognize and promote exemplary individual performance or
initiative.
ELIGIBLE PARTICIPANTS: All staff members are eligible except staff
members who are in established incentive plans with payment amounts
determined by performance in relation to established goals.
NOMINATION PROCESS: Managers would nominate staff member(s) according
to established guidelines. They would also obtain concurrence and
approval from their respective Direct Report to the CEO.
MONETARY GUIDELINES: Range of $500 to $3000. Larger amounts could be
given in exceptional circumstances.
GUIDELINES: Discretionary awards should be given in recognition for one
or more of the following performance criteria:
Earnings:
- Expense reduction
- Revenue enhancement
Innovation:
- Continuous improvement efforts
- Innovative delivery alternatives
- Foresight and planning to prevent crises
Achievement:
- Unique/specialized skills or knowledge of value to the
company, i.e., Key Performers
- Sustained high performance
- Exemplary performance during unusual circumstances or
specific events
- Special projects completed in an exceptional manner or
ahead of schedule
- Superior client service
EXHIBIT E
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CITIZENS BANKING CORPORATION
SUPPLEMENTAL RETIREMENT BENEFITS PLAN
FOR XXXXXXX X. XXXXXXX
EFFECTIVE February __, 2002 Citizens Banking Corporation
("Corporation") hereby establishes the Supplemental Retirement Benefits Plan for
Xxxxxxx X. Xxxxxxx ("Plan").
1. COVERAGE. The coverage of the Plan shall be limited to Xxxxxxx X.
Xxxxxxx ("Participant").
2. SUPPLEMENTAL RETIREMENT BENEFIT. Participant shall, subject to
paragraph 3, be entitled to the supplemental retirement benefit ("Supplemental
Retirement Benefit") described below:
(a) AMOUNT AT OR AFTER AGE 65. The annual amount of the
Supplemental Retirement Benefit, when expressed in the form of a single life
annuity commencing at age 65, shall be equal to the excess of (i) over (ii),
where--
(i) is 60.0% of the highest average base salary paid
and bonus earned during any consecutive thirty-six months out
of the last sixty months of employment (or, if fewer, the
period Participant has been an employee of the Corporation) by
Corporation, and
(ii) is the sum of Participant's normal retirement
benefit under the Citizens Banking Corporation Pension Plan
for Employees ("Pension Plan") calculated as of his attainment
of age 65, and Participant's Social Security benefit also
calculated as of age 65, in each case without regard to any
changes in either benefit amount that may occur subsequent to
that age due to increases for cost-of-living or other factors.
If Participant's employment continues after age 65, his benefit otherwise
calculated under Section 2(a)(i) will be actuarially adjusted on the same basis
that post-age 65 benefits are adjusted under the Pension Plan or, if no such
adjustment is made under the Pension Plan, on the basis of the most generous
actuarial and other permissible assumptions that may be applied for such
purposes.
(b) AMOUNT AT AGE PRIOR TO AGE 65. If Participant elects early
retirement under the Pension Plan, the annual amount of the Supplemental
Retirement Benefit, when expressed in the form of a single life annuity
commencing at such early retirement date, shall be equal to the excess of (i)
over (ii), where--
(i) is 60.0% of the highest average base salary paid
and bonus earned during any consecutive thirty-six months out
of the last sixty months of employment (or, if fewer, the
period Participant has been an employee of the Corporation) by
Corporation, reduced by 1/3rd of 1.0% for each complete
calendar month that the Participant's retirement date precedes
his 65th birthday, and
(ii) is the sum of Participant's early retirement
benefit under the Pension Plan calculated as of Participant's
early retirement age, and Participant's Social Security
benefit also calculated as of Participant's early retirement
age (or, if later, the earliest age at which Participant is
entitled to receive a Social Security benefit, but with that
Social Security amount reduced by 5/9th of 1.0% for each
complete calendar month that Participant's early retirement
date precedes his first eligibility for such benefit), in each
case without regard to any changes in either benefit amount
that may occur subsequent to such age due to increases for
cost-of-living or other factors.
(c) COMMENCEMENT AND FORM OF BENEFIT. Supplemental Retirement
Benefit payments shall be made in monthly installments at the same time as
normal or early retirement benefits, as the case may be, under the Pension Plan,
but in no event earlier than Participant's attainment of age 61. If Participant
is married at the time Supplemental Retirement Benefits commence hereunder, the
Supplemental Retirement Benefit shall be converted to and paid in the form of a
50% joint and survivor annuity with Participant's spouse as the joint annuitant,
unless Participant validly elects another form of payment for benefits under the
Pension Plan, in which case the Supplemental Retirement Benefit shall be
converted to and payable in the same form as elected under the Pension Plan. In
all events, all forms of payment of the Supplemental Retirement Benefit shall be
computed using the same formulas and actuarial factors set forth in the Pension
Plan for the determination of optional forms of benefits. For purposes of this
paragraph 2, Participant's "spouse" shall be determined in accordance with the
Pension Plan.
