AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (effective upon merger with Republic Bancorp Inc.) 
CHANGE IN CONTROL AGREEMENT
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
 
 
 
                                                                    EXHIBIT 10.4
 
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
made and entered into as of May 29, 2003, by and between William R. Hartman (the
"Executive") and Citizens Banking Corporation, a Michigan corporation (the
"Company").
 
                                WITNESSETH THAT:
 
         WHEREAS, the Company and the Executive are currently parties to an
employment agreement dated as of February 11, 2002, as amended by a First
Amendment to Employment Agreement dated as of December 13, 2002 and a Second
Amendment to Employment Agreement dated as of January 23, 2003 (such employment
agreement as amended is referred to herein as the "Employment Agreement");
 
         WHEREAS, the parties desire to further amend and to restate the
Employment Agreement as set forth herein;
 
         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, and for other good and valuable consideration, 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 Chairman, 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 (the "Bank"), and the title of Chairman of Citizens
Bank Wealth Management, N.A. (the "Wealth Bank"), both being subsidiaries of the
Company. In his positions with the Company, the Bank, and the Wealth Bank the
Executive shall only report directly to the Board of Directors of the Company
(the "Board"). The Executive has commenced 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 fifth 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
 
 
 
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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.
 
         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
$575,000 which has been increased from a base salary of $525,000 payable under
the Employment Agreement between Company and the Executive as in effect on
February 11, 2002. Such base salary shall be 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.
 
         (b) Option Award. In 2003, the Executive shall be entitled to receive a
nonqualified option to purchase 225,000 shares of the Company's common stock
under the Citizens Banking Corporation Stock Compensation Plan (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 "Option"). The
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 in equal annual
installments of 20% per year beginning on the first anniversary of the grant
date and shall be fully exercisable at the close of business on the fifth
anniversary of the grant date, and (iv) if the employment of the Executive is
terminated by the Company without Cause, 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.
 
         (c) 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"). The Executive's target Incentive Payment for 2002 shall
be 50% of his salary range midpoint for such year and such target percentage for
2003 shall be 65% of his base salary for such year. The target percentage for
years after 2003 shall be determined by the Board and communicated to the
Executive each year.
 
 
 
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         (d) Supplemental Pension Benefits. The Executive shall continue to be
entitled to receive the benefits pursuant to the Supplemental Executive
Retirement Plan ("SERP") which was entered into between the Company and the
Executive on February 25, 2002. For purposes of determining the SERP benefit,
the Executive shall be deemed to have received a $200,000 cash bonus for the
year ending December 31, 2002.
 
         (e) Stock Issuance. The Executive shall be entitled to have received a
grant of shares of Company common stock with an aggregate fair market value of
$200,000, valued as of January 15, 2003 pursuant to the Stock Plan. Such shares
shall not be sold by the Executive so long as the Executive remains employed by
the Company without the written approval of the Board. The Executive shall be
entitled to vote such shares and receive dividends thereon.
 
         (f) Restricted Stock and Initial Option Award. The Executive shall
continue to be entitled to the benefits of the Restricted Stock Award of 20,000
shares of the Company Common Stock and the Initial Option Award to purchase
225,000 shares of the Company Common Stock (the "Initial Option") granted to the
Executive on February 25, 2002. Such awards shall be governed by the terms and
conditions of the separate agreements entered into by the Company and the
Executive.
 
         (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, life insurance and accidental death
and dismemberment insurance (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.
 
         (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. 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) 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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         (j) Change in Control. The Executive shall continue to be entitled to
the benefits of the Change in Control Agreement entered into between the
Executive and the Company on February 25, 2002.
 
         (k) Indemnification. The Executive shall continue to entitled to the
benefits of the Indemnification Agreement entered into between the Executive and
the Company on February 25, 2002.
 
         4. [reserved]
 
         5. Termination of Employment. Upon termination of the Executive's
employment for any reason, the Executive or, in the event of death, his 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 (x) a felony or (y) 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
 
 
 
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         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 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's employment without Cause:
 
                  (i) The Executive shall be entitled to a lump sum payment,
         within 60 days following termination of his employment, of (A) five
         times his then current Base Salary, plus (B) five times the average
         annual Incentive Payment paid to or earned by the Executive (whichever
         is larger) during the five previous fiscal years during the Agreement
         Term or, if there have not been five previous fiscal years during the
         Agreement Term, such fewer number of fiscal years as shall have
         occurred during the Agreement Term. For purposes of determining such
         severance benefit, the Executive will have been deemed to have received
         a $200,000 annual Incentive Payment for the year ending December 31,
         2002.
 
                  (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
 
 
 
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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:
 
                  (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 in Control (as defined in the Change in Control
         Agreement between the Company and Executive as in effect on the date of
         this Agreement (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 currently in effect 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) [reserved]
 
         (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
 
 
 
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                  (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 Section 5(c)(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 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,
 
 
 
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<PAGE>
 
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.
 
         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 five 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
 
 
 
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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 five-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 fifth anniversary of his last day of
employment by the Company, divided by (y) 1826. 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 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
 
 
 
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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
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, or any agreement referenced herein, 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.
 
 
 
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         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 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
                           328 South Saginaw St.
                           Flint, Michigan 48502
                           Attention:  General Counsel and Secretary
 
or to the Executive:
 
                           At the most recent address maintained
                           by the Company in its personnel records
 
 
 
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with a copy to:
                           Anthony C. Ciriaco
                           Vorys, Sater, Seymour and Pease LLP
                           52 East Gay Street
                           Columbus, Ohio 43215
 
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) 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.
 
 
 
                                       12
<PAGE>
 
         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.
 
         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.
 
