10-19-98
TCF FINANCIAL EXECUTIVE DEFERRED COMPENSATION PLAN
(Amended and Restated effective as of November 1, 1998)
1. DEFERRAL OF INCENTIVE COMPENSATION AND SALARIES.
a. From time to time eligible employees ("Employees") of TCF
Financial Corporation ("TCF Financial") or any of its direct or indirect
subsidiaries (each such corporation being referred to hereinafter as the
"Company") may, by written notice, elect to have payment of a portion of
their salary for the next succeeding calendar year, and/or all or a portion
of their incentive compensation payable for the next succeeding calendar
year, deferred as hereinafter provided. Each such deferral of compensation
shall be (and is hereinafter referred to as) a "Deferred Amount."
Notwithstanding the foregoing, however, an Employee may not elect to defer
any portion of salary or incentive compensation with respect to any calendar
year, unless such Employee's deferrals with respect to such year are at least
$1,000 in the aggregate, and no deferral may be made of any salary or
incentive compensation payable within 12 months after such Employee has
received a distribution of pre-tax from the TCF Employees Stock Ownership
Plan - 401(k) pursuant to the financial hardship withdrawal provisions of
such plan.
b. Any elections with respect to Deferred Amounts of salary shall
be exercised in writing by the Employee prior to the latest to occur of the
following: (i) the beginning of the calendar year for which the salary is to
be earned; (ii) such Employee's first day of employment service in that year;
or (iii) the first day of the calendar month next following the date the
Employee first becomes eligible to participate in the Plan. Any election
with respect to Deferred Amounts of incentive compensation shall be made no
later than December 31 of the calendar year preceding the calendar year in
which the periods of service are rendered for which the incentive
compensation is to be paid. An election of Deferred Amounts, once made, is
irrevocable, except as provided in paragraph 6 hereof.
c. Deferred Amounts shall be subject to the rules set forth in
this document, and each Employee shall have the right to receive cash
payments on account of previously Deferred Amounts only in the amounts and
under the circumstances hereinafter set forth.
d. Employees eligible to participate in this Plan are Employees of
a Company who have been designated by TCF Financial as subject to the
reporting requirements of Section 16(a) under the Securities Exchange Act of
1934. Eligibility shall be determined annually as of the latest practicable
date prior to the commencement of each new calendar year. In the event an
Employee ceases to be eligible for this Plan during the course of a calendar
year, the Employee's eligibility shall nevertheless continue through the end
of that calendar year. Notwithstanding the foregoing, individuals who become
employees of a Company as a result of a merger or acquisition shall not be
eligible Employees under
1
this Plan unless and until TCF Financial has adopted a resolution identifying
them as eligible Employees.
2. PERSONNEL COMMITTEE. The Committee (the "Committee") shall consist
of such members of the Personnel Committee of the Board of Directors of TCF
Financial Corporation who qualify as non-employee directors from time to time
under Rule 16b-3 of the Securities and Exchange Commission. Full power and
authority to construe, interpret, and administer this Plan document shall be
vested in the Committee. The Committee shall have full power and authority
to make each determination provided for in this Plan document, and in this
connection, to promulgate such rules and regulations as the Committee
considers necessary or appropriate for the implementation and management of
this Plan. The Committee shall have sole and absolute discretion in the
performance of its powers and duties under this Plan. All determinations made
by the Committee shall be final, conclusive and binding upon the Companies,
each Employee and former Employee and their designees, unless found by a
court of competent jurisdiction to have been arbitrary and capricious. The
Committee shall have authority to designate officers of TCF Financial and to
delegate authority to such officers to receive documents which are required
to be filed with the Committee, to execute and provide directions to the
Trustee and other administrators, and to do such other actions as the
Committee may specify on its behalf, and any such actions undertaken by such
officers shall be deemed to have the same authority and effect as if done by
the Committee itself.
3. DEFERRED COMPENSATION ACCOUNTS. Each Company shall establish on its
books a separate account ("Account"), including sub-accounts pursuant to
Exhibit A hereto and Section 10 hereof, for each of its Employees who becomes
a participant in this Plan, and each such Account shall be maintained as
follows:
a. Each Account shall be credited with the Deferred Amounts
elected by the Employee for whom such Account is established as of the date
on which such Deferred Amount would otherwise have been paid to the Employee.
