Exhibit 10.4
CITIZENS FIRST SAVINGS BANK
FORM OF
EMPLOYEE SEVERANCE COMPENSATION PLAN
PLAN PURPOSE
The purpose of the Citizens First Savings Bank Employee Severance
Compensation Plan is to assure for Citizens First Savings Bank (the "Bank") the
services of Employees of the Bank in the event of a Change in Control
(capitalized terms are defined in section 2.1) of Citizens First Bancorp, Inc.
(the "Holding Company") or the Bank. The benefits contemplated by the Plan
recognize the value to the Bank of the services and contributions of the
Employees of the Bank and the effect upon the Bank resulting from the
uncertainties of continued employment, reduced employee benefits, management
changes and relocations that may arise in the event of a Change in Control of
the Bank or the Holding Company. The Bank's and the Holding Company's Boards of
Directors believe that it is in the best interests of the Bank and the Holding
Company to provide long-term and key Employees of the Bank with such benefits in
order to defray the costs and changes in employment status that could follow a
Change in Control. The Board of Directors of the Bank believes that the Plan
will also aid the Bank in attracting and retaining highly-qualified individuals
who are essential to the Bank's success and that the Plan's assurance of fair
treatment of the Bank's Employees will reduce the distractions and other adverse
effects on the performance of its Employees' in the event of a Change in
Control.
ARTICLE I
ESTABLISHMENT OF PLAN
1.1 Establishment of Plan
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As of the Effective Date of the Plan, the Bank hereby establishes an
employee severance compensation plan to be known as the "Citizens First Savings
Bank Employee Severance Compensation Plan."
1.2 Applicability of Plan
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The benefits provided by this Plan shall be available to all Employees of
the Bank, who, at or after the Effective Date, meet the eligibility requirements
of Article III.
1.3 Contractual Right to Benefits
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This Plan establishes and vests in each Participant a contractual right to
the benefits to which each Participant is entitled hereunder, enforceable by the
Participant against the Employer, the Bank, or both.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions
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Whenever used in the Plan, the following terms shall have the meanings set
forth below.
(a) "Annual Compensation" of a Participant means and includes all wages,
salary, bonus, and cash compensation, if any, paid or accrued by an Employer as
consideration for the Participant's service during the 12 months preceding the
date giving rise to the Participant's entitlement to benefits under this Plan
ended the date as of which Annual Compensation is to be determined, which are or
would be includable in the gross income of the Participant receiving the same
for federal income tax purposes.
(b) "Bank" means Citizens First Savings Bank or any successor of Citizens
First Savings Bank, as provided for in Article VII of the Plan.
(c) "Change in Control" shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Bank Change in Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. (S) 303.4(a) with
respect to the Bank, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or predecessor agency) with respect to the Holding
Company, as in effect on the date hereof; or (iii) without limitation such a
Change in Control shall be deemed to have occurred at such time as (A) any
"person" (as the term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Bank or the Holding
Company representing ___% or more of the Bank's or the Holding Company's
outstanding securities except for any securities of the Bank purchased by the
Holding Company in connection with the conversion of the Bank to the stock form
and any securities purchased by any tax-qualified employee benefit plan of the
Bank; or (B) individuals who constitute the Board of Directors on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least ______ (__/__) of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board; or (C)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Bank or the Holding Company or similar transaction occurs
in which the Bank or Holding Company is not the resulting entity; or (D)
solicitations of shareholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or Bank
or similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the plan or
transaction are exchanged for or converted into cash or property or securities
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not issued by the Bank or the Holding Company shall be distributed; or (E) a
tender offer is made for ____% or more of the voting securities of the Bank or
the Holding Company.
(d) "Conversion Date" means the date the Holding Company first issues
common stock pursuant to its initial public offering and mutual-to-stock
conversion.
(e) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him. A medical doctor selected or approved by the Board
of Directors must advise the Board of Directors that it is either not possible
to determine if or when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder of the
Employee's lifetime.
(f) "Effective Date" means the date the Plan is approved by the Board of
Directors of the Bank, or such other date as the Board of Directors shall
designate in its resolution approving the Plan.
(g) "Employee" means any employee of an Employer.
(h) "Employer" means the Bank or a subsidiary of the Bank or a parent of
the Bank which has adopted the Plan pursuant to Article VI of the Plan.
(i) "Expiration Date" means a date ten (10) years from the Effective Date
unless earlier terminated pursuant to Section 8.2 or extended pursuant to
Section 8.1.
(j) "Just Cause" shall mean termination because of Participant's personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure or unjustified neglect to perform
stated duties, conviction of or pleading guilty or nolo contendere to any crime
or offense punishable as a felony or to any crime or offense involving moral
turpitude, or violation of any final cease-and desist order. In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the savings institutions industry.