3. CONDITIONS. Payment of benefits under the Plan shall be made only
upon receipt of benefits from the Pension Plan. Nevertheless, all benefits
calculated under this Plan will be fully vested (a) upon a Change in Control as
defined in the Change in Control Agreement between the Corporation and the
Participant dated February __, 2002, and (b) after the earlier of the date
Participant is fully vested under the pension Plan or the fifth anniversary of
the date of this Agreement, provided that Participant is an employee of the
Corporation as of such date.
4. SPECIAL DISTRIBUTION. If any taxing authority finally establishes
that the Participant is constructively in receipt of any Plan benefit that has
not actually been distributed and that the Participant is immediately liable for
any income or other taxes (other than any taxes within the scope of the second
sentence of Section 5(e)) that normally would not be imposed until the Plan
benefit is actually paid to the Participant, the Committee (as defined in
Section 7) will immediately distribute to the Participant a lump sum amount
equal to that which the taxing authority has deemed the Participant to have
constructively received. The Participant's ultimate benefit under Section 2(a)
shall be actuarially adjusted to account for any special distributions under
this Section 4.
2
5. COST OF PLAN.
(a) The entire cost of providing benefits under the Plan shall
be paid by Corporation out of its current operating budget, and Corporation's
obligations under the Plan shall be an unfunded and unsecured promise to pay.
Corporation shall not be obligated under any circumstances to fund its
obligations under the Plan.
(b) Notwithstanding paragraph (a), Corporation may, at its
sole option, or by agreement, informally fund its obligations under the Plan in
whole or in part, through a group or individual rabbi or similar trust(s)
established with a banking institution unaffiliated with Corporation; provided,
however, in no event shall such informal funding be construed to create any
trust fund, escrow account or other security for Participant with respect to the
payment of benefits under the Plan, other than as permitted under Internal
Revenue Service and Department of Labor rules and regulations for unfunded
supplemental retirement plans.
(c) If Corporation decides to fund the Plan informally, in
whole or in part, by procuring, as owner, life insurance for its own benefit on
the life of Participant, the form of such insurance and the amounts thereof
shall be the sole decision of Corporation, and in no event shall Participant or
any beneficiary have any incidents of ownership in any such policies of
insurance. If a physical examination is required for Corporation to obtain
insurance for Participant under this paragraph, Participant agrees to undergo
such physical examinations as may be required by the insurance carrier. Such
physical examinations shall be conducted by a physician approved by Corporation,
at the expense of Corporation.
(d) No contributions by Participant are required or permitted
under the Plan.
(e) All taxes on benefits payable to Participant under the
Plan, except for the employer's share of applicable employment taxes, shall be
the obligation of Participant. To the extent that benefits (or their present
value) become taxable to Participant at any time prior to actual payment of
those benefits, such as in the case of the Medicare tax, and to the extent that
Corporation is required to withhold taxes, those taxes shall be withheld from
other compensation payable by Corporation to Participant.
6. LIMITATION OF PARTICIPANT'S RIGHTS.
(a) The Plan shall not be deemed to create a contract of
employment between Corporation and Participant and shall create no right in
Participant to continue in Corporation's employment for any specific period of
time, or to create any other rights in Participant or obligations on the part of
Corporation, except as are set forth herein or in any written employment
contract. Nor shall the Plan restrict the right of Corporation to terminate
Participant, or restrict the right of Participant to terminate his employment,
except as otherwise provided by written employment contract.
3
(b) The rights of Participant or any person claiming through
Participant under the Plan shall be solely those of an unsecured general
creditor of Corporation. Participant, or any person claiming through
Participant, shall have the right to receive from Corporation only those
payments as specified herein. Participant agrees that he or any person claiming
through him shall have no rights or interests in any asset of Corporation.
(c) Except to the extent provided by paragraph 5(b) and as
permitted by applicable tax law, no asset used or acquired by Corporation in
connection with the liabilities it has assumed under the Plan shall be deemed to
be held under any trust for the benefit of Participant. Nor shall it be
considered security for the performance of the obligations of Corporation,
except as provided by separate agreement and as permitted under Internal Revenue
Service and Department of Labor rules and regulations for unfounded supplemental
retirement plans.
7. PLAN ADMINISTRATOR AND CLAIMS PROCEDURE.
(a) The Plan Administrator and Named Fiduciary of the Plan for
purposes of the Employee Retirement Income Security Act of 1974, as amended,
shall be the Compensation and Benefits Committee of Corporation's Board of
Directors ("Committee"), whose business address is c/o Citizens Banking
Corporation, 000 X. Xxxxxxx Xx., Xxxxx, Xxxxxxxx 00000-0000, and whose telephone
number is (000) 000-0000. Corporation's Board of Directors shall have the right
to change the Plan Administrator and Named Fiduciary of the Plan at any time,
and to change the address and telephone number of the same. Corporation shall
give Participant written notice of any such change in the Plan Administrator and
Named Fiduciary or in the address or telephone number of the same.