                                     WILLIAM R. HARTMAN
 
 
                                     /s/ William R. Hartman
                                     -----------------------------------
                                      Executive
 
 
                                     CITIZENS BANKING CORPORATION
 
 
 
                                     By: /s/ Kendall B. Williams
                                        ----------------------------------------
                                          Kendall B. Williams
                                     Its: Chairman of the Compensation and Human
                                          Resources Committee
 
 
 
                                       13
 
Top of the Document
 
EXHIBIT 99.1
<TEXT>
 
                                                                    Exhibit 99.1
 
                              EMPLOYMENT AGREEMENT
 
            THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered
into as of June 26th, 2006, by and between William R. Hartman (the "Executive")
and Citizens Banking Corporation, a Michigan corporation (the "COMPANY").
 
                                WITNESSETH THAT:
 
            The Company has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication of the Executive pending and following the merger (the "MERGER") of
the Company and Republic Bancorp Inc. ("REPUBLIC") pursuant to the Agreement and
Plan of Merger, dated as of June 26th, 2006, between the Company and Republic
(the "MERGER AGREEMENT"). Therefore, in order to accomplish these objectives,
the Executive and the Company desire to enter into this Agreement.
 
            NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below, and for other good and valuable consideration, it is
hereby covenanted and agreed by the Executive and the Company as follows:
 
            1. EFFECTIVE DATE. The "EFFECTIVE DATE" shall mean the date on which
the "EFFECTIVE TIME" (as defined in the Merger Agreement) of the Merger occurs.
In the event that the Effective Time shall not occur, this Agreement shall be
null and void AB INITIO and of no further force and effect.
 
            2. EMPLOYMENT PERIOD. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company, subject to the
terms and conditions of this Agreement, for the period commencing on the
Effective Date and ending on December 31, 2012 (the "EMPLOYMENT PERIOD"). The
Employment Period shall be divided into two periods, the "INITIAL PERIOD" and
the "SECOND PERIOD." The Initial Period shall commence on the Effective Date and
end on December 31, 2010, and the Second Period shall commence on January 1,
2011 and end on December 31, 2012.
 
            3. POSITION AND DUTIES. (a) (i) During the Initial Period, the
Executive shall serve as the Chief Executive Officer of the Company, and, (ii)
during the Second Period, the Executive shall cease serving as the Chief
Executive Officer of the Company and shall serve as the Executive Chairman of
the Company, in the case of each of (i) and (ii), with such authority, power,
duties and responsibilities as are commensurate with such positions and as are
customarily exercised by a person holding such positions in a company of the
size and nature of the Company. During the Employment Period, the Executive
shall report directly to the Board of Directors of the Company (the "BOARD").
During the Employment Period, the Executive shall serve as a member of the Board
and, on the first anniversary of the Effective Date, the Executive shall
commence serving as the Chairman of the Board. The Board shall appoint the
Executive to the positions specified above at the times specified above
throughout the Employment Period. During the Employment Period, the Executive
shall perform his duties at the Company's corporate headquarters.
 
                 (b) The Executive agrees that during the Initial Period, he
shall devote his full business time, energies and talents to serving in the
positions described in Section 3(a)
 
<PAGE>
 
and he shall perform his duties faithfully and efficiently subject to the
directions of the Board. During the Second Period, the Executive shall devote
such time to his duties as mutually agreed upon by the Executive and the
Company. Notwithstanding the foregoing provisions of this Section 3(b), 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 (the "AFFILIATED ENTITIES").
 
            4. COMPENSATION. Subject to the terms of this Agreement, while the
Executive is employed by the Company, the Company shall compensate him for his
services as follows:
 
                 (a) BASE SALARY. During the Initial Period, the Executive shall
receive an annual base salary ("ANNUAL BASE SALARY") of no less than $740,000.
During the Initial Period, the Executive's Annual Base Salary shall be reviewed
annually by the Board for increase pursuant to its normal performance review
policies for senior executives. During the Second Period, the Executive's Annual
Base Salary shall be determined by the Compensation Committee of the Board (the
"COMPENSATION COMMITTEE"), but in no event shall it be less than fifty percent
(50%) of the Executive's Annual Base Salary at the end of the Initial Period.
The term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as in effect from time to time, including any increases. Such Annual
Base Salary shall be payable in monthly or more frequent installments in
accordance with the Company's payroll policies. Except as provided for in this
Section 4(a), the Executive's Annual Base Salary may not be decreased at any
time during the Employment Period.
 
                 (b) ANNUAL INCENTIVE PAYMENT. With respect to each fiscal year
of the Company ending during the Initial Period, 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 substitute or
successor plan thereto (the "INCENTIVE PLAN"). The Executive's target Incentive
Payment under the Incentive Plan for each fiscal year during the Initial Period
shall not be less 75% of his Annual Base Salary (the "TARGET INCENTIVE
PAYMENT"), with such target incentive percentage to be reviewed, for increase
but not decrease, annually by the Board pursuant to its normal performance
review policies for senior executives. With respect to each fiscal year ending
during the Second Period, the Executive's Incentive Payment shall be determined
by the Compensation Committee in its sole discretion.
 
                 (c) ANNUAL EQUITY INCENTIVE AWARDS. During the Initial Period,
the Executive shall receive annual equity incentive awards under the Company's
equity-based compensation plans on terms and conditions no less favorable than
those provided to other senior executives of the Company, taking into account
competitive practice at comparable institutions. Notwithstanding the foregoing
or any provision of any applicable plan or award agreement to the contrary, all
equity incentive awards granted to the Executive during the Initial Period shall
vest no later than immediately prior to the expiration of the Initial Period and
shall include provisions
 
                                      -2-
 
<PAGE>
 
relating to vesting and, with respect to stock options, post-termination
exercise periods, upon attaining age 55 with five years of service, that are no
less favorable than those in effect with respect to the equity incentive awards
most recently granted to the Executive prior to the Effective Date. With respect
to each fiscal year ending during the Second Period, the Executive shall receive
equity incentive awards as determined by the Compensation Committee in its sole
discretion.
 
