Document:

Exhibit 10.4

 

LEVEL ONE BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

FOR

Executive

 

(A Non-Qualified Supplemental Income Plan)

 

As of June 18, 2015

 

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PREAMBLE

 

This Agreement is executed this 18 day of June, 2015 (the “Execution Date”) by Level One Bank, a Michigan state chartered commercial bank (hereinafter sometimes referred as the “Company” or “Employer”), and Executive (the “Executive”), evidencing and sometimes referred to as the “Level One Bank Supplemental Executive Retirement Plan for the Executive” or the or this “Plan.”

 

WHEREAS, Employer desires to retain the valuable services of Executive by providing the Plan; and

 

WHEREAS, The Employer believes that a non-qualified benefit plan such as the Plan would serve the Employer’s best business interests to retain the services of the Executive; and

 

WHEREAS, The Employer therefore adopts this Level One Bank Supplemental Executive Retirement Plan for the Executive, constituting a nonqualified deferred compensation plan which is unfunded and constitutes a “top-hat” plan under ERISA.

 

NOW, THEREFORE, the Plan is hereby established as follows:

 

ARTICLE I - INTRODUCTION

 

1.1                               Name

 

The name of this Plan is the “Level One Bank Supplemental Executive Retirement Plan for the Executive”.

 

1.2                               Effective Date

 

The effective date of the Plan is January 1, 2015 (the “Effective Date”).

 

1.3                               Purpose

 

The purpose of the Plan is to provide deferred income for the Executive.

 

This Plan is intended to be a non-qualified unfunded “top-hat” plan under applicable provisions of the Code and ERISA, and thus the Plan is an unfunded plan of deferred compensation maintained for a member of a select group of management or highly compensated employees pursuant to sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and an unfunded plan of deferred compensation under the Code.

 

1.4                               Interpretation

 

Wherever appropriate, pronouns of any gender shall be deemed synonymous, as shall singular and plural pronouns. Headings of Articles and Sections are for convenience of reference only, and are not to be considered in the construction or interpretation of the Plan. The Plan shall be interpreted and administered so as to give effect to its purpose as expressed in Section 1.3 and to qualify as a non-qualified, unfunded plan of deferred compensation in compliance with the requirements of Code section 409A, and the Treasury regulations and IRS pronouncements thereunder, as in effect from time-to-time (collectively, “Section 409A”).

 

ARTICLE II - DEFINITIONS & TERMS

 

Definition of Terms.

 

Certain words and phrases are defined when first used in later paragraphs of this Agreement. Unless the context clearly indicates otherwise, the following words, when used in this Agreement, shall have the following respective meanings:

 

2.1.1                     Account

 

“Account” means a liability and hypothetical reserve on the books of the Company to which Account shall accrue and be credited, as of the last day of each Plan Year on which the Executive is employed by the Company, an aggregate dollar amount equal to the following:

 

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A.            Ten percent (10%) of the Executive’s Base Salary for such applicable Plan Year, but only if the Company achieves “Threshold net income” for such applicable Plan Year as contemplated under the Level One Executive Incentive Plan for such applicable Plan Year, plus

 

B.            Ten percent (10%) of the Executive’s Base Salary, but only if the Company achieves “Target net income” for such applicable Plan Year as contemplated under the Level One Executive Incentive Plan for such applicable Plan Year.

 

C.            These contributions are discretionary. If there is a significant negative operational outcome outside of net income, the Board may determine that a different, or no, contribution would be credited for that plan year.

 

The Account shall be adjusted quarterly in accordance with the investment experience of the Lipper Balanced Fund Index.

 

All such accruals in respect of such applicable percentages of Base Salary and such adjustments for deemed investment experience of the Account shall be reflected as an aggregate dollar amount as of an applicable date, and shall constitute the Account as of such applicable date.

 

2.1.2                     Affiliate

 

“Affiliate” shall mean any corporation, partnership, joint venture, association, or similar organization or entity, the employees of which would be treated as employed by the Company under Section 414(b) and 414(c) of the Code. It also means any organization that is a member of an affiliated service group with the Company within the meaning of Section 414(m) of the Code and any other organization required to be aggregated with the Company under Section 414(o) of the Code. No entity shall be treated as an Affiliate for any period that it is not a part of a controlled group, under common control, part of an affiliated service group or is otherwise required to be aggregated under Section 414 of the Code.

 

2.1.3                     Agreement

 

“Agreement” shall mean this Agreement, evidencing the Plan, together with any and all amendments or restatements thereof.

 

2.1.4                     Bancorp

 

Bancorp shall mean Level One Bancorp, Inc., a bank holding company organized under the laws of the State of Michigan.

 

2.1.5                     Base Salary

 

“Base Salary” shall mean “Base Compensation” as defined under the Employment Agreement and as in effect as of the last day of an applicable Plan Year.

 

2.1.6                     Board of Directors or Board

 

“Board of Directors” or “Board” shall mean the Board of Directors of the Company.

 

2.1.7                     Cause

 

“Cause” shall have the meaning as provided under the Employment Agreement.

 

2.1.8                     Change in Control

 

“Change in Control” means the first to occur of any one of the events:

 

(i)                                     the date any Person (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) or more than one Person acting as a group (as determined under Treasury Regulation §1.409A-3(i)(5)(v)(B)), acquires ownership of the stock of the Company or Bancorp that, together with stock held by such Person or group, constitutes more than 50 percent of the total voting power of the stock of such Company or Bancorp;

 

(ii)                                  the date individuals who, as of the Effective Date (which, solely for purposes of this definition of Change in Control shall mean the Effective Date as defined under the Level One Bancorp, Inc. 2015 Equity Incentive Plan, which is May 21, 2015), constituted the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided, however, that any individual becoming a director subsequent to such Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (either by a

 

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specific vote or by approval of the proxy statement of Bancorp in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member-of the Incumbent Board, but excluding for this purpose any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than such Board; or

 

(iii)                               the date that any Person or more than one Person acting as a group (as defined under Treasury Regulation §1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company and Bancorp that have a total gross fair market value equal to or more than 50 percent of the total gross fair market value of all assets of the Company and Bancorp immediately before such acquisition or acquisitions.

 

In addition, a Change in Control shall not be considered to have occurred under the Plan unless such Change in Control also constitutes a “change in the ownership or effective control” of the Company and Bancorp or a “change in ownership of a substantial portion of the assets” of the Company and Bancorp, in each case, within the meaning of Section 409A.

 

2.1.9                     Code

 

“Code” means the Internal Revenue Code of 1986 and Treasury regulations thereunder, as amended.

 

2.1.10              Committee

 

“Committee” shall mean the person or persons described in Article VII who serve on the Compensation Committee and, as such, are charged with the day-to-day administration, interpretation and operation of the Plan.

 

2.1.11              Disability

 

“Disability” shall mean the definition of “disability” in Section 409A.

 

2.1.12              Effective Date

 

“Effective Date” shall mean the effective date of this Plan as defined in Section 1.2.

 

2.1.13              Employer

 

“Employer” shall mean the Company and its Affiliates and their successors or assigns.

 

2.1.14              Employment Agreement

 

“Employment Agreement” shall mean that certain Employment Agreement, dated as of January 1, 2015, by and between the Company, Bancorp and Executive, and any and all amendments thereof after the Effective Date.

 

2.1.15              ERISA

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

2.1.16              Executive

 

“Executive” shall mean the individual identified as the “Executive” in the first sentence of this Agreement establishing and evidencing this Plan.

