METROPOLITAN FINANCIAL CORPORATION
DIRECTORS' RETIREMENT PLAN
1. Description
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1) Name. The name of the Plan is the "Metropolitan Financial
Corporation Directors' Retirement Plan."
2) Purpose. The purpose of the Plan is to advance the interests of
the Company and its stockholders by assisting the Company in attracting
and retaining Directors of outstanding ability through payment of
benefits to eligible Directors for a period after they cease to be
Directors equal to their Period of Service on the Board.
3) Type. Benefits under the Plan relate solely to service
performed by a Director as a Director and compensation for such service
and not to status as an officer or employee of the Company or any
Affiliate. To the extent ERISA is applicable to the Plan, the Plan is
an unfunded plan maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees and, as such, is intended to be exempt from the
provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by
operation of sections 201(2), 302(a)(3) and 401(a)(4) thereof,
respectively, and from the provisions of Title IV of ERISA by operation
of section 4021(b)(6) thereof. The Plan will be construed and
administered in a manner that is consistent with and gives effect to
such intent.
2. Definitions, Construction and Interpretations
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The definitions and rules of construction and interpretation set forth
in this article apply in construing the Plan unless the context
otherwise requires.
1) Affiliate. "Affiliate" is:
(a) any corporation at least a majority of whose securities
having ordinary voting power for the election of directors is owned
directly or indirectly by the Company; or
(b) any other form of business entity in which the Company, by
virtue of a direct or indirect ownership interest, has the right to
elect a majority of the members of such entity's governing body.
2) Annual Retainer. "Annual Retainer" is the annual base cash fee
payable by the Company to a non-employee Director for service as a
Director, plus any other elements of compensation payable to a Director
for service as a Director (including service on any committee of the
Board) specified in a written resolution adopted by the Board,
determined in each case without regard to any deferral election by a
Director.
3) Board. "Board" is the Board of Directors of the Company.
4) Change in Control.
(A) "Change in Control" is any of the following:
(1) the sale, lease, exchange or other transfer, directly
or indirectly, of all or substantially all of the assets of the Company,
in one transaction or in a series of related transactions, to any
person;
(2) the approval by the stockholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company;
(3) any person is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of (a) 20 percent or more, but not more than 50 percent, of the combined
voting power of the Company's outstanding securities ordinarily having
the right to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by the
continuity directors or (b) more than 50 percent of the combined voting
power of the Company's outstanding securities ordinarily having the
right to vote at elections of directors (regardless of any approval by
the continuity directors);
(4) a merger or consolidation to which the Company is a
party if the stockholders of the Company immediately prior to the
effective date of such merger or consolidation have beneficial ownership
(as defined in Rule 13d-3 under the Exchange Act) immediately following
the effective date of such merger or consolidation of securities of the
surviving company representing (a) 50 percent or more, but not more than
80 percent, of the combined voting power of the surviving corporation's
then outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation has been
approved in advance by the continuity directors, or (b) less than 50
percent of the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at elections
of directors (regardless of any approval by the continuity directors);
(5) the continuity directors cease for any reason to
constitute at least a majority of the Board; or
(6) a change in control of a nature that is determined by
outside legal counsel to the Company to be required to be reported
(assuming such event has not been "previously reported") pursuant to
section 13 or 15(d) of the Exchange Act, whether or not the Company is
then subject to such reporting requirement.
(B) For purposes of this section:
(1) a "continuity director" means any individual who is
a member of the Board on the Effective Date while he or she is a member
of the Board, and any individual who subsequently becomes a member of
the Board whose election or nomination for election by the Company's
stockholders was approved by a vote of at least a majority of the
directors who are continuity directors (either by a specific vote or by
approval of the proxy statement of the Company in which such individual
is named as a nominee for director without objection to such
nomination);
(2) "Exchange Act" is the Securities Exchange Act of
1934, as amended from time to time; and
(3) "person" includes any individual, corporation,
partnership, group, association or other "person," as such term is
defined in section 14(d) of the Exchange Act, other than (a) the
Company; (b) any Affiliate; or (c) any benefit plan sponsored by the
Company or an Affiliate.