b. To the extent that a Company has made contributions to the
Trust described in paragraph 4 with respect to an Employee's Deferred
Amounts, the Employee's Account shall thereafter be adjusted as described in
paragraph 4. To the extent such contributions have not been made with respect
to an Employee's Deferred Amounts, and within 30 days after the date on which
such Deferred Amounts are credited to an Employee's Account, they shall have
been deemed to have been invested in such investments as shall be permitted
by the Committee and as the Employee shall direct. Any investment direction
by an Employee shall be consistent with Section 10 and Exhibit A and shall be
irrevocable with respect to the calendar year to which it applies, unless the
Committee allows additional elections. While an Employee's Account is deemed
to be so invested, it shall be credited with all interest, dividends (whether
in stock, cash, or other property), stock splits, or other property that
would have been received if the Deferred Amounts had actually been so
invested. All cash deemed to have been received with respect to investments
deemed to have been made for an Employee's Account shall be
2
deemed to be reinvested in such investments as the Employee shall direct as
of a date selected by the Committee, which date shall be not less than 30
days after receipt of such direction, and the balance credited to an
Employee's Account as of any date shall be equal to the fair market value of
the investments deemed to have been made for such Account as of such date.
c. Although the value of an Employee's Account is to be measured
by the value of and income from certain investments, the value of and income
from such investments are merely a measuring device to determine the payments
to be made to each Employee hereunder. Each Employee, and each other
recipient of an Employee's Deferred Amounts pursuant to paragraph 7, shall be
and remain an unsecured general creditor of the Company by which he is
employed with respect to any payments due and owing to such Employee
hereunder. If a Company should from time to time, in its discretion,
actually purchase the investments deemed to have been made for an Employee's
Account, either directly or through the trust described in paragraph 4, such
investments shall be solely for the Company's or such trust's own account,
and the Employees shall have no right, title or interest therein.
d. Sub-accounts shall be maintained as provided in Exhibit A
hereto and in Section 10 hereof.
4. TRUST. TCF Financial may establish a trust (of the type commonly
known as a "rabbi trust") to aid in the accumulation of assets for payment of
Deferred Amounts. In the event that such a Trust is established, the amounts
credited to the Employee's Accounts shall be adjusted as follows:
a. Each Company may, in its discretion, contribute to the trust an
amount equal to the balance credited to the Account of each Employee (other
than Employees who have made the election described in paragraph 3.c.)
employed by such Company on the date of such contribution. Thereafter, each
Company may, in its discretion, contribute to the trust an amount equal to
the Deferred Amounts of the Employees employed by such Company within five
business days after the Deferred Amount is earned by the Employee. The
assets of the trust shall be invested in such investments as may be permitted
by the Committee and directed by an Employee for his own Account. Any
investment direction of an Employee shall be made consistent with Section 10
and shall be irrevocable with respect to the calendar year to which it
applies, unless the Committee allows additional elections. Insofar as the
trustee of the Trust ("Trustee") has acquired an investment for an Employee's
Account pursuant to such directions, the Employee shall have the right to
determine confidentially whether such investment will be tendered in a tender
or exchange offer, and to direct the Trustee accordingly. The terms of the
trust shall be consistent with the terms of this Plan. The Trustee shall be
a corporate trustee independent of the Company or, if individual(s), shall
not include at any time any person who is or has been eligible for
participation in this Plan. Nothing herein shall be construed as requiring
the Company to make any contributions to the trust. To the extent
3
such contributions are actually made, the trust assets shall remain subject
to the claims of the Company's general creditors in the event of its
insolvency.
b. The trust shall provide for separate accounts in the name of
each Employee who has elected a Deferred Amount. Except as provided in
paragraph 4.d., from and after the date as of which such accounts are
established, the balances in the Accounts established for Employees pursuant
to this Plan shall be equal to the balances credited to such separate
accounts. Each such separate account shall then be adjusted as follows:
(i) Contributions made by the Companies to the trust on behalf
of such Employee, and all dividends or other distributions made
with respect to property allocated to such separate account, and
shall be credited to such separate account and invested as the
Employee shall direct.
(ii) Each Employee's separate account shall be increased by
the amount of any increase in the fair market value, as determined
by the Trustee, of any assets allocated to such separate account,
and shall be decreased by any decrease in the fair market value of
such assets, as determined by the Trustee.
(iii) Each Employee's separate account shall be reduced by
any distributions made to the Employee from the trust which are
chargeable to such separate account.
c. An Employee's right to direct the investment of the Employee's
separate account shall continue during any period of distribution subsequent
to the Employee's termination of employment in the same manner as if the
Employee had continued as an active Employee, although the Committee may, in
its discretion, add additional registered mutual funds or collective or
common trustee funds which are available only for the accounts of terminated
Employees if the Committee deems such funds to be particularly appropriate or
suitable for such accounts.
d. The adjustments described in this paragraph 4 shall only be
made to an Employee's Account to the extent that a Company has made
contributions to the trust pursuant to this paragraph 4. If for any reason
such contributions have not been made then, and only to that extent, the
Employee's Account shall be adjusted as provided in paragraph 3.b.
e. Sub-Accounts shall be maintained as provided in Exhibit A
hereto and in Section 10 hereof.