 

2.1.17              Leave of Absence.

 

“Leave of Absence” shall mean a temporary period of time, not to exceed twelve (12) consecutive calendar months during which time a Participant shall not be an active employee of an Employer, but shall be treated for purposes of this Plan as in continuous employment with the Employer, including for purposes of vesting; provided, however, and notwithstanding anything in this Plan to the contrary, if the Executive is on Leave of Absence for more than twelve (12) weeks during an applicable Plan Year, then no amount shall accrue or be credited to the Account for such applicable Plan Year. A Leave of Absence may be either paid or unpaid, but must be agreed to in writing by both the Employer and the Participant. A Leave Of Absence that continues beyond the twelve (12) consecutive months shall be treated as a voluntary Termination of Employment as of the first business day of the thirteenth month for purposes of the Plan.

 

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2.1.18              Named Beneficiary

 

“Named Beneficiary” or “Designated Beneficiary” or “Beneficiary” shall mean any person or trust, or combination, as last designated by the Participant during his lifetime upon a “Beneficiary Designation Form” provided by the Employer and filed with the Committee, who is specifically named to be a direct or contingent recipient of all or a portion of a Participant’s benefits under the Plan in the event of the Participant’s death. Such designation shall be revocable by the Participant at any time during his lifetime without the consent of any Beneficiary, whether living or born hereafter. Unless expressly provided by law, the Named Beneficiary may not be designated or revoked and changed by the Participant in any other way. No beneficiary designation or beneficiary change shall be effective until received in writing and acknowledged according to established Employer procedures and practices. Should the Participant fail to designate the Named Beneficiary, the Named Beneficiary shall be the Participant’s estate.

 

2.1.19              Participant

 

“Participant” shall mean only the Executive. Solely and exclusively for purposes of payment of survivor death benefits, if any, the term “Participant” shall also include a surviving Beneficiary.

 

2.1.20              Plan

 

“Plan” shall mean the “Level One Bank Supplemental Executive Retirement Plan for the Executive” as set forth herein.

 

2.1.21              Plan Distribution

 

“Plan Distribution” shall mean a distribution and payment of the Account (the amount of which shall be determined as of the tenth day preceding the applicable date of distribution, provided that, if such tenth day is a weekend or holiday, the most recent preceding non-weekend or non-holiday shall be used as the date of determination) made from the Plan pursuant to applicable Plan provisions, and subject to vesting and forfeiture as provided under Article IV of this Plan.

 

2.1.22              Plan Year

 

“Plan Year” shall mean the twelve (12) consecutive month period constituting a calendar year, beginning on January 1 and ending on December 31.

 

2.1.23              Section 409A

 

“Section 409A” shall have the meaning as provided under Section 1.4.

 

2.1.24              Termination of Employment

 

“Termination of Employment” shall mean the Participant’s “separation from service” with the Employer and all Affiliates within the meaning of Section 409A.

 

2.1.25              Trust

 

“Trust” shall mean one or more grantor trusts (so-called “Rabbi Trusts”), if any, established pursuant to Sections 671 et. seq. of the Code, and maintained by the Employer for its own administrative convenience in connection with the operation of the Plan and the management of any of its general assets set aside to help cover its financial obligations under the Plan. Such Trusts, if any, shall be governed by a separate irrevocable agreement between the Employer and the Trustee. Any such assets held in such a Trust shall remain subject to the claims of the Employer’s general creditors. The Employer shall establish such a Trust not later than immediately prior to a Change in Control. Upon establishing the Trust, the Company shall deliver to the Trustee an amount equal to the Account, determined as of such Change in Control. Thereafter, the Company (Level One Bank or its successors) shall make additional contributions to the Trust as frequently as necessary to cause the Trust to maintain assets in an amount equal to the Account, as determine from time-to-time pursuant to Section 2.1.1. Establishment of the Trust shall not diminish or relieve the Company of its obligations under the Agreement and the Plan, including a distribution of the Account to the Executive when the Executive terminates employment with the Bank and all related entities (or, if applicable, the Executive’s Beneficiary) in accordance with the terms of the Plan.

 

2.1.26              Trustee

 

“Trustee” shall mean the party or parties named under any Trust agreement (and such successor and/or additional trustees) who shall possess such authority and discretion to hold, manage and control such Employer assets in connection with the Plan as provided under the agreement between the Trustee and the Employer.

 

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ARTICLE III - ELIGIBILITY & PARTICIPATION

 

3.1                               Eligibility Requirements

 

D.            General Eligibility - The Executive is the only Participant. The Participant shall remain eligible in accordance with and subject to the terms of the Plan.

 

E.             No Employee Contributions Required - No Participant contribution shall be required to become a Participant in the Plan or accrue benefits under the Plan, nor shall any such contribution be permitted. All Plan costs, including costs of administration and those relating to Trusts, shall be borne exclusively by the Employer. The Participant shall bear all federal, state and local (or other) personal income taxes on his/her plan benefits. The Employer shall be entitled to withhold any and all applicable income and employment taxes in connection with any distribution and payment of the Account.

 

ARTICLE IV - VESTING AND FORFEITURE

 

4.1                               Vesting

 

The Participant’s Account under this Plan shall vest as follows, provided that the Participant is employed by the Company and Bancorp on the last day of the applicable Plan Year set forth below:

 

	
Contribution
    	
 
    	
Vesting on
    	
 
    	
Vesting on
    	
 
    	
Vesting on
    	
 
    	
Vesting on
    	
 
    	
Vesting on
    	
 
    	
Vesting on
    	
 
    
	
Year
    	
 
    	
12/31/15
    	
 
    	
12/31/16
    	
 
    	
12/31/17
    	
 
    	
12/31/18
    	
 
    	
12/31/19
    	
 
    	
12/31/20
    	
 
    
	
2015
    	
 
    	
25
    	
%
    	
50
    	
%
    	
75
    	
%
    	
100
    	
%
    	
 
    	
 
    	
 
    	
 
    
	
2016
    	
 
    	
 
    	
 
    	
25
    	
%
    	
50
    	
%
    	
75
    	
%
    	
100
    	
%
    	
 
    	
 
    
	
2017
    	
 
    	
 
    	
 
    	
 
    	
 
    	
25
    	
%
    	
50
    	
%
    	
75
    	
%
    	
100
    	
%
    
	
2018
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
25
    	
%
    	
50
    	
%
    	
75
    	
%
    
	
2019
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
25
    	
%
    	
50
    	
%
    
	
2020
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
25
    	
%
    

 

The Contribution Year is the year for which a contribution is credited. The contribution will be credited no later than March 31 of the year following the contribution year, and immediately 25% vested. The chart illustrates the pattern for subsequent year vesting; this pattern will continue beyond the years reflected in this chart, as long as the executive remains a participant in this plan.

 

The Participant’s Account shall be 100% vested upon retirement no earlier than age 62, or the earlier of a Change in Control, or the Participant’s death or Disability, in each case, prior to Termination of Employment.

 

4.2                               Additional Vesting Matters

 

Notwithstanding anything in the Agreement or this Plan to the contrary, the following provision shall control and govern:

 

Upon the Participant’s involuntary Termination of Employment for Cause, or if circumstances constituting Cause exist at the time of or prior to the Participant’s Termination of Employment, the Account shall be completely forfeited, no additional crediting or accrual to the Account shall occur, and the Participant (and the Participant’s Beneficiary) shall have no right or claim to a distribution or payment of, or otherwise in respect of, the Account or this Agreement or Plan.

 

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ARTICLE V - DISTRIBUTIONS

 

5.1                               Distributions

 

The Participant’s Plan Distributions shall be distributed only in accordance with the provisions of this Plan and Section 409A. No other distributions of a Participant’s Plan Distributions shall be allowed from the Plan under any circumstances.