(b) Participant, or other person claiming through Participant,
must file a written claim for benefits with the Plan Administrator as a
prerequisite to the payment of benefits under the Plan. Any denial by the Plan
Administrator of a claim for benefits under the Plan by Participant or other
person (collectively referred to as "claimant") shall be stated in writing by
the Plan Administrator and delivered or mailed to the claimant within 90 days
after receipt of the claim unless special circumstances require an extension of
time for processing the claim. If such an extension of time is required, written
notice of the extension shall be furnished to the claimant prior to the
termination of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of the initial period. Any notice of
denial shall set forth the specific reasons for the denial, specific reference
to pertinent provisions of the Plan upon which the denial is based, a
description of any additional material or information necessary for the claimant
to perfect his claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures under the Plan,
written to the best of the Plan Administrator's ability in a manner that may be
understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Plan Administrator may request, within 90 days following
the date of such denial, in a writing addressed to the Plan Administrator, a
review of such denial. The claimant shall be
4
entitled to submit such issues or comments in writing or otherwise, as he shall
consider relevant to a determination of his claim, and may include a request for
a hearing in person before the Plan Administrator. Prior to submitting his
request, the claimant shall be entitled to review such documents as the Plan
Administrator shall agree are pertinent to his claim. The claimant may, at all
stages of review, be represented by counsel, legal or otherwise, of his choice,
provided that the fees and expenses of such counsel shall be borne by the
claimant. All requests for review shall be promptly resolved. The Plan
Administrator's decision with respect to any such review shall be set forth in
writing and shall be mailed to the claimant not later than 60 days following
receipt by the Plan Administrator of the claimant's request unless special
circumstances, such as the need to hold a hearing, require an extension of time
for processing, in which case the Plan Administrator's decision shall be so
mailed not later than 120 days after receipt of such request. In no decision or
review is rendered within this 120 day period, the claimant's appeal shall be
deemed denied and the Plan Administrator's original denial of the claim
affirmed.
(d) Any claim under this claims procedure must be submitted
within twelve months from the earlier of (1) the date on which the claimant
learned of facts sufficient to enable him to formulate such claim or (2) the
date on which the claimant reasonably should have been expected to learn of
facts sufficient to enable him to formulate such claim. Also, the Corporation
may not reduce any benefit under this Plan (including a reduction attributable
to an increase in the amount payable under Section 2(a)(ii), the flush language
following Section 2(a)(ii) or 2(b)(ii)) unless it gives Participant written
notice of that intent within 12 months from the date benefit become payable
under this Plan. If the notice described in the preceding sentence is given, the
Participant will be entitled to dispute that reduction under the procedures
described in this Section 6 but based on time periods running from the date the
written notice is given and whether or not that special claims period overlaps
an existing claims period.
(e) The decision of the Plan Administrator upon review of any
claim shall be binding upon the claimant, his heirs and assigns and the
Corporation, and all other persons claiming by, through or under him.
(f) The timely filing of a request for review in the manner
specified above shall be a condition precedent to obtaining review before the
Plan Administrator, and the Plan Administrator shall have no jurisdiction to
entertain a request for review unless so filed. A failure to file a claim and a
request for review in the manner and within the time limits set forth above
shall be deemed a failure by the aggrieved party to exhaust his administrative
remedies and shall constitute a waiver of the rights sought to be established
under the Plan.
(g) Any suit brought to contest or set aside a decision of the
Plan Administrator shall be filed in a court of competent jurisdiction within
one year from the date of receipt of written notice of the Plan Administrator's
final decision or from the date the appeal is deemed denied, if later. No legal
action to recover Plan benefits or to enforce or clarify rights under the Plan
shall be commenced until the claimant first shall have exhausted the claims and
review procedures available to him hereunder.
5
(h) Any claim filed under the Pension Plan relating to any
matter that may affect benefits under this Plan shall be treated as a claim
filed under this section.
7. INDEPENDENCE OF BENEFITS. Except as otherwise provided herein, the
benefits payable under the Plan shall be independent of, and in addition to, any
other benefits or compensation, whether by salary, or bonus or otherwise,
payable under any employment agreements that now exist or may hereafter exist
from time to time between Corporation and Participant. The Plan does not involve
a reduction in salary or foregoing of an increase in future salary by
Participant. Nor does the Plan in any way affect or reduce the existing and
future compensation and other benefits of Participant.
8. NON-ALIENATION OF BENEFITS. Except in so far as this provision may
be contrary to applicable law, no sale, transfer, alienation, assignment,
pledge, collateralization, or attachment of any benefits under the Plan shall be
valid.