5) Code. "Code" is the Internal Revenue Code of 1986, as amended from
time to time.
6) Company. "Company" is Metropolitan Financial Corporation.
7) Cross References. References within a section of the Plan to a
particular subsection refer to that subsection within the same section
and references within a section or subsection to a particular clause
refer to that clause within the same section or subsection, as the case
may be.
8) Director. "Director" is an individual who (a) is a member of
the Board pursuant to Section 6 of the Company's Restated Certificate of
Incorporation or any successor provision of the Restated Certificate of
Incorporation, as it may be amended from time to time, and (b) was not,
on the Effective Date, both a member of the Board and an employee of the
Company.
9) Effective Date. "Effective Date" is defined in Section 4.1.
10) ERISA. "ERISA" is the Employee Retirement Income Security Act
of 1974, as amended from time to time.
11) Governing Law. To the extent that state law is not preempted
by the provisions of ERISA or any other laws of the United States, all
questions pertaining to the construction, validity, effect and
enforcement of the Plan will be determined in accordance with the
internal, substantive laws of the State of Minnesota without regard to
the conflict of laws rules of the State of Minnesota or of any other
jurisdiction
12) Headings. The headings of articles and sections are included
solely for convenience of reference; if there is a conflict between the
headings and the text of the Plan, the text controls.
13) Number and Gender. Wherever appropriate, the singular number
may be read as the plural, the plural may be read as the singular, and
one gender may be read as the other gender.
14) Period of Service.
(A) "Period of Service" with respect to a Director is, subject
to Subsections (B) and (C), the sum of:
(1) the total number of complete calendar months, before
and after the Effective Date, during which he or she was a Director and
was not an employee of the Company or any Affiliate, plus
(2) the total number of complete calendar months prior to
March 1, 1985 during which he or she was a director of Metropolitan
Federal Bank, fsb, Metropolitan Federal Savings and Loan Association of
Fargo, Metropolitan Savings and Loan Association or Metropolitan
Building and Loan Association (a "Predecessor") and was not an employee
of the Predecessor or any entity that would be an Affiliate if
"Predecessor" were substituted for "Company" in Section 2.1 (a
"Predecessor Affiliate").
(B) The Period of Service with respect to a Director who was a
Director on the Effective Date is, subject to Subsection (C), the total
number of complete calendar months, before and after the Effective Date,
during which he or she was a Director or a director of a Predecessor,
including such months during which he or she was employed by the
Company, an Affiliate, a Predecessor or a Predecessor Affiliate.
(C) A Director's Period of Service does not include any
service on the board of directors of any entity acquired by either the
Company, an Affiliate, a Predecessor or a Predecessor Affiliate or any
service on the Board after a Change in Control.
15) Plan. "Plan" is the Metropolitan Financial Corporation
Directors' Retirement Plan set forth in this instrument, as it may be
amended from time to time.
3. Benefits
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1) Eligibility. A Director will become eligible to receive a
benefit under the Plan upon the earlier to occur of:
(a) his or her ceasing to be a Director after the Effective
Date, other than due to his or her death or removal for cause, following
(1) his or her completion of a Period of Service of at
least 60 complete calendar months, or
(2) the date of the annual meeting of the stockholders of
the Company that is the fifth annual meeting after the annual meeting at
which he or she was elected to the Board if he or she has served on the
Board continuously since such election; or
(b) a Change in Control after the Effective Date.
2. Benefit.
(A) Amount. Except as otherwise expressly provided in the Plan, a
Director or former Director who becomes eligible to receive a benefit
pursuant to Section 3.1 will receive a monthly cash benefit equal to
one-twelfth of the Annual Retainer at the rate in effect immediately
prior to the date on which he or she becomes eligible for the benefit.
(B) Period. Except as otherwise expressly provided in the Plan,
the benefit will begin on a date, selected by the Company, during the
first month following the month in which the Director or former Director
becomes eligible for the benefit and will continue to be paid on or
around the same date during each of the following months until the
number of months during which the benefit has been paid equals the
number of complete calendar months within his or her Period of Service.
(C) Change in Control.
