<PAGE>
Securities and Exchange Commission
Washington, DC 20549
Form 10-K
Annual Report Pursuant
to Section 13 or 15(d) of
the Securities Exchange Act
of 1934.
For the fiscal year ended December 31, 1996.
Commission file number
1-10706
Comerica Incorporated
Comerica Tower at Detroit Center
500 Woodward Avenue,
Detroit, Michigan 48226
313-222-4000
Incorporated in the State
of Delaware, IRS Employer Identification No. 38-1998421.
Securities registered pursuant to Section 12(b) of the Act:
- - Common Stock, $5 par value
- - Rights to acquire Series D
Preferred Stock, no par value
- - Preferred Stock Series E, $50.00 liquidation preference per share
These securities are registered on the New York Stock Exchange.
Securities registered pursuant to Section 12(g) of the Act:
- - 10 1/8 percent Subordinated
Debentures due in 1998
1
<PAGE>
- - 7 1/4 percent Subordinated
Notes due in 2007
The registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, but will be contained in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
At March 10, 1997, the registrant's common stock, $5 par value, held by
nonaffiliates had an aggregate market value of $6,161,755,577 based on the
closing price on the New York Stock Exchange on that date of $ 62.75 per
share and 98,195,308 shares of common stock held by nonaffiliates. For
purposes of this Form 10-K only, it has been assumed that all common shares
held by the Trust Department of Comerica affiliated banks and by the
registrant's directors and executive officers are held by affiliates.
At March 10, 1997, the registrant had outstanding 106,421,266 shares of its
common stock, $5 par value.
DOCUMENTS INCORPORATED
BY REFERENCE:
1. Parts I and II:
Items 1-8--Annual Report to Shareholders for the year ended December 31, 1996.
2. Part III:
Items 10-13--Proxy Statement for the Annual Meeting of Shareholders to be held
May 16, 1997.
PART I
ITEM 1. BUSINESS
GENERAL
Comerica Incorporated ("Comerica" or the "Corporation") is a registered bank
holding company incorporated under the laws of the State of Delaware,
headquartered in Detroit, Michigan. Based on assets as of December 31, 1996, it
was the 25th largest bank holding company in the United
2
<PAGE>
States and the largest bank holding company headquartered in Michigan in
terms of both total assets and total deposits. Comerica was formed in 1973 to
acquire the outstanding common stock of Comerica Bank (formerly Comerica
Bank-Detroit), one of Michigan's oldest banks ("Comerica Bank"). Since that
time, Comerica has acquired financial institutions in California, Texas and
Florida. As of December 31, 1996, Comerica owned directly or indirectly all
the outstanding common stock (except for directors' qualifying shares, where
applicable) of six banking and thirty-seven non-banking subsidiaries. At
December 31, 1996, Comerica had total assets of approximately $34.2 billion,
total deposits of approximately $22.4 billion, total loans (net of unearned
income) of approximately $26.2 billion and common shareholders' equity of
approximately $2.4 billion.
BUSINESS STRATEGY
Comerica has strategically aligned its operations into three major lines of
business: the Business Bank, the Individual Bank and the Investment Bank. The
Business Bank is comprised of middle market lending, asset based lending, large
corporate banking, international financial services and institutional trust.
This line of business meets the needs of medium-size businesses, multinational
corporations, and governmental entities by offering various products and
services, including commercial loans and lines of credit, deposits, cash
management, institutional trust, international trade finance, letters of credit
and foreign exchange management services.
The Individual Bank includes consumer lending, consumer deposit gathering,
mortgage loan origination and servicing, small business banking (annual sales
under $5 million) and private banking. This line of business offers a
variety of consumer products, including deposit accounts, direct and indirect
installment loans, credit cards, home equity lines of credit and residential
mortgage loans. In addition, a full range of financial services is provided
to small business, area merchants and municipalities. Private lending and
personal trust services are also provided to meet the personal financial
needs of affluent individuals (as defined by individual net income or wealth).
The Investment Bank is responsible for the sales of mutual fund and annuity
products, as well as life, disability and long-term care insurance products.
This line of business also offers capital market products, manages loan
syndications and provides investment management and advisory services,
investment banking and discount securities brokerage services.
The core businesses are tailored to each of Comerica's four primary geographic
markets: Michigan, Texas, California and Florida.