 

5.2                               Method and Form of Payment

 

A Plan Distribution shall be made in cash, in U.S. currency in a single sum, less applicable withholding.

 

5.3                               Commencement of Plan Distribution

 

A.            Plan Distribution Upon Termination of Employment — No later than the first day of the month following 30 days after or coincident with the Participant’s Termination of Employment other than as a result of death of the Participant, and provided that circumstances constituting Cause do not exist at the time of or prior to such Termination of Employment, the Employer shall make payment of the Plan Distribution to the Participant.

 

B.            Death - In the event the Participant dies prior to the Plan Distribution, and at or prior to the time of the Participant’s death, circumstances constituting Cause do not exist, the Employer shall pay the Participant’s Named Beneficiary the Plan Distribution on the first day of the month following 30 days after or coincident with the Participant’s date of death.

 

5.4                               Acceleration or Deferral

 

Acceleration or deferral of the time or schedule of any payment under the Plan is not permitted except as may be permitted by Code Section 409A and as may be agreed upon by the Participant and Company, in writing.

 

ARTICLE VI - ADMINISTRATION & CLAIMS PROCEDURE

 

6.1                               Duties of the Employer

 

The Company shall have overall responsibility for the establishment, amendment, termination, administration, and operation of the Plan. The Company may discharge this responsibility through members of the Committee.

 

6.2                               The Committee

 

The Compensation Committee shall consist of one (1) to five (5) members appointed by the Corporate Governance and Nominating Committee and one of whom shall be designated by the Corporate Governance and Nominating Committee as Chairman of the Committee. The Committee shall consist of Board Members or other employees of the Employer, or any other persons who shall serve at the request of the Board. The members of the Committee shall serve at the will of the Board, and the Board may from time to time remove any Committee member for any or no reason and appoint their successors. In the event of a vacancy in membership, the remaining members shall constitute the Committee with full authority to act

 

6.3                               Committee’s Powers and Duties to Administer, Interpret and Enforce the Plan

 

The Committee shall be the “Plan Administrator” and “Named Fiduciary”, but only to the extent required by ERISA for “top-hat” plans, and shall have the authority to administer and enforce the Plan on behalf of any and all persons having or claiming any interest in the Plan in accordance with its terms and purposes. The Committee, or any single individual Committee member it may designate, shall have the authority to interpret the Plan and its provisions, and shall determine any and all questions or claims arising in the administration and application of the Plan, in accordance with applicable laws. Any such interpretation by the Committee, or its authorized individual member, shall be conclusive and binding on all persons. Written interpretations or responses by the Committee, or its authorized individual member, shall only be required to the extent required by the Claims Procedure of Section 6.8 herein.

 

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6.4                               Organization of the Committee

 

The Committee shall act by a majority of its members at the time in office. Committee action may be taken either by a vote at a meeting or by written consent without a meeting. The Committee may authorize any one or more of its members to execute any document or documents on behalf of the Committee, or to act in its behalf without additional consent as to any issue of Plan administration. The Committee shall notify the Company, in writing, of such authorization and the name or names of its member or members so designated in such cases. The Company thereafter shall accept and rely on any documents executed by or actions taken by said member of the Committee or members as representing action by the Committee until the Committee shall file with the Company a written revocation of such designation. The Committee may adopt such by-laws and regulations, as it deems desirable for the proper conduct of the Plan and to change or amend these by-laws and regulations from time to time. With the permission of the Company, the Committee may employ and appropriately compensate accountants, legal counsel, benefit specialists, actuaries and record keepers and any other persons as it deems necessary or desirable in connection with the administration and maintenance of the Plan. Such professionals and advisors shall not be considered members of the Committee for any purpose.

 

6.5                               Limitation of Liability

 

A.            No member of the Board of Directors, the Company and no officer or employee of the Company shall be liable to any employee, Participant, Named Beneficiary or any other person for any action taken or act of omission in connection with the administration or operation of this Plan unless attributable to his or her own fraud or willful misconduct. Nor shall an Employer be liable to any employee, Participant, Named Beneficiary any other person for any such action taken or act of omission unless attributable to fraud, gross negligence or willful misconduct on the part of a director, officer or employee of the Employer. Moreover, each Participant, Named Beneficiary, and any other person claiming a right to payment under the Plan shall only be entitled to look to the Employer for payment, and shall not have the right, claim or demand against the Committee (or any member thereof), or any director, officer, employee or other agent of the Employer or any Affiliate.

 

B.            To the fullest extent permitted by the law, the Employer shall indemnify the Committee, each of its members, and the Employer’s officers and directors for expenses, costs, or liabilities arising out of the performance of duties required by the Plan or any Trust agreement, except for those expenses, costs, or liabilities arising out of a member’s fraud, willful misconduct or gross negligence.

 

6.6                               Committee Reliance on Records and Reports

 

The Committee shall be entitled to rely upon certificates, reports, and opinions provided by an accountant, tax or pension advisors, actuary or legal counsel employed by the Employer or Committee. The Committee shall keep a record of all its proceedings and acts, and shall keep all such books of account, records, and other data as may be necessary for the proper administration of the Plan. The regularly kept records of the Committee and the Employer shall be conclusive evidence of the service of a Participant, compensation, age, marital status, status as an employee, and all other matters contained therein and relevant to this Plan. However, a Participant may request a correction in the record of his age at any time prior to his Retirement Age. Such correction shall be made if Participant furnishes a birth certificate, or other satisfactory documentary proof of age within 90 days after such correction request. The Committee, in any of its dealings with Participant(s) may conclusively rely on any written statement, representation, or documents made or provided by such Participants.

 

6.7                               Costs of the Plan

 

All the costs and expenses for administering and operating the Plan and Trust shall be borne by the Employer.

 

6.8                               Claims Procedure

 

A.            Claim. - Benefits shall be paid in accordance with the terms of this Plan. A Participant, Named Beneficiary or any person who believes that he is being denied a benefit to which he is entitled under the Plan (“Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Committee at the Company’s principal place of business.

 

B.            Claim Decision. - Upon the receipt of a claim, the Committee shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such

 

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period. However, the Committee may extend the reply period for an additional ninety (90) days for reasonable Cause. Any claim not granted or denied within such time period shall be deemed to have been denied. If the claim is denied in whole or in part, the Committee shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

 

1.              The specific reason or reasons for such denial;

 

2.              The specific reference to pertinent provisions of this Plan on which such denial is based;

 

3.              A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

 

4.              Steps to be taken if the Claimant wishes to submit the claim for review; and

 

5.              The time limits for requesting a review under Subsection C. and under Subsection D hereof.

 

C.            Request for Review - Within sixty (60) days after the receipt by the Claimant of the Committee’s written opinion described above, the Claimant may request in writing that the Secretary of the Company review the determination of the Committee. Such request must be addressed to the Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Committee’s determination by the Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Committee’s determination.

 

D.            Review of Decision - Within sixty (60) days after the Secretary’s receipt of a request for review, he or she will review the Committee’s determination. After considering all materials presented by the Claimant, the Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Plan on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Secretary will so notify the Claimant and shall render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review. Any claim not granted or denied within such time period will be deemed to have been denied.

 

6.9                               Litigation

 

It shall be necessary to join only the Employer as a party in any action or judicial proceeding affecting the Plan. Any final judgment in such action or proceeding shall be binding on the Participant, Named Beneficiaries and other persons claiming under the Plan.

 

ARTICLE VII - AMENDMENT, TERMINATION & MERGER

 

7.1                               Amendment

 

The Company by action of its Board of Directors, and with the written consent of the Executive, may amend or terminate the Agreement and Plan.

