EXHIBIT (10)M
FIRST OF AMERICA BANK CORPORATION
MANAGEMENT EMPLOYEE
SEVERANCE PAY PLAN
1. Purpose; Effective Date. The purpose of this Plan is to set
forth the terms and conditions pursuant to which the Company will pay
severance benefits to certain terminated Management Employees, whose
employment is terminated, either before or after a Change in Control
of the Company. The Plan is effective October 1, 1997.
2. Definitions. For purposes of the Plan the following terms
shall have the meanings as set forth below:
"Annual Compensation Rate" means in the case of a Management
Employee who is not paid through a Variable Pay Program, the sum
of a Management Employee's annual base salary, the target annual
award, if any, under the First of America Bank Corporation Annual
Incentive Compensation Plan, and the target award, if any, under
the First of America Bank Corporation Long-Term Incentive
Compensation Plan, all as in effect for the year in which the
Change in Control occurs, or if greater, as of the date of the
Management Employee's termination of employment.
In the case of a Management Employee, who is paid in whole or in
part through a Variable Pay Program, "Annual Compensation Rate"
means the Management Employee's W-2 compensation for the
calendar year preceding the year in which termination of
employment occurs, such compensation being annualized in the
event the Employee was not employed for the entire calendar year
applicable. Notwithstanding the foregoing, if a Management
Employee has no W-2 compensation paid by any Employer in the
calendar year preceding the year in which termination of
employment occurs, then the annualized W-2 compensation for the
calendar year in which the termination of employment occurs shall
be used to determine the Management Employee's Annual
Compensation Rate.
"Board" means the Board of Directors of the Company.
"Cause" means;
a. the Employee's willful and continued failure to
perform substantially the Employee's duties with
the Employer other than such failure resulting
from incapacity due to physical or mental illness,
after written demand for substantial performance
is delivered to the Employee by an Officer of the
Company, who is senior to the Employee, which
specifically identifies the manner in which the
Officer believes that the Employee has not
substantially performed the Employee's duties; or
b. or the Employee's willful engaging in illegal
conduct or gross misconduct which is materially
and demonstrably injurious to the Company.
For purpose of this definition, no act or failure to act, on the
Employee's part, shall be considered "willful" unless it is done,
or omitted to be done, by the Employee in bad faith or without
reasonable belief that the Employee's action or omission was in
the best interests of the Company. Any act or failure to act,
based upon the instructions of an officer of the Company senior
to the Employee or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to
be done, by the Employee in good faith and in the best interests
of the Company.
A "Change in Control" of the Company shall have occurred:
a. on the fifth day preceding the scheduled
expiration date of a tender offer by, or exchange
offer by any corporation, person, other entity or
group (other than the Company or any of its wholly
owned Subsidiaries), to acquire Voting Stock of
the Company if:
i. after giving effect to such offer such
corporation, person, other entity or group
would own 25% or more of the Voting Stock of
the Company;
ii. there shall have been filed documents with
the Securities and Exchange Commission in
connection therewith (or, if no such filing
is required, public evidence that the offer
has already commenced); and
iii. such corporation, person, other entity or
group has secured all required regulatory
approvals to own or control 25% or more of
the Voting Stock of the Company;
b. if the shareholders of the Company approve a
definitive agreement to merge or consolidate the
Company with or into another corporation in a
transaction in which neither the Company nor any
of its wholly owned Subsidiaries will be the
surviving corporation, or to sell or otherwise
dispose of all or substantially all of the
Company's assets to any corporation, person, other
entity or group (other than the Company or any of
its wholly owned Subsidiaries), and such
definitive agreement is consummated;
c. if any corporation, person, other entity or group
(other than the Company or any of its wholly owned
Subsidiaries) becomes the Beneficial Owner (as
defined in the Company's articles of
incorporation) of Stock representing 25% or more
of the Voting Stock of the Company; or
d. if during any period of two consecutive years
Continuing Directors cease to comprise a majority
of the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed in accordance with
Section 6 of this Plan.
