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EXHIBIT 10(r)
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 10th day of March,
2004 by and between Republic Bancorp Inc.,
a Michigan corporation (the
"Company"), and Barry J. Eckhold
("Executive").
W I T N E S S E T H
WHEREAS, the Company considers the establishment and
maintenance of a sound and vital management
to be essential to protecting and
enhancing the best interests of the Company
and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many
publicly held corporations, the possibility
of a change in control may arise and
that such possibility may result in the
departure or distraction of management
personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Company and the Executive have previously entered
into a Management Retention Agreement;
and
WHEREAS, the Board (as defined in Section 1) has determined
that the terms of the Management Retention
Agreement are inadequate to ensure
Executive's continued and undivided
dedication to his duties in the event of any
threat or occurrence of a Change in Control
(as defined in Section 1) of the
Company; and
WHEREAS, the Board has determined that it is in the best
interests of the Company and its
stockholders to secure Executive's continued
services and to ensure Executive's
continued and undivided dedication to his
duties in the event of any threat or
occurrence of a Change in Control of the
Company; and
WHEREAS, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements herein
contained, the Company and Executive
hereby agree as follows:
1.
Definitions. As used in this Agreement, the following
terms shall have the respective meanings
set forth below:
(a) "Board"
means the Board of Directors of the
Company.
(b) "Bonus
Amount" means the average of the
annual incentive bonus earned by Executive
from the Company (or its affiliates)
during the last three (3) completed fiscal
years of the Company immediately
preceding Executive's Date of
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Termination (annualized in the event
Executive was not employed by the Company
(or its affiliates) for the whole of any
such fiscal year).
(c) "Cause"
means (i) the willful and continued
failure of Executive to perform
substantially his duties with the Company (other
than any such failure resulting from
Executive's incapacity due to physical or
mental illness or any such failure
subsequent to Executive being delivered a
Notice of Termination without Cause by the
Company or delivering a Notice of
Termination for Good Reason to the Company)
after a written demand for
substantial performance is delivered to
Executive by the Board which
specifically identifies the manner in which
the Board believes that Executive
has not substantially performed Executive's
duties and Executive has not cured
to the satisfaction of the Board any such
failure that is capable of being cured
in all material respects within thirty (30)
days of receiving such written
demand; or (ii) the willful engaging by
Executive in illegal conduct or gross
misconduct which is demonstrably and
materially injurious to the Company,
monetarily or otherwise, including but not
limited to embezzlement, theft, fraud
or other felony involving the Company or
its assets. For purpose of the
preceding sentence, no act or failure to
act by Executive shall be considered
"willful" unless done or omitted to be done
by Executive in bad faith and
without reasonable belief that Executive's
action or omission was in the best
interests of the Company. Any act, or
failure to act, based upon authority given
pursuant to instructions from the Board or
from a more senior officer of the
Company shall be conclusively presumed to
be done, or omitted to be done, by
Executive in good faith and in the best
interests of the Company. Cause shall
not exist unless and until (a) the Company
establishes to the Board by clear and
convincing evidence that Cause exists, and
(b) the Company has delivered to
Executive a copy of a resolution duly
adopted by three-quarters (3/4) of the
entire Board (excluding Executive if
Executive is a Board member) at a meeting
of the Board called and held for such
purpose (after reasonable notice to
Executive and an opportunity for Executive,
together with counsel, to be heard
before the Board), finding that in the good
faith opinion of the Board an event
set forth in clauses (i) or (ii) has
occurred and specifying the particulars
thereof in detail. The Company must notify
Executive of any event constituting
Cause within thirty (30) days following the
Company's knowledge of its existence
or such event shall not constitute Cause
under this Agreement.