                 (d) SUPPLEMENTAL PENSION BENEFITS. During the Initial Period,
the Executive shall continue to participate in and accrue benefits under the
Supplemental Executive Retirement Plan which was entered into between the
Company and the Executive on February 25, 2002 (the "SERP"). For purposes of
determining the Executive's benefit under the SERP, the Executive shall be
deemed to have received a $200,000 cash bonus for the year ending December 31,
2002. In addition, upon the Effective Date, notwithstanding anything to the
contrary in the SERP, the SERP shall be amended hereby as follows: (i) for all
purposes of the SERP, all references to "age 65," "65th birthday" and "65" shall
be amended to be references to "age 62 and one-half," "62nd and one-half
birthday" and "62 and one-half"; (ii) notwithstanding anything to the contrary
contained in the SERP, including without limitation Section 2(c) and the first
sentence of Section 3, on or prior to December 31, 2006, the Executive shall be
entitled to make an election as to the time and form of distribution of the SERP
benefit, with the optional forms of benefit to include (A) a 50% joint and
survivor annuity option to be purchased by the Company for the Executive from a
nationally recognized insurance company selected by the Executive, (B) a lump
sum option, with the lump sum to be calculated in accordance with the actuarial
factors set forth in the Citizens Banking Corporation Pension Plan for Employees
as of the date hereof (the "PENSION PLAN") for the determination of lump sum
benefits thereunder, PROVIDED that in no event shall the discount rate for
determining such lump sum exceed 5.5% and (C) any other form of distribution
provided for under the Pension Plan as provided in Section 2(c) of the SERP; and
(iii) to provide that, in the event of the Executive's death while employed by
the Company, the Executive's spouse shall be entitled to the benefit under the
SERP, the amount and form of which shall be determined as if the Executive had
retired under the SERP as of the date of his death.
 
                 (e) STOCK ISSUANCE. The Executive has previously received a
grant of shares of Company common stock with an aggregate fair market value of
$200,000, valued as of January 15, 2003, pursuant to the Company's Stock
Compensation Plan. So long as the Executive remains employed by the Company,
such shares shall not be sold by the Executive without the written approval of
the Board. The Executive shall remain entitled to vote such shares and receive
dividends thereon.
 
                 (f) EMPLOYEE BENEFITS, FRINGE BENEFITS AND PERQUISITES. During
the Employment Period, 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,
life insurance and accidental death and dismemberment insurance. Upon the
Executive's termination of employment for any reason, for the remainder of the
lives of each of the Executive and his current spouse, without regard to the
Executive's years of service with the Company as of the Date of Termination, the
Executive and his current spouse shall be eligible to participate in the
Company's group healthcare programs with benefits no less
 
                                      -3-
Top of the Document
<PAGE>
 
favorable than those provided to eligible retirees under the Company's welfare
benefit programs as in effect on the date hereof and at the Executive's expense
(the "MEDICAL BENEFITS").
 
                 (g) OTHER BENEFITS. During the Employment Period, the Company
shall reimburse the Executive for the initiation fees (to the extent applicable)
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
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 the Executive
from time to time by reason of the receipt of such reimbursements (or direct
payment of initiation fees (to the extent applicable) and dues for country club
membership) under this Section 4(g).
 
                 (h) EXPENSE REIMBURSEMENT. During the Employment Period, 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. In addition, the Company shall reimburse the
Executive for reasonable attorney's fees incurred by him in the negotiation of
this Agreement.
 
                 (i) CHANGE IN CONTROL AGREEMENT. Notwithstanding anything to
the contrary herein, the Change in Control Agreement entered into between the
Executive and the Company on February 25, 2002 (the "CHANGE IN CONTROL
AGREEMENT") shall remain in full force and effect; HOWEVER, the Executive and
the Company acknowledge and agree that the Merger shall not constitute a "Change
in Control" for purposes of the Change in Control Agreement. Upon a termination
of the Executive's employment entitling the Executive to benefits under this
Agreement and the Change in Control Agreement, the Executive shall be entitled
to the better of the benefit provided herein or in the Change in Control
Agreement on a benefit by benefit basis; PROVIDED, HOWEVER, that in no event
shall the Executive be entitled to duplicate benefits.
 
                 (j) INDEMNIFICATION. The Executive shall continue to be
entitled to the benefits of the Indemnification Agreement entered into between
the Executive and the Company on February 25, 2002.
 
            5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may provide the Executive
with written notice in accordance with Section 23 of this Agreement of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "DISABILITY EFFECTIVE
DATE"), PROVIDED that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "DISABILITY" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative.
 
                                      -4-
 
<PAGE>
 
                 (b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period either with or without Cause. For purposes of this
Agreement, "CAUSE" shall mean:
 
                 (i) the continued failure of the Executive to perform
     substantially the Executive's duties with the Company or one of the
     Affiliated Entities (other than any such failure resulting from incapacity
     due to physical or mental illness), after a written demand for substantial
     performance is delivered to the Executive by the Board which specifically
     identifies the manner in which the Board believes that the Executive has
     not substantially performed the Executive's duties;
 
                 (ii) the Executive is convicted of, or pleads guilty or NOLO
     contendere to a charge of commission of (A) a felony or (B) any crime
     involving moral turpitude resulting in reputational harm causing material
     injury to the Company; or
 
                 (iii) the willful engaging by the Executive in illegal conduct
     or gross misconduct which is materially and demonstrably injurious to the
     Company.
 