3
<PAGE>
PHASE III OF DIRECTION 2000
In 1996, Comerica completed the final steps of Direction 2000, the strategic
effort to prepare the organization for the new millennium. Following Comerica's
1995 organization of its business units into the Business, Individual and
Investment Banks, and the subsequent alignment and consolidation of back-office
areas, Comerica in 1996 identified which business lines it believed were best
managed on a local basis and a national basis and realigned its support
functions to optimally link them to business strategies and corporate
objectives. In the third and final phase of this effort, Comerica employees
systematically reviewed all functions of the organization. Their objectives were
to determine first, if the work was absolutely necessary and second, if they
were doing the work in the most efficient way possible. Comerica's goal was to
improve customer service, increase efficiency, enhance revenue and position it
to achieve its financial objectives. Comerica employees identified myriad ways
to serve customers better, including simplifying the referral and delivery of
its services, empowering colleagues with additional authority and reducing their
clerical responsibility. In addition to reducing overhead costs and enhancing
revenues, the results of Phase III are expected to support future investments in
growth businesses, geographic expansion, marketing, technology and talent.
Phase III of Direction 2000 which, when fully implemented by the first half of
1998, may reduce overhead costs and increase revenues on an annualized basis by
$110 million. However, several outside factors such as an economic downturn,
significant changes in monetary or governmental policies or dramatic changes in
interest rates could cause the actual results to differ materially from these
projections.
SHAREHOLDER VALUE
In 1996, as part of Comerica's capital management program, Comerica directors
authorized the purchase of up to 15 million shares of Comerica common stock.
At December 31, 1996, 8.6 million shares had been repurchased under this
program, reflecting its commitment to optimize its capital position and focus
on shareholder value. The share repurchase activity is beneficial to
shareholders who sell their shares by providing additional liquidity to the
marketplace and allowing for the efficient redistribution of ownership. For
shareholders who remain, the repurchase activity leverages ownership through
a smaller base of common shares over which earnings are spread. In 1996
Comerica also issued preferred stock, a strategy which, when coupled with the
common stock repurchase plan, further enhanced the returns available to
common shareholders.
ACQUISITIONS
Comerica acquired Metrobank, a California bank with assets of approximately $1.1
billion, on January 16, 1996, through the merger of Metrobank into Comerica
Holdings Incorporated
4
<PAGE>
("Holdings"), a California corporation and wholly-owned subsidiary of Comerica,
with Metrobank being the surviving corporation, operating as a wholly-owned
subsidiary of Comerica under the charter and by-laws of Metrobank with the name
"Metrobank." The acquisition was accounted for as a purchase and the
shareholders of Metrobank received common stock of Comerica valued at about $125
million in exchange for their interests in Metrobank. To complete the
acquisition, Comerica merged Metrobank into Comerica Bank-California, effective
November 1, 1996, with Comerica Bank-California surviving.
Comerica completed several other non-bank acquisitions in 1996 to enhance its
ability to compete in its developing markets. On April 10, 1996, Comerica Bank
acquired Fairlane Associates, Inc., a Michigan corporation and insurance agency
whose product line includes property and casualty insurance. This acquisition
expanded Comerica's ability to provide insurance products to its customers.
On October 17, 1996, acting through its partnership interest in Munder Capital
Management ("Munder"), Comerica broadened its global capabilities when Munder
purchased a 49% interest in London based Framlington Group plc. Framlington
offers a wide range of international mutual funds and enhanced Munder's
penetration in this market and enabled Munder to offer additional products to
its customers.
On November 15, 1996, Comerica acquired a 36% interest in B. Motor Acceptance
Corp., which was formed to offer subprime indirect automobile lending.
On December 20, 1996, acting through a national banking subsidiary, Comerica
acquired a 5.58% interest in Integrion Financial Network, LLC, to offer it
access to electronic banking and commerce services available through a common
network.
DIVESTITURES
During 1996 Comerica continued to sharpen its focus on those areas in which it
excels and exit those lines which do not meet its profitability standards. This
strategy includes outsourcing and entering into alliances to better provide
services to its customers. Comerica followed this strategy with respect to
merchant services by entering into (through its California, Michigan and Texas
banking subsidiaries), an alliance with National Data Corporation ("NDC") on
March 31, 1996. This alliance is designed to enhance services to customers and
gain operational efficiencies using NDC's technical expertise.
On March 18, 1996, Comerica entered into an agreement with ABN-
5
<PAGE>
AMRO North America, Inc. ("ABN-AMRO") for the sale of the stock of Comerica
Bank-Illinois ("CBI"), an Illinois bank, via a merger with a subsidiary of
ABN-AMRO. The transaction closed on August 18, 1996. The assets sold to
ABN-AMRO represented approximately 4% of Comerica's total assets and Comerica
received approximately $160 million in exchange for its ownership interest in
CBI. Comerica continues to maintain a presence in Illinois to serve certain of
its business customers.
Comerica also decided to exit the customs brokerage and freight forwarding
business. On April 12, 1996, Comerica entered into an agreement with AEI
Radix Custom Brokerage Services, a California corporation, to sell the
business and certain assets of John V. Carr & Son, Inc., Comerica Bank's
wholly owned customs brokerage and freight forwarding subsidiary. The
transaction was consummated on May 18, 1996.