 

7.2                               Consolidation/Merger/Reorganization

 

Notwithstanding anything in the Plan to the contrary, neither the Employer nor Bancorp shall enter into any consolidation, merger or reorganization without the Employer or Bancorp obtaining from the successor-in-interest organization an agreement to an assignment and assumption of the obligations under this Plan by its successor-in-interest or surviving company or companies. Should such consolidation, merger or reorganization occur with such an assignment and assumption of the Plan’s obligation, the term “Employer” as defined and used in this Agreement shall refer to the successor-in-interest or surviving company or companies.

 

ARTICLE VIII - GENERAL PROVISIONS

 

8.1                               Applicable Law

 

Except insofar as the law has been superseded by applicable federal law, Michigan law shall govern the construction, validity and administration of this Plan as created by this Agreement. This Plan is intended

 

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be a non-qualified unfunded plan of deferred compensation and any ambiguities in its construction shall be resolved in favor of an interpretation which will affect this intention.

 

8.2                               Benefits Not Transferable or Assignable

 

A.            Benefits under the Plan shall not be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge such benefits shall be void, nor shall any such benefits be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to them. This section shall also apply to the creation, assignment or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, including a qualified domestic relations order under Section 414(p) of the Code.

 

B.            An Employer may bring an action for a declaratory judgment if a Participant’s Named Beneficiary or any beneficiary’s benefits hereunder are threatened to be attached by an order from any court. The Employer may seek such declaratory judgment in a court of competent jurisdiction to:

 

1.              Determine the proper recipient or recipients of the benefits to be paid under the plan;

 

2.              Protect the operation and consequences of the Plan for the Employer and all Participants; and

 

3.              Request any other equitable relief the Employer in its sole judgment may feel appropriate.

 

Benefits which may become payable during the pendency of such an action shall, at the sole discretion of the Employer, either be:

 

1.              Paid into the court as they become payable, or

 

2.              Held in a separate account subject to the court’s final distribution order. Any such delay shall comply in all respects with Code Section 409A.

 

C.            Notwithstanding anything in the Agreement or Plan to the contrary, the Participant’s (and, if applicable, Beneficiary’s) rights in respect of the Agreement and Plan shall be no greater than that of a general unsecured creditor of the Employer.

 

8.3                               Not an Employment Contract

 

The Plan is not and shall not be deemed to constitute a contract between the Employer or any Affiliate and any Participant, or to be a consideration for, or an inducement to, or a condition of, the employment of any employee. Nothing contained in the Plan shall give or be deemed to give the Executive the right to remain in the employment of the Employer or any Affiliate or to interfere with the right to be retained in the employ of the Employer, any legal or equitable right against the Employer or an Affiliate, or to interfere with the right of the Employer or any Affiliate to discharge or retire the Executive at any time. It is expressly understood by the parties that the Plan relates to the payment of deferred compensation for the Participant’s services, and is not intended to be an employment contract. Nothing in the Agreement or Plan modifies the Employment Agreement.

 

8.4                               Notices

 

A.            Any notices required or permitted hereunder shall be in writing and shall be deemed to be sufficiently given at the time when delivered personally or when mailed by certified or registered first class mail, postage prepaid, addressed to either party hereto as follows:

 

If to the Company:

 

Level One Bank

32991 Hamilton Court

Farmington Hills, MI 48334

 

Or another address communicated by the Company to the Participant in future Plan communications.

 

If to the Participant:

 

At his last known address, as indicated by the records of the Employer, or to such changed address as such parties may have fixed by notice. However, any notice of change of address shall be effective only upon receipt.

 

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B.            Any communication, benefit payment, statement of notice addressed to the Participant or Named Beneficiary at the last post office address as shown on the Employer’s records shall be binding on the Participant or Named Beneficiary, as applicable, for all purposes of the Plan. The Employer, and a Trustee, if applicable, shall not be obligated to search for any Participant or Named Beneficiary beyond sending a registered letter to such last known address.

 

8.5          Severability

 

The Plan as contained in this document constitutes the entire agreement with the Participant. If any provision of the Plan shall for any reason be invalid or unenforceable, the remaining provisions of the Plan shall be carried into effect, unless the effect thereof would be to materially alter or defeat the purposes of the Plan.

 

8.6          Participant is General Creditor with No Rights to Assets

 

A.            The payments to the Participant or his Named Beneficiary or any other beneficiary hereunder shall be made from assets that shall continue, for all purposes, to be a part of the general, unrestricted assets of the Employer; no person shall have any interest in any such assets by virtue of the provisions of this Plan. The Employer’s obligation under this Plan is solely and exclusively the Employer’s obligation and shall be an unfunded and unsecured promise to pay money in the future. No other company, bank, person or other entity shall in any way be responsible or otherwise accountable for such obligation. To the extent that any person acquires a right to receive a benefit from the Employer under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Employer; no such person shall have nor acquire any legal or equitable right, or claim in or to any property or assets of the Employer. The Employer shall not be obligated under any circumstances to fund obligations under this Agreement.

 

B.            An Employer, at its sole discretion, may acquire and/or set aside assets or funds to support its financial obligations under this Plan. No such acquisition or set-aside shall impair or derogate from the Employer’s direct obligation to a Participant or Named Beneficiary under this Plan. However, no Participant or Named Beneficiary shall be entitled to receive duplicate payments of any benefits provided under the Plan because of the existence of such assets or funds.

 

C.            In the event that, in its discretion, the Employer purchases an asset(s) or insurance policy or policies insuring the life of the Participant to allow the Employer to recover the cost of providing benefits, in whole or in part hereunder, neither the Participant, Named Beneficiary nor any other beneficiary shall have any rights whatsoever therein in such assets or in the proceeds therefrom. The Employer shall be the sole owner and beneficiary of any such assets or insurance policies and shall possess and may exercise all incidents of ownership therein. No such asset or policy, policies or other property shall be held in any Trust either for the Participant or any other person nor as collateral security for any obligation of the Employer hereunder. The Participant’s participation in the acquisition of such assets or policy or policies shall not be a representation to the Participant, Named Beneficiary or any other beneficiary of any beneficial interest or ownership in such assets, policy or policies. The Participant may be required to submit to medical examinations, supply such information and to execute such documents as may be required by any insurance carriers as a pre-condition to participation in and any benefit under the Plan, or continuing participation in and any benefit under the Plan.

 

8.7          No Trust Relationship Created

 

Nothing contained in this Plan shall be deemed to create a trust of any kind or create any fiduciary relationship between the Employer and the Participant, Named Beneficiary, other beneficiaries of the Participant, or any other person claiming through the Participant. Funds allocated hereunder shall continue for all purposes to be part of the general assets and funds of the Employer and no person other than the Employer shall, by virtue of the provisions of this Plan, have any beneficial interest in such assets and funds. The creation of a grantor trust under the Code to hold such assets or funds for the administrative convenience of the Employer shall in no way represent to the Participant or Named Beneficiary a property or beneficial ownership interest in such assets.

 

11

 

8.8          Limitations on Liability of the Employer

 

Neither the establishment of the Plan nor any modification hereof nor the creation of any account under the Plan nor the payment of any benefits under the Plan shall be construed as giving to the Participant or any other person any legal or equitable right against the Employer or any officer or employee thereof except as provided by law.