"Company" means First of America Bank Corporation, a Michigan
corporation, and its successor or successors.
"Compensation and Benefit Plans" means the compensation and
benefit plans generally available to management employees of the
Company of like grade and salary including, but not limited to,
retirement plans, group life, disability, accidental death and
dismemberment, travel and accident, and health and dental
insurance plans, incentive compensation plans, stock compensation
plans, deferred compensation plans, supplemental retirement plans
and excess benefit plans.
"Continuing Director" means:
a. any member of the Board of Directors of the
Company at the beginning of any period of two
consecutive years; and
b. any person who subsequently becomes a member of
the Board of Directors of the Company; if
c. such person's nomination for election or election
to the Board of Directors of the Company is
recommended or approved by resolution of a
majority of the Continuing Directors; or
d. such person is included as a nominee in a proxy
statement of the Company distributed when a
majority of the Board of Directors of the Company
consists of Continuing Directors.
"Covered Termination" means the termination of an Employee's
employment prior to a Change in Control of the Company, as
described in Section 4 of the Plan, and as determined by the
Committee in its sole discretion.
"Employee" means any individual regularly employed by an
Employer, who is also a Management Employee. The term "Employee"
shall include Management Employees.
"Employer" means the Company or any of its Subsidiaries.
"Employment Agreement" means a written agreement to which the
Employee and an Employer are parties and which provides for the
continuation of compensation in the event of the termination of
employment.
"Management Continuity Agreement" means an employment agreement
to which a Management Employee and the Company are parties, which
provides for the payment of compensation and benefits in the
event of the Management Employee's termination of employment
following a Change in Control of the Company.
"Management Employee" means an Employee, who has a Total
Compensation Grade of 20 or greater, as determined by the
Committee. In the event of a Change in Control of the Company,
an Employee's status as a Management Employee shall be determined
by the Committee immediately prior to the Change in Control.
"Plan" means this First of America Bank Corporation Severance Pay
Plan.
"Savings Plan" means the First of America Bank Corporation
Reserve Plus Retirement Savings Plan.
"Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code.
"Total Compensation Grade" means the numerical designation
assigned to the ranges of the sum of salary and variable
compensation opportunity into which jobs of the same or similar
value are grouped by the Company for targeted total compensation
purposes, as identified in the payroll records of the Company.
"Variable Pay Program" means a formal compensation program which
provides for remuneration amounts that vary based on achievement
levels of specific performance goals including commissions,
incentives, bonuses and other payments based on an Employee's
performance, excluding the First of America Bank Corporation
Annual Incentive Compensation Plan, the First of America Bank
Corporation Long-Term Incentive Compensation Plan and the First
of America Bank Corporation Employees' Stock Compensation Plan.
"Voting Stock" shall mean those shares of the Company Stock
entitled to vote generally in the election of directors.
"Weekly Compensation Rate" means, in the case of a Management
Employee, the Management Employee's Annual Compensation Rate
divided by 52.
"Year of Service" shall have the same meaning as such term has
pursuant the First of America Bank Corporation Employees'
Retirement Plan for purposes of determining vesting service,
excluding any reference in such plan to any maximum service
limitations, and including any past-service credit granted to an
Employee pursuant to such plan or an agreement adopting that
plan.
3. Eligibility.
(a) General Severance Benefits. All Employees are eligible
for severance pay in the event of a termination of employment, which
the Committee determines is a Covered Termination, as described in
Section 4 of this Plan.
(b) Change in Control Severance Benefits. All Employees
are eligible for severance pay in the event of their termination of
employment, which is described in Section 5 of this Plan, following a
Change in Control. Notwithstanding the foregoing, no Employee, who is
a party to a Management Continuity Agreement, shall be eligible for
severance payments under this Plan following a Change in Control.