(d) "Change in
Control" means the occurrence of
any one of the following events:
(i)
individuals who, on the date of
this Agreement, constitute the Board (the "Incumbent Directors")
cease
for any reason to constitute at least a majority of the Board,
provided
that any person becoming a director subsequent to the date of
this
Agreement, whose election or nomination for election was approved
by a
vote of at least two-thirds of the Incumbent Directors then on
the
Board (either by a specific vote or by approval of the proxy
statement
of the Company in which such person is named as a nominee for
director,
without written objection to such nomination) shall be an
Incumbent
Director; provided, however, that no individual initially elected
or
nominated as a director of the Company as a result of an actual
or
threatened election contest with
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respect to directors or as a result of any other actual or
threatened
solicitation of proxies (or consents) by or on behalf of any
person
other than the Board shall be deemed to be an Incumbent
Director;
(ii)
any "Person" (as such term is
defined in Section 3(a)(9) of the Securities Exchange Act of 1934
(the
"Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of
the
Exchange Act) is or becomes a "beneficial owner" (as defined in
Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of
the Company representing 50% or more of the combined voting power
of
the Company's then outstanding securities eligible to vote for
the
election of the Board (the "Company Voting Securities");
provided,
however, that the event described in this paragraph (ii) shall not
be
deemed to be a Change in Control by virtue of any of the
following
acquisitions: (A) by the Company, (B) by any employee benefit plan
(or
related trust) sponsored or maintained by the Company, (C) by
any
underwriter temporarily holding securities pursuant to an offering
of
such securities, (D) pursuant to a Non-Qualifying Transaction
(as
defined in paragraph (iii)), or (E) pursuant to any acquisition
by
Executive or any group of persons including Executive (or any
entity
controlled by Executive or any group of persons including
Executive);
(iii) the
consummation of a merger,
consolidation, statutory share exchange or similar form of
corporate
transaction involving the Company that requires the approval of
the
Company's stockholders, whether for such transaction or the
issuance of
securities in the transaction (a "Business Combination"),
unless
immediately following such Business Combination: (A) more than 50%
of
the total voting power of (x) the corporation resulting from
such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or
indirectly
has beneficial
ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that
were
outstanding immediately prior to such Business Combination (or,
if
applicable, is represented by shares into which such Company
Voting
Securities were converted pursuant to such Business Combination),
and
such voting power among the holders thereof is in substantially
the
same proportion as the voting power of such Company Voting
Securities
among the holders thereof immediately prior to the Business
Combination, (B) no person (other than any employee benefit plan
(or
related trust) sponsored or maintained by the Surviving Corporation
or
the Parent Corporation), is or becomes the beneficial owner,
directly
or indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent
Corporation (or, if there is no Parent Corporation, the
Surviving
Corporation) and (C) at least a majority of the members of the
board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation
of
the Business Combination were Incumbent Directors at the time of
the
Board's approval of the execution of the initial agreement
providing
for such Business Combination (any Business Combination which
satisfies
all of the criteria
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specified in (A), (B) and (C) above shall be deemed to be a
"Non-Qualifying Transaction);
(iv)
the consummation of a sale of all
or substantially all of the Company's assets; or
(v) the
stockholders of the Company
approve a plan of complete liquidation or dissolution of the
Company.
Notwithstanding the foregoing, a Change in Control of the
Company shall not be deemed to occur solely
because any person acquires
beneficial ownership of more than 50% of
the Company Voting Securities as a
result of the acquisition of Company Voting
Securities by the Company which
reduces the number of Company Voting
Securities outstanding; provided, that if
after such acquisition by the Company such
person becomes the beneficial owner
of additional Company Voting Securities
that increases the percentage of
outstanding Company Voting Securities
beneficially owned by such person, a
Change in Control of the Company shall then
occur.
(e) "Date of
Termination" means (1) the
effective date on which Executive's
employment by the Company terminates as
specified in a prior written notice by the
Company or Executive, as the case may
be, to the other, delivered pursuant to
Section 12(b) or (2) if Executive's
employment by the Company terminates by
reason of death, the date of death of
Executive.