 

8.9          Agreement between Employer and Participant Only; Certain Construction Matters

 

This Plan is solely between the Employer and the Participant. The Participant, Named Beneficiary, estate or any other person claiming through the Participant, shall only have recourse against the Employer for enforcement of the terms of this Plan. This Plan shall be binding upon and inure to the benefit of the Employer and its successors and assigns, and the Participant, and his or her heirs, executors, administrators and Beneficiaries. This Agreement and Plan shall not be construed against the party preparing it, but shall be construed as if the Employer and Participant jointly prepared this Agreement and Plan, and no provision of this Agreement or Plan shall be interpreted against any one party.

 

8.10        Independence of Benefits

 

The benefits payable under this Plan are for services already rendered or to be rendered and shall be independent of, and in addition to, any other benefits or compensation, whether by salary, bonus or otherwise, payable to the Participant under any compensation and/or benefit arrangements or plans, incentive cash compensations and stock plans and other retirement or welfare benefit plans, that now exist or may hereafter exist from time to time.

 

8.11        Unclaimed Property

 

Except as may be required by law, the Company may take of any the following actions if it gives notice to the Participant or Named Beneficiary of an entitlement to a benefit under the Plan, and the Participant or Named Beneficiary fails to claim such benefit or fails to provide their location to the Company within three (3) calendar years of such notice:

 

A.            Direct distribution of such benefits, in such proportions as the Company may determine, to one or more or all, of the Participant’s next of kin, if the Company knows their location; or

 

B.            Deem this benefit to be forfeited and paid to the Employer if the location of the Participant’s next of kin is not known. However, the Employer shall pay the benefit, unadjusted for gains or losses from the date of such forfeiture, to the Participant or Named Beneficiary who subsequently makes proper claim to the benefit.

 

The Employer and any Trustee, if applicable, shall not be liable to any person for payment made in accordance pursuant to applicable state unclaimed property laws.

 

8.12        Named Beneficiary

 

As long as this Plan is in force, the Participant shall be entitled to specify or revoke and change the beneficiary or beneficiaries of a survivor benefit, if any, to be paid at the time of his/her death according to procedures set out by the Employer. No Named Beneficiary shall obtain any vested right to have this Plan continued in force, and it may be amended, modified, terminated in whole or in part by the Company in writing without the consent of any Named Beneficiary.

 

8.13        Required Tax Withholding and Reporting

 

The Employer shall withhold and report federal, state and local income and other tax amounts in connection with this Plan as may be required by law from time to time.

 

8.14        Discrepancies between the Plan Document and Any Other Understanding

 

In the event of any discrepancies or ambiguities between the terms of the Plan and any other understanding of the Plan, the terms of the Plan as set forth in this Agreement (and any amendment or restatement of this Agreement and Plan) shall control.

 

12

 

8.15        Code Section 409A Compliance

 

A.            This Plan shall be interpreted by the Committee to comply with Section 409A. Notwithstanding anything herein to the contrary, (i) if at the time of Participant’s Termination of Employment Participant is a “specified employee” as defined in Section 409A and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such Termination of Employment is necessary in order to prevent any accelerated or additional tax under Section 409A, then the Employer will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Participant) until the date that is six months following Participant’s Termination of Employment (or the earliest date as is permitted under Section 409A) and (ii) if any other payments of money or other benefits due to Participant hereunder could cause the application of an accelerated or additional tax under Section 409A, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner, determined by the Board of Directors, that does not cause such an accelerated or additional tax.

 

B.            The intent of the parties is that payments and benefits under this Agreement comply with Section 409A and the regulations and guidance promulgated such that taxation under Section 409A shall not arise in connection with this Agreement, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted so as to be in compliance with Section 409A. In no event whatsoever shall the Company, or any other company, bank, person or other entity be liable for any additional tax, interest or penalty that may be imposed on Participant or Beneficiary under Section 409A or damages or any other losses for failing to comply with Section 409A or any other provision of applicable tax or other similar law. Neither the Company nor any of its Affiliates, or any of the agents, employees, officers, directors or other representatives of one or more of the foregoing represents, warrants or guarantees any particular or favorable tax or other result in connection with this Agreement, the Plan, or otherwise. The Participant shall be solely and exclusively responsible for any and all such results.

 

13

 

ARTICLE IX - SIGNATURE PAGE

 

IN WITNESS WHEREOF, the Company has caused this Agreement and Plan to be executed, and the Participant has executed this Agreement and Plan, on the Execution Date, effective as of the Effective Date.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
Level One Bank
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Print Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PARTICIPANT:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Print Name:
    	
 
    

 

14

 

BENEFICIARY DESIGNATION FORM

 

Level One Bank Supplemental Executive Retirement Plan for Executive

 

	
1.
    	
 
    
	
(Participant’s   Last Name)
    	
(MI)
    	
(First Name)
    
				

 

	
 
    	
 
    	
(       )
    	
 
    
	
(Social   Security Number)
    	
(Office Tel.)
    	
(E Mail)
    

 

2. I hereby:

 

o            make the following first designation of my revocable beneficiary to receive any benefits, if any, to which I may be entitled and to possess my rights and interest under the Plan in the event of my death.

 

o            revoke any and all of my prior beneficiary designations as filed with the Company (Level One Bank) and make the following new designation of my revocable beneficiary to receive any benefits, if any, to which I may be entitled and to possess my rights and interest under the Plan in the event of my death.

 

I understand that this beneficiary designation shall become effective upon the date it is received and acknowledged by the Company.

 

3. Named Beneficiary (ies):

 

	
A. Primary Beneficiary:
    	
 
    	
B. Secondary   Beneficiary:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    	
Address:
    	
 
    
	
 
    	
(Street)
    	
 
    	
 
    	
(Street)
    
	
 
    	
 
    	
 
    
	
(City)
    	
(State)
    	
(ZIP)
    	
 
    	
(City)
    	
(State)
    	
(ZIP)
    
	
 
    	
 
    
	
Relationship:
    	
 
    	
 
    	
Relationship:
    	
 
    
												

 

	
4.    Your Signature:
    	
 
    	
 
    	
 
    
	
 
    	
(Participant’s   Signature)
    	
 
    	
(Date)
    

 

We recommend you consult with legal counsel in the preparation of this designation.

 

	
Company Acknowledgment:   By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(Date)
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    	
 
    

 

15Exhibit 10.5

 

LEVEL ONE BANCORP, INC.

2007 STOCK OPTION PLAN

 

1. Purpose; Effectiveness of the Plan

 

(a) The purpose of this Plan is to advance the interests of Level One Bancorp, Inc. (the “Company”) and its shareholders by helping the Company and its Subsidiaries attract and retain the services of employees, officers and directors, upon whose judgment, initiative and efforts the Company is substantially dependent, and to provide those persons with further incentives to advance the interests of the Company. The Plan is also established with the objective of encouraging Stock ownership by such employees, officers and directors and aligning their interests with those of stockholders.

 

(b) This Plan will become effective on the date of its adoption by the Board, provided the Plan is approved by the shareholders of the Company (excluding holders of shares of Option Stock issued by the Company under this Plan) within twelve months after that date. If the Plan is not approved by the shareholders of the Company, any Options granted under this Plan will be rescinded and void. This Plan will remain in effect until it is terminated by the Board under Section 10 hereof, except that no Incentive Stock Option will be granted after the tenth anniversary of the date of this Plan’s adoption by the Board.

 

2. Definitions. Unless the context otherwise requires, the following defined terms (together with other capitalized terms defined elsewhere in this Plan) will govern the construction of this Plan, and of any Stock Option Agreements entered into pursuant to this Plan:

 

(a) “10% Stockholder” means a person who owns, either directly or indirectly by virtue of the ownership attribution provisions set forth in Section 424(d) of the Code at the time he or she is granted an Option, Stock possessing more than ten percent (10%) of the total combined voting power or value of all classes of Stock of the Company and/or of its Subsidiaries.

