Change in Control Agreement with H. Douglas Chaffin

Supplemental Executive Retirement Agreement

 

 

                              AMENDED AND RESTATED

                           CHANGE IN CONTROL AGREEMENT

                                 JANUARY 3, 2006

 

     This is an amended and restated agreement (the "Agreement") of that certain

agreement by and between MBT Financial Corp., a Michigan Corporation ("MBT") and

H. Douglas Chaffin ("Executive") dated July 30, 2001.

 

                                    RECITALS

 

     WHEREAS, MBT is a bank holding company whose principal subsidiary is

engaged in the business of banking and businesses incidental thereto.

 

     WHEREAS, Executive possesses unique skills, knowledge and experience

relating to the business of MBT.

 

     WHEREAS, MBT desires to retain the future services of Executive, and, in

that connection, Executive desires to be assured that, in the event of a change

in the control of MBT, Executive will be provided with an adequate severance

payment for termination without cause or as compensation for Executive's

severance because of a material change in his duties and functions.

 

     WHEREAS, MBT desires to be assured of the objectivity of Executive in

evaluating a potential change of control and advising whether or not a potential

change of control is in the best interest of MBT and its shareholders.

 

     WHEREAS, MBT desires to induce Executive to remain in the employ of the

Company following a change of control to provide for continuity of management.

 

     NOW, THEREFORE, in consideration of the premises and of their mutual

covenants expressed in this Agreement, the parties hereto make the following

agreement, intending to be legally bound thereby:

 

SECTION 1 - DEFINITIONS.

 

A.   Board - "Board" shall mean the Board of Directors of MBT.

 

B.   MBT -"MBT" means MBT Financial Corp., a Michigan corporation and the parent

     corporation of Monroe Bank & Trust.

 

C.   Cause - "Cause" shall mean and be limited to Executive's (a) criminal

     dishonesty, (b) refusal to perform his duties on an exclusive and

     substantially full-time basis, (c) refusal to act in accordance with any

     specific substantive instructions given by Company with respect to

     Executive's performance of duties normally associated with his position

     prior to the Change in Control, or (d) engaging in conduct which could be

     materially damaging to Company without a reasonable good faith belief that

     such conduct was in the best interest of Company.

 

D.   Change in Control - "Change in Control" shall have the meaning set forth on

     Exhibit A.

 

E.   Code - "Code" shall mean the Internal Revenue Code of 1986, as amended from

     time to time.

 

F.   Company - "Company" means MBT, Monroe Bank & Trust and all other members of

     MBT's Affiliated Group, over which Executive has managerial control, as the

     term "Affiliated Group" is defined in Section 1504 of the Code, and shall

     include any predecessor or successor corporations of the Company and its

     Affiliated Group.

 

G.   Compensation - "Compensation" shall mean Executive's then current annual

     base salary plus any cash bonuses for the last whole calendar year

     preceding Executive's termination of employment. Compensation shall not

     include any amount, other than base salary and cash bonuses, included in

     Executive's taxable compensation for federal income tax purposes and

     reported to Executive and Internal Revenue Service ("IRS") such as the

     reporting of previously deferred compensation or gain realized upon

     exercise of any non qualified stock options.

 

H.   Exchange Act - "Exchange Act" means the Securities Exchange Act of 1934.

 

SECTION 2 - TERM OF AGREEMENT.

 

This Agreement shall terminate on the date which is the latest of: (i) Company's

payment of any amounts due under Section's 4 and 6, (ii) the performance of

Executive's obligations under Section 9 hereof, and (iii) the earliest of:

 

     1.   The date this Agreement is mutually rescinded;

 

     2.   The date which is two (2) years after the date of a Change in Control.

 

     3.   Before a Change in Control, on the date which Monroe Bank & Trust, or

          any other member of the Company's Affiliated Group, and over which

          Executive has managerial control, which is a depository institution

          which is insured by an agency of any state or the United States

          Federal Government:

 

          a.   becomes insolvent; or

 

          b.   has appointed any conservator or receiver; or

 

          c.   is determined by an appropriate federal banking agency to be in a

               troubled condition, as defined in the applicable law and

               regulations; or

 

          d.   is assigned a composite rating of 4 or 5 by the appropriate

               federal banking agency or is informed in writing by the Federal

               Deposit Insurance Corporation that it is rated a 4 or 5 under the

               Uniform Financial Institution's Rating System of the Federal

               Financial Institutions Examination Council; or

 

          e.   has initiated against it by the Federal Deposit Insurance

               Corporation a proceeding to terminate or suspend deposit

               insurance; or

 

          f.   reasonably determines in good faith and with due care that the

               payments called for under this Agreement, or the obligations and

               promises assumed and made under this Agreement have become

               proscribed under applicable law or regulations. Provided,

               however, if such law or regulations apply prospectively only, or

               for some other reason do not apply to this Agreement, then this

               Agreement shall not be deemed by Company to be proscribed.

 

SECTION 3 - REDUCTION IN COMPENSATION PROSCRIBED AFTER A CHANGE IN CONTROL.

 

From the date of a Change in Control to the date of termination of this

Agreement Executive shall receive as compensation, while still employed by

Company, a salary at a rate no less than the highest rate in effect during the

one-year period before the Change in Control, and shall, in addition, be

entitled to receive a bonus equal to at least the average of the last three

years bonuses paid before the Change in Control. In addition, during such

period, the Company shall pay and provide for Executive at no cost to Executive,

all of his then-current fringe benefits, including but not limited to health,

disability, dental, life insurance and club memberships, all of which shall be

at levels and amounts no less favorable than levels and amounts in effect as of

the Change in Control.