9. RIGHT TO AMEND OR TERMINATE PLAN.
(a) Corporation reserves the right to amend the Plan in any
manner, and Corporation reserves the right to terminate the Plan at any time in
whole or part. Amendment or termination of the Plan shall be accomplished by
resolution of Corporation's Board of Directors.
(b) Notwithstanding paragraph (a), no such amendment or
termination shall be effective without the explicit written consent of the
Participant (or beneficiary, if applicable).
10. CONSTRUCTION AND GOVERNING LAW.
(a) Wherever any words are used in the Plan in the masculine
gender, they shall be construed as though they also were used in the feminine
gender in all cases where they would so apply, and wherever any words are used
in the Plan in the singular form they shall be construed as though they also
were used in the plural form in all cases where they would so apply, and vice
versa.
(b) Headings of paragraphs herein are inserted for convenience
of reference. They constitute no part of the Plan and are not to be considered
in the construction of the Plan.
(c) If any provisions of the Plan shall be for any reason
invalid or unenforceable, the remaining provisions nevertheless shall be carried
into effect.
(d) Except in the case of preemption by applicable federal
law, the Plan shall be governed by the laws of the State of Michigan.
(e) This Plan constitutes the entire arrangement between
Corporation and Participant with respect to the subject matter addressed herein.
This Plan amends, restates, supercedes and replaces the Prior Plan in its
entirety.
6
It is intended that the Plan shall be unfunded and maintained
by Corporation primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees, so that the Plan
is exempt from the requirements of Parts 2, 3 and 4 of the Employee Retirement
Income Security Act of 1974, as amended. All provisions shall be interpreted in
accordance with such intentions.
Citizens Banking Corporation has caused the Plan, as amended
and restated herein, to be executed on February , 2002.
CITIZENS BANKING CORPORATION
By:
-------------------------------------
7
EXHIBIT F
CHANGE IN CONTROL AGREEMENT
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is made by and between
Citizens Banking Corporation, a Michigan corporation ("Corporation"), and
Xxxxxxx X. Xxxxxxx ("Executive").
The Corporation anticipates the valuable services that the Executive
will render on behalf of the Corporation and its subsidiary banks and is
desirous of having some assurance that the Executive will continue as an
employee and that, in the event of a possible Change in Control of the
Corporation, the Executive will be able to perform his duties without undue
concern for the Executive's personal financial well-being; and
The Executive is willing to serve as an employee of the Corporation but
desires assurance that in the event of a Change in Control of the Corporation,
he will continue to have the responsibility and status he has earned.
Accordingly, the Corporation and the Executive agree as follows:
1. In order to protect the Executive against the possible consequences
of a Change in Control of the Corporation, as defined in paragraph 2 of this
Agreement, and thereby to induce the Executive to serve as an officer of the
Corporation or a subsidiary bank the Corporation agrees that if (a) there is
such a Change in Control of the Corporation and (b) the Executive's employment
with the Corporation or a subsidiary bank is terminated under the circumstances
described in paragraph 3 of this Agreement, then:
A. The Corporation shall pay the Executive a lump sum amount in cash
equal to the sum of (i) three times the Executive's annual base salary
immediately prior to the Change in Control (or if higher, the annual base salary
on the date the Executive's employment is terminated) and (ii) three times the
greater of (x) the anticipated bonus amount under the Citizens Banking
Corporation Management Incentive Plan to be earned in accordance with the plan
in the year in which the termination occurs or (y) the highest bonus paid to the
Executive in the last three full calendar years of such employment. The
applicable amount shall be payable within 60 days following the date of the
Executive's termination of employment.
B. The Executive shall continue to be covered, at the Corporation's
cost, by the medical, dental and life insurance benefit plans that are in effect
on the date of his termination and that cover executive employees, for a period
of thirty-six (36) months after his termination of employment; provided,
however, that if during such time period the Executive should enter into other
employment providing comparable benefits, his participation in such plans of the
Corporation shall cease to the extent of his coverage by his new employer's
plans. Any such non-cash benefit that is tied to compensation shall be based on
the Executive's annual compensation averaged over the same period as applicable
under paragraph A of this Agreement.
C. If the Executive has been furnished with an automobile for business
or personal use at the Corporation's expense within the previous 12 months prior
to the Change in Control, then the Corporation shall offer that automobile (or
one of comparable value) for sale to the Executive at a price equal to the
residual lease value or so-called "book value" in the case of a vehicle owned by
the Corporation. Similarly, if the Executive was furnished with a club
membership, that membership will be transferred by the Corporation to the
Executive at no cost to the Executive, who immediately following the transfer
shall become subject to monthly dues charges of the club.
D. All stock options and restricted stock previously granted by the
Corporation to the Executive, whether or not then exercisable, shall become
immediately vested and exercisable.
