3. Indemnification. Subject to the terms and conditions of this Agreement, theCompany shall indemnify and hold harmless the Director to the fullest extent authorized byapplicable law, as the same exists or may hereafter be amended (but, in the case of any suchamendment, only to the extent that such amendment permits the Company to provide broaderindemnification rights than said law permitted the Company to provide prior to such change),against all Expenses reasonably incurred or suffered by the Director in connection with anyProceeding in which the Director is or was a party or is threatened to be made a party or isinvolved by reason of the fact that the Director is or was a director, officer or employee of theCompany or is or was serving at the request of the Company as a director, officer, partner,trustee, administrator, employee or agent of another corporation or of a partnership, jointventure, trust or other enterprise, including service with respect to employee benefit plans,whether the basis of the Proceeding is alleged action in an official capacity as a director,officer, partner, trustee, administrator, employee or agent or in any other capacity while servingas a director, officer, partner, trustee, administrator, employee or agent; providedhowever, that, except as provided in Section 5 hereof with respect to Proceedings toenforce rights to indemnification, the Company shall indemnify the Director seeking indemnificationin connection with a Proceeding (or part thereof) initiated by the Director only if such proceeding(or part thereof) was authorized by the Board of Directors of the Company.     4. Expenses. The right to indemnification conferred under Section 3 hereof shallinclude the right to be paid by the Company Expenses incurred in defending any such Proceeding inadvance of its final disposition; providedhowever, that the payment of suchExpenses incurred by the Director in advance of the final disposition of a Proceeding shall be madeonly upon (i) delivery to the Company of an undertaking, by or on behalf of the Director, to repayall advances if it shall ultimately be determined by final judicial decision that the Director didnot meet the standard of conduct, if any, required under the Michigan Business Corporation Act forindemnification of the Director under the circumstances (such undertaking shall be by unlimitedgeneral obligation of the Director but need not be secured) and (ii) a determination by theCompany’s Board of Directors or shareholders in any of the ways described in Section 564a(4) of theMichigan Business Corporation Act that the facts then known to those making the determination toadvance payment of such Expenses would not preclude indemnification under this Agreement, theMichigan Business Corporation Act or other applicable law and that payment is therefore authorized.     5. Right of the Director to Bring Suit. (a) If a claim under Section 3 hereof is notpaid in full by the Company within forty (40) days after notice to the Company as provided inSection 10 hereof, the Director may at any time thereafter bring suit against the Company in anycourt of competent jurisdiction to recover the unpaid amount of the claim, and if successful inwhole or in part, the Director shall be entitled to be paid also the expense of prosecuting suchclaim.     (b) It shall be a defense to any such action seeking indemnification under Section 3 hereof(other than an action brought to enforce a claim for Expenses incurred in defending any Proceedingin advance of its final disposition where the required undertaking has been tendered to the Companyin accordance with Section 4 hereof) that the Director has not met the applicable standard ofconduct, if any, required by the Michigan Business Corporation Act or other applicable law for theindemnification of the Director under the circumstances. Further, in any action brought by theCompany to recover advances the Company shall be entitled to recover such advances if the Directorhas not met the applicable standard of conduct set forth in the Michigan Business Corporation Actor other applicable law. Neither the failure of the Company (including its Board of Directors,independent legal counsel, or its shareholders) to have made a determination prior to thecommencement of such action that indemnification of the Director is proper in the circumstancesbecause the Director has met the applicable standard of conduct set forth in the Michigan BusinessCorporation Act or other applicable law, nor an actual determination by the Company (including itsBoard of Directors, independent legal counsel, or its shareholders) that the Director has not metsuch applicable standard of conduct, shall be a defense to an action brought by the Director orcreate a presumption that the Director has not met the applicable standard of conduct. In anyaction brought by the Director to enforce a right hereunder, or by the Company to recover paymentsby the Company of advances, the burden of proof shall be on the Company.     6. Assumption of Claim. The Company shall be entitled, but not obligated, to assumethe defense of any Proceeding with respect to which indemnification is sought, with counselsatisfactory to the Director, upon the delivery to the Director of written notice of the Company’selection to do so. After delivery of such notice, the Company will not be liable to the Directorunder this Agreement for any expenses (including legal expenses) subsequently incurred by theDirector in defending such Proceeding; provided however, that the Director shall have the right toemploy his or her own counsel in any Proceeding but the fees and expenses of such counsel incurredafter delivery of notice from the Company of its assumption of such defense shall be at theDirector’s expense; and provided however that if (i) the employment of such counsel by the Directorhas been previously authorized by the Company, (ii) the Director shall have reasonably concludedthat there may be a conflict of interest between the Company and the Director in the conduct of anysuch
 

 