5. PAYMENT OF DEFERRED AMOUNTS. Not later than 30 days after an
Employee's "Distribution Event" (as defined herein), the Trustee shall
commence distribution of the amounts credited to such Employee's Account.
Notwithstanding the foregoing sentence, if an Employee's distribution
requires Committee action then the commencement of distributions shall occur
not later than 30 days after such Committee action or, if later,
4
after the Employee's Distribution Event. Provided, that the Committee shall
take any action required of it no later than its next regularly scheduled
meeting after the Employee's Distribution Event. An Employee's "Distribution
Event" is the first to occur of the following: (i) termination of employment;
(ii) disability or (iii) the date one year after a "Change in Control: (as
defined herein). Commencing within such 30 day period, the balance credited
to the Employee's Account shall be paid as follows:
a. 15-YEAR PAYMENT SCHEDULE SUBJECT TO ACCELERATION BY COMMITTEE.
For distributions not subject to paragraph 5.b, c, d or k, payment shall be
in fifteen annual installments unless the Committee approves a different
schedule. The Committee may determine on a case by case basis to approve a
different payment schedule for an Employee after taking into account whether
the Employee has executed or will execute a non-competition agreement in form
and scope reasonably acceptable to the Committee. The Committee may also
consider such other factors as the Committee considers appropriate in each
case. Any alternative payment schedule the Committee approves under this
paragraph 5.a. may be in the form of installments over such period as the
Committee selects, in the form of a lump sum, or any combination of
installments and lump sum payments. For distributions from the Accounts of
Employees who did not consent to the terms of this paragraph 5.a., the
balance in the Account shall be paid as provided in paragraph b of this
section.
(I) The first payment under paragraph 5.a. shall be paid on a date
the Committee selects which is no later than 30 days after the
Committee's direction as to the form and timing of
distributions is made or, if later, 30 days after the
Employee's Distribution Event. If no date is selected, the
first payment shall be on the date that is the later of 30
days after the Committee's action or 30 days after the
Employee's Distribution Event. Succeeding installments (if
any) shall be paid on January 31 of each calendar year
following the calendar year in which the first payment was
made.
(II) Each payment shall be made in cash or in kind as the Committee,
in its discretion, shall determine except that all assets of
an Employee's Account invested in common stock of TCF
Financial (" TCF Stock") shall be distributed in the form of
TCF Stock. If the Committee makes no instruction, any assets
of the Employee's Account invested in assets other than TCF
Stock shall be distributed in the form of cash. Annual
installments are intended to be substantially equal in value.
To that end, each annual distribution shall be determined as
follows. The amount credited to Employee's Account, as
reported on the latest available account statement, shall be
multiplied by a fraction, the numerator of which is one and
the denominator of which is the number if installments
remaining to be paid, including the current installment. The
value of any portion of the account distributed in cash shall
be equal to the cash received upon its liquidation by the
Trustee, provided
5
that such liquidation occurs on the latest practicable date
prior to the distribution date.
(III) Notwithstanding the foregoing subparagraph (I), an Employee who
has terminated employment and commenced receiving payments may
elect each year to have the payment otherwise due on January
31 of the next succeeding year paid as monthly installments
instead, with each payment made on the last day of each month.
Any such election shall be made in writing and delivered to
the Committee on or before December 1 prior to any year for
which it is to be effective. Such election may also indicate
the assets to be liquidated in connection with each monthly
payment (subject to the requirement that any assets invested
in TCF Stock must be distributed in kind). The amount of each
monthly payment shall be equal to the amount that would
otherwise be paid in one payment in January, divided by 12.
Any asses to be liquidated in order to pay monthly benefits
shall be liquidated on the last practicable date prior to the
installment's payment date. In no event shall this
subparagraph be construed as allowing the executive to
lengthen or shorten the number of years over which his or her
benefits will be paid; the election herein pertains only to
timing of payments within a year.
b. PRE-1996 LUMP SUM PAYMENT. For distributions to Employees who
did not consent to the terms of paragraph 5.a. at the time it was added to
the Plan, distribution shall occur on or about the 30th day after the
Employee's Distribution Event. Distribution shall consist of a single lump
sum equal to the total value of the Employee's Account unless the termination
of employment was due to retirement or disability (as defined herein), in
which case the distribution shall be in five annual installments. However,
the Committee shall reduce the number of the installments if necessary to
provide for annual payments of at least $15,000. In addition, if the value of
the Employee's Account is less than $15,000 as of any annual installment
payment date, the Account shall be paid in full as of such installment
payment date. Distributions shall be in the form of cash, except that any
portion of the Account invested in TCF Stock shall be distributed in kind.