E. For a period of one year following termination of the Executive's
employment, the Executive shall be entitled to outplacement services provided by
an outplacement service provider designated by the Corporation. The cost of
providing the outplacement services shall be borne solely by the Corporation,
and shall be equal to the lesser of (i) 10% of the Executive's annual base
salary immediately prior to the Change in Control (or, if higher, the
Executive's annual base salary as of the date of termination of the Executive's
employment) and (ii) $20,000.
F. If the payment of any of the foregoing amounts or benefits (when
added to any other payments or benefits provided to the Executive in the nature
of compensation) will result in the payment of an excess parachute payment as
that term is defined in Section 280G of the Internal Revenue Code of 1986
("Code"), then in such event, the Corporation shall pay the Executive an
additional amount for each calendar year in which an excess parachute payment is
received by the Executive (the "Gross-Up Payment"). The Gross-Up Payment is
intended to cover the Executive's liability for any parachute tax under Code
Section 4999 on such excess parachute payment, as well as federal and state
income taxes and parachute tax on the additional amount, and shall be computed
as follows:
A=Pt/(1 - T - t), where -
A is the additional amount for any calendar year;
P is the amount of the excess parachute payment for the
calendar year in excess of the allocable base amount
as defined in Code Section 28OG(b)(3);
T is the effective marginal rate of federal and state
income tax applicable to the Executive for the
calendar year; and
T is the rate of parachute tax under Code Section 4999.
The effective marginal rate of federal and state income tax
shall be computed as follows:
2
T = F + S(l - 0.8F) + m, where -
F is the highest marginal rate of federal income tax
applicable to the Executive for the calendar year;
and
S is the highest aggregate marginal rate of state
income tax applicable to the Executive for the
calendar year in the state or states and
municipalities to which he is then required to pay
income taxes as a result of his employment by the
Corporation; and
m is the employee's portion of the Medicare tax,
currently 1.45%.
Payment of the Gross-Up Payment shall be made to the Executive
on or before December 31 of each calendar year for which an
excess parachute payment is received by the Executive.
G. Subject to the provisions of paragraph G, all determinations
required to be made under these paragraphs E, F and G, 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 Ernst & Young, LLP or such other certified public accounting firm reasonably
acceptable to the Corporation as may be designated by the Executive (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Corporation and the Executive within 15 business days of the receipt of
notice from the Executive that there has been an excess parachute payment, or
such earlier time as is requested by the Corporation. All fees and expenses of
the Accounting Firm shall be borne solely by the Corporation. Any determination
by the Accounting Firm shall be binding upon the Corporation 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 Corporation
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Corporation exhausts its
remedies pursuant to paragraph G 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 Corporation to or for the benefit of the Executive.
H. The Executive shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Corporation 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 Corporation 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 Corporation (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Corporation 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 Corporation any information reasonably requested
by the Corporation relating to such claim, (ii) take such action in connection
with contesting such claim
3
as the Corporation 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 Corporation, (iii)
cooperate with the Corporation in good faith in order effectively to contest
such claim, and (iv) permit the Corporation to participate in any proceedings
relating to such claim; provided, however, that the Corporation shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subparagraph H, the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and 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
Corporation shall determine; provided, however, that if the Corporation directs
the Executive to pay such claim and xxx for a refund, the Corporation shall
advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax and income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance calculated as described in subparagraph F of
this section; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Corporation's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. If, after the receipt by the Executive of
an amount advanced by the Corporation pursuant to this subparagraph H, the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Corporation's complying with the requirements of
this subparagraph H) promptly pay to the Corporation the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to this subparagraph H, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Corporation 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 such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
2. For purposes of this Agreement, a "Change in Control" shall mean:
A. The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule l3d-3 promulgated under the
4
Exchange Act) of 20% or more of either (1) the then outstanding shares of common
stock of the Corporation (the "Outstanding Corporation Common Stock") or (2) the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that for
purposes of this subparagraph A, the following acquisitions shall not constitute
a Change in Control: (i) any acquisition directly from the Corporation, (H) any
acquisition by the Corporation, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or.(iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1), (2) and
(3) of subparagraph C of this paragraph 2; or
B. Individuals who, as of the date hereof, constitute the Board of
Directors of the Corporation (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (either by a specific vote or by approval of the proxy statement
of the Corporation in which such person is named as a nominee for director,
without written objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than the Board of Directors of the
Corporation; or
C. Consummation of a reorganization, merger, share exchange or
consolidation or sale of other disposition of all or substantially all of the
assets of the Corporation (a "Business Combination"), in each case, unless,
following such Business Combination: (1) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 65% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be; (2) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Corporation or such corporation resulting from
the Business Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination; and (3) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were
5
members of the Incumbent Board immediately prior to the time of the execution of
the initial agreement, or of the action of the Board of Directors of the
Corporation, providing for such Business Combination; or
D. Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
3. Termination of the Executive's employment shall mean the Executive's
termination of employment at any time within 3 months prior to, on the date of,
or within 24 months after a Change in Control of the Corporation as defined in
paragraph 2 of this Agreement either by (a) involuntary dismissal by the
Corporation; or (b) the Executive's Constructive Discharge as defined in (and
subject to the procedures described therein) Section 5(d) of the Employment
Agreement.