            For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the 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 a
resolution duly adopted by the Board or upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in clauses (i), (ii) or (iii) above, and
specifying the particulars thereof in detail.
 
                 (c) GOOD REASON. The Executive's employment may be terminated
by the Executive during the Employment Period with or without Good Reason. For
purposes of this Agreement, "GOOD REASON" shall mean in the absence of the
written consent of the Executive:
 
                 (i) the failure of the Company to appoint or reappoint the
     Executive to the positions set forth in Section 3(a) of the Agreement at
     the times specified in Section 3(a) of the Agreement or the removal of the
     Executive from any of such positions, other than, in the case of each of
     the foregoing, if such failure or removal is for Cause or due to the
     Executive's death or Disability;
 
                 (ii) the assignment to the Executive of any duties inconsistent
     with the Executive's positions (including status, offices and titles),
     authority, duties or responsibilities as contemplated by Section 3(a) of
     this Agreement, or any other action by the Company which results in a
     diminution in such positions, authority, duties or
 
                                      -5-
 
<PAGE>
 
     responsibilities, excluding for this purpose an isolated, insubstantial or
     inadvertent action not taken in bad faith and which is remedied by the
     Company within 30 days after receipt of notice thereof given by the
     Executive;
 
                 (iii) any failure by the Company to comply with any of the
     provisions of Section 4 of this Agreement, other than an isolated,
     insubstantial or inadvertent failure not occurring in bad faith and which
     is remedied by the Company within 30 days after receipt of notice thereof
     given by the Executive;
 
                 (iv) any change in the Executive's reporting relationship other
     than as contemplated in Section 3(a) or any requirement by the Company that
     the Executive's services be rendered primarily at a location or locations
     other than the Company's corporate headquarters in the lower peninsula of
     Michigan;
 
                 (v) any failure by the Company to comply with Section 17(b) of
     this Agreement; or
 
                 (vi) any failure to elect or reelect the Executive to the Board
     other than any such failure for Cause or due to the Executive's death or
     Disability.
 
                 (d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 23 of
this Agreement. For purposes of this Agreement, a "NOTICE OF TERMINATION" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
 
                 (e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive with or without Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days of such notice,
as the case may be, (ii) if the Executive's employment is terminated by the
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
 
            6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON;
OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall
 
                                      -6-
 
<PAGE>
 
terminate the Executive's employment other than for Cause, death or Disability
or the Executive shall terminate employment for Good Reason:
 
                 (i) the Company shall pay to the Executive in a lump sum in
     cash within 30 days after the Date of Termination the aggregate of the
     following amounts:
 
                     A. the sum of (1) the Executive's Annual Base Salary
          through the Date of Termination to the extent not theretofore paid,
          (2) any annual Incentive Payment earned by the Executive for a prior
          award period, but not yet paid to the Executive, (3) the product of
          (x) the Target Incentive Payment and (y) a fraction, the numerator of
          which is the number of days that have elapsed in the fiscal year of
          the Company in which the Date of Termination occurs as of the Date of
          Termination, and the denominator of which is 365 (the "PRO-RATA
          BONUS"), (4) any accrued vacation pay to the extent not theretofore
          paid, and (5) any business expenses incurred by the Executive that are
          unreimbursed as of the Date of Termination (the sum of the amounts
          described in clauses (1), (2), (3), (4) and (5) shall be hereinafter
          referred to as the "ACCRUED OBLIGATIONS"); and
 
                     B. the amount equal to the product of (1) the greater of
          (x) the number of days from the Date of Termination until the
          expiration of the Initial Period, divided by 365, and (y) three (the
          greater of (x) and (y) referred to herein as the "MULTIPLE"), and (2)
          the sum of (x) the Executive's Annual Base Salary and (y) the Target
          Incentive Payment (the product of (1) and (2), the "SEVERANCE
          PAYMENT"); PROVIDED, HOWEVER, that, notwithstanding anything contained
          herein to the contrary, for purposes of the Pro-Rata Bonus and the
          Severance Payment payable upon a termination of the Executive's
          employment that occurs during the Second Period, the Target Incentive
          Payment component of such calculations shall equal the Incentive
          Payment paid or payable (including amounts deferred) to the Executive
          in respect of the completed fiscal year prior to the fiscal year in
          which the Date of Termination occurs; and
 
                 (ii) All stock options, restricted stock, restricted stock
     units and other equity-based compensation awards outstanding as of the Date
     of Termination and held by the Executive shall vest in full and all
     restrictions thereon shall lapse, and all stock options shall remain
     exercisable for the remainder of their full term (or, with respect to stock
     options granted prior to the Effective Date, such shorter period as would
     not be considered an extension and renewal of an option for purposes of
     Section 409A of the Internal Revenue Code of 1986, as amended (the "CODE")
     and the regulations thereunder, taking into account the post-termination
     exercise period provided to the Executive under the Prior Agreement (as
     defined in Section 25 hereof) or pursuant to the Company's policy with
     respect to executives who are age 55 with five years of service)
     (collectively, the "EQUITY BENEFITS"); and
 
                 (iii) the Executive's club membership shall be transferred to
     the Executive at no cost to the Executive, who immediately following the
     transfer shall become subject to the monthly dues charges of the club; and
 
                                      -7-
 
<PAGE>
 
                 (iv) during the three-year period following the Date of
     Termination, the Executive and his eligible dependents shall continue to be
     covered, at the Company's cost, by the medical, dental and life insurance
     benefits plans that are in effect on the Date of Termination and that cover
     senior executive officers, and, thereafter the Executive shall be entitled
     to the Medical Benefits. Any such non-cash benefit that is tied to
     compensation shall be based on the Executive's Severance Payment divided by
     the Multiple; and
 
                 (v) to the extent not theretofore paid or provided, the Company
     shall timely pay or provide to the Executive any other amounts or benefits
     required to be paid or provided or which the Executive is eligible to
     receive under any plan, program, policy or practice or contract or
     agreement of the Company and the Affiliated Entities through the Date of
     Termination, including without limitation the benefits under the SERP as
     modified by Section 4(d) (such other amounts and benefits shall be
     hereinafter referred to as the "OTHER BENEFITS").
 