The value of any portion of the account distributed in cash shall be equal to
the cash received upon its liquidation by the Trustee, provided that such
liquidation occurs on the latest practicable date prior to the distribution
date.
c. AUTOMATIC LUMP SUM DISTRIBUTION IN EXCHANGE FOR NON-COMPETITION
COVENANT OR REDUCTION IN ACCOUNT BALANCE. Effective on and after September
30, 1998, each Employee who so elects in accordance with this paragraph c
shall be entitled to receive a lump sum form of distribution. A lump sum
distribution shall consist of a single distribution of the entire value of
the Employee's Account (unless the Employee elects to apply the election to
only the portion of the Account invested in TCF Stock or to only the portion
of the Account invested in assets other than TCF Stock) on or about 30 days
after the later of the Employee's Distribution Event or the date on which the
Employee's election is filed with TCF Financial. The distribution shall be
in the form of cash, except that any portion of the Employee's Account
invested in TCF Stock shall be distributed in kind. The value of any portion
of the Account distributed in cash shall be
6
equal to the cash received upon its liquidation by the Trustee, provided that
such liquidation occurs on the latest practicable date prior to the
distribution date. An Employee's election under this paragraph c may occur at
any time prior to or after the commencement of distributions to such
Employee. If distributions have already commenced, such election shall apply
only to the balance of the Employee's Account at the time of the election.
The election shall be made on such form as TCF Financial reasonably requires
and shall be accompanied by either: (a) a noncompetition agreement reasonably
acceptable to the Committee (see paragraph (i ) below); or (b) the Employee's
written acceptance of a reduction by 5% in the Employee's Account, whichever
the Employee elects to provide. If the Employee elects the reduction in his
or her Account, such reduction shall be accomplished by TCF Financial and the
Trustee on or about 30 days after such election is made.
d. CHANGE IN CONTROL DISTRIBUTION. In the event of a Change in
control (as defined herein) all Accounts in the Plan will be distributed to
all Employees. If the Employee's Account is subject to paragraph 5.a.,
distribution will be subject to the provisions of paragraph 5.a. If the
Employee's Account is subject to paragraphs 5.b or c. distribution will be in
the form of a lump sum. The first payment shall occur on or about 30 days
after the earlier of (i) the date one year after the Change in Control, or
(ii) the date of the Employee's termination of employment or disability. Any
portion of the Account invested in TCF Stock (or common stock of a successor
company) shall be distributed in kind. The value of any portion of the
account distributed in cash shall be equal to the cash received upon its
liquidation by the Trustee, provided that such liquidation occurs on the
latest practicable date prior to the distribution date.
e. For purposes of this section, an Employee's employment is
considered to terminate as of the date which is the later of (i) Employee's
last date of service for the Company, or (ii) the last date on which there is
an employment relationship between the Employee and a Company.
f. For purposes of this section, an Employee is disabled as of the
date the Employee is eligible for payments under the long term disability
plan of a Company.
g. In the event installment payments commence and any installments
are unpaid at the time of Employee's death, the payments shall be made at the
times and in such amounts as if Employee were living to the persons specified
in paragraph 7.a.
h. For purposes of this section, an Employee's termination of
employment is a retirement if so determined by the Committee under all the
facts and circumstances.
i. A non-competition agreement shall be reasonably acceptable to
the Committee for purposes of this Section 5 if it has a value as of the
Committee's action date, equal to at least five percent of the then-current
value of the Employee's Account. Valuation shall be determined in all cases
on the basis of an independent appraisal, unless such an appraisal is deemed
unnecessary by both the Committee and the Employee.
j. For purposes of this Plan, a Change in Control shall be deemed
to have occurred if (i) any "person" as defined in sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (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 TCF financial representing more than fifty
percent (50%) or more of the combined voting power of TCF Financial's then
outstanding securities. (For purposes of this clause (i), the
7
term "beneficial owner" does not include any employee benefit plan maintained
by TCF Financial that invests in TCF Financial's voting securities.); or (ii)
during any period of two (2) consecutive years there shall cease to be a
majority of the Board comprised as follows: individuals who at the beginning
of such period constitute the Board or new directors whose nomination for
election by the company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; or (iii) the shareholders of TCF
Financial approve a merger or consolidation of TCF Financial with any other
corporation, other than a merger or consolidation which would result in the
voting securities of TCF Financial outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty
percent (50%) of the combined voting power of the voting securities of TCF
Financial or such surviving entity outstanding immediately after such merger
or consolidation, or the shareholders of TCF Financial approve a plan of
complete liquidation of TCF Financial or an agreement for the sale or
disposition by TCF Financial of all or substantially all TCF Financial's
assets; provided, however, that no Change in Control will be deemed to have
occurred if such merger, consolidation, sale or disposition of assets, or
liquidation is not subsequently consummated. The date of a Change in
Control, for purposes of this Plan, is the date on which the Change in
Control is consummated.