(f)
"Disability" means termination of
Executive's employment by the Company due
to Executive's absence from
Executive's duties with the Company on a
full-time basis for at least one
hundred eighty (180) consecutive days as a
result of Executive's incapacity due
to physical or mental illness; provided,
that, the Company may not terminate the
Executive's employment as a result of
Disability unless it has first given the
Executive notice of such termination and,
within thirty (30) days after such
notice is given, the Executive has not
returned to the full-time performance of
the Executive's duties.
(g) "Good
Reason" means, without Executive's
express written consent, the occurrence of
any of the following events after a
Change in Control:
(i) (A) any
change in the duties or
responsibilities (including reporting responsibilities) of
Executive
that is inconsistent in any material and adverse respect with
Executive's position(s), duties, responsibilities or status with
the
Company immediately prior to such Change in Control or (B) a
material
and adverse change in Executive's titles or offices (including,
if
applicable, membership or position on the Board) with the Company
as in
effect immediately prior to such Change in Control;
(ii)
a reduction by the Company in
Executive's rate of annual base salary or annual target bonus
opportunity (including any material and adverse change in the
formula
for such annual bonus target) as in effect
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immediately prior to such Change in Control or as the same may
be
increased from time to time thereafter, or the Company's failure to
pay
any such amounts when due;
(iii) any
requirement of the Company that
Executive be based anywhere more than thirty-five (35) miles from
the
office where Executive is located at the time of the Change in
Control,
if such relocation increases Executive's commute by more than
twenty
(20) miles;
(iv)
the failure of the Company to (A)
continue in effect any employee benefit plan, compensation
plan,
welfare benefit plan or material fringe benefit plan in which
Executive
is participating immediately prior to such Change in Control or
the
taking of any action by the Company which would adversely
affect
Executive's participation in or reduce Executive's benefits under
any
such plan, unless Executive is permitted to participate in other
plans
providing Executive
with substantially equivalent benefits in the
aggregate (at substantially equivalent or lower cost with respect
to
welfare benefit plans), or (B) provide Executive with paid vacation
in
accordance with the most favorable vacation policies of the Company
as
in effect for Executive immediately prior to such Change in
Control,
including the crediting of all service for which Executive had
been
credited under such vacation policies prior to the Change in
Control;
(v) any
refusal by the Company to
continue to permit Executive to engage in activities not
directly
related to the business of the Company which Executive was
permitted to
engage in prior to the Change in Control;
(vi)
any purported termination of
Executive's employment which is not effectuated pursuant to a
proper
Notice of Termination, and which will not constitute an
effective
termination of employment hereunder;
(vii) the
failure of the Company to
obtain the assumption (and, if applicable, guarantee) agreement
from
any successor (and, if applicable, Parent Corporation) as
contemplated
in Section 12(b); or
(viii) a
termination of employment by
Executive for any reason during the 30-day period commencing one
(1)
year after the date of a Change in Control.
An isolated, insubstantial and inadvertent action taken in
good faith and which is remedied by the
Company within ten (10) days after
receipt of notice thereof given by
Executive shall not constitute Good Reason.
Executive's right to terminate employment
for Good Reason shall not be affected
by Executive's incapacity due to mental or
physical illness and Executive's
continued employment shall not constitute
consent to, or a waiver of rights with
respect to, any event or condition
constituting Good Reason.
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For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive
that Good Reason exists shall be
presumed to be correct unless the Company
establishes to the Board by clear and
convincing evidence that Good Reason does
not exist. The Executive must notify
the Company of any event constituting Good
Reason within thirty (30) days
following the Executive's knowledge of its
existence or such event shall not
constitute Good Reason under this
Agreement.