Notwithstanding the foregoing provisions of this Section 6(a), to the extent
required in order to comply with Section 409A of the Code, cash amounts and the
benefits that would otherwise be payable or provided under this Section 6(a)
during the six-month period immediately following the Date of Termination shall
instead be paid or provided, with interest on any delayed cash payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code
("INTEREST"), on the first business day after the date that is six months
following the Executive's "separation from service" within the meaning of
Section 409A of the Code; PROVIDED, HOWEVER, that, with respect to the provision
of healthcare benefits, the Company shall take such action as is necessary to
ensure that there is not a lapse in coverage.
 
                 (b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of the Equity Benefits, the
Medical Benefits and the Other Benefits. Accrued Obligations shall be paid to
the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include death benefits as in effect on the date of the Executive's death with
respect to senior executives of the Company and their beneficiaries.
 
                 (c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
the Equity Benefits, the Medical Benefits and the Other Benefits. Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination, PROVIDED, that to the extent required in order to
comply with Section 409A of the Code, amounts and benefits to be paid or
provided under this sentence of Section 6(c) shall be paid, with Interest, or
provided to the Executive on the first business day after the date that is six
months following the Executive's "separation from service" within the meaning of
Section 409A of the Code. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(c) shall include, and the
Executive shall be entitled
 
                                      -8-
 
<PAGE>
 
after the Disability Effective Date to receive, disability and other benefits as
in effect at any time thereafter generally with respect to senior executives of
the Company.
 
                 (d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (i) the Accrued Obligations (other than the
Pro-Rata Bonus), (ii) the Other Benefits and (iii) the Medical Benefits.
 
                 (e) EFFECT OF TERMINATION ON OTHER POSITIONS. If, on the Date
of Termination, the Executive is a member of the Board or the board of directors
of any of the Company's subsidiaries, or holds any other position with the
Company or its subsidiaries, the Executive shall be deemed to have resigned from
all such positions as of the date of his termination of employment with the
Company. The Executive agrees to execute such documents and take such other
actions as the Company may request to reflect such resignation.
 
            7. NO MITIGATION; NO OFFSET. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case Interest on any delayed payment.
 
            8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 8) (a "PAYMENT") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "EXCISE TAX"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
 
                                      -9-
Top of the Document
<PAGE>
 
                 (b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, 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 a nationally recognized certified public accounting firm reasonably
acceptable to the Company as may be designated by the Executive (the "ACCOUNTING
FIRM") which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company. All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive or directly to the Internal
Revenue Service, in the sole discretion of the Company, within five days of the
later of (i) the due date for the payment of any Excise Tax, and (ii) the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company 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 Company should have been
made ("UNDERPAYMENT"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) 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
Company to or for the benefit of the Executive.
 
                 (c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company 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 Company 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 Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company 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 Company any information reasonably requested
     by the Company relating to such claim,
 
                     (ii)  take such action in connection with contesting such
     claim as the Company 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 Company,
 
                     (iii) cooperate with the Company in good faith in order
      effectively to contest such claim, and
 
                     (iv)  permit the Company to participate in any proceedings
      relating to such claim;
 
                                      -10-
 
<PAGE>
 
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including all professional fees and 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 Section 8(c), the Company 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 pay the tax claimed to the appropriate taxing authority on
behalf of the Executive and direct the Executive to sue 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 Company shall
determine; PROVIDED, HOWEVER, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such payment or with respect to any imputed income in connection with such
payment; and PROVIDED, FURTHER, 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 Company's control of the contest shall be
limited to issues with respect to which the 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.
 
                 (d) If, after the receipt by the Executive of a payment by the
Company of an amount on the Executive's behalf pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the requirements of
Section 8(c)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after payment by the Company of an amount on the Executive's behalf pursuant to
Section 8(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company 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 the amount of such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
 
            9. RETURN OF COMPANY PROPERTY. Upon his termination of employment
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 the Affiliated Entities
or containing any trade secrets relating to the Company or the Affiliated
Entities 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 9.
 
                                      -11-
 
<PAGE>
 
            10. MUTUAL NONDISPARAGEMENT. The Executive and the Company each
agree that, following the Executive's termination of employment, neither the
Executive, nor the Company, including its executive officers and directors, will
make any public statements which materially disparage the other party.
Notwithstanding the foregoing, nothing in this Section 10 shall prohibit any
person from making truthful statements when required by order of a court or
other governmental or regulatory body having jurisdiction.
 
            11. CONFIDENTIAL INFORMATION. The Executive agrees that, during his
employment with 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 the Affiliated
Entities, 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.
 
            12. NONSOLICITATION. For the two-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 the Affiliated Entities 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 the Affiliated Entities,
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.
 
            13. NONCOMPETITION. The Executive agrees that, while he is employed
by the Company and during the two-year period thereafter, he will not engage in
Competition (as defined below). 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
the Affiliated Entities as of the Date of Termination operates 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
the Affiliated Entities. 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 state in which the Company or
the Affiliated Entities operates a material business as of the Date of
Termination. 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.
 