4. General Severance Benefits.
(a) Covered Termination. Subject to the provisions of this
Section 4, the Committee shall, in its sole discretion determine
whether an Employee's termination of employment prior to a Change in
Control of the Company is a Covered Termination under this Plan. The
Committee may establish policies and guidelines to be used in the
determination of whether a termination constitutes a Covered
Termination. Notwithstanding the existence of such policies and
guidelines,the Committee shall retain complete discretion in
determining whether a termination constitutes a Covered Termination.
(b) Effect of Certain Offers of Employment. In no event
will a termination of employment be considered a Covered Termination
if the Employee is offered alternative employment with any Employer
where:
(i) the principal location of such alternative
employment is less than 35 miles from the principal
location of the Employee's employment immediately prior
to termination;
(ii) the Total Compensation Grade, if any, applicable
to the alternative employment is not more than two
Total Compensation Grades less than the Employee's
Total Compensation Grade immediately prior to
termination; and
(iii) in the case of a full-time, salaried Employee,
the alternative employment offered to the Employee is a
full-time, salaried position.
(c) Asset Sales. In no event will a termination of
employment be considered a Covered Termination if the termination of
employment results from the sale of all or a portion of the Employer's
assets (excluding any such sale, which constitutes a Change in Control
of the Company) and the Employee is offered, within 15 days following
such sale, a substantially similar employment with the business
entity, which purchased such assets from the Employer.
(d) Outsourcing. In no event will a termination of
employment be considered a Covered Termination, if the termination of
employment results from the outsourcing of services by an Employer and
the Employee is offered, within 15 days following such outsourcing,
substantially similar employment with the business entity providing
the services to the Employer following the outsourcing.
(e) Amount of Severance Benefits. In the event of an
Employee's Covered Termination, the Committee shall, in its sole
discretion, determine the amount of severance benefits payable to the
Employee. The Committee shall make such determination within 30 days
following the date of the Covered Termination. The Committee may
establish policies and guidelines to be used in the determination of
the amount of severance benefits payable to an Employee following a
Covered Termination. Notwithstanding the existence of such policies
and guidelines, the Committee shall retain complete discretion in
determining severance benefits.
(f) Payment of Severance Benefits. Provided that the
Employee has executed the release described in Section 4(g) of this
Plan, the Company shall pay such benefits to the Employee at the same
time and in the same manner that such payments would have been made
had the Employee remained employed with an Employer, in a single
payment, less any applicable withholding. Employees shall not be
entitled to defer the receipt of such severance benefits through any
qualified or nonqualified deferred compensation plan of the Company,
including, not by way of limitation, the Savings Plan.
(g) Release. An Employee shall receive the severance
benefits described in this Section 4 only after the Employee signs a
settlement agreement and release in the form presented to the Employee
by the Company. If the Employee fails to sign such settlement
agreement and release, or the Employee revokes the settlement
agreement and release, to the extent permitted by its terms, then the
Employee shall not receive any severance benefit under Section 4 of
this Plan.
5. Change in Control Severance Benefits.
(a) Termination by Successor or for Good Reason. An
Employee, who satisfies the eligibility provisions of Section 3(b) of
this Plan, shall be eligible for severance benefits described in
Section 5(b) of this Plan if, within the one year period following the
date of the Change in Control:
(i) the Company terminates the Employee's employment
without Cause; or
(ii) an Employee voluntarily resigns from employment
following a material change in the Employee's position,
authorities or responsibilities, in effect immediately
prior to the Change in Control, a reduction in the
Employee's compensation or a material reduction in
benefits provided pursuant to the Compensation and
Benefit Plans below the compensation and benefits in
effect immediately prior to the Change in Control, a
reduction in the Employee's base salary below the
Employee's base salary immediately prior to the Change
in Control, or a change of the Employee's principal
place of employment without the Employee's consent to a
city different from the city which is the principal
place of the Employee's employment immediately prior to
the Change in Control provided that if the Company
provides formal written notice to the Employee of an
event which would give the Employee the right to
voluntarily resign under this Section 5(a)(ii), the
Employee shall notify the Company in writing of such
voluntary resignation within thirty days of receiving
such written notice.