(1) Basic Payment. Notwithstanding Subsections (A) and (B),
if a Director becomes eligible to receive a benefit upon the occurrence
of a Change in Control pursuant to clause (b) of Section 3.1 or upon the
occurrence of a Change in Control during the period described in
Subsection (B) with respect to a former Director, the benefit, or the
remainder of the benefit, will be paid to the Director or former
Director in a single lump sum cash payment not later than ten days after
the occurrence of the Change in Control. The amount of the payment will
be equal to the present value of the monthly benefit to which the
Director or former Director would otherwise be entitled, determined by
applying the same actuarial factors that would then be used to determine
a lump sum benefit of $3500 or less under the Metropolitan Federal Bank
Employees' Pension Plan (or any successor thereto) as then in effect.
(2) Gross-Up Payment. Following a Change in Control, the
Company will cause its independent auditors promptly to review, at the
Company's sole expense, the applicability of the excise tax pursuant to
Code section 4999 to payments pursuant to the Plan. If the auditors
determine that any payment or distribution of any type by the Company or
an Affiliate to or for the benefit of a Director or former Director,
whether paid or payable or distributed or distributable pursuant to the
terms of the Plan or otherwise (the "Total Payments"), would be subject
to the excise tax under Code section 4999 or any comparable tax under
state or local law, or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the "Excise Tax"), in
addition to the payment described in clause (1), the Company will make a
cash payment (a "Gross-Up Payment") to the Director or former Director
within ten days after such determination equal to an amount such that
after payment by the Director or former Director of all taxes (including
any interest or penalties imposed with respect to such taxes), including
any Excise Tax, imposed upon the Gross-Up Payment, the Director or
former Director would retain an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Total Payments. For purposes of the
foregoing determination, the Director's or former Director's tax rate
will be deemed to be the highest statutory marginal state and federal
tax rate (on a combined basis) then in effect. If no determination by
the Company's auditors is made prior to the time a tax return reflecting
the Total Payments is required to be filed by the Director or former
Director, he or she will be entitled to receive from the Company a
Gross-Up Payment calculated on the basis of the Total Payments he or she
reported on such tax return, within ten days after the later of the
filing of such tax return or the Company's receipt of a copy of the
return. In all events, if any tax authority determines that a greater
Excise Tax should be imposed upon the Total Payments than is determined
by the Company's independent auditors or reflected on the Director's or
former Director's tax return pursuant to this clause (2), the Director
or former Director is entitled to receive from the Company the full
Gross-Up Payment calculated on the basis of the amount of Excise Tax
determined to be payable by such tax authority within ten days after the
Company's receipt of a copy of such determination. If the Director or
former Director is entitled to any payment under any other plan or
policy of or agreement with the Company or an Affiliate and such plan,
policy or agreement provides for a gross-up payment with respect to
Excise Tax, the Company will coordinate payment under this clause (2)
and the other gross-up provision solely to the extent necessary to avoid
double payment.
3. Nondeductibility. If the Company determines in good faith prior
to a Change in Control that there is a reasonable likelihood that any
compensation paid to a Director or former Director for a taxable year of
the Company would not be deductible by the Company solely by reason of
the limitation under Code section 162(m), solely to the extent deemed
necessary by the Company to ensure that the entire amount of any payment
to the Director or former Director pursuant to the Plan prior to the
Change in Control is deductible, the Company may defer all or any
portion of the payment. Upon the occurrence of a Change in Control, the
aggregate amount of payments deferred pursuant to this Section 3.3 will
be added to the amount of the lump sum payment made to the Director or
former Director pursuant to Section 3.2(C).
4. Death Benefits. If a former Director dies before the end of the
period described in Section 3.2(B), his or her benefits will be paid
through the month during which his or her death occurs and no further
benefits will be payable under the Plan with respect to the former
Director to any person. If a Director or former Director dies after the
occurrence of a Change in Control but before receiving the lump sum
payment to which he or she is entitled pursuant to Section 3.2(C), the
payment will be made to his or her estate not later than the date on
which it was required to have been made to the former Director and no
further benefits will be payable under the Plan with respect to the
former Director to any person. Except as provided in this Section 3.4,
no benefits will be payable with respect to a former Director after his
or her death.