4. The specific arrangements referred to above are not intended to
exclude the Executive's participation in other benefits available to executive
personnel of the Corporation generally or to preclude other compensation or
benefits as may be authorized by the Corporation's Board of Directors from time
to time.
5. As partial consideration for the above, the Executive agrees not to
disclose any confidential information about the Corporation and its operation to
which the Executive was privy during the course of his employment by the
Corporation. Further, the Executive agrees not to accept employment or consult
for or otherwise assist any competitor of the Corporation for a period of 24
months following his termination of employment. For purposes of the foregoing,
"competitor" means any financial institution that conducts business from any
location within 50 miles of any location at which the Corporation or any
subsidiary bank had an office on the day immediately prior to the day on which
the Change of Control of the Corporation occurred.
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6. This Agreement shall be binding upon and shall inure to the benefit
of the respective successors, assigns, legal representatives and heirs to the
parties.
7. Any payment or delivery required under this agreement shall be
subject to all requirements of the law with regard to withholding, filing,
making of reports and the like, and the Corporation shall use its best efforts
to satisfy promptly all such requirements.
8. Notwithstanding anything contained herein to the contrary, this
Agreement shall be terminated and no benefits to the Executive shall be payable
if, at any time, the Executive shall resign voluntarily (other than as provided
in Section 3) , retire at or after normal retirement age, become incapacitated,
voluntarily take another position requiring a substantial portion of his time,
or die. This Agreement also shall terminate upon termination for cause of the
Executive's employment as an officer of the Corporation or any subsidiary bank
by the Incumbent Board. For purposes of the foregoing, "Cause" has the meaning
given in the Employment Agreement between the Corporation and Executive dated
February __, 2002.
9. Any and all disputes, controversies or claims arising out of or in
connection with or relating to this Agreement or any breach or alleged breach
thereof shall, upon the request of either party, be submitted to and settled by
arbitration in the State of Michigan pursuant to the Voluntary Labor Arbitration
Rules, then in effect, of the American Arbitration Association (or at any other
place or under any other form of arbitration mutually acceptable to the parties
involved). The parties hereto specifically agree to arbitrate with the other
party in a proceeding with regard to all issues and disputes, and to permit
pre-hearing discovery in the time and manner provided by the then applicable
Federal Rules of Civil Procedure. This agreement to arbitrate shall be
specifically enforceable under the prevailing arbitration law. Notice of the
demand for arbitration shall be filed, in writing, with the other party to this
Agreement and with the American Arbitration Association. The demand for
arbitration shall be made within a reasonable time after the claim, dispute, or
other matter in question arose where the party asserting the claim should
reasonably have been aware of the same, but in no event later than the
applicable Michigan or federal statute of limitations. The arbitrator shall have
no power to add to, subtract from, or alter the terms of this Agreement, and
shall render a written decision setting forth findings and conclusions only as
to the claims or disputes at issue. Any award by the arbitrator shall be final
and conclusive upon the parties, and a judgement thereon may be entered in the
highest court for the forum, state or federal, having jurisdiction. All expenses
of the arbitration process shall be borne by the Corporation. The Corporation
shall reimburse the Executive for the reasonable fees of legal counsel as
incurred in connection with arbitrating the enforcement of any of the
Executive's rights under this Agreement. However, in no event shall the
Executive be entitled to retain any fees so reimbursed if the claim brought by
the Executive against the Corporation is in the arbitrator's sole determination
frivolous or was brought in bad faith, and the Corporation will be entitled to
seek repayment from the Executive for such fees after such determination by the
arbitrator.
10. The invalidity or unenforceability of any provision of this
Agreement shall not affect the enforceability or validity of any other provision
hereof.
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11. This Agreement constitutes the entire agreement of the parties with
respect to the subject matter addressed in this Agreement. This Agreement may be
amended only in a written document signed by both the Corporation and the
Executive.
12. This Agreement shall be governed by the laws of the State of
Michigan. This Agreement has been executed by the parties on and effective as of
, 2002.
CITIZENS BANKING CORPORATION
By:
-------------------------------------
Date: February , 2002
XXXXXXX X. XXXXXXX
By:
-------------------------------------
Date: February , 2002
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EXHIBIT G
INDEMNIFICATION AGREEMENT
DIRECTOR INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of the
_______ day of __________________ , _______, by and between CITIZENS BANKING
CORPORATION, a bank holding company organized under the laws of the State of
Michigan (the "Company"), and ________________________________ (the "Director").