defense or (iii) the Company shall not, in fact, have employed counsel to assume the defense ofsuch action, the fees and expenses of such counsel shall be at the expense of the Company.     7. Establishment of Trust. In the event of a Potential Change in Control of theCompany, as hereinafter defined, the Company shall, upon written request by the Director, create atrust for the benefit of the Director and from time to time upon written request of the Directorshall fund such trust in an amount sufficient to satisfy any and all Expenses that may properly besubject to indemnification under Section 3 above anticipated at the time of each such request. Theamount or amounts to be deposited in the trust pursuant to this funding obligation shall bedetermined by (a) a majority vote of a quorum consisting of directors who are not parties to suchProceeding, if any, (b) the executive committee of the Board of Directors or (c) the President ofthe Company. If all such individuals are parties to the Proceeding, if any, the amount or amountsto be deposited in the trust shall be determined by independent legal counsel for the Company. Theterms of the trust shall provide that upon a Change in Control (i) the trust shall not be revokedor the principal thereof invaded, without the written consent of the Director; (ii) the trusteeshall advance, within two business days of a request by the Director, any amount properly payableto the director under Section 3 of this Agreement; (iii) the trust shall continue to be funded bythe Company in accordance with the funding obligation set forth above; (iv) the trustee shallpromptly pay to the Director all amounts for which the Director shall be entitled toindemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such trustshall revert to the Company upon a final determination by a court of competent jurisdiction thatthe Director has been fully indemnified under the terms of this Agreement. The trustee shall bechosen by the Director and shall be a national or state chartered commercial bank. Nothing in thisSection shall relieve the Company of any of its obligations under this Agreement. At the time ofeach draw from the trust fund, the Director shall provide the trustee with a written requestproviding that the Director undertakes (as an unlimited general obligation) to repay such amount tothe extent that it is ultimately determined that the Director is not entitled to suchindemnification. Any funds, including interest or investment earnings thereon, remaining in thetrust shall revert and be paid to the Company if (i) a Change in Control has not occurred and (ii)the Board of Directors, the executive committee of the Board of Directors or the President of theCompany determines that the circumstances giving rise to that particular funding of the trust nolonger exists.     For purposes of this Section and Section 9 hereof, a “Change in Control” shall mean a changein control of a nature that would be required to be reported in response to Item 6(e) of Schedule14A of Regulation 14a promulgated under the Securities Exchange Act of 1934, as amended, providedthat, without limitation, such a change in control shall be deemed to have occurred if (i) duringany period of two consecutive years, individuals who at the beginning of such period constitute theBoard of Directors of the Company and any new director whose election by the Board of Directors ornomination 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 theperiod or whose election or nomination for election was previously so approved, cease for anyreason to constitute a majority thereof; (ii) the shareholders of the Company approve a merger orconsolidation of the Company with any other corporation, other than a merger or consolidation whichwould result in the voting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being converted into votingsecurities of the surviving entity) at least 80% of the total voting power represented by thevoting securities of the Company or such surviving entity outstanding immediately after such mergeror consolidation; or (iii) the shareholders of the Company approve a plan of complete liquidationof the Company or an agreement for the sale or disposition by the Company of all or substantiallyall of the Company’s assets.     For purposes of this Section, a “Potential Change in Control” shall be deemed to have occurredif (i) the Company enters into an agreement, the consummation of which would result in theoccurrence of a Change in Control; (ii) any person (including the Company) publicly announces anintention to take or to consider taking actions which once consummated would constitute a Change inControl; or (iii) the Board of Directors adopts a resolution to the effect that, for purposes ofthis Agreement, a Potential Change in Control has occurred.     8. Non-Exclusivity of Rights. The rights provided hereunder shall not be deemedexclusive of any other rights which the Director may be entitled under any statute, agreement,provision of the Articles of Incorporation or Bylaws of the Company, vote of shareholders ordisinterested directors of the Company, or otherwise, and such rights shall continue after theDirector ceases to serve the Company as a director; provided, however, that thisAgreement shall be deemed to supersede all prior arrangements, whether oral or written, between theDirector and the Company (directly or as a successor to Republic Bancorp, Inc.).
 

 
     9. Settlement. Unless and until a Change in Control has occurred, the Company shallhave no obligation to indemnify the Director under this Agreement for any amounts paid insettlement of any Proceeding effected without the Company’s prior written consent. The Companyshall not settle any claim in any manner which would impose any obligation on the Director withoutthe Director’s written consent. Neither the Company nor the Director shall unreasonably withholdtheir consent to any proposed settlement.     10. Notice of Claim. The Director, as a condition precedent to his right to beindemnified under this Agreement, shall give to the Company notice in writing as soon aspracticable of any claim made against him for which indemnity will or could be sought under theAgreement. Notice to the Company shall be directed to CITIZENS REPUBLIC BANCORP, INC., Attention:President (or such other address as the Company shall designate in writing to the Director).Notice shall be deemed received if sent by prepaid mail properly addressed, the date of such noticebeing the date postmarked. In addition, the Director shall give the Company such information andcooperation as it may reasonably request.     11. Severability. In the event that any provision of this Agreement is determined bya court to require the Company to do or to fail to do an act which is in violation of applicablelaw, such provision shall be limited or modified in its application to the minimum extent necessaryto avoid a violation of law, and, as so limited or modified, such provision and the balance of thisAgreement shall be enforceable in accordance with their terms.     12. Choice of Law. This Agreement shall be governed by and construed and enforced inaccordance with the laws of the State of Michigan.     13. Successors and Assigns. This Agreement shall be (i) binding upon all successorsand assigns of the Company (including any transferee of all or substantially all of its assets andany successor by merger or otherwise by operation of law) and (ii) shall be binding on and inure tothe benefit of the heirs, personal representatives, executors and administrators of the Director.     14. Amendment. No amendment, modification, termination or cancellation of thisAgreement shall be effective unless made in writing and signed by each of the parties hereto.IN WITNESS WHEREOF, the Company and the Director have executed this Agreement as of the                      day of                    ,                     .      CITIZENS REPUBLIC BANCORP, INC.