(k) "Leave of Absence" and "LOA" mean (i) the taking of an authorized or
approved leave of absence under the provisions of the federal Family and Medical
Leave Act ("FMLA"), (ii) any state law providing qualitatively similar benefits
as the FMLA, or (iii) a leave of absence authorized under the policies of the
Bank. "Leave of Absence" and "LOA" are defined in this paragraph for the
exclusive purposes of this Plan.
(l) "Payment" means the payment of severance compensation as provided in
Article IV of the Plan.
(m) "Participant" means an Employee who meets the eligibility requirements
of Article III of the Plan.
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(n) "Plan" means the Citizens First Savings Bank Employee Severance
Compensation Plan.
(o) "Year of Service" means each consecutive 12-month period, beginning
with an Employee's date of hire and running without a termination of employment
in which an Employee is credited with at least one hour of service in each of
the 12 calendar months in such period. The taking of an LOA shall not eliminate
a period of time from being a Year of Service if such period of time otherwise
qualifies as such. Further if a particular 12-month period of time would not
otherwise qualify under the Plan as a Year of Service because one hour of
service is not credited during each month of such period due to the taking of a
LOA, then such period of time shall be deemed to be a Year of Service for all
purposes of this Plan.
2.2 Applicable Law
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The laws of the State of Michigan shall be the controlling law in all
matters relating to the Plan to the extent not preempted by Federal law.
2.3 Severability
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If a provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of the Plan and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.
ARTICLE III
ELIGIBILITY
3.1 Participation
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For purposes of this Plan, the term "Participant" shall include:
(a) Without regard to Years of Service, all Employees who were employed by
an Employer as of the Conversion Date; and
(b) All Employees employed after the Conversion Date who have completed at
least One Year of Service with an Employer at the time of any termination
pursuant to Section 4.2 of the Plan.
Notwithstanding the foregoing, persons who have entered into and continue
to be covered by an employment contract or change in control agreement with an
Employer shall not be entitled to participate in this Plan.
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3.2 Duration of Participation
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A Participant shall cease to be a Participant in the Plan when the
Participant ceases to be an Employee of an Employer, unless such Participant has
become entitled to a Payment under the Plan. A Participant entitled to receipt
of a Payment shall remain a Participant in this Plan until the full amount of
such Payment has been paid to the Participant.
ARTICLE IV
PAYMENTS
4.1 Right to Payment
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A Participant shall be entitled to receive from his respective Employer a
Payment in the amount provided in Section 4.3 of the Plan if there has been a
Change in Control of the Bank or the Holding Company and if, within ______ (__)
months thereafter, the Participant's employment with an Employer terminates for
any reason specified in Section 4.2 of the Plan. A Participant shall not be
entitled to a Payment if his termination of employment occurs by reason of
death, voluntary retirement, voluntary termination other than for reasons
specified in Section 4.2 of the Plan, Disability, or Just Cause.
4.2 Reasons for Termination
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Following a Change in Control, a Participant shall be entitled to a Payment
if his employment with an Employer is terminated, voluntarily or involuntarily,
for any one or more of the following reasons:
(a) The Employer reduces the Participant's base salary or rate of
compensation, as in effect immediately prior to the Change in Control.
(b) The Employer materially changes the Participant's function,
duties or responsibilities which would cause the Participant's position to be
one of lesser responsibility, importance or scope with the Employer than
immediately prior to the change in control.
(c) The Employer requires the Participant to change the location of
the Participant's job or office, so that such Participant will be based at a
location more than _____ (___) miles from the location of the Participant's job
or office immediately prior to the Change in Control provided that such new
location is not closer to Participant's home.
(d) The Employer materially reduces the benefits and perquisites
available to the Participant immediately prior to the Change in Control,
provided, however, that a material reduction in benefits and perquisites
generally provided to all Employees of the Employer on a nondiscriminatory basis
will not trigger a payment pursuant to this Plan.
(e) A successor to the Bank fails or refuses to assume the Bank's
obligations under this Plan, as required by Article VII of the Plan.
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(f) The Bank or any successor to the Bank breaches any other
provisions of this Plan.
(g) The Employer terminates the employment of a Participant at or
after a Change in Control other than for Just Cause.
4.3 Amount of Payment
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(a) Each Participant entitled to a Payment under this Plan shall
receive from the Employer, a lump sum cash payment equal to ________th of his
Annual Compensation for each Year of Service up to a maximum of _______ of such
Annual Compensation.
(b) Notwithstanding the provisions of paragraph (a) above, if a
Payment to a Participant who is a "Disqualified Individual" shall be in an
amount which includes an "Excess Parachute Payment," the Payment hereunder to
that Participant shall be reduced to the maximum amount which does not include
an Excess Parachute Payment. The terms "Disqualified Individual" and "Excess
Parachute Payment" shall have the same meanings as under Section 280G of the
Internal Revenue Code of 1986, as amended, or any successor provision thereto.