 

SECTION 4 - PAYMENTS DUE AFTER A CHANGE IN CONTROL.

 

A.   If during the term of this Agreement and after the date of a Change in

     Control, Executive is discharged without Cause or Executive resigns because

     he has: (i) been demoted, (ii) had his compensation reduced, (iii) had his

     principal place of employment transferred away from Monroe County,

     Michigan, or a county contiguous thereto, or (iv) had his job title, status

     or responsibility materially reduced, then the Company shall make the

     payments to Executive set forth in subsection D of this Section 4.

 

B.   If Executive voluntarily terminates employment not earlier than six (6)

     months and not later than nine (9) months following a Change in Control,

     then the Company shall make the payments to Executive set forth in

     subsection D of this Section 4.

 

C.   If Executive is discharged by Company other than for Cause and there is a

     Change in Control within two years following the discharge, then the

     Company shall make the payments to Executive set forth in subsection D of

     this Section 4.

 

D.   In the event of the termination of Executive's employment as described in

     A, B or C above, Executive shall be entitled to receive a cash payment

     equal to one (1) times his Compensation. The payment required shall be paid

     at the end of the first month commencing after the Executive's termination

     of employment in the case of a benefit entitlement under Subsection A, or B

     above. In the event of termination of employment as described in C above,

     payment shall be made immediately upon the Change in Control. If

     Executive's employment is terminated as described in Subsection A or

     Subsection B above, then in addition to the above cash payment, Company

     shall make an additional cash payment equal to twelve months of the then

     current cost of any club memberships provided by the Company for the

     benefit of Executive and continue at no cost to Executive for the term of

     the Benefit Period as defined below, Executive's coverage in Company's

     health, disability, dental, and life insurance at the same levels that had

     been provided immediately prior to his termination of employment. The

     Benefit Period shall commence on the date of termination of the Executive's

     employment and shall end on the last day of the 12th consecutive whole

     month thereafter.

 

     In the event Executive dies before collecting all amounts and benefits due

     under this Section, any payments owing shall be paid to the person or

     persons as stated in the last designation of beneficiary concerning this

     Agreement signed by Executive and filed with Company, and if not, then to

     the personal representative of Executive.

 

     The payments and benefits provided for herein are in lieu of compensation,

     benefits or amounts the Executive might otherwise be entitled to under the

     Company's severance policy or otherwise payable by the Company be reason of

     termination of employment.

 

E.   In the event the payments required under this Agreement, when added

     together with any other amounts required to be included by Executive under

     the provisions of the Code, result in an "Excess Parachute Payment," as

     that term is defined in Section 280G of the Code, then the amount of the

     payments provided for in this agreement

 

     shall be increased in an amount equal to 250% of any excise tax imposed

     under Section 4999 (or any successor thereto) of the Code and otherwise

     payable by the Executive.

 

F.   Any subsequent employment by Executive shall not reduce the obligation of

     the Company to make the full payments and provide the full benefits

     specified herein and Executive shall have no obligation to seek other

     employment or otherwise mitigate the effect of his discharge from

     employment.

 

G.   Notwithstanding the provisions of this agreement providing for payment of

     benefits, if at the time a benefit would otherwise be payable, Employee is

     a "specified employee" [as defined below], and the payment provided for

     would be deferred compensation with the meaning of the Internal Revenue

     Code (the "Code"), section 409A, the distribution of the Employee's benefit

     may not be made until six months after the date of the Employee's

     separation from service with the Company [as that term may be defined in

     Section 409A(a)(2)(A)(i) of the Code and regulations promulgated

     thereunder], or, if earlier the date of death of the Employee. This

     requirement shall remain in effect only for periods in which the stock of

     the Company is publicly traded on an established securities market. For

     purposes of this subparagraph a "specified employee" shall mean any

     Employee of the Company who is a "key employee" of the Company within the

     meaning of Code section 416(i). This shall include any Employee who is (i)

     a 5-percent owner of the Company's common stock, or (ii) an officer of the

     Company with annual compensation from the Company of $130,000.00 or more,

     or (iii) a 1-percent owner of Company's common stock with annual

     compensation from the Company of $150,000.00 or more (or such higher annual

     limit as may be in effect for years subsequent to 2005 pursuant to indexing

     section 416(i) of the Code). The provisions of this subparagraph have been

     adopted only in order to comply with the requirements added by Code section

     409A. These provisions shall be interpreted and administered in a manner

     consistent with the requirements of Code section 409A, together with any

     regulations or other guidance which may be published by the Treasury

     Department or Internal Revenue Service interpreting such Code section 409A.

 

SECTION 5 - QUALIFIED AND NON-QUALIFIED RETIREMENT PENSION PLANS.

 

Nothing in this Agreement shall reduce any pension benefits or benefits from

other qualified or non-qualified retirement plans maintained by Company to which

Executive is otherwise entitled without regard to this Agreement.

 

SECTION 6 - PROVISION FOR OUTPLACEMENT SERVICES.

 

In the event of the termination of employment of Executive requiring the

payments specified in Section 4 of this Agreement, Executive shall be entitled

to six months of out-placement services following termination of employment.

Such services shall include employment counseling, resume services, executive

placement services and similar services generally provided to executives by

professional executive out placement service providers. All costs of such out

placement services shall be paid for by the Company.

 

SECTION 7 - ARBITRATION.