k. Notwithstanding any other provision of this Section 5 or any
payment schedule approved by the Committee pursuant to this Section 5 and
regardless of whether payments have commenced under this Section 5, in the
event that the Internal Revenue Service should finally determine with respect
to an Employee who has terminated employment with the Company that part or
all of the value of the Employee's Deferred Amounts or Plan Account which
have not actually been distributed to the Employee, or that part or all of a
related Trust Account which has not actually been distributed to the
Employee, is nevertheless required to be included in the Employee's gross
income for federal and/or State income tax purposes, then the Deferred
Amounts or the Account or the part thereof that was determined to be
includible in gross income shall be distributed to the Employee in a lump sum
as soon as practicable after such determination without any action or
approval by the Committee. A "final determination" of the Internal Revenue
Service for purposes of this paragraph 5.i. is a determination in writing by
said Service ordering the payment of additional tax, reporting of additional
gross income or otherwise requiring Plan amounts to be included in gross
income, which is not appealable or which the Employee does not appeal within
the time prescribed for appeals.
6. EMERGENCY PAYMENTS. In the event of an "unforeseeable emergency" as
determined hereafter, the Committee may determine the amounts payable under
paragraph 5 hereof and pay all or a part of such amounts without regard to
the payment dates provided in paragraph 5 to the extent the Committee
determines that such action is necessary in light of immediate and heavy
needs of the Employee (or his beneficiary) occasioned by severe financial
hardship. For the purposes of this paragraph 6, an "unforeseeable emergency"
is a severe financial hardship to the Employee resulting from a sudden and
unexpected illness or accident of the Employee or beneficiary, or of a
8
dependent (as defined in Section 152(a) of the Internal Revenue Code of 1986,
as amended) of the Employee or beneficiary, loss of the Employee's or
beneficiary's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control
of the Employee or beneficiary. Payments shall not be made pursuant to this
paragraph 6 to the extent that such hardship is or may be relieved: (a)
through reimbursement or compensation by insurance or otherwise, (b) by
liquidation of the Employee's or beneficiary's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship,
or (c) by cessation of the Employee's deferrals under the Plan. Such action
shall be taken only if Employee (or Employee's legal representatives or
successors) signs an application describing fully the circumstances which are
deemed to justify the payment, together with an estimate of the amounts
necessary to prevent such hardship, which application shall be approved by
the Committee after making such inquiries as the Committee deems necessary or
appropriate.
7. METHOD OF PAYMENTS.
a. In the event of Employee's death, payments shall be made to the
persons (including a trustee or trustees) named in the last written
instrument signed by Employee and received by the Committee prior to
Employee's death, or if Employee fails to so name any person, the amounts
shall be paid to Employee's estate or the appropriate distributee thereof.
The Committee, the Company, and the Trustee shall be fully protected in
making any payments due hereunder in accordance with what the Committee
believes to be such last written instrument received by it.
b. Payments due to a legally incompetent person may be made in such
of the following ways as the Committee shall determine:
(i) directly to such incompetent person,
(ii) to the legal representative of such incompetent person, or
(iii) to some near relative of the incompetent person to be used
for the latter's benefit.
c. Except as otherwise provided in paragraphs 7.a. and b., all
payments to persons entitled to benefits hereunder shall be made to such
persons in person or upon their personal receipt or endorsement, and shall
not be grantable, transferable, or otherwise assignable in anticipation of
payment thereof, in whole or in part, by the voluntary or involuntary acts of
any such persons, or by operation of law, and shall not be pledged,
encumbered, or otherwise liable or taken for any obligation of such person.
d. All payments to persons entitled to benefits hereunder shall be
made out of the general assets, and shall be the sole obligations, of the
Employer(s) by which the Eligible Employee was employed, except to the extent
that such payments are made out of the trust described in paragraph 4.
9
8. CLAIMS PROCEDURES.
a. If a claim for benefits made by any person (the "Applicant") is
denied, the Committee shall furnish to the Applicant within 90 days after its
receipt of such claim (or within 180 days after such receipt if special
circumstances require an extension of time) a written notice which: (i)
specifies the reasons for the denial, (ii) refers to the pertinent provisions
of the Plan on which the denial is based, (iii) describes any additional
material or information necessary for the perfection of the claim and
explains why such material or information is necessary, and (iv) explains the
claim review procedures.
b. Upon the written request of the Applicant submitted within 60
days after his receipt of such written notice, the Committee shall afford the
Applicant a full and fair review of the decision denying the claim and, if so
requested: (i) permit the Applicant to review any documents which are
pertinent to the claim, (ii) permit the Applicant to submit to the Committee
issues and comments in writing, and (iii) afford the Applicant an opportunity
to meet with a quorum of the Committee as a part of the review procedure.
c. Within 60 days after its receipt of a request for review (or
within 120 days after such receipt if special circumstances, such as the need
to hold a hearing, require an extension of time) the Committee shall notify
the Applicant in writing of its decision and the reasons for its decision and
shall refer the Applicant to the provisions of the Plan which form the basis
for its decision.