Comerica's final strategic divestiture in 1996 was the sale of its bond
indenture and escrow business. On September 25, 1996, Comerica entered into an
agreement with First Bank System, Inc. for that business. The transaction
closed on January 31, 1997.
SUPERVISION AND
REGULATION
Banks, bank holding companies and financial institutions are highly regulated at
both the state and federal level. As a bank holding company, Comerica is subject
to supervision and regulation by the Federal Reserve Board under the Bank
Holding Company Act of 1956, as amended (the "Act"). Under the Act, the
Corporation is prohibited from engaging in activities other than those of
banking or of managing or controlling banks or from acquiring or retaining
direct or indirect ownership or control of voting shares of any company which is
not a bank or bank holding company unless the activities engaged in by the
Corporation or the company whose voting shares are acquired by the Corporation
are activities which the Federal Reserve Board determines to be so closely
related to the business of banking as to be a proper incident thereto.
Comerica Bank is chartered by the State of Michigan and is supervised and
regulated by the Financial Institutions Bureau of the State of Michigan.
Comerica Bank-Texas is chartered by the State of Texas and is supervised and
regulated by the Texas Department of Banking. Comerica Bank-Midwest, N.A. and
Comerica Bank-Ann Arbor, N.A. are chartered under federal law and subject to
supervision and regulation by the Office of the Comptroller of the Currency.
Comerica Bank-California is chartered by the State of California and regulated
by the California State Banking Department. Comerica Bank & Trust, FSB is
chartered under federal law and subject to supervision and regulation by the
Office of Thrift Supervision. Comerica Bank, Comerica Bank-Ann Arbor, N.A. and
Comerica Bank-Midwest, N.A. are members of the Federal Reserve
6
<PAGE>
System. State member banks are also regulated by the Federal Reserve Board and
state non-member banks are also regulated by the Federal Deposit Insurance
Corporation ("FDIC"). The deposits of all the banks are insured by the Bank
Insurance Fund (the "BIF") of the FDIC to the extent provided by law, except
that the deposits of Comerica Bank & Trust, FSB are insured by the FDIC's
Savings Association Insurance Fund ("SAIF").
Comerica is a legal entity separate and distinct from its banking and other
subsidiaries. Most of Comerica's revenues result from dividends paid to it by
its bank subsidiaries. There are statutory and regulatory requirements
applicable to the payment of dividends by subsidiary banks to Comerica as well
as by Comerica to its shareholders.
INTERSTATE BANKING AND BRANCHING
On September 29, 1995, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Act") was enacted. The Interstate
Act's provisions, among other things: (i) permit bank holding companies to
acquire control of banks in any state, subject to (a) specified maximum
national state deposit concentration limits; (b) any applicable state law
provisions requiring the acquired bank to be in existence for a
specified period of up to five years; (c) any applicable nondiscriminatory
state provisions that make an acquisition of a bank contingent upon a
requirement to hold a portion of such bank's assets available for call by a
state sponsored housing entity; and (d) applicable anti-trust laws; (ii)
authorize interstate mergers by banks in different states (and retention of
interstate branches resulting from such mergers) beginning June 1, 1997,
subject to the provisions noted in (i) and to any state laws that "opt-in" as
of an earlier date or "opt-out" of the provision entirely; and (iii)
authorize states to enact legislation permitting interstate de novo branching.
Since the provision permitting interstate bank acquisitions became effective,
Comerica has had enhanced opportunities to acquire banks in any state subject to
approval by the appropriate federal and state regulatory agencies. Under the
Interstate Act, Comerica will have the opportunity (after June 1, 1997, for
states that do not "opt-out" and earlier for states that "opt-in") to
consolidate its affiliate banks to create one bank with branches in more than
one state, or to establish branches in different states, subject to any state
"opt-in" and "opt-out" provisions. Of Comerica's primary markets, as of
December 31, 1996 Texas was the only state to have opted out of the interstate
branching provisions. The Texas "opt-out" expires in September 1999.
DIVIDENDS
Each state bank subsidiary that is a member of the Federal Reserve System and
each national banking association is required by federal law to obtain the prior
approval of the Federal Reserve
7
<PAGE>
Board or the Office of the Comptroller of the Currency, as the case may be, for
the declaration and payment of dividends if the total of all dividends declared
by the board of directors of such bank in any year will exceed the total of (i)
such bank's retained net income (as defined and interpreted by regulation) for
that year plus (ii) the retained net income (as defined and interpreted by
regulation) for the preceding two years, less any required transfers to surplus.
In addition, these banks may only pay dividends to the extent that retained net
profits (including the portion transferred to surplus) exceed bad debts (as
defined by regulation). Comerica's state bank subsidiaries that are not members
of the Federal Reserve System are also subject to limitations under state law
regarding the amount of earnings that may be paid out as dividends. Comerica's
federal savings bank subsidiary is subject to limitations under federal law
regarding the payment of dividends.