 

Subject to the Company's right to seek injunctive relief under Section 9 of this

Agreement, the parties hereto agree to arbitrate any issue, misunderstanding,

disagreement or dispute in connection with the terms in effect in this Agreement

in accordance with the Rules of the American Arbitration Association, before one

arbitrator mutually agreeable to the parties. If either party determines that

the parties have been unable to agree upon one arbitrator, then such party may

appoint one arbitrator and require the other party to appoint a second

arbitrator. Whereupon, the two appointed arbitrators shall appoint a third

neutral arbitrator. If the arbitrators selected by the parties are unable or

fail to agree upon the third arbitrator, the American Arbitration Association

shall select the third arbitrator. Failure by a party to either (i) accept as

mutually agreeable, or (ii) appoint an arbitrator, within 30 days of receipt of

notice of the appointment of an arbitrator by the other party, shall be deemed

as acceptance of arbitration by such single arbitrator. The arbitration shall

occur in Monroe, Michigan, or such other place as mutually agreed upon. The

prevailing party shall be entitled to recover any and all costs associated with

any arbitration proceeding (and any subsequent proceeding to enforce rights

thereunder) including the recovery of reasonable attorneys fees. Judgement on

the award rendered by the arbitrator(s) may be entered in any court having

jurisdiction thereof.

 

SECTION 8 - RIGHT TO OTHER BENEFITS.

 

Except as otherwise specified herein, nothing in this Agreement shall abridge,

eliminate, or cause Executive to lose Executive's right or entitlement to any

other Company benefit to which Executive may be entitled due to his status as an

employee under any plan or policy of Company on such terms and conditions as are

required of any employee under any plan or policy of Company. Further, nothing

in this Agreement shall create in Executive any greater rights or entitlements,

except as specified in this Agreement. The plans and policies referred to in

this Section 8 include, but are

 

not limited to, life insurance plans, dental, disability or health insurance

benefits, severance policies, club memberships, and accrued vacation pay.

 

SECTION 9 - NONCOMPETITION AND NONSOLICITATION AGREEMENT AND BUSINESS

PROTECTION.

 

Notwithstanding anything to the contrary contained elsewhere in this Agreement:

 

A.   Noncompetition Agreement and Nonsolicitation Agreement

 

     1.   In view of Executive's importance to the success of the Company,

          Executive and Company agree that the Company would likely suffer

          significant harm from Executive's competing with Company during

          Executive's term of employment with Company and for some period of

          time thereafter. Accordingly, Executive agrees that Executive shall

          not engage in competitive activities while employed by Company and

          during the Restricted Period. Executive shall be deemed to engage in

          competitive activities if he shall, without the prior written consent

          of the Company, (i) in Monroe County, Michigan and counties contiguous

          thereto (including the municipalities therein), render services

          directly or indirectly, as an employee, officer, director, consultant,

          advisor, partner or otherwise, for any organization or enterprise

          which competes directly or indirectly with the business of Company or

          any of its affiliates in providing financial products or services

          (including, without limitation, banking, insurance, or securities

          products or services) to consumers and businesses, or (ii) directly or

          indirectly acquires any financial or beneficial interest in (except as

          provided in the next sentence) any organization which conducts or is

          otherwise engaged in a business or enterprise in Monroe County,

          Michigan, and counties contiguous thereto (including all

          municipalities therein) which competes directly or indirectly with the

          business of Company or any of its affiliates in providing financial

          products or services (including, without limitation, banking,

          insurance or securities products or services) to consumers and

          businesses. Notwithstanding the preceding sentence, Executive shall

          not be prohibited from owning less that 1 percent of any publicly

          traded corporation, whether or not such corporation is in competition

          with Company. For purposes of this paragraph 9 the term "Restricted

          Period" shall equal one year, commencing as of the date of Executive's

          termination of employment.

 

     2.   While employed by Company and for a period of one (1) year following

          Executive's termination of employment with Company, Executive agrees

          that Executive shall not, in any manner, directly or indirectly, (i)

          solicit by mail, by telephone, by personal meeting, or by any other

          means, either directly or indirectly, any customer or prospective

          customer of Company to whom Executive provided services, or for whom

          Executive transacted business, or whose identity become known to

          Executive in connection with Executive's services to Company

          (including employment with or services to any predecessor or successor

          entities), to transact business with a person or an entity other than

          the Company or its affiliates or reduce or refrain from doing any

          business with the Company or its affiliates or (ii) interfere with or

          damage (or attempt to interfere with or damage) any relationship

          between Company or its affiliates and any such customer or prospective

          customer. The term "solicit" as used in this Agreement means any

          communication of any kind whatsoever, inviting, encouraging or

          requesting any person to take or refrain from taking any action with

          respect to the business of Company and its subsidiaries.

 

     3.   While employed by Company and for a period of one (1) year following

          Executive's termination of employment with Company, Executive agrees

          that Executive shall not, in any manner, directly or indirectly,

          solicit any person who is an employee of Company or any of its

          affiliates to apply for or accept employment or a business opportunity

          with any other person or entity.

 

     4.   The parties agree that nothing herein shall be construed to limit or

          negate the common law of torts or trade secrets where it provides

          broader protection than that provided herein.