                                      -12-
 
<PAGE>
 
            14. EQUITABLE REMEDIES. The Executive acknowledges that the Company
would be irreparably injured by a violation of Section 10, 11, 12 or 13 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 10, 11, 12 or 13. 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. In no event shall an asserted violation of the provisions of
Section 10, 11, 12 or 13 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
 
            15. ASSISTANCE WITH CLAIMS. The 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 the Affiliated
Entities 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 the Affiliated Entities in the prosecution of any
claims that may be made by the Company or the Affiliated Entities 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. The 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. The Executive also agrees, unless precluded by
law, to promptly inform the Company if the Executive is asked to assist in any
investigation (whether governmental or private) of the Company or the Affiliated
Entities (or their actions), regardless of whether a lawsuit has then been filed
against the Company or the Affiliated Entities with respect to such
investigation. The Company agrees to reimburse the Executive for all of the
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 the Executive's services.
 
            16. ARBITRATION. (a) Except as provided in Section 14 of this
Agreement, any and all controversies, disputes or claims arising between the
parties to this Agreement, including any purported controversies, disputes or
claims not arising under contract, that have not been resolved within twenty
(20) days after notice is given in writing of the controversy, dispute or claim
shall be submitted for arbitration in accordance with the rules of the American
Arbitration Association in effect as of the date hereof. Arbitration shall take
place at an appointed time and place in Flint, Michigan. Each party hereto shall
select one arbitrator, and the two so designated shall select a third
arbitrator. If either party shall fail to designate an arbitrator within fifteen
(15) calendar days after arbitration is requested, or if the two arbitrators
shall fail to select a third arbitrator within thirty (30) calendar days after
arbitration is requested, then such arbitrator shall be selected by the American
Arbitration Association, or any successor thereto, upon application of either
party. The arbitration shall be instead of any civil litigation; this means that
the Executive and the Company are each waiving any rights to a jury trial.
 
                 (b) Except as provided in Section 14 of this Agreement,
arbitration under this provision shall be the sole and exclusive forum and
remedy for resolution of controversies, disputes and claims of any kind or
nature, whether or not presently known or anticipated, including any purported
controversies, disputes or claims not arising under contract, between the
 
                                      -13-
 
<PAGE>
 
parties to this Agreement, and no recourse shall be had to any other judicial or
other forum for any such resolution. The award of the arbitrators may grant any
relief that a court of general jurisdiction has authority to grant, including,
without limitation, an award of damages and/or injunctive relief. All costs and
expenses of arbitration shall be borne by the Company. Any award of the majority
of arbitrators shall be binding and not subject to judicial appeal or review of
the award, including without limitation any proceedings under sections 9 and 10
of the Federal Arbitration Act, 9 U.S.C. ss. 1 ET SEQ., or any comparable
provision for review of an arbitral award under any comparable statute or law of
any jurisdiction, all rights to which are hereby expressly waived by the
parties. The Executive and the Company knowingly and voluntarily agree to this
arbitration provision. Subject to the preceding sentence, the United States
District Court for the District of Michigan and the courts of the State of
Michigan shall have sole and exclusive jurisdiction solely for the purpose of
entering judgment upon any award by the majority of arbitrators.
 
                 (c) Nothing herein shall bar the right of either party to this
Agreement to seek and obtain injunctive relief from a court of competent
jurisdiction in accordance with Section 14 above. Furthermore, claims for
unemployment insurance benefits, for workers' compensation insurance benefits,
and for benefits under any employee benefit plan(s) governed by the Employee
Retirement Income Security Act of 1974, as amended, shall be resolved pursuant
to the claims procedures under such benefit plans, notwithstanding this
agreement to arbitrate.
 
            17. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive. This Agreement and any rights and benefits hereunder shall inure to
the benefit of and be enforceable by the Executive's legal representatives,
heirs or legatees. This Agreement and any rights and benefits hereunder shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.
 
                     (b) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to satisfy all of the obligations under this Agreement
(including, without limitation, the Company's obligations under the SERP as
amended by Section 4(d) of this Agreement) in the same manner and to the same
extent that the Company would be required to satisfy such obligations if no such
succession had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
 
            18. AMENDMENT. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. If any compensation or benefits
provided by this Agreement may result in the application of Section 409A of the
Code, the Company shall, in consultation with the Executive, modify the
Agreement in the least restrictive manner necessary in order to exclude such
compensation from the definition of "deferred compensation" within the meaning
of such Section 409A or in order to comply with the provisions of Section 409A,
other applicable provision(s) of the Code and/or any rules, regulations or other
regulatory guidance issued under
 
                                      -14-
 
<PAGE>
 
such statutory provisions and without any diminution in the value of the
payments or benefits to the Executive and, in the case of the health care
benefits, without any lapse in coverage.
 
            19. WITHHOLDING. The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
 
            20. 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.
 
            21. 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).
 
            22. 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.
 
            23. 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
                        328 South Saginaw St.
                        Flint, Michigan  48502
                        Attention:  General Counsel and Secretary
 
            or to the Executive:
 
                        At the most recent address maintained
                        by the Company in its personnel records
 
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
 
                                      -15-
 
<PAGE>
 
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.
 
            24. 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.
 
            25. ENTIRE AGREEMENT. From and after the Effective Date, this
Agreement shall supersede any other employment, severance or change of control
agreement between the parties with respect to the subject matter hereof,
including the Amended and Restated Employment Agreement between the Company and
the Executive, dated as of May 29, 2003 (the "Prior Agreement"), except as
expressly provided herein.
 
            26. 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.
 
                                      -16-
 
<PAGE>
 
            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.
 