(h) "Notice of
Termination" means a written
notice of Executive's Date of Termination
by the Company or Executive, as the
case may be, to the other delivered in
accordance with the requirements of
Section 13 hereof, which (i) indicates the
specific termination provision in
this Agreement relied upon, (ii) sets forth
in reasonable detail the facts and
circumstances claimed to provide a basis
for termination of Executive's
employment under the provision so indicated
and (iii) specifies the Date of
Termination, which date shall be not less
than thirty (30) days from the date of
such notice; provided that, subject to the
terms of this Agreement, the failure
by Executive or the Company to set forth in
such notice any fact or circumstance
which contributes to a showing of Good
Reason or Cause shall not waive any right
of Executive or the Company hereunder or
preclude Executive or the Company from
asserting such fact or circumstance in
enforcing Executive's or the Company's
rights hereunder.
(i)
"Qualifying Termination" means a termination
of Executive's employment (i) by the
Company other than for Cause or (ii) by
Executive for Good Reason. Termination of
Executive's employment on account of
death, Disability or Retirement shall not
be treated as a Qualifying
Termination.
(j)
"Retirement" means Executive's retirement
(not including any mandatory early
retirement) in accordance with the Company's
retirement policy generally applicable to
its salaried employees, as in effect
immediately prior to the Change in Control,
or in accordance with any retirement
arrangement established with respect to
Executive with Executive's written
consent.
(k)
"Termination Period" means the period of
time beginning with a Change in Control and
ending two (2) years following such
Change in Control. Notwithstanding anything
in this Agreement to the contrary,
if (i) Executive's employment is terminated
within 6 months prior to a Change in
Control for reasons that would have
constituted a Qualifying Termination if they
had occurred following a Change in Control,
then for purposes of this Agreement,
the date immediately prior to the date of
such termination of employment shall
be treated as a Change in Control. For
purposes of determining the timing of
payments and benefits to Executive under
this Agreement, the date of the actual
Change in Control shall of treated as
Executive's Date of Termination.
2.
Obligation of Executive. In the event of a tender or
exchange offer, proxy contest, or the
execution of any agreement which, if
consummated, would constitute a Change in
Control, Executive agrees not to
voluntarily leave the employ of the
Company, other than as a result of
Disability, Retirement or an event which
would constitute Good Reason if a
Change in Control had occurred, until the
Change in Control
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occurs or, if earlier, such tender or
exchange offer, proxy contest, or
agreement is terminated or abandoned.
3. Term
of Agreement. This Agreement shall be effective
on the date hereof and shall continue in
effect while Executive continues to be
employed by the Company, and for such
further period as may be required for the
Company to perform its obligations
hereunder in the event of a Qualifying
Termination.
4.
Payments Upon Termination of Employment.
(a) Qualifying Termination
- Severance. Subject
to the Executive's execution of a release
substantially in the form attached
hereto as Annex I, if during the
Termination Period the employment of Executive
shall terminate pursuant to a Qualifying
Termination, then the Company shall
provide to Executive:
(i) within
fifteen (15) days following
the Date of Termination a lump sum cash amount equal to the sum of
(A)
Executive's base salary through the Date of Termination and any
bonus
amounts which have become payable, to the extent not theretofore
paid
or deferred, (B) a pro rata portion of Executive's annual bonus for
the
fiscal year in which Executive's Date of Termination occurs in
an
amount at least equal to (1) Executive's Bonus Amount, multiplied
by
(2) a fraction, the numerator of which is the number of days in
the
fiscal year in which the Date of Termination occurs through the
Date of
Termination and the denominator of which is three hundred
sixty-five
(365), and reduced by (3) any amounts paid from the Company's
annual
incentive plan for the fiscal year in which Executive's Date of
Termination occurs and (C), any compensation previously deferred
by
Executive other than pursuant to a tax-qualified plan (together
with
any interest and earnings thereon) and any accrued vacation pay,
in
each case to the extent not theretofore paid; plus
(ii)
within fifteen (15) days following
the Date of Termination, a lump-sum cash amount equal to (i) two
(2)
times Executive's highest annual rate of base salary during the
12-month period immediatel