 

B.   Confidential Information

 

Executive has obtained and may obtain confidential information concerning the

businesses, operations, financial affairs, organizational and personnel matters,

policies, procedures and other non-public matters of Company and its affiliates,

and those of third-parties that is not generally disclosed to persons not

employed by Company or its subsidiaries. Such information (referred to herein as

the "Confidential Information") may have been or may be provided in written form

or orally. Executive shall not disclose to any other person the Confidential

Information at any time during his employment with Company or after the

termination of his employment, provided that Executive may disclose such

Confidential Information only to a person who is then a director, officer,

employee, partner, attorney or agent of Company who, in Executive's reasonable

good faith judgment, has a need to know the Confidential Information.

 

C.   Remedies

 

     1.   Executive acknowledges that a violation on Executive's part of this

          Section 9 would cause immeasurable and irreparable damage to Company.

          Accordingly, Executive agrees that notwithstanding Section 7 hereof,

          Company shall be entitled to injunctive relief in any court of

          competent jurisdiction for any actual or threatened violation of any

          of the provisions of this Section 9, in addition to any other remedies

          it may have.

 

     2.   In addition to Company's right to seek injunctive relief as set forth

          in subparagraph 1 above of this Section 9.C, in the event that

          Executive shall violate the terms and conditions of this Section 9,

          Company may: (i) make a general claim for damages and (ii) terminate

          any payments or benefits payable by Company, if applicable, to

          Executive.

 

     3.   The Board shall be responsible for determining whether Executive shall

          have violated this Section 9, and in the absence of Executive's

          ability to show that the Board has acted in bad faith and without fair

          dealing, such decision will be final and binding. Upon the request of

          Executive, the Company shall provide an advance opinion as to whether

          a proposed activity would violate the provisions of this Agreement.

 

SECTION 10 - NOTICE AND PAYMENTS.

 

All payments required or permitted to be made under the provisions of this

Agreement, and all notices and other communications required or permitted to be

given or delivered under this Agreement to Company or to Executive, which

notices or communications must be in writing, shall be deemed to have been given

if delivered by hand, or mailed by first-class mail, addressed as follows:

 

A.   If to Company:

 

     MBT Financial Corp

     102 E. Front Street

     Monroe, MI 48161

     Attn: Chairman, Compensation Committee

 

B.   If to Executive:

 

     H. Douglas Chaffin

     c/o MBT Financial Corp

     102 E. Front Street

     Monroe, MI 48161

 

Company or Executive may, by notice given to the other from time to time and at

any time, designate a different address for making payments required to be made,

and for the giving of notices or other communications required or permitted to

be given, to the party designating such new address.

 

SECTION 11 - PAYROLL TAXES.

 

Any payment required or permitted to be made or given to Executive under this

Agreement shall be subject to the withholding and other requirements of

applicable laws, and to the deduction requirements of any benefit plan

maintained by Company in which Executive is a participant, and to all reporting,

filing and other requirements in respect of such payments, and Company shall use

it best efforts promptly to satisfy all such requirements.

 

SECTION 12 - GOVERNING LAW.

 

This Agreement shall be governed by and construed in accordance with the laws of

the State of Michigan.

 

SECTION 13 - DUPLICATE ORIGINALS.

 

This Agreement may be executed in one or more counterparts, each of which shall

be deemed to be a duplicate original, but all of which, taken together, shall

constitute a single instrument.

 

SECTION 14 - CAPTIONS.

 

The captions contained in this Agreement are included only for convenience of

reference and do not define, limit, explain or modify this Agreement or its

interpretations, construction or meaning and are in no way to be construed as a

part of this Agreement.

 

SECTION 15 - SEVERABILITY.

 

If any provision of this Agreement or the application of any provision to any

person or any circumstances shall be determined to be invalid or unenforceable,

such provision or portion thereof shall nevertheless be effective and

enforceable to the extent determined reasonable. Such determination shall not

affect any other provision of this Agreement or the application of said

provision to any other person or circumstance, all of which other provisions

shall remain in full force and effect, and it is the intention of Company and

Executive that if any provision of this Agreement is susceptible of two or more

constructions, one of which would render the provision enforceable and the other

or others of which would render the provisions unenforceable, then the

provisions shall have the meaning which renders it enforceable.

 

SECTION 16 - NUMBER AND GENDER.

 

When used in this Agreement, the number and gender of each pronoun shall be

construed to be such number and gender as the context, circumstances or its

antecedent may require.

 

SECTION 17 - SUCCESSOR AND ASSIGNS.

 

This Agreement shall inure to the benefit of and be binding upon the successors

and assigns (including successive, as well as immediate, successors and assigns)

of Company; provided, however, that Company may not assign this Agreement or any

of its rights or obligations hereunder to any party other than a corporation

which succeeds to substantially all of the business and assets of Company by

merger, consolidation, sale of assets or otherwise. This Agreement shall inure

to the benefit of and be binding upon the successor and assigns (including

successive, as well as immediate, successors and assigns) of Executive;

provided, however, that the right of Executive under this Agreement may be

assigned only to his personal representative or trustee or by will or pursuant

to applicable laws of descent and distribution.

 

SECTION 18 -PRIOR AGREEMENT SUPERCEDED.

 

This Agreement supersedes the previous agreement dated July 30, 2001.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amended Agreement to be

executed on and to be effective on January 18, 2006.

 

In the Presence of:                     EXECUTIVE

 

                                             /s/  H. Douglas Chaffin

                                        ----------------------------------------

/s/ Bonnie S. Snyder                        H. Douglas Chaffin

/s/ Donald M. Lieto

 

In the Presence of:                     MBT FINANCIAL CORP.

 

                                             /s/ William D. McIntyre, Jr.