                                    WILLIAM R. HARTMAN
 
                                    /s/ William R. Hartman
                                    -----------------------------------------
 
 
 
                                    CITIZENS BANKING CORPORATION
 
 
                                    By: /s/ Kendall B. Williams
                                        -------------------------------------
                                        Name: Kendall B. Williams
                                        Title:  Chairman of the Compensation
                                                and Human Resources Committee

 

 

 

Top of the Document

 

 

FORM OF CHANGE IN CONTROL AGREEMENT
Exhibit 10.17
                                                                     (Form 10-K)
 
                           CHANGE IN CONTROL AGREEMENT
 
      This Change in Control Agreement ("Agreement") is made by and between
Citizens Banking Corporation, a Michigan corporation ("Corporation"), and
_______________________ ("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.
<PAGE>
      C. 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:
 
            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
 
 
                                        2
<PAGE>
                  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 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
 
Top of the Document
                                       3
<PAGE>
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 sue 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 sue 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 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, (ii) 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
 
 
                                       4
<PAGE>
      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 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 termination as described in the
following sentences of this paragraph 3. If (i) there is a significant reduction
in the scope of the Executive's authority or in the extent of his powers,
functions, duties or
 
 
                                       5
<PAGE>
responsibilities, or (ii) the Executive's annual rate of compensation is reduced
or fringe benefits, including relocation benefits, are not provided to him on a
basis commensurate with other executives of the Corporation and its subsidiary
banks, or (iii) there are changes in the Executive's responsibilities for the
Corporation which require moving the Executive's job location to a location
outside of the lower peninsula of the State of Michigan, then the Executive
shall be entitled to give written notice thereof to the Board of Directors of
the Corporation. If within 60 days following such notice, the Executive and the
Board of Directors of the Corporation do not resolve the Executive's concerns to
the satisfaction of the Executive (the Executive's satisfaction or
dissatisfaction to be communicated to the Board of Directors of the Corporation
in writing within such 60 days), the Executive's employment shall be deemed to
be constructively terminated at the end of such 60-day period.
 
      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.
 
 
                                       6
<PAGE>
      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, "termination for cause"
means termination due to the Executive's conviction of a felony, a determination
that the Executive is guilty of sexual harassment of another employee, the
Executive's proven embezzlement from the Corporation or a subsidiary bank, the
Executive's gross misconduct or incompetence, the Executive's disclosure of
confidential information of the Corporation or intentional assistance of a
competitor of the Corporation (as defined in paragraph 5), or any other activity
of the Executive which has or may have a material adverse effect on the finances
or business reputation of the Corporation or a subsidiary bank.
 
      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
 
 
                                       7
<PAGE>
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.
 
      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 effective as of
__________________________.
 
CITIZENS BANKING CORPORATION                EXECUTIVE
 
 
By:
   --------------------------------         ------------------------------
      William R. Hartman
      Chairman, President and
      Chief Executive Officer
 
Date:                                        Date:
      -------------------                         -------------------
 
Name, Principal Position of Participants, and Effective Date of Contract:
 
William R. Hartman, Chairman, President and Chief Executive Officer, February
25, 2002. Charles D. Christy, Executive Vice President and Chief Financial
Officer, September 3, 2002. John D. Schwab, Executive Vice President and Chief
Credit Officer, November 12, 2002.
 
 
Top of the Document                                       8
 
</TEXT>
</DOCUMENT>

 

EX-10.42 4 k24347exv10w42.htm AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

 

Exhibit 10.42*
(Form 10-K)

AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

     This Amended and Restated Change in Control Agreement (“Agreement”) is made by and between Citizens Republic Bancorp, Inc., a Michigan corporation (“Corporation”), and
[                    ] (“Executive”).

     The Executive and the Corporation are parties to that certain Change of Control Agreement, dated as of [               ] (the “Original Agreement”). The Corporation now desires to make certain amendments to the Original Agreement as deemed advisable to prevent an inclusion of income or imposition of penalties under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) or as deemed advisable to facilitate compliance with Code Section 409A.

     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 the Executive’s 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, the Executive will continue to have the responsibility and status the Executive 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 experiences a “separation from service” from the Corporation or a subsidiary thereof within the meaning of Code Section 409A (a “Separation from Service”) 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 Separation from Service occurs or (y) the highest bonus paid to the Executive in the last three full calendar years of such employment (such amount, the “Severance Payment”). The Severance Payment shall be payable within 60 days following the date of the Executive’s Separation from Service, provided that, except as provided with respect to an Anticipatory Termination (as defined in paragraph 3 below), in the event that the Executive is a “specified employee” within the meaning of Code Section 409A (with such classification to be determined in accordance with the methodology established by the applicable employer) (a “Specified Employee”) as of the date of the Executive’s Separation from Service, the Severance Payment shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Code Section 7872(f)(2)(A) (“Interest”), on the first business day after the date that is six months following the Executive’s Separation from Service (the “409A Payment Date”). Notwithstanding the foregoing, in the event of an Anticipatory Termination, the Severance Payment shall be paid as follows: (i) if such Change in Control is a “change in control event” within the meaning of Code Section 409A, (A) except

 


 

as provided in clause (i)(B), on the date of such Change in Control, or (B) if the Executive is a Specified Employee as of the date of the Executive’s Separation from Service, on the 409A Payment Date, and (ii) if such Change in Control is not a “change in control event” within the meaning of Code Section 409A, (A) except as provided in clause (ii)(B), on the first business day following the three-month anniversary of the date of such Anticipatory Termination, or (B) if the Executive is a Specified Employee as of the date of the Executive’s Separation from Service, on the 409A Payment Date. Interest with respect to the period, if any, from the date of the Change in Control until the actual date of payment shall be paid on the Severance Payment made in connection with an Anticipatory Termination.