W I T N E S S E T H
WHEREAS, it is essential to the Company to retain and attract as
directors the most capable persons available; and
WHEREAS, the substantial increase in corporate litigation subjects
directors to expensive litigation risks; and
WHEREAS, it is reasonable, prudent and necessary for the Company to
contractually obligate itself to indemnify directors to the fullest extent
permitted by the Michigan Business Corporation Act so that capable persons will
serve or continue to serve the Company; and
WHEREAS, the Director is willing to serve, continue to serve and to
take on additional service for or on behalf of the Company on the condition that
the Director be so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and the Director do hereby agree as follows:
1. Definitions. The following terms as used in this Agreement shall
have the following respective meanings:
"Expenses" means all expenses, liabilities and losses, including
attorneys' fees, judgments, fines, and amounts paid or to be paid in settlement
of a Proceeding.
"Proceeding" means any action, suit or proceeding (or part thereof),
whether civil, criminal, administrative or investigative.
2. Services by Director. The Director agrees to serve as a director of
the Company for so long as the Director is duly elected or appointed or until
the tender of the Director's written resignation.
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3. Indemnification. Subject to the terms and conditions of this
Agreement, the Company shall indemnify and hold harmless the Director to the
fullest extent authorized by the Michigan Business Corporation Act, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such change), against all Expenses reasonably incurred or suffered by the
Director in connection with any Proceeding in which the Director is or was a
party or is threatened to be made a party or is involved by reason of the fact
that the Director is or was a director, officer or employee of the Company or is
or was serving at the request of the Company as a director, officer, partner,
trustee, administrator, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of the Proceeding is
alleged action in an official capacity as a director, officer, partner, trustee,
administrator, employee or agent or in any other capacity while serving as a
director, officer, partner, trustee, administrator, employee or agent; provided
however, that, except as provided in Section 5 hereof with respect to
Proceedings to enforce rights to indemnification, the Company shall indemnify
the Director seeking indemnification in connection with a Proceeding (or part
thereof) initiated by the Director only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Company.
4. Expenses. The right to indemnification conferred under Section 3
hereof shall include the right to be paid by the Company Expenses incurred in
defending any such Proceeding in advance of its final disposition; provided
however, that the payment of such Expenses incurred by the Director in advance
of the final disposition of a Proceeding shall be made only upon (i) delivery to
the Company of (A) a written affirmation by the Director of the Director's good
faith belief that the Director has met the standard of conduct set forth in
Section 561 of the Michigan Business Corporation Act, and (B) an undertaking, by
or on behalf of the Director, to repay all advances if it shall ultimately be
determined by final judicial decision that the Director did not meet such
standard of conduct and (ii) a determination that the facts then known to those
making the determination to advance payment of such Expenses would not preclude
indemnification under the Michigan Business Corporation Act.
5. Right of the Director to Bring Suit. (a) If a claim under Section 3
hereof is not paid in full by the Company within thirty (30) days after notice
to the Company as provided in Section 10 hereof, the Director may at any time
thereafter bring suit against the Company in any court of competent jurisdiction
to recover the unpaid amount of the claim, and if successful in whole or in
part, the Director shall be entitled to be paid also the expense of prosecuting
such claim.
(b) It shall be a defense to any such action seeking indemnification
under Section 3 hereof (other than an action brought to enforce a claim for
Expenses incurred in defending any Proceeding in advance of its final
disposition where the required affirmation and undertaking have been tendered to
the Company in accordance with Section 4 hereof) that the Director has not met
the applicable standard of conduct set forth in the Michigan Business
Corporation Act. Further, in any action brought by the Company to recover
advances the Company shall be entitled to recover such advances if the Director
has not met the applicable standard of conduct set forth in the Michigan
Business Corporation Act. Neither the failure of the Company (including its
Board of Directors, independent legal counsel, or its shareholders) to have made
a determination prior to the
2
commencement of such action that indemnification of the Director is proper in
the circumstances because the Director has met the applicable standard of
conduct set forth in the Michigan Business Corporation Act, nor an actual
determination by the Company (including its Board of Directors, independent
legal counsel, or its shareholders) that the Director has not met such
applicable standard of conduct, shall be a defense to an action brought by the
Director or create a presumption that the Director has not met the applicable
standard of conduct. In any action brought by the Director to enforce a right
hereunder, or by the Company to recover payments by the Company of advances, the
burden of proof shall be on the Company.
6. Assumption of Claim. The Company shall be entitled, but not
obligated, to assume the defense of any Proceeding with respect to which
indemnification is sought, with counsel satisfactory to the Director, upon the
delivery to the Director of written notice of the Company's election to do so.