                                        ----------------------------------------

/s/ Bonnie S. Snyder                        By: William D. McIntyre, Jr.

/s/ Donald M. Lieto                         Its: Chairman

 

Exhibit A

Change in Control Definition

 

               A "Change in Control" shall mean a "Change in Ownership" as

     defined in (a) hereof; a "Change in Effective Control" as defined in (b),

     hereof; or a "Change in Ownership of a Substantial Portion of Assets" as

     defined in (c) hereof.

 

     (a)  Change in Ownership. For purposes of this Agreement, a "change in the

          ownership" of the Company occurs on the date that any one person, or

          more than one person acting as a group (as defined in subsection (d)

          hereof, acquires ownership of stock of the Company that, together with

          stock held by such person or group, constitutes more than 50 percent

          of the total fair market value or total voting power of the stock of

          the Company. However, if any one person, or more than one person

          acting as a group, is considered to own more than 50 percent of the

          total fair market value or total voting power of the stock of the

          Company, the acquisition of additional stock by the same person or

          persons is not

 

          considered to cause a change in the ownership of the Company (or to

          cause a change in the effective control of the Company (within the

          meaning of subsection (b) hereof. An increase in the percentage of

          stock owned by any one person, or persons acting as a group, as a

          result of a transaction in which the Company acquires its stock in

          exchange for property will be treated as an acquisition of stock for

          purposes of this section.

 

     (b)  Change in the Effective Control. For purposes of this Agreement, a

          change in the effective control of the Company occurs on the date that

          either -

 

          (i)  Any one person, or more than one person acting as a group (as

               determined under subsection (d) hereof, acquires (or has acquired

               during the 12-month period ending on the date of the most recent

               acquisition by such person or persons) ownership of stock of the

               Company possessing 35 percent or more of the total voting power

               of the stock of the Company; or

 

          (ii) a majority of members of the Company's board of directors is

               replaced during any 12-month period by directors whose

               appointment or election is not endorsed by a majority of the

               members of the Company's board of directors prior to the date of

               the appointment or election.

 

                    In the absence of an event described in subsection (b)(i) or

          (ii) above, a change in the effective control of a Company will not

          have occurred.

 

     (c)  Change in the Ownership of a Substantial Portion of the Company's

          Assets. For purposes of this Agreement, a change in the ownership of a

          substantial portion of the Company's assets occurs on the date that

          any one person, or more than one person acting as a group (as

          determined in subsection(d) hereof, acquires (or has acquired during

          the 12-month period ending on the date of the most recent acquisition

          by such person or persons) assets from the Company that have a total

          gross fair market value equal to or more than 40 percent of the total

          gross fair market value of all of the assets of the Company

          immediately prior to such acquisition or acquisitions. For this

          purpose, gross fair market value means the value of the assets of the

          Company, or the value of the assets being disposed of, determined

          without regard to any liabilities associated with such assets.

 

                    There is no Change in Control Event under this subsection

          (c) when there is a transfer to an entity that is controlled by the

          shareholders of the Company immediately after the transfer, as

          provided in this paragraph. A transfer of assets by the Company is not

          treated as a change in the ownership of such assets if the assets are

          transferred to --

 

          (i)  A shareholder of the Company (immediately before the asset

               transfer) in exchange for or with respect to its stock;

 

          (ii) An entity, 50 percent or more of the total value or voting power

               of which is owned, directly or indirectly, by the Company;

 

          (iii) A person, or more than one person acting as a group, that owns,

               directly or indirectly, 50 percent or more of the total value or

               voting power of all the outstanding stock of the Company; or

 

          (iv) An entity, at least 50 percent of the total value or voting power

               of which is owned, directly or indirectly, by a person described

               in subsection (iii) hereof.

 

                    For purposes of this subsection(c) and except as otherwise

          provided, a person's status is determined immediately after the

          transfer of the assets. For example, a transfer to a corporation in

          which the transferor corporation has no ownership interest before the

          transaction, but which is a majority-owned subsidiary of the

          transferor corporation after the transaction is not treated as a

          change in the ownership of the assets of the transferor corporation.

 

     (d)  Persons Acting as a Group. Persons will not be considered to be acting

          as a group solely because they purchase assets or purchase or own

          stock of the same corporation at the same time, or as a result of the

          same public offering. However, persons will be considered to be acting

          as a group if they are owners of a corporation that enters into a

          merger, consolidation, purchase or acquisition of stock, purchase or

          acquisition of assets, or similar business transaction with the

          Company. If a person, including an entity shareholder, owns stock in

          both corporations that enter into a merger, consolidation, purchase or

          acquisition of stock, or similar transaction, such shareholder is

          considered to be acting as a group with other shareholders in a

          corporation only to the extent of the ownership in that corporation

          prior to the transaction giving rise to the change and not with the

          ownership interest in the other corporation.

 

Top of the Document

 

 

                               MONROE BANK & TRUST

                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

 

         THIS AGREEMENT is adopted this 1st day of July, 2003, by and between

MONROE BANK & TRUST, a state-chartered commercial bank located in Monroe,

Michigan (the "Company"), and H. DOUGLAS CHAFFIN (the "Executive").

 

                                  INTRODUCTION

 

         To encourage the Executive to remain an employee of the Company, the

Company is willing to provide supplemental retirement benefits to the Executive.

The Company will pay the benefits from its general assets.

 

                                    AGREEMENT

 

       The Company and the Executive agree as follows:

 

                                    ARTICLE 1

                                   DEFINITIONS

 

         Whenever used in this Agreement, the following words and phrases shall

have the meanings specified:

 

         1.1 "Code" means the Internal Revenue Code of 1986, as amended.