5. Termination of Benefits. No further benefits will be payable
under the Plan to any former Director following the date, prior to a
Change in Control, on which the Board determines that the former
Director has: (a) acted as a director, officer, stockholder or employee
of or consultant to any bank, savings and loan association, credit union
or similar thrift, savings bank or institution within a 100-mile radius
of any branch of any insured depository institution owned, directly or
indirectly, by the Company as of the date the former Director began to
receive benefits under the Plan (unless the former Director was acting
in such capacity while he or she was a Director with the written
approval of the Board); or (b) alone or as a partner, director, officer,
stockholder or employee of or consultant to any entity, solicited or
attempted to solicit, directly or indirectly, (i) any employee of the
Company or an Affiliate to terminate his or her employment relationship
with the Company or Affiliate, or (ii) any savings and loan, banking or
other business in which the Company or any Affiliate was engaged as of
the date the former Director began to receive benefits under the Plan
from any individual or entity that is or was a client, employee or
customer of the Company or an Affiliate. For purposes of this Section
3.5, a former Director will not be considered to be a "stockholder" if
he or she owns, directly and indirectly, less than five percent of the
combined voting power of a corporation's outstanding equity securities
which are traded on a nationally recognized securities exchange or on
the NASDAQ National Market System.
6. Suspension. If a former Director who is receiving benefits
under the Plan pursuant to Section 3.1(a) again becomes a Director,
payment of his or her benefits will be suspended until he or she again
becomes eligible to receive a benefit pursuant to Section 3.1. The
amount of the monthly benefit following resumption will be equal to one-
twelfth of the Annual Retainer at the rate in effect immediately prior
to the date on which he or she again becomes eligible to receive the
benefit. The benefits will be payable for a period equal to the number
of complete calendar months within his or her Period of Service, reduced
by the number of months during which benefits were paid prior to his or
her again becoming a Director.
7. Facility of Payment. If the Company determines that a Director or
former Director entitled to benefits under the Plan is under legal
disability or is otherwise unable to receive or acknowledge receipt of
any benefit payment, the Company may pay the benefit to his or her
spouse, parent or adult child or to any other person whom the Company
determines to have assumed responsibility for the Director's or former
Director's financial affairs. The Company is not required to see to the
proper application of any such payment and the payment completely
discharges all claims under the Plan to the extent of the payment.
4. Establishment, Amendment and Termination
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1. Effective Date. The Plan will become effective upon its
approval by the stockholders of the Company at the annual meeting to be
held on May 4, 1994. No Director will acquire any rights under the Plan
until the Plan has been so approved.
2. Applicability to Certain Former Directors. The Plan does not
apply to any former Director who ceased to be a Director before the
Effective Date unless he or she (a) again becomes a Director on or after
the Effective Date, (b) otherwise becomes eligible to receive a benefit
under the Plan and (c) is not eligible to receive similar benefits with
respect to his or her service as a Director or an emeritus director
under any other plan or policy of, or agreement with, the Company or an
Affiliate.
3. Amendment. Subject to Section 4.5, the Company reserves the
right to amend the Plan at any time to any extent that it deems
advisable. Each amendment must be stated in a written instrument
approved by the Board or any committee or individual authorized to act
on the Board's behalf.
4. Termination.
(A) Subject to Section 4.5, the Company reserves the right to
terminate the Plan at any time prior to a Change in Control by
resolution of the Board. In conjunction with the termination of the
Plan, any benefits that are otherwise payable to any former Director
will, subject to Section 3.3, be paid in the form of a single lump sum
cash payment made on or as soon as administratively practicable after
the effective date of the termination. The amount of the lump sum
payment will be determined in accordance with Section 3.2(C)(1).
(B) The Plan will terminate upon the payment of all benefits
pursuant to Section 3.2(C) following the occurrence of a Change in
Control.
5. Restrictions.
(A) Except as provided in Section 4.4(A), an amendment or
termination of the Plan prior to a Change in Control may not decrease
the amount or change the form or timing of the benefit payable to any
former Director who, prior to the later of (1) the effective date of the
amendment or termination or (2) the date of the written instrument or
Board action, as the case may be, has become eligible to receive a
benefit pursuant to clause (a) of Section 3.1.