 

b) “1934 Act” means the federal Securities Exchange Act of 1934, as amended.

 

c) “Board” means the Board of Directors of the Company.

 

d) “Cause” means, in the context of termination of status as an Eligible Participant,:

 

(i)                                     The willful and continued failure by the Eligible Participant to substantially perform his duties with the Company (other than any such failures resulting from the Eligible Participant’s being disabled), within a reasonable period of time after a written demand for substantial performance is delivered to the Eligible Participant by the Board, which demand specifically identifies the manner in which the Boards believed that the Eligible Participant has not substantially performed his duties;

 

 

(ii)                                  the failure by the Eligible Participant to materially conform to the Company’s Code of Conduct, within a reasonable period of time after a written demand for compliance with the Company’s Code of Conduct is delivered to the Eligible Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Eligible Participant has failed to materially conform to the Company’s Code of Conduct;

 

(iii)                               the willful engaging by the Eligible Participant in conduct which is demonstrably and materially injurious to the Company or a Subsidiary, monetarily or otherwise; or

 

(iv)                              the engaging by the Eligible Participant in egregious misconduct involving serious moral turpitude to the extent that, in the reasonable judgment of the Board, the Eligible Participant’s credibility and reputation no longer conform to the standard of the employer’s employees.

 

For purposes of the Plan, no act, or failure to act, on the Eligible Participant’s part shall be deemed “willful” unless done, or omitted to be done, by the Eligible Participant not in good faith and without reasonable belief that the Eligible Participant’s action or omission was in the best interest of the Company.

 

(e) A “Change in Control” of the Company shall have occurred:

 

(i)                                     on the scheduled expiration date of a tender offer by, or exchange offer by any corporation, person, other entity or group (other than the Company, any of its wholly owned Subsidiaries or a qualified retirement plan of the Company or one of its Subsidiaries), to acquire Voting Stock of the Company if:

 

(1)                                 after giving effect to such offer such corporation, person, other entity or group would own 50% or more of the Voting Stock of the Company;

 

(2)                                 there shall have been filed documents with the Securities and Exchange Commission in connection therewith (or, if no such filing is required, public evidence that the offer has already commenced); and

 

(3)                                 such corporation, person, other entity or group has secured all required regulatory approvals to own or control 50% or more of the Voting Stock of the Company;

 

(ii)                                  if the shareholders of the Company approve a definitive agreement to merge or consolidate the Company with or into another corporation in

 

 

a transaction in which neither the Company nor any of its wholly owned Subsidiaries will be the surviving corporation, or to sell or otherwise dispose of all or substantially all of the Company’s assets to any corporation, person, other entity or group (other than the Company, any of its wholly owned Subsidiaries or a qualified retirement plan of the Company or one of its Subsidiaries), and such definitive agreement is consummated;

 

(iii)                               if any corporation, person, other entity or group (other than the Company or any of its wholly owned Subsidiaries) becomes the Beneficial Owner (as defined in the Company’s articles of incorporation) of Stock representing 50% or more of the Voting Stock of the Company; or

 

(iv)                              if during any period of two consecutive years Continuing Directors cease to comprise a majority of the Company’s Board of Directors.

 

(f) “Code” means the Internal Revenue Code of 1986, as amended (references herein to Sections of the Code are intended to refer to Sections of the Code as enacted at the time of the Plan’s adoption by the Board and as subsequently amended, or to any substantially similar successor provisions of the Code resulting from recodification, renumbering or otherwise).

 

(g) “Committee” means the Compensation Committee of the Board of Directors of the Company provided that the Compensation Committee consists only of Non-Employee Directors of the Board; or, if so determined by the Board of Directors, entire Board may act as the Committee.

 

(h) “Company” means Level One Bancorp, Inc., Michigan corporation.

 

(i) “Continuing Director” means:

 

(i)                                     any member of the Board of Directors of the Company at the beginning of any period of two consecutive years; and

 

(ii)                                  any person who subsequently becomes a member of the Board of Directors of the Company; if

 

(1)                                 such person’s nomination for election or election to the Board of Directors of the Company is recommended or approved by resolution of a majority of the Continuing Directors; or

 

(2)                                 such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board of Directors of the Company consists of Continuing Directors.

 

(j) “Disability” has the same meaning as “permanent and total disability,” as defined in Section 22(e)(3) of the Code.

 

 

(k) “Disqualifying Disposition” means a disposition, as defined in Section 424(c)(1) of the Code, of Option Stock acquired pursuant to an ISO, which occurs either:

 

(i)            within two years after the underlying Option is granted; or

 

(ii)           within one year after the underlying Option is exercised.

 

Under Section 424(c)(1) of the Code, the term “disposition” includes a sale, exchange, gift, or a transfer of legal title, but does not include (A) a transfer from a decedent to an estate or a transfer by bequest or inheritance, (B) an exchange to which Section 354, 355, 356, or 1036 (or so much of Section 1031 as relates to Section 1036) applies, or (C) a mere pledge or hypothecation.

 

(l) “Eligible Participants” means persons who, at a particular time, are employees, officers, directors or organizers of the Company or its Subsidiaries. With respect to ISOs only, this definition does not include persons who have been on leave of absence for greater than 90 days, unless re-employment is guaranteed by law or contract. An individual shall be considered an organizer of the Company for as long as he or she retains ownership of Company common stock in an amount equal to or greater than the number of shares he or she purchases in the initial offering of Company Stock.

 

(m) “Fair Market Value” means, with respect to Option Stock and as of the date in question, the market price per share of such Stock determined in a manner consistent with the requirements of Section 422 of the Code and to the extent consistent therewith:

 

(i)                                     if the Stock was traded on a national stock exchange as of the date in question, then the Fair Market Value will be equal to the average of the high and low prices reported by the applicable composite transactions report for such date or, if no trading occurred on the applicable exchange for that date, for the latest trading date prior to such date.

 

(ii)                                  if the Stock was traded on any other established market as of the date in question, then the Fair Market Value will be equal to the average of the high and low prices reported for such date or, if no trading occurred on the applicable exchange for that date, for the latest trading date prior to such date; or

 

(iii)                               if neither of the foregoing provisions is applicable, then the Fair Market Value will be determined in good faith by an independent appraiser selected by the Committee.

 

(n) “ISO” or “Incentive Stock Option” means an Option, which is subject to certain holding requirements and tax benefits, and which qualifies as an “incentive stock option,” as defined in Section 422 of the Code.

 

(o) “Non-Employee Director” means a director who:

 

 

(i)                                     is not currently an officer of the Company or its Subsidiaries, or otherwise currently employed by the Company or its Subsidiaries;

 

(ii)                                  does not receive compensation, either directly or indirectly, from the Company or its Subsidiaries, for services rendered as a consultant or in any capacity other than as a director, except for an amount that does not exceed the dollar amount for which disclosure would be required in the Company’s proxy statement;

 

(iii)                               does not possess an interest in any other transaction for which disclosure would be required in the Company’s proxy statement; and

 

(iv)                              is not engaged in a business relationship for which disclosure would be required in the Company’s proxy statement.

 

(p) “NSO” means any Option granted under this Plan whether designated by the Committee as a “non-qualified stock option,” a “non-statutory stock option” or otherwise, other than an Option designated by the Committee as an ISO. The term “NSO” also includes any Option designated by the Committee as an ISO but which, for any reason, fails to qualify as an ISO pursuant to Section 422 of the Code and the rules and regulations thereunder.

 

(q) “Option” means a right granted pursuant to this Plan entitling the Optionee to acquire shares of Stock issued by the Company.