 

         1.2 "Disability" means the Executive's suffering a sickness, accident

or injury which has been determined by the carrier of any individual or group

disability insurance policy covering the Executive, or by the Social Security

Administration, to be a disability rendering the Executive totally and

permanently disabled. The Executive must submit proof to the Company of the

carrier's or Social Security Administration's determination upon the request of

the Company.

 

         1.3 "Early Termination" means the Termination of Employment before

Normal Retirement Age for reasons other than death, Disability, or Termination

for Cause.

 

         1.4 "Early Termination Date" means the month, day and year in which

Early Termination occurs.

 

         1.5 "Effective Date" means July 1, 2003.

 

         1.6 "Final Pay" means the total annual base salary payable to the

Executive at the rate in effect at Termination of Employment. Final Pay shall

not be reduced for any salary reduction contributions to: (i) cash or deferred

arrangements under Section 401(k) of the Code; (ii) a cafeteria plan under

Section 125 of the Code; or (iii) a deferred compensation plan that is not

qualified under Section 401(a) of the Code.

 

         1.7 "Normal Retirement Age" means the Executive's 65th birthday.

 

         1.8 "Normal Retirement Date" means the later of the Normal Retirement

Age or Termination of Employment.

 

         1.9 "Plan Year" means a twelve-month period commencing on July 1 and

ending on June 30 of each year. The initial Plan Year shall commence on the

Effective Date of this Agreement.

 

         1.10 "Termination for Cause" See Article 5.

 

         1.11 "Termination of Employment" means that the Executive ceases to be

employed by the Company for any reason, voluntary or involuntary, other than by

reason of a leave of absence approved by the Company.

 

                                    ARTICLE 2

                            BENEFITS DURING LIFETIME

 

         2.1 Normal Retirement Benefit. Upon Termination of Employment on or

after the Normal Retirement Age for reasons other than death, the Company shall

pay to the Executive the benefit described in this Section 2.1 in lieu of any

other benefit under this Agreement.

 

                  2.1.1 Amount of Benefit. The annual benefit under this Section

         2.1 is 65 percent of the Executive's Final Pay, as set forth on

         Schedule A, attached hereto and incorporated by reference herein, and

         as revised and updated by the Company from time to time, reduced by:

 

                           (a)      fifty percent (50%) of the primary Social

                                    Security benefit payable (before earnings

                                    reduction) to the Executive or which would

                                    be payable if applied for by the Executive

                                    upon his Normal Retirement Age;

 

                           (b)      the annual amount of benefits payable to the

                                    Executive upon his Normal Retirement Age

                                    (whether or not actually paid) from the

                                    Company's qualified pension plan (the

                                    "Pension Plan"); and

 

                           (c)      the annual amount of benefits payable to the

                                    Executive upon his Normal Retirement Age, on

                                    a single life annuity basis, attributable to

                                    the portion of the Executive's account

                                    balances arising from employer contributions

                                    (but excluding the portion of such balances

                                    arising from employee salary reduction

                                    contributions) from the Bank's Section

                                    401(k) plan.

 

                  2.1.2 Payment of Benefit. The Company shall pay the annual

         benefit to the Executive in 12 equal monthly installments commencing

         with the month following the Executive's Normal Retirement Date. The

         annual benefit shall be paid to the Executive for a period of 10 years.

 

         2.2 Early Termination Benefit. Upon Early Termination, the Company

shall pay to the Executive the benefit described in this Section 2.2 in lieu of

any other benefit under this Agreement.

 

                  2.2.1 Amount of Benefit. The benefit under this Section 2.2 is

         an amount equal to the "Accrual Balance" determined as of the Company's

         fiscal year end immediately preceding the Executive's Early Termination

         Date, as set forth on Schedule A, attached hereto and incorporated by

         reference herein, and as revised and updated by the Company from time

         to time. The Executive shall begin to vest in said Accrual Balance

         commencing on the date of Ronald D. LaBeau's retirement, subject to the

         following vesting schedule:

 

 

  PLAN YEARS SINCE

LABEAU'S RETIREMENT    VESTED PERCENTAGE

----------------------------------------

<S>                    <C>

       0 - 4                    0%

----------------------------------------

     5 or more                100%

----------------------------------------

 

                  2.2.2 Payment of Benefit. The Company shall pay the benefit to

         the Executive by calculating a fixed annuity payable in 120 monthly

         installments, crediting interest on the unpaid balance at an annual

         rate of 6.75 percent, compounded monthly. The monthly installments

         shall be payable on the first day of each month commencing with the

         month following Normal Retirement Age.

 

         2.3 Disability Benefit. If the Executive terminates employment due to

Disability prior to

 

Normal Retirement Age, the Company shall pay to the Executive the benefit

described in this Section 2.3 in lieu of any other benefit under this Agreement.

 

                  2.3.1 Amount of Benefit. The benefit under this Section 2.3 is

         an amount equal to the "Accrual Balance" determined as of the Company's

         fiscal year end immediately preceding the date the Executive's

         Termination of Employment occurs, as set forth on Schedule A, attached

         hereto and incorporated by reference herein, and as revised and updated

         by the Company from time to time.

 

                  2.3.2 Payment of Benefit. The Company shall pay the benefit to

         the Executive by calculating a fixed annuity payable in 120 monthly

         installments, crediting interest on the unpaid balance at an annual

         rate of 6.75 percent, compounded monthly. The monthly installments

         shall be payable on the first day of each month commencing with the

         month following Normal Retirement Age.