(B) Upon the occurrence of a Change in Control, the Plan may not be
amended without the written consent of each Director or former Director
who could be affected by the amendment.
5. Miscellaneous
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1. Administration.
(A) The Board has discretionary power and authority to
interpret, construe, apply, enforce and otherwise administer the Plan
and act on behalf of the Company. The Board may delegate such power and
authority to any individual or committee. Any action taken in good
faith by the Board or its delegates prior to a Change in Control is
binding and conclusive on all interested parties. No member of the
Board will participate in any manner in any Board decision regarding his
or her benefit.
(B) Any decision by the Board denying a claim by a Director or
former Director for benefits under the Plan will be stated in writing
and delivered or mailed to the Director or former Director. Each such
notice will set forth the specific reasons for the denial. The Board
will afford a reasonable opportunity to the Director or former Director
for a full and fair review of the decision denying such claim.
(C) Any act or failure to act by the Company, the Board or its
delegate or any waiver of any right or failure to enforce any provision
of the Plan with respect to a Director or former Director is unique to
that Director or former Director and in no way modifies or amends, or
limits or impairs the rights of the Company or Board or its delegate
to enforce, the terms of the Plan with respect to any other Director
or former Director.
2. Disputes.
(A) Any dispute between the Company and a Director or former
Director (or any person making a claim for a benefit on his or her
behalf) regarding this Plan that is not satisfactorily resolved by
negotiation will be resolved exclusively by arbitration, by a panel of
three arbitrators, in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then in effect. Any arbitration
proceeding will be held in Minneapolis, Minnesota.
(B) In connection with any dispute arising before a Change in
Control, the Director or former Director (or the person making the claim
on his or her behalf) is responsible for paying any costs he or she
incurs, including attorney's fees and legal expenses, and the Company is
responsible for paying any costs it incurs, including attorney's fees
and legal expenses. In connection with any dispute arising after a
Change in Control, the Company is responsible for paying all costs of
both parties, including attorney's fees and expenses.
3. Source of Payment. Benefits payable under the Plan will be paid
only from the general assets of the Company. No person has any right to
or interest in any specific assets of the Company by reason of the Plan.
To the extent benefits under the Plan are not paid when due, the rights
of the person to whom they are due to receive such benefits are no
greater than the rights of any unsecured general creditor of the
Company.
4. Non-assignability of Benefits. The benefits payable under the
Plan and the right to receive future benefits under the Plan may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered
or subjected to any charge or legal process and any attempt to do so is
void. No rights or benefits under the Plan may in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or
torts of any Director or former Director and, to the full extent
permitted by law, the rights of any Director or former Director are not
subject in any manner to attachment or other legal process for the
Director's or former Director's obligations.
5. Withholding and Offsets. The Company retains the right to
withhold from any benefit payment under the Plan any and all income,
employment, excise and other tax as the Company deems necessary and,
prior to but not after a Change in Control, the Company may offset
against amounts payable to a former Director under the Plan any amounts
then owing to the Company or any Affiliate by the former Director.
6. Other Benefits. Amounts paid pursuant to the Plan do not
constitute salary or compensation for the purpose of computing benefits
under any other benefit plan, practice, policy or procedure of the
Company or any Affiliate unless otherwise expressly provided thereunder.
7. No Right to Continued Service.
(A) Nothing in the Plan confers on any Director any right to
continued service as a Director or limits the right of the Company,
acting through the Board or otherwise, to terminate or otherwise modify
in any manner the service of the Director or decrease, eliminate or
change the form of payment of his or her compensation from the Company
for service as a Director.
(B) With respect to any Director who is also an employee of the
Company or any Affiliate, nothing in this Plan confers on the Director
the right to continued employment or limits the right of the Company or
Affiliate to discharge, transfer, demote, modify terms and conditions of
employment or otherwise deal with the Director in his or her capacity as
an employee.
8. Successors. The Plan will be binding on and inure to the
benefit of the successors of the Company and the Directors or former
Directors.