9. MISCELLANEOUS.
a. Except as limited by paragraph 7.c. and except that an Employee
shall have a continuing power to designate a new recipient in the event of
Employee's death at any time prior to such death without the consent or
approval of any person theretofore named as Employee's recipient by an
instrument meeting the requirements of paragraph 7.a., this document shall be
binding upon and inure to the benefit of each Company, the Employees, their
legal representatives, successors and assigns, and all persons entitled to
benefits hereunder.
b. Any notice given in connection with this document shall be in
writing and shall be delivered in person or by registered mail or overnight
delivery service, return receipt requested. Any notice given by registered
mail or overnight delivery service shall be deemed to have been given upon
the date of delivery indicated on the return receipt, if correctly addressed.
c. Nothing in this document shall interfere with the rights of any
Employee to participate or share in any profit sharing or pension plan which
is now in force or which may at some future time become a recognized plan of
any Company.
10
d. Nothing in this document shall be construed as an employment
agreement nor as in any way impairing the right of any Company to terminate
an Employee's employment at will.
e. This Plan constitutes a mere promise by the Company to make
benefit payments in the future, and it is intended to be unfunded for tax
purposes and for the purposes of Title I of ERISA. The rights of an Employee
or beneficiary to receive benefit payments hereunder are solely those of an
unsecured general creditor of the Company.
10. INVESTMENT ELECTIONS BY EMPLOYEES; LEVERAGING; PURCHASE PROCEDURES
FOR PURPOSES OF RULE 16B-3..
a. Employees may elect to liquidate funds in their Deferred
Compensation Accounts under Section 3 or 4 and reinvest them as directed,
PROVIDED that any investment election shall be exercised in writing by the
Employee and approved by the Committee or its approved representative under
such terms and conditions as the Committee deems appropriate (Exhibit A to
this Plan), and FURTHER PROVIDED, that on and after September 30, 1998 any
investments in TCF Stock shall be subject to paragraph b of this section 10.
b. If an Employee directs or retains any investment in shares of
TCF Stock on or after September 30, 1998, the Employee's Account shall
include a TCF Stock Account which shall operate as follows:
i. All shares of TCF Stock allocated to the Employee's Account
on September 30, 1998 (excluding any shares held in suspense
pursuant to paragraph c of this section) shall be allocated on that
date to the Employee's TCF Stock Account and the fixed number of
shares so allocated shall be the beginning balance of the TCF Stock
Account.
ii. Thereafter, the TCF Stock Account shall be increased by
the number of shares, if any, of TCF Stock purchased (or deemed to
be purchased) from Deferred Amounts, dividends and/or interest
pursuant to the Employee's directions under Section 3 of this Plan
and shall also be increased by any shares of TCF Stock released
from pledge pursuant to paragraph c of this section.
iii. The balance of shares of the TCF Stock Account shall in
no event be decreased.
iv. Shares allocated to the Employee's TCF Stock Account
shall be subject to all of the restrictions and other provisions of
this Committee's action dated 8-24-98 establishing separate
accounts for TCF Stock as compared to non-TCF Stock assets.
c. In the event the Trustee engages in borrowing on behalf of an
Employee's account pursuant to directions of the Committee under section
5.1(f) of the Trust, all shares of TCF Stock acquired with the proceeds of
such borrowing shall be pledged by the Trustee to secure the repayment of
such loan and any shares of TCF Stock so pledged shall be held in suspense
(unallocated) in the Employee's TCF Stock Account pursuant to this paragraph
c. Shares held in suspense (unallocated) under this
11
paragraph c shall be treated as follows: (i) they shall not be credited to
the balance of the Employee's TCF Stock Account under paragraph a of this
section and shall not be distributed or distributable to the Employee,
whether as part of a distribution pursuant to section 5 of this Plan or
otherwise, during any time when they are pledged; (ii) they shall not be used
for any other purpose than the repayment of principal and/or interest
payments as they come due on the loan entered into by the Trustee in
connection with the purchase of such shares; and (iii) they shall not in any
event be credited to or inure to the benefit of any other Employee's Account
in the Plan and/or Trust. Dividends paid on shares held in suspense shall be
credited to the Employee's Account in TCF Stock or in other assets as the
Employee shall direct, to the extent such dividends exceed then-current
amounts of principal and interest due on the loan. In the event the Employee
has a distribution of his or her entire Account balance or entire remaining
Account balance in the Plan, the Trustee shall be directed to liquidate a
sufficient number of the shares of TCF Stock held in suspense in order to
repay the balance due on the loan in full and the remainder of the shares
held in suspense, if any, shall be released from the pledge, allocated to the
Employee's TCF Stock Account and included in the distribution.