 

                                    ARTICLE 3

                                 DEATH BENEFITS

 

         3.1 Death During Active Service. If the Executive dies while in the

active service of the Company, no benefit shall be payable under this Agreement.

 

         3.2 Death During Payment of a Benefit. If the Executive dies after any

benefit payments have commenced under Article 2 of this Agreement but before

receiving all such payments, the Company shall pay the remaining benefits to the

Executive's beneficiary at the same time and in the same amounts they would have

been paid to the Executive had the Executive survived.

 

         3.3 Death After Termination of Employment But Before Payment of a

Benefit Commences. If the Executive is entitled to a benefit under Article 2 of

this Agreement, but dies prior to the commencement of said benefit payments, the

Company shall pay the same benefit payments to the Executive's beneficiary that

the Executive was entitled to prior to death except that the benefit payments

shall commence on the first day of the month following the date of the

Executive's death.

 

                                    ARTICLE 4

                                  BENEFICIARIES

 

         4.1 Beneficiary Designations. The Executive shall designate a

beneficiary by filing a written designation with the Company. The Executive may

revoke or modify the designation at any time by filing a new designation.

However, designations will only be effective if signed by the Executive and

received by the Company during the Executive's lifetime. The Executive's

beneficiary designation shall be deemed automatically revoked if the beneficiary

predeceases the Executive, or if the Executive names a spouse as beneficiary and

the marriage is subsequently dissolved. If the Executive dies without a valid

beneficiary designation, all payments shall be made to the Executive's estate.

 

         4.2 Facility of Payment. If a benefit is payable to a minor, to a

person declared incompetent, or to a person incapable of handling the

disposition of his or her property, the Company may pay such benefit to the

guardian, legal representative or person having the care or custody of such

minor, incompetent person or incapable person. The Company may require proof of

incompetence, minority or guardianship as it may deem appropriate prior to

distribution of the benefit. Such distribution shall completely discharge the

Company from all liability with respect to such benefit.

 

                                    ARTICLE 5

 

                               GENERAL LIMITATIONS

 

         5.1 Termination for Cause. Notwithstanding any provision of this

Agreement to the contrary, the Company shall not pay any benefit under this

Agreement if the Company terminates the Executive's employment for:

 

                  (a)      Gross negligence or gross neglect of duties;

 

                  (b)      Commission of a felony or of a gross misdemeanor

         involving moral turpitude; or

 

                  (c)      Fraud, disloyalty, dishonesty or willful violation of

         any law or significant Company policy committed in connection with the

         Executive's employment and resulting in an adverse effect on the

         Company.

 

         5.2 Suicide or Misstatement. The Company shall not pay any benefit

under this Agreement if the Executive commits suicide within three years after

the date of this Agreement. In addition, the Company shall not pay any benefit

under this Agreement if the Executive has made any material misstatement of fact

on an employment application or resume provided to the Company, or on any

application for any benefits provided by the Company to the Executive.

 

         5.3 Competition After Termination of Employment. The Company shall not

pay any benefit under this Agreement if the Executive, within 12 months

following Termination of Employment, without the prior written consent of the

Company, engages in, becomes interested in, directly or indirectly, as a sole

proprietor, as a partner in a partnership, or as a substantial shareholder in a

corporation, or becomes associated with, in the capacity of employee, director,

officer, principal, agent, trustee or in any other capacity whatsoever, any

enterprise conducted in the trading area (a 50 mile radius) of the business of

the Company, which enterprise is, or may deemed to be, competitive with any

business carried on by the Company as of the date of termination of the

Executive's employment or retirement. This section shall not apply following a

Change of Control.

 

                                    ARTICLE 6

                          CLAIMS AND REVIEW PROCEDURES

 

         6.1 Claims Procedure. An Executive or beneficiary ("claimant") who has

not received benefits under the Agreement that he or she believes should be paid

shall make a claim for such benefits as follows:

 

                  6.1.1 Initiation - Written Claim. The claimant initiates a

         claim by submitting to the Company a written claim for the benefits.

 

                  6.1.2 Timing of Company Response. The Company shall respond to

         such claimant within 90 days after receiving the claim. If the Company

         determines that special circumstances require additional time for

         processing the claim, the Company can extend the response period by an

         additional 90 days by notifying the claimant in writing, prior to the

         end of the initial 90-day period that an additional period is required.

         The notice of extension must set forth the special circumstances and

         the date by which the Company expects to render its decision.

 

                  6.1.3 Notice of Decision. If the Company denies part or all of

         the claim, the Company shall notify the claimant in writing of such

         denial. The Company shall write the notification in a manner calculated

         to be understood by the claimant. The notification shall set forth:

 

                        (a)      The specific reasons for the denial;

 

                        (b)      A reference to the specific provisions of the

                  Agreement on which the

                  denial is based;

 

                        (c)      A description of any additional information or

                  material necessary for the claimant to perfect the claim and

                  an explanation of why it is needed;

 

                        (d)      An explanation of the Agreement's review

                  procedures and the time limits applicable to such procedures;

                  and

 

                        (e)      A statement of the claimant's right to bring a

                  civil action under ERISA Section 502(a) following an adverse

                  benefit determination on review.