A Participant shall not be required to mitigate damages on the amount of a
Payment by seeking other employment or otherwise, nor shall the amount of such
Payment be reduced by any compensation earned by the Participant as a result of
employment after termination of employment hereunder.
4.4 Time of Payment
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The Payment to which a Participant is entitled shall be paid to the
Participant by the Employer or the successor to the Employer, in cash and in
full, not later than ___ (___) business days after the termination of the
Participant's employment. If any Participant should die after termination of
employment but before all amounts have been paid, such unpaid amounts shall be
paid to the Participant's named beneficiary, if living, otherwise to the
personal representative on behalf of or for the benefit of the Participant's
estate.
ARTICLE V
OTHER RIGHTS AND BENEFITS NOT AFFECTED
5.1 Other Benefits
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Neither the provisions of this Plan nor the Payment provided for hereunder
shall reduce any amounts otherwise payable, or in any way diminish the
Participant's rights as an Employee of an Employer, whether existing now or
hereafter, under any benefit, incentive, retirement, stock option, stock bonus,
stock ownership or any employment agreement or other plan or arrangement.
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5.2 Employment Status
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This Plan does not constitute a contract of employment or impose on the
Participant or the Participant's Employer any obligation to retain the
Participant as an Employee, to change the status of the Participant's
employment, or to change the Employer's policies regarding termination of
employment.
ARTICLE VI
PARTICIPATING EMPLOYERS
6.1 Upon approval by the Board of Directors of the Bank, this Plan may be
adopted by any Subsidiary or Parent of the Bank. Upon such adoption, the
Subsidiary or Parent shall become an Employer hereunder and the provisions of
the Plan shall be fully applicable to the Employees of that Subsidiary or
Parent. The term "Subsidiary" means any corporation in which the Bank, directly
or indirectly, holds a majority of the voting power of its outstanding shares of
capital stock. The term "Parent" means any corporation which holds a majority
of the voting power of the Bank's outstanding shares of capital stock.
ARTICLE VII
SUCCESSOR TO THE BANK
7.1 The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
plan, in the same manner and to the same extent that the Bank would be required
to perform if no such succession or assignment had taken place.
ARTICLE VIII
DURATION, AMENDMENT AND TERMINATION
8.1 Duration
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If a Change in Control has not occurred, this Plan shall expire as of the
Expiration Date, unless sooner terminated as provided in Section 8.2 of the
Plan, or unless extended for an additional period or periods by resolution
adopted by the Board of Directors of the Bank.
Notwithstanding the foregoing, if a Change in Control occurs this Plan
shall continue in full force and effect, and shall not terminate or expire until
such date as all Participants who become entitled to Payments hereunder shall
have received such Payments in full.
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8.2 Amendment and Termination
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The Plan may be terminated or amended in any respect by resolution adopted
by a majority of the Board of Directors of the Bank, unless a Change in Control
has previously occurred. If a Change in Control occurs, the Plan no longer
shall be subject to amendment, change, substitution, deletion, revocation or
termination in any respect whatsoever.
8.3 Form of Amendment
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The form of any proper amendment or termination of the Plan shall be a
written instrument signed by a duly authorized officer or officers of the Bank,
certifying that the amendment or termination has been approved by the Board of
Directors. A proper amendment of the Plan automatically shall effect a
corresponding amendment to each Participant's rights hereunder. A proper
termination of the Plan automatically shall effect a termination of all
Participants' rights and benefits hereunder.
8.4 No Attachment
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(a) Except as required by law, no right to receive payments under
this Plan shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect such action shall be null, void,
and of no effect.
(b) This Plan shall be binding upon, and inure to the benefit of,
Employee and the Bank and their respective successors and assigns.
ARTICLE IX
LEGAL FEES AND EXPENSES
9.1 All reasonable legal fees and other expenses paid or incurred by a
party hereto pursuant to any dispute or question of interpretation relating to
this Plan shall be paid or reimbursed by the prevailing party in any legal
judgment, arbitration or settlement.
ARTICLE X
REQUIRED PROVISIONS
10.1 The Bank may terminate the Employee's employment at any time, but any
termination by the Bank, other than Termination for Cause, shall not prejudice
Employee's right to compensation or other benefits under this Agreement.
Employee shall not have the right to receive compensation or other benefits for
any period after termination for Just Cause as defined in Section 2.1 of the
Plan.
10.2 If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
(S)1818(e)(3) or (g)(1), the Bank's obligations under this contract
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shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Employee all or part of the compensation withheld while
their contract obligations were suspended and (ii) reinstate (in whole or in
part) any of the obligations which were suspended.