 

(r) “Option Agreement” means an agreement between the Company and an Eligible Participant to evidence the terms and conditions of the issuance of Options hereunder.

 

(s) “Option Price” with respect to any particular Option means the exercise price at which the Optionee may acquire each share of the Option Stock called for under such Option.

 

(t) “Option Stock” means Stock issued or issuable by the Company pursuant to the valid exercise of an Option.

 

(u) “Optionee” means an Eligible Participant to whom an Option is granted hereunder, and any transferee of such Option received pursuant to a Transfer authorized under this Plan.

 

(v) “Plan” means this 2007 Level One Bancorp, Inc. Stock Option Plan, as the Plan may be amended from time-to-time.

 

(w) “Stock” means shares of the Company’s common stock.

 

(x) “Subsidiary” has the same meaning as “Subsidiary Corporation” as defined in Section 424(f) of the Code.

 

(y) “Transfer,” with respect to Option Stock, includes, without limitation, a voluntary or involuntary sale, assignment, transfer, conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of such Stock, including without limitation an assignment for the benefit of creditors of the Optionee, a transfer by operation of law, such as a transfer by will or under the laws of descent and distribution, an execution of judgment against the Option Stock or the acquisition of record or beneficial ownership thereof by a

 

 

lender or creditor, a transfer pursuant to any decree of divorce, dissolution or separate maintenance, any property settlement, any separation agreement or any other agreement with a spouse (except for estate planning purposes) under which a part or all of the shares of Option Stock are transferred or awarded to the spouse of the Optionee or are required to be sold, or a transfer resulting from the filing by the Optionee of a petition for relief, or the filing of an involuntary petition against such Optionee, under the bankruptcy laws of the United States or of any other nation.

 

(z) “Voting Stock” shall mean those shares of the Company Stock entitled to vote generally in the election of directors.

 

3. Eligibility. Options may be granted under this Plan only to persons who are Eligible Participants as of the time of such grant. Only Eligible Participants who are employees or officers of the Company or one of its Subsidiaries shall be eligible to receive a grant of ISOs.

 

4. Administration

 

(a)           Administration by the Committee. The Committee will administer this Plan, but may delegate such powers or duties to employees of the Company or its Subsidiaries, as it deems appropriate.

 

(b)           Authority and Discretion of Committee. The Committee will have full and final authority in its discretion, at any time subject only to the express terms, conditions and other provisions of the Company’s articles of incorporation, bylaws and this Plan, and the specific limitations on such discretion set forth herein:

 

(i)                                     to select and approve the persons to whom Options will be granted under this Plan from among the Eligible Participants, including the number of Options and the amount of Option Stock available for purchase under such Options so granted to each person;

 

(ii)                                  to determine the period or periods of time during which Options may be exercised or become exercisable, the Option Price and the duration of such Options, the date on which Options are granted, and other matters to be determined by the Committee in connection with specific Option grants and Option Agreements as specified under this Plan; and

 

(iii)                               to interpret this Plan, to prescribe, amend and rescind rules and regulations relating to this Plan, and to make all other determinations necessary or advisable for the operation and administration of this Plan.

 

(c)           Designation of Options. Except as otherwise provided herein, the Committee will designate any Option granted hereunder either as an ISO or as an NSO. To the extent that the Fair Market Value of Stock, determined at the time the Option is granted, with respect to which all ISOs are exercisable for the first time by any individual during any calendar year (pursuant to this Plan and all other plans of the Company and/or its Subsidiaries) exceeds

 

 

$100,000, such Option will be treated as an NSO.

 

(d)           Option Agreements. Options will be deemed granted hereunder only upon the execution and delivery of an Option Agreement by the Optionee and a duly authorized officer of the Company. Options will not be deemed granted hereunder merely upon the authorization of such grant by the Committee.

 

5.              Shares Reserved for Options. Subject to Sections 7 and 10 of this Plan, the aggregate number of shares of Option Stock that may be issued and outstanding pursuant to the exercise of Options under this Plan (the “Option Pool”) will not exceed 630,265 shares. . Shares of Option Stock that would have been issuable pursuant to Options, but that are no longer issuable because all or part of those Options have terminated or expired may also be added back into the Option Pool to be available for issuance.

 

6.              Terms of Stock Option Agreements. Each Option granted pursuant to this Plan will be evidenced by an Option Agreement between the Company and the Eligible Participant to whom such Option is granted, in form and substance satisfactory to the Committee in its sole discretion, consistent with this Plan. Without limiting the foregoing, the following terms and conditions will be considered a part of each Option Agreement (unless otherwise stated therein):

 

(a)         Covenants of Optionee. Nothing contained in this Plan, any Option Agreement or in any other agreement executed in connection with the granting of an Option under this Plan will confer upon any Optionee any right with respect to the continuation of his or her status as an employee, officer or director of the Company or its Subsidiaries.

 

(b)   Option Vesting Periods. Except as otherwise provided herein, each Option Agreement will specify the period or periods of time within which each Option or portion thereof will first become exercisable (the “Option Vesting Period”). Such Option Vesting Periods will be determined by the Committee in its discretion, and may be accelerated or shortened by the Committee in its discretion; provided, however, that the Option Vesting Period shall not be less than 3 years and the percentage of shares subject to an Option Agreement that become exercisable in any single year shall not exceed 33 1/3%.

 

(c)   Exercise of the Option.

 

(i)                                     Mechanics and Notice. Options may be exercised to the extent exercisable by giving written notice to the Company specifying the number of Options to be exercised, the date of the grant of the Option or Options to be exercised, the Option Price, the desired effective date of the exercise, the number of full shares of Option Stock to be retained by the Optionee after exercise, and the method of payment. Options shall not be exercisable if and to the extent the Company determines that such exercise would violate applicable state or Federal securities laws or the rules and regulations of any securities exchange on which the Stock is traded. If the Company makes such a determination, it shall use all reasonable efforts to obtain compliance with such laws, rules and regulations. Once written notice complying with the requirements of this subsection is received, the Committee or its designee shall promptly notify the Optionee of the amount of the Option Price and withholding taxes due, if either or both is applicable. Payment of any amounts owing shall be due immediately upon receipt of such notice.

 

 

(ii)                                  Withholding Taxes. As a condition to the issuance of shares of Option Stock upon exercise of an Option granted under this Plan, the Optionee will pay to the Company in cash or check the amount of the Company’s tax withholding liability, if any, associated with such exercise. The Committee may prescribe a specific method of payment of such withholding, in its discretion. For purposes of this subsection 6(c)(ii), “tax withholding liability” will mean all federal and state income taxes, social security tax, medicare tax and any other taxes applicable to the income arising from the transaction required by applicable law to be withheld by the Company.

 

(d) Payment of Option Price. Each Option Agreement will specify the Option Price, with respect to the exercise of Option Stock granted thereunder, which may be stated in terms of a fixed dollar amount, a percentage of Fair Market Value at the time of the grant, or such other method as determined by the Committee in its discretion. In no event will the Option Price for an ISO or NSO granted hereunder be less than the Fair Market Value (or, where an ISO Optionee is a 10% Stockholder, one hundred ten percent (110%) of such Fair Market Value) of the Option Stock at the time such ISO or NSO is granted. The Option Price will be payable to the Company in United States dollars in cash or by check.

 

(e) Notice of Disqualifying Disposition. In the event of a Disqualifying Disposition, the Optionee will promptly give written notice to the Company of such disposition including information regarding the number of shares involved, the exercise price of the underlying Option through which the shares were acquired and the date of the Disqualifying Disposition.