Notwithstanding the foregoing, the lender may elect to release from pledge
any shares of TCF Stock held in suspense under this paragraph c prior to
complete repayment of the loan and in such event the Trustee and the
administrator of the Plan shall thereafter immediately allocate such shares
to the Employee's TCF Stock Account and shall increase the balance thereof as
provided in paragraph a of this section.
d. Any election of Deferred Amounts of salary or incentive
compensation under paragraph 1.b. shall be exercised in writing by the
Employee and filed with the Committee no later than the date prior to the
date the first salary or incentive compensation, part or all of which is to
become a Deferred Amount, is earned.
e. Any investment election under paragraph 3 or 4 relating to
initial or periodic investment of Deferred Amounts in TCF Stock, whether as a
result of an initial or yearly election to participate in the Plan or a
change in the level of participation in the Plan, shall be exercised in
writing by the Employee and filed with the Committee no later than the date
prior to the date the first salary or incentive compensation, part or all of
which is to become a Deferred Amount, is earned. Deferred Amounts of salary
or incentive compensation, to the extent they are forwarded to the trustee,
shall be so forwarded on or immediately after the payroll date of the salary
or incentive compensation which is being deferred and shall be deemed to be
invested on the same date on which the Trustee purchases the designated
investments. The Trustee shall purchase such investments as soon as
practicable after the payroll date for which the Deferred Amount is received,
and in the case of investments consisting of TCF Stock, no later than two
weeks after such payroll date, with the exact date and purchase terms to be
determined by a stock broker or other investment professional on the basis of
such person's judgment as to the best available purchase price for the Plan
and Trust. If Deferred Amounts are not forwarded to the Trustee, investments
in equity securities of TCF Financial shall be deemed to occur at the average
of the high and low trading price for such securities on the payroll date.
12
f. Any investment election under paragraph 3 or 4 relating to
liquidation of existing investments and reinvestment or reapplication of
proceeds within the Plan or Trust shall be consistent with Exhibit A hereto,
shall be exercised in writing and filed with the Committee by the Employee on
any date, provided that any such election which is a discretionary purchase
of TCF Stock is at least six months after the date of the Employee's last
such discretionary election (as defined in Rule 16b-3) of a sale of TCF Stock
under any other benefit plan of the Company. Liquidation and/or reinvestment
of funds within the Plan or Trust under Section 3 or 4 shall occur as soon as
practicable after the Employee's election is filed with the Committee,
provided that the Committee determines it is a valid election and, in the
case of investment or reinvestment in TCF Stock, such election is implemented
by the Trustee no later than two weeks after the date such election is filed
with the Committee and determined to be valid, with the exact date(s) and
terms of any such transaction involving TCF Stock to be determined by a stock
broker or other investment professional on the basis of such person's
judgment as to the then best available purchase price for the Plan and Trust.
If Deferred Amounts have not been forwarded to the Trustee, to the extent
there are no actual funds to implement the Employee's election, such election
shall be deemed to be implemented at the average of the high and low sales
prices for TCF Stock on the date the election was filed with the Committee
and determined to be valid and, for other investments, on such basis as the
Trustee reasonably determines.
g. For purposes of this Section 10, filing with the corporate
secretary of TCF Financial shall be deemed to be a filing with the Committee.
11. SPECIAL PROVISIONS REGARDING OSPIP AND DEFERRED STOCK. Effective
for deferrals of incentive compensation with respect to the 1992 calendar
year and thereafter, Employees' deferrals of incentive compensation payable
in the form of common stock of TCF Financial pursuant to the Officer's Stock
Performance Incentive Plan ("OSPIP") or otherwise subject to issuance as
Deferred Stock under the Stock Option and Incentive Plan of TCF Financial ,
the TCF Financial 1995 Stock Incentive Plan, or any successor stock option
plan or restricted stock plan of TCF Financial shall be credited to the
Employee's account as "Deferred Stock" and the Employee shall be prohibited
from making any investment election with respect to such Deferred Stock until
the date or dates specified in an award agreement entered into pursuant to
the Stock Option and Incentive Plan by TCF Financial, subject to acceleration
upon the occurrence of events as specified in such agreement. Upon and after
such date or dates, the Deferred Stock credits to the Employee's account
shall be subject to investment elections the same as any other credits in the
Employee's accounts. In the event TCF Financial so notifies the Trustee,
dividend credits on Deferred Stock shall be withheld until such time as the
Deferred Stock becomes subject to investment elections. In the event the
Employee's employment terminates or in the event of the Employee's
disability, any Deferred Stock credits not yet subject to investment election
by the Employee shall be reduced to zero and no benefits shall be payable
with respect to them. Deferred Stock credits shall not be distributable
pursuant to paragraph 6 (Emergency Payments) until they are subject to
investment election by the Employee.