10.3 If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
(S)1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
10.4 If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. (S)1813(x)(1), all obligations of the
Bank under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
ARTICLE XI
ADMINISTRATIVE PROVISIONS
11.1 Plan Administrator. The administrator of the Plan shall be under the
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supervision of the Board of Directors or a Committee appointed by the Board of
Directors. It shall be a principal duty of the Board of Directors to see that
the Plan is carried out in accordance with its terms, for the exclusive benefit
of persons entitled to participate in the Plan without discrimination among
them. The Board of Directors will have full power to administer the Plan in all
of its details subject, however, to the requirements of ERISA. For this
purpose, the powers of the Board of Directors will include, but will not be
limited to, the following authority, in addition to all other powers provided by
this Plan: (a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan; (b) to
interpret the Plan, its interpretation thereof in good faith to be final and
conclusive on all persons claiming benefits under the Plan; (c) to decide all
questions concerning the Plan and the eligibility of any person to participate
in the Plan; (d) to compute the amount of Payment that will be payable to any
Participant or other person in accordance with the provisions of the Plan, and
to determine the person or persons to whom such benefits will be paid; (e) to
authorize Payments; (f) to appoint such agents, counsel, accountants,
consultants and actuaries as may be required to assist in administering the
Plan; and (g) to allocate and delegate its responsibilities under the Plan and
to designate other persons to carry out any of its responsibilities under the
Plan, any such allocation, delegation or designation to be by written instrument
and in accordance with Section 405 of ERISA.
11.2 Named fiduciary. The Board of Directors will be a "named fiduciary"
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for purposes of Section 402(a)(1) of ERISA with authority to control and manage
the operation and administration of the Plan, and will be responsible for
complying with all of the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA.
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11.3 Claims and review procedures.
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(a) Claims procedure. If any person believes he is being denied any
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rights or benefits under the Plan, such person may file a claim in writing with
the Board of Directors. If any such claim is wholly or partially denied, the
Board of Directors will notify such person of its decision in writing. Such
notification will be written in a manner calculated to be understood by such
person and will contain: (i) specific reasons for the denial, (ii) specific
reference to pertinent Plan provisions, (iii) a description of any additional
material or information necessary for such person to perfect such claim and an
explanation of why such material or information is necessary and (iv)
information as to the steps to be taken if the person wishes to submit a request
for review. Such notification will be given within ___ (___) days after the
claim is received by the Board of Directors (or within_______ days, if special
circumstances require an extension of time for processing the claim, and if
written notice of such extension and circumstances is given to such person
within the initial ____ day period). If such notification is not given within
such period, the claim will be considered denied as of the last day of such
period and such person may request a review of his claim.
(b) Review procedure. Within _____ (___) days after the date on
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which a person receives a written notice of a denied claim (or, if applicable,
within ___ (___) days after the date on which such denial is considered to have
occurred) such person (or his duly authorized representative) may (i) file a
written request with the Board of Directors for a review of his denied claim and
of pertinent documents and (ii) submit written issues and comments to the
Board. The Board of Directors will notify such person of its decision in
writing. Such notification will be written in a manner calculated to be
understood by such person and will contain specific reasons for the decision as
well as specific references to pertinent Plan provisions. The decision on
review will be made within _______ (___) days after the request for review is
received by the Board of Directors (or within ________ (____) days, if special
circumstances require an extension of time for processing the requests such as
an election by the Board of Directors to hold a hearing, and if written notice
of such extension and circumstances is given to such person within the initial
_____ (___) day period). If the decision on review is not made within such
period, the claim will be considered denied.
11.4 Nondiscriminatory exercise of authority. Whenever, in the
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administration of the Plan, any discretionary action by the Board of Directors
is required, the Board of Directors shall exercise its authority in a
nondiscriminatory manner so that all persons similarly situated will receive
substantially the same treatment.
11.5 Indemnification of Board. The Bank will indemnify and defend to the
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fullest extent permitted by law any person serving on the Board of Directors or
as a member of a committee designated as Board of Directors (including any
person who formerly served as a Board of Directors member or as a member of such
committee) against all liabilities, damages, costs and expenses (including
attorneys fees and amounts paid in settlement of any claims approved by the
Bank) occasioned by any act or omission to act in connection with the Plan, if
such act or omission is in good faith.
11.6 "Plan Year" means the calendar year.
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11.7 Benefits solely from general assets. The benefits provided hereunder
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will be paid solely from the general assets of the Bank. Nothing herein will be
construed to require the Bank or the Board of Directors to maintain any fund or
segregate any amount for the benefit of any Participant, and no Participant or
other person shall have any claim against, right to, or security or other
interest in, any fund, account or asset of the Bank from which any payment under
the Plan may be made.
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Having been adopted by its Board of Directors, this Plan is executed by its duly
authorized officers this ___ day of _______________________,2001.
Attest: CITIZENS FIRST SAVINGS BANK
_____________________ By: _________________________________
For the Entire Board of Directors
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