 

         6.2 Review Procedure. If the Company denies part or all of the claim,

the claimant shall have the opportunity for a full and fair review by the

Company of the denial, as follows:

 

                  6.2.1 Initiation - Written Request. To initiate the review,

         the claimant, within 60 days after receiving the Company's notice of

         denial, must file with the Company a written request for review.

 

                  6.2.2 Additional Submissions - Information Access. The

         claimant shall then have the opportunity to submit written comments,

         documents, records and other information relating to the claim. The

         Company shall also provide the claimant, upon request and free of

         charge, reasonable access to, and copies of, all documents, records and

         other information relevant (as defined in applicable ERISA regulations)

         to the claimant's claim for benefits.

 

                  6.2.3 Considerations on Review. In considering the review, the

         Company shall take into account all materials and information the

         claimant submits relating to the claim, without regard to whether such

         information was submitted or considered in the initial benefit

         determination.

 

                  6.2.4 Timing of Company Response. The Company shall respond in

         writing to such claimant within 60 days after receiving the request for

         review. If the Company determines that special circumstances require

         additional time for processing the claim, the Company can extend the

         response period by an additional 60 days by notifying the claimant in

         writing, prior to the end of the initial 60-day period, that an

         additional period is required. The notice of extension must set forth

         the special circumstances and the date by which the Company expects to

         render its decision.

 

                  6.2.5 Notice of Decision. The Company shall notify the

         claimant in writing of its decision on review. The Company shall write

         the notification in a manner calculated to be understood by the

         claimant. The notification shall set forth:

 

                        (a)      The specific reasons for the denial;

 

                        (b)      A reference to the specific provisions of the

                  Agreement on which the denial is based;

 

                        (c)      A statement that the claimant is entitled to

                  receive, upon request and free of charge, reasonable access

                  to, and copies of, all documents, records and other

                  information relevant (as defined in applicable ERISA

                  regulations) to the claimant's claim for benefits; and

 

                        (d)      A statement of the claimant's right to bring a

                  civil action under ERISA Section 502(a).

 

                                    ARTICLE 7

                           AMENDMENTS AND TERMINATION

 

         This Agreement may be amended or terminated only by a written agreement

signed by the Company and the Executive.

 

         Notwithstanding the previous paragraph in this Article 7, the Company

may amend or terminate this Agreement at any time if, pursuant to legislative,

judicial or regulatory action, continuation of the Agreement would (i) cause

benefits to be taxable to the Executive prior to actual receipt, or (ii) result

in significant financial penalties or other significantly detrimental

ramifications to the Company (other than the financial impact of paying the

benefits).

 

                                    ARTICLE 8

                                  MISCELLANEOUS

 

         8.1 Binding Effect. This Agreement shall bind the Executive and the

Company, and their beneficiaries, survivors, executors, successors,

administrators and transferees.

 

         8.2 No Guarantee of Employment. This Agreement is not an employment

policy or contract. It does not give the Executive the right to remain an

employee of the Company, nor does it interfere with the Company's right to

discharge the Executive. It also does not require the Executive to remain an

employee nor interfere with the Executive's right to terminate employment at any

time.

 

         8.3 Non-Transferability. Benefits under this Agreement cannot be sold,

transferred, assigned, pledged, attached or encumbered in any manner.

 

         8.4 Reorganization. The Company shall not merge or consolidate into or

with another company, or reorganize, or sell substantially all of its assets to

another company, firm, or person unless such succeeding or continuing company,

firm, or person agrees to assume and discharge the obligations of the Company

under this Agreement. Upon the occurrence of such event, the term "Company" as

used in this Agreement shall be deemed to refer to the successor or survivor

company.

 

         8.5 Tax Withholding. The Company shall withhold any taxes that are

required to be withheld from the benefits provided under this Agreement.

 

         8.6 Applicable Law. The Agreement and all rights hereunder shall be

governed by the laws of the State of Michigan, except to the extent preempted by

the laws of the United States of America.

 

         8.7 Unfunded Arrangement. The Executive and beneficiary are general

unsecured creditors of the Company for the payment of benefits under this

Agreement. The benefits represent the mere promise by the Company to pay such

benefits. The rights to benefits are not subject in any manner to anticipation,

alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or

garnishment by creditors. Any insurance on the Executive's life is a general

asset of the Company to which the Executive and beneficiary have no preferred or

secured claim.

 

         8.8 Entire Agreement. This Agreement constitutes the entire agreement

between the Company and the Executive as to the subject matter hereof. No rights

are granted to the Executive by virtue of this Agreement other than those

specifically set forth herein.

 

         8.9 Administration. The Company shall have powers which are necessary

to administer this Agreement, including but not limited to:

 

                  (a)      Establishing and revising the method of accounting

         for the Agreement;

 

                  (b)      Maintaining a record of benefit payments;

 

                  (c)      Establishing rules and prescribing any forms

         necessary or desirable to administer

 

         the Agreement; and

 

                  (d)      Interpreting the provisions of the Agreement.

 

         8.10 Named Fiduciary. The Company shall be the named fiduciary and plan

administrator under this Agreement. It may delegate to others certain aspects of

the management and operational responsibilities including the employment of

advisors and the delegation of ministerial duties to qualified individuals.

 

         IN WITNESS WHEREOF, the Executive and the Company have signed this

Agreement.

 

EXECUTIVE:                             COMPANY:

 

                                       MONROE BANK & TRUST

 

/s/ H. Douglas Chaffin                 By: /s/ John L. Skibski

-------------------------              --------------------------------

H. Douglas Chaffin                     Title: Senior Vice President & Controller

 

Top of the Document