     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 the Executive’s Separation from Service and that cover executive employees, for a period of thirty-six (36) months (the “Benefit Continuation Period”) after the Executive’s Separation from Service; provided, however, that such medical and dental benefits provided during the Benefit Continuation Period shall be provided in such a manner that such benefits (and the costs and premiums thereof) are excluded from the Executive’s income for federal income tax purposes and, if the Corporation reasonably determines that providing continued coverage under one or more of its health care benefit plans contemplated herein could be taxable to the Executive, the Corporation shall provide such benefits at the level required hereby through the purchase of individual insurance coverage; provided, however, that if during such time period the Executive should enter into other employment providing comparable benefits, the Executive’s participation in such plans of the Corporation shall cease to the extent of the Executive’s coverage by the Executive’s 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 1.A of this Agreement.

     C. 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 on the date of the Executive’s Separation from Service, in which case the Executive shall, immediately following the transfer, become subject to the dues charges of the club. Notwithstanding the foregoing, if the Executive is a Specified Employee as of the date of the Executive’s Separation from Service, the Corporation shall continue to maintain the Executive’s club membership at the same level and rate as in effect on the date of the Executive’s Separation from Service until, and shall transfer such membership at no cost to the Executive on, the 409A Payment Date, in which case the Executive shall, during such period of delay, pay the dues charges of the club on behalf of the Corporation and, immediately following such delayed transfer, become subject to the 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 Executive’s Separation from Service, 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 the Executive’s Separation from Service) 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 Code Section 280G, 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 excise tax imposed under Code Section 4999, together with any interest or penalties imposed with respect to such excise tax (the “Excise Tax”) 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 -

-2-


 

 

 

 

 

 

 

 

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 280G(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:

 

 

 

 

 

 

 

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;

 

 

 

 

 

 

 

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 the Executive is then required to pay income taxes as a result of the Executive’s 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, provided, that in the event the Executive is a Specified Employee as of the date of the Executive’s Separation from Service, the Gross-Up Payment shall be made to the Executive on the 409A Payment Date, if later.

     G. Subject to the provisions of paragraph 1.G, all determinations required to be made under these paragraphs 1.E, 1.F and 1.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 Code Section 4999 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 1.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

-3-


 

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 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 paragraph 1.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 pay the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the Executive to sue 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 pays such claim and directs the Executive to sue for a refund, the Corporation shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income with respect to such payment calculated as described in paragraph 1.F; 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 a payment by the Corporation of an amount on the Executive’s behalf pursuant to this paragraph 1.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 paragraph 1.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 payment by the Corporation of an amount on the Executive’s behalf pursuant to this paragraph 1.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 the amount of such payment 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 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, (ii) 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

-4-


 

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 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. Executive’s Separation from Service shall be as described in this paragraph 3 if the Separation from Service results from the Executive’s termination of employment at any time within 3 months prior to (such termination of employment, an “Anticipatory Termination”), 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 termination as described in the following sentences of this paragraph 3. If (i) there is a significant reduction in the scope of the Executive’s authority or in the extent of the Executive’s powers, functions, duties or responsibilities, or (ii) the Executive’s annual rate of compensation is reduced or fringe benefits, including relocation benefits, are not provided to the Executive on a basis commensurate with other executives of the Corporation and its subsidiary banks, or (iii) there are changes in the Executive’s responsibilities for the Corporation which require moving the Executive’s job location to a location outside of the State of Wisconsin, then the Executive shall be entitled to give written notice thereof to the Board of Directors of the Corporation. If within 60 days following such notice, the Executive and the Board of Directors of the Corporation do not resolve the Executive’s concerns to the satisfaction of the Executive (the Executive’s satisfaction or dissatisfaction to be communicated to the Board of Directors of the Corporation in writing within such 60 days), the Executive’s employment shall be deemed to be constructively terminated at the end of such 60-day period, provided that Executive in fact experiences a Separation from Service.

     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

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other compensation or benefits as may be authorized by the Corporation’s Board of Directors from time to time provided however, Executive shall not be eligible to receive any benefits under the Corporation’s Severance Pay Plan if Executive receives the severance amount and other benefits under this Agreement.

     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 the Executive’s 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 the Executive’s Separation from Service. 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 in Control of the Corporation occurred.

     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 paragraph 3), retire at or after normal retirement age, become incapacitated, voluntarily take another position requiring a substantial portion of the Executive’s 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, “termination for cause” means termination due to the Executive’s conviction of a felony, a determination that the Executive is guilty of sexual harassment of another employee, the Executive’s proven embezzlement from the Corporation or a subsidiary bank, the Executive’s gross misconduct or incompetence, the Executive’s disclosure of confidential information of the Corporation or intentional assistance of a competitor of the Corporation (as defined in paragraph 5), or any other activity of the Executive which has or may have a material adverse effect on the finances or business reputation of the Corporation or a subsidiary bank.

     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 (within ten days following the Corporation’s receipt of an invoice from the Executive), at any time from the effective date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the 20th

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anniversary of the effective date of this Agreement) 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. In order to comply with Code Section 409A, in no event shall the payments by the Corporation under this paragraph 9 be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees and expenses at least ten days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Corporation is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Corporation is obligated to pay in any other calendar year, and the Executive’s right to have the Corporation pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

     10. Within the time period permitted by the applicable Treasury Regulations, the Corporation may, in consultation with the Executive, modify the Agreement, in the least restrictive manner necessary and without any diminution in the value of the payments to the Executive, in order to cause the provisions of the Agreement to comply with the requirements of Code Section 409A, so as to avoid the imposition of taxes and penalties on the Executive pursuant to Code Section 409A.

     11. The invalidity or unenforceability of any provision of this Agreement shall not affect the enforceability or validity of any other provision hereof.

     12. 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.

     13. This Agreement shall be governed by the laws of the State of Michigan. This Agreement has been executed by the parties effective as of February 26, 2008.

 

 

 

 

 

 

 

 

 

CITIZENS REPUBLIC BANCORP, INC.

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date: February 26, 2008

 

 

 

Date: February 26, 2008

 

 

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