After delivery of such notice, the Company will not be liable to the Director
under this Agreement for any expenses (including legal expenses) subsequently
incurred by the Director in defending such Proceeding; provided however, that
the Director shall have the right to employ his or her own counsel in any
Proceeding but the fees and expenses of such counsel incurred after delivery of
notice from the Company of its assumption of such defense shall be at the
Director's expense; and provided however that if (i) the employment of such
counsel by the Director has been previously authorized by the Company, (ii) the
Director shall have reasonably concluded that there may be a conflict of
interest between the Company and the Director in the conduct of any such defense
or (iii) the Company shall not, in fact, have employed counsel to assume the
defense of such action, the fees and expenses of such counsel shall be at the
expense of the Company.
7. Establishment of Trust. In the event of a Potential Change in
Control of the Company, as hereinafter defined, the Company shall, upon written
request by the Director, create a trust for the benefit of the Director and from
time to time upon written request of the Director shall fund such trust in an
amount sufficient to satisfy any and all Expenses that may properly be subject
to indemnification under Section 3 above anticipated at the time of each such
request. The amount or amounts to be deposited in the trust pursuant to this
funding obligation shall be determined by a majority vote of a quorum consisting
of directors who are not parties to such Proceeding, if any, the executive
committee of the Board of Directors or the President of the Corporation. If all
such individuals are parties to the Proceeding, if any, the amount or amounts to
be deposited in the trust shall be determined by independent legal counsel. The
terms of the trust shall provide that upon a Change in Control (i) the trust
shall not be revoked or the principal thereof invaded, without the written
consent of the Director; (ii) the trustee shall advance, within two (2) business
days of a request by the Director, any amount properly payable to the director
under Section 3 of this Agreement; (iii) the trust shall continue to be funded
by the Company in accordance with the funding obligation set forth above; (iv)
the trustee shall promptly pay to the Director all amounts for which the
Director shall be entitled to indemnification pursuant to this Agreement or
otherwise; and (v) all expended funds in such trust shall revert to the Company
upon a final determination by a court of competent jurisdiction that the
Director has been fully indemnified under the terms of this Agreement. The
trustee shall be chosen by the Director and shall be a national or state
chartered commercial bank. Nothing in this Section shall relieve the Company of
any of its obligations under this Agreement. At the time of each draw from the
trust fund, the Director shall provide the trustee with a written request
providing that the Director undertakes to repay such amount to the extent that
3
it is ultimately determined that the Director is not entitled to such
indemnification. Any funds, including interest or investment earnings thereon,
remaining in the trust shall revert and be paid to the Company if (i) a Change
in Control has not occurred and (ii) the Board of Directors, the executive
committee of the Board of Directors or the President of the Company determines
that the circumstances giving rise to that particular funding of the trust no
longer exists.
For purposes of this Section and Section 9 hereof, a "Change in
Control" shall mean a change in control 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, provided that, without
limitation, such a change in control shall be deemed to have occurred if (i)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company and any new
director whose election by the Board of Directors or nomination for election by
the Company's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; (ii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80% of the
total voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation; or
(iii) the shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
For purposes of this Section, a "Potential Change in Control" shall be
deemed to have occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which once consummated would constitute a Change
in Control; or (iii) the Board of Directors adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
8. Non-Exclusivity of Rights. The rights provided hereunder shall not
be deemed exclusive of any other rights which the Director may be entitled under
any statute, agreement, provision of the Articles of Incorporation or Bylaws of
the Company, vote of shareholders or disinterested directors of the Company, or
otherwise, and such rights shall continue after the Director ceases to serve the
Company as a director.
9. Settlement. Unless and until a Change in Control has occurred, the
Company shall have no obligation to indemnify the Director under this Agreement
for any amounts paid in settlement of any Proceeding effected without the
Company's prior written consent. The Company shall not settle any claim in any
manner which would impose any obligation on the Director without the Director's
written consent. Neither the Company nor the Director shall unreasonably
withhold their consent to any proposed settlement.
4
10. Notice of Claim. The Director, as a condition precedent to his
right to be indemnified under this Agreement, shall give to the Company notice
in writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under the Agreement. Notice to the Company
shall be directed to CITIZENS BANKING CORPORATION, Attention: President (or such
other address as the Company shall designate in writing to the Director). Notice
shall be deemed received if sent by prepaid mail properly addressed, the date of
such notice being the date postmarked. In addition, the Director shall give the
Company such information and cooperation as it may reasonably request.
11. Severability. In the event that any provision of this Agreement is
determined by a court to require the Company to do or to fail to do an act which
is in violation of applicable law, such provision shall be limited or modified
in its application to the minimum extent necessary to avoid a violation of law,
and, as so limited or modified, such provision and the balance of this Agreement
shall be enforceable in accordance with their terms.
12. Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Michigan.
13. Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law) and (ii) shall be binding on and inure to the benefit of the
heirs, personal representatives, executors and administrators of the Director.
14. Amendment. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless made in writing and signed by each
of the parties hereto.
IN WITNESS WHEREOF, the Company and the Director have executed this
Agreement as of the day and year first above written.
CITIZENS BANKING CORPORATION
By:
-------------------------------------
DIRECTOR
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5