13
12. TERMINATION OR AMENDMENT. This Plan may be amended at any time and
from time to time, upon the approval of the Board of Directors of TCF
Financial; PROVIDED, that, if the amendment is adopted prior to a change in
control (as defined in section 5(j) hereof), no such amendment shall (without
the consent of all participants, including any terminated participants and
beneficiaries then receiving distributions) alter any participant's or
beneficiary's right to payments of amounts previously credited to such
participant's or beneficiary's Account or delay the time or times at which a
participant or beneficiary is entitled to receive payments with respect to
the participant's Deferred Amounts under the Plan. If the amendment is
adopted after a change in control, as defined in section 5(j) hereof, the
approval of the Board of Directors and the consent of all participants,
terminated participants and beneficiaries shall be required for the
amendment. In the event that all of the Plan's participants and
beneficiaries do not consent to a proposed amendment, such amendment shall
not take effect but the Plan Accounts of the consenting participants shall be
transferred to a separate plan that is identical to this Plan in all
respects, except that it may include the proposed amendment. The Board of
Directors may terminate this Plan in its discretion, except that any such
termination shall require the consent of all participants (including any
terminated participants and beneficiaries then receiving distributions),
unless it is an automatic termination of the Plan under section 5(k) hereof.
14
EXHIBIT A
(Action of 16b-3 Sub-Committee of the Personnel Committee Establishing TCF Stock
Accounts and Diversified Accounts effective as of September 30, 1998)
1. Effective as of September 30, 1998 (the "Effective Date"), each
participant's Account in the Plan and Trust shall be divided into two
sub-accounts: a "TCF Stock Account" and a "Diversified Account". All
shares of common stock of TCF Financial ("TCF Stock") in a participant's
Account on the Effective Date shall be allocated as of that Date to the
Participant's TCF Stock Account. All other investments in a participant's
Account on the Effective Date shall be allocated as of that Date to the
participant's Diversified Account. Thereafter, the Sub-Accounts shall
operate as follows:
a. The TCF Stock Account shall consist solely of shares of TCF Stock (and
cash or cash equivalent money market funds for fractional shares or
for funds held temporarily prior to investment). The Diversified
Account shall not at any time include any shares of TCF Stock. Except
as permitted by paragraph e, below, no transfer of assets will be
permitted from the TCF Stock Account to the Diversified Account or
from the Diversified Account to the TCF Stock Account.
b. A participant's TCF Stock Account shall hold all shares of TCF Stock
allocated to it on or after the Effective Date and such shares shall
not be subject to sale, transfer, assignment, pledge or other
hypothecation in any manner. Upon the occurrence of a Distribution
Event (as defined in the Plans) the shares will be distributed from
the Plan and Trust to the participant in an in-kind distribution
pursuant to the terms of the Plan.
c. The Diversified Account shall not at any time purchase or invest in
any shares of TCF Stock, but shall invest in such investments as the
participant directs and as the Committee permits from time to time.
d. Any new Deferred Amounts for a participant after the Effective Date
shall be allocated to either the participant's TCF Stock Account or to
such participant's Diversified Account, as the participant shall
direct in an irrevocable election filed before the beginning of each
calendar year and applicable throughout the calendar year. The
Deferred Amounts shall be credited to the applicable sub-Account as of
the same date that they are otherwise credited to the participant's
Account under Section 3.a. of the Plans and Section 4.2 of the Trusts.
e. Dividends generated by a participant's TCF Stock Account shall be
reinvested in the TCF Stock Account, or in the Diversified Account, as
the participant directs in an irrevocable election filed before the
beginning of each calendar year and applicable throughout the calendar
year. Any interest or dividends generated by a participant's
Diversified Account shall be reinvested in the Diversified Account, or
in the participant's TCF Stock Account, as the participant directs in
an irrevocable election filed before the beginning of each calendar
year and applicable throughout the calendar year, unless management
determines that the reinvestment of interest and dividends within or
from the Diversified Account is not administratively feasible. If the
participant does not file an election with
15
respect to the investment of interest and/or dividends, all interest
and dividends shall be reinvested in the asset that generated them.
f. Notwithstanding the election provisions of paragraphs 1.d and 1.e.,
any participant may make a one-time only investment election for the
fourth quarter of 1998 with respect to new Deferred Amounts and
dividends and interest generated during that calendar quarter,
provided that the election is filed prior to the beginning of the
calendar quarter, is irrevocable and applies to the entire calendar
quarter.
16