 

(f) Termination of the Option. Except as otherwise provided herein, each Option Agreement will specify the period of time, to be determined by the Committee in its discretion, during which the Option granted therein will be exercisable, not to exceed ten years from the date of grant (the “Option Period”); provided that the Option Period will not exceed five years from the date of grant in the case of an ISO granted to a 10% Stockholder.

 

(i)                                     ISOs. To the extent not previously exercised, each ISO will terminate upon the expiration of the Option Period specified in the Option Agreement; provided, however, that, subject to the discretion of the Committee, each ISO will terminate, if earlier:

 

(a) immediately upon the cessation of status as an Eligible Participant due to Cause; (b) 90 days after the date that the Optionee ceases to be an Eligible Participant for any reason other than Cause, death, or Disability; or (c) one year after the Optionee ceases to be an Eligible Participant by reason of such person’s death or Disability.

 

(ii)                                  NSOs. To the extent not previously exercised, each NSO will terminate upon the expiration of the Option Period specified in the Option Agreement; provided, however, that, subject to the discretion of the Committee, each NSO will terminate, if earlier:

 

 

(a) immediately upon the cessation of status as an Eligible Participant due to Cause; (b) 90 days after the date that the Optionee ceases to be an Eligible Participant for any reason, other than Cause, death or Disability; or (c) one year after the date the Optionee ceases to be an Eligible Participant by reason of such person’s death or Disability.

 

(iii) Effect of Change in Control. Notwithstanding any other provision of this Plan, each Option that has not yet become fully exercisable will become fully exercisable upon the later of (1) the effective date of a Change in Control of the Company or a liquidation or dissolution of the Company; or (2) the third anniversary of the date on which the Option was granted.

 

(iv) FDIC Direction to Terminate Options. Notwithstanding any other provision of this Plan, in the event the capital of the Company’s Subsidiary, Level One Bank falls below the minimum requirements, as determined by its state regulator or the FDIC, the FDIC shall have the authority to require Optionees to exercise or forfeit their Options. In such cases, Options that are not yet exercisable shall be forfeited.

 

(g) Transferability of Options. ISOs and NSOs will be subject to Transfer by the Optionee only by will or the laws of descent and distribution.

 

(h) Compliance with Law. Notwithstanding any other provision of this Plan, Options may be granted pursuant to this Plan, and Option Stock may be issued pursuant to the exercise thereof by an Optionee, only after there has been compliance with all applicable federal and state tax and securities laws. The right to exercise an Option, to Transfer an Option or to Transfer Option Stock, will be further subject to such requirements that at any time the Committee reasonably imposes, in its discretion, including, but not limited to, a determination that the listing, registration or qualification of the shares of Option Stock called for by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of or in connection with the granting or Transfer of such Option or the purchase or the Transfer of shares of Option Stock, and the Option may not be exercised or Transferred, in whole or in part, or that the Option Stock may not be purchased or Transferred unless and until such listing, registration, qualification, consent or approval is effected or obtained free of any conditions not acceptable to the Committee, in its discretion.

 

(i) Stock Certificates. Certificates representing the Option Stock issued pursuant to the exercise of Options will bear all legends required by law and necessary to effectuate this Plan’s provisions. The Company may place a “stop transfer” order against shares of the Option Stock until all restrictions and conditions set forth in this Plan and in the legends referred to in this subsection 6.(i) have been complied with.

 

(j) Other Provisions. The Option Agreement may contain such other terms, provisions and conditions, including such special forfeiture conditions, rights of repurchase, rights of first refusal and other restrictions on Transfer of Option Stock issued upon exercise of any Options granted hereunder, not inconsistent with this Plan, as may be determined by the Committee in its sole discretion.

 

 

7. Adjustments Upon Changes in Stock. In the event of any change in the outstanding Stock of the Company as a result of a merger, reorganization, stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, appropriate proportionate adjustments will be made:

 

(a) in the aggregate number of shares of Option Stock in the Option Pool;

 

(b) in the Option Price and the number of shares of Option Stock that may be purchased pursuant to an outstanding Option granted hereunder;

 

(c) in the exercise price of any rights of repurchase or of first refusal under this Plan; and

 

(d) with respect to other rights and matters determined on a per share basis under this Plan or any associated Option Agreement.

 

Any such adjustments will be made only by the Committee, and when so made will be effective, conclusive and binding for all purposes with respect to the Plan and all Options then outstanding. No such adjustments will be required by reason of the issuance or sale by the Company for cash or other consideration of additional shares of its Stock or securities convertible into or exchangeable for shares of its Stock.

 

8.              Proceeds from Sale of Option Stock. Cash proceeds from the sale of shares of Option Stock issued from time to time upon the exercise of Options granted pursuant to this Plan will be added to the general funds of the Company and as such will be used from time to time for general corporate purposes.

 

9.              Modification, Extension and Renewal of Options. Subject to the terms and conditions and within the limitations of this Plan, the Committee may modify, extend or renew outstanding Options granted under this Plan, but in no event may the Committee change the Option Price as stated in the Option Agreement, if expressed as a fixed dollar amount, or the manner in which the Option Price is to be calculated as stated in the Option Agreement, if expressed as a percentage of Fair Market Value at the time of the grant or otherwise. Notwithstanding the foregoing, no modification of any Option will, without the consent of the holder of the Option, alter or impair any rights or obligations under any Option previously granted under this Plan.

 

10.       Amendment and Discontinuance. The Committee may amend, and the Board may suspend or discontinue, this Plan at any time, provided that:

 

(a) No such action may, without the approval of the shareholders of the Company, increase the maximum total number of shares of Option Stock that may be granted to an individual over the term of this Plan, or materially increase (other than by reason of an adjustment pursuant to Section 7 hereof) the aggregate number of shares of Option Stock in the Option Pool that may be granted pursuant to this Plan;

 

(b) No action of the Committee will cause ISOs granted under this Plan not to comply with Section 422 of the Code unless the Committee specifically declares such action to be made for that purpose;

 

 

(c) No action of the Committee shall alter or impair any Option previously granted under this Plan without the consent of such affected Optionee.

 

11.       Plan Binding upon Successors. This Plan shall be binding upon and inure to the benefit of the Company, its Subsidiaries, and their respective successors and assigns, and Eligible Participants and their respective assigns, personal representatives, heirs, legatees and beneficiaries.

 

12.       Compliance with Rule 16b-3. With respect to persons subject to Section 16 of the 1934 Act, transactions under this Plan are intended to be exempt from short-swing profit liability. To the extent that any transaction made pursuant to the Plan may give rise to short-swing profit liability, the Committee may deem such transaction to be null and void, to the extent permitted by law and deemed advisable by the Committee.

 

Notices. Any notice to be given to the Company under the terms of an Option Agreement will be addressed to Level One Bancorp, Inc., 32991 Hamilton Court, Farmington Hills, MI 48334; Attention: President, or at such other address as the Company may designate in writing. Any notice to be given to an Optionee will be addressed to the Optionee at the address provided to the Company by the Optionee. Any such notice will be deemed to be given when deposited in the United States mail at a post office or branch post office regularly maintained by the United States Postal Service, with postage fully prepaid, enclosed in a properly sealed envelope, and addressed as required under this Section 0.

 

13.       Governing Law. This Plan will be governed by, and construed in accordance with, the laws of the State of Michigan.

 

14.       Copies of Plan. A copy of this Plan will be delivered to each Optionee at or before the time he or she executes an Option Agreement.

 

Date Plan Adopted by Board of Directors: October 17, 2007

Date Plan Approved by Stockholders: January 16, 2008

Date Plan Amended by Stockholders: April 20, 2011

Date Plan Amended by Stockholders: April 15, 2015

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