No severance benefits shall be payable in the event of an Employee's
termination of employment, which occurs due to the Employee's
voluntarily resignation (other than a voluntary resignation described
in Section 5(a)(ii) above), death or disability preventing the
Employee from performing any services for the Employer within the one
year period following a Change in Control of the Company.
(b) Amount of Severance Benefits. In the event an Employee
becomes entitled to severance benefits as determined pursuant to
Section 5(a) of this Plan, the Company shall pay the following
benefits to the Employee:
(i) a cash payment equal to the product of two, the
Employee's Years of Service and the Employee's Weekly
Compensation; and
(ii) for the number of weeks equal to the product of
two and the Employee's Years of Service, the Company
shall continue to provide health and dental plan
coverage to the Employee and the Employee's family on
terms and conditions at least as favorable to the
Employee and the Employee's family as those that
applied immediately prior to the Change in Control.
Notwithstanding the foregoing, the payment described in Section
5(b)(i) above shall not be less than 50% of the Employee's Annual
Compensation Rate and shall not exceed 150% of the Employee's Annual
Compensation Rate.
Neither the Committee nor the Company shall have discretion to deny
severance benefits to an Employee whose termination satisfies the
requirements of Section 5(a) of this Plan or to reduce the amount of
such benefits, as determined under this Section 5(b). An Employee's
severance benefit shall not be decreased by the Employee's earnings
from any subsequent employer after the Employee's termination of
employment following a Change in Control.
In lieu of providing health and dental plan coverage to an Employee,
the Company may pay an Employee the cash equivalent of such coverage,
if the Company makes a good faith determination that the provision of
such benefits in-kind would adversely affect the tax exempt status of
its health and dental plans.
(c) Payment of Benefits. Within 30 days following the
Employee's termination of employment, the Company shall pay any cash
payment due under this Plan to the Employee in a single payment, less
any applicable tax withholding. Employees shall not be entitled to
defer the receipt of such severance benefits through any qualified or
nonqualified deferred compensation plan of the Company, including, not
by way of limitation, the Savings Plan.
6. Plan Not Contract of Employment. This Plan shall not give
any Employee the right to remain employed with any Employer and shall
not constitute a contract of employment. Nothing in this Plan shall
be construed as changing any Employee's status as an at-will Employee.
7. Administration of Plan. This Plan shall be administered by
a Committee, consisting of the Company's Senior Vice President of
Human Resources, and two or more additional individuals designated by
the Company's Senior Vice President of Human Resources. The Committee
shall have the authority to determine an Employee's eligibility for
benefits under the Plan, interpret the terms of the Plan and to
resolve any ambiguities that arise in the administration of the Plan.
8. Amendment of Plan. This Plan may be amended or terminated
by written action of the Nominating and Compensation Committee of the
Company's Board of Directors. Following a Change in Control of the
Company, the Plan may not be amended or terminated until all of the
Company's obligations under Section 5 of the Plan have been satisfied.
9. Assignment of Rights. An Employee may not assign, pledge or
otherwise transfer any of the benefits of this Plan either before or
after termination of employment, and any purported assignment, pledge
or transfer of any payment to be made by the Company hereunder shall
be void and of no effect. No payment to be made to an Employee
hereunder shall be subject to the claims of creditors of the Employee.
10. Agreements Binding on Successors. This Agreement shall be
binding and inure to the benefit of the Company, Employees and their
respective successors, assigns, personal representatives, heirs,
legatees and beneficiaries.
11. Severability of Provisions. If for any reason any
paragraph, term or provision of this Plan is held to be invalid or
unenforceable, all other valid provisions herein shall remain in full
force and effect and all paragraphs, terms and provisions of this Plan
shall be deemed to be severable in nature.
12. Governing Law. This Agreement is made in, and shall be
governed by, the laws of the State of Michigan.
FIRST OF AMERICA BANK CORPORATION
By: /S/ RICHARD V. WASHBURN
Richard V. Washburn
Its: Executive Vice President