Under the foregoing dividend restrictions, at January 1, 1997 Comerica's
subsidiary banks, without obtaining governmental approvals, could declare
aggregate dividends of approximately $371 million from retained net profits of
the preceding two years, plus an amount approximately equal to the net profits
(as measured under current regulations), if any, earned for the period from
January 1, 1997 through the date of declaration. Dividends paid to Comerica by
its subsidiary banks amounted to $322 million in 1996, $184 million in 1995 and
$293 million in 1994.
FIRREA
Banking legislation, including the Financial Institutions Reform and Recovery
and Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), has broadened the regulatory
powers of the federal bank regulatory agencies. Under FIRREA, a depository
institution insured by the FDIC shall be liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC in connection with (i) the
default of a commonly controlled FDIC-insured depository institution, or (ii)
any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver and "in danger of default" is
defined as the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
FDICIA
In December 1991, FDICIA was enacted, substantially revising the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and making revisions
to several other federal banking statutes. Among other things, FDICIA requires
the federal banking agencies to take "prompt corrective action" in respect of
depository institutions that do not meet minimum capital requirements. FDICIA
establishes five capital tiers: "well capitalized," "adequately capitalized,"
8
<PAGE>
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." A depository institution's capital tier will depend upon
where its capital levels are in relation to various relevant capital measures,
which will include a risk-based capital measure and a leverage ratio capital
measure, and certain other factors.
Regulations establishing the specific capital tiers provide that, for an
institution to be well capitalized it must have a total risk-based capital ratio
of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6 percent,
a Tier 1 leverage ratio of at least 5 percent, and not be subject to any
specific capital order or directive. For an institution to be adequately
capitalized it must have a total risk-based capital ratio of at least 8 percent,
a Tier 1 risk-based capital ratio of at least 4 percent, and a Tier 1 leverage
ratio of at least 4 percent (and in some cases 3 percent). Under these
regulations, the banking subsidiaries of Comerica would be considered to be well
capitalized as of December 31, 1996.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
limitations on growth and certain activities and are required to submit an
acceptable capital restoration plan. The federal banking agencies may not accept
a capital plan without determining, among other things, that the plan is based
on realistic assumptions and is likely to succeed in restoring the depository
institution's capital. In addition, for a capital restoration plan to be
acceptable, the depository institution's parent holding company must guarantee
for a specific time period that the institution will comply with such capital
restoration plan. The aggregate liability of the parent holding company under
the guaranty is limited to the lesser of (i) an amount equal to 5 percent of the
depository institution's total assets at the time it became undercapitalized,
and (ii) the amount that is necessary (or would have been necessary) to bring
the institution into compliance with all capital standards applicable with
respect to such institution as of the time it fails to comply with the plan. If
a depository institution fails to submit or implement an acceptable plan, it is
treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets, restrictions on interest rates on deposits and on asset growth, orders
to improve management cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
Under FDICIA, the FDIC is permitted to provide financial assistance to an
insured bank before appointment of a conservator or receiver only if (i) such
assistance would be the least costly method of meeting the FDIC's insurance
obligations, (ii) grounds for appointment of a conservator
9
<PAGE>
or a receiver exist or are likely to exist in the future, (iii) it is unlikely
that the bank can meet all capital standards without assistance and (iv) the
bank's management has been competent, has complied with applicable laws,
regulations, rules and supervisory directives and has not engaged in any insider
dealing, speculative practice or other abusive activity.
FDICIA directs that each federal banking agency prescribe standards for
depository institutions and depository institution holding companies relating to
internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, asset quality, earnings, stock valuation and other standards as
they deem appropriate. Such standards were issued jointly by the agencies on
August 9, 1995, in guideline form.
FDICIA also contains a variety of other provisions that may affect the
operations of depository institutions including new reporting requirements,
regulatory standards for real estate lending, "truth in savings" provisions, the
requirement that a depository institution give 90 days prior notice to customers
and regulatory authorities before closing any branch and a prohibition on the
acceptance or renewal of brokered deposits by depository institutions that are
not well capitalized or are adequately capitalized and have not received a
waiver from the FDIC. Under regulations relating to the brokered deposit
prohibition, Comerica's subsidiary banks are all well-capitalized and may accept
brokered deposits without restriction.
FDIC INSURANCE ASSESSMENTS
Comerica's subsidiary banks are subject to FDIC deposit insurance assessments.
On January 1, 1994, a permanent risk-based deposit premium assessment system
became effective under which each depository institution is placed in one of
nine assessment categories based on certain capital and supervisory measures.
The deposit-insurance assessment schedule published by the FDIC for the
assessment period commencing January 1, 1997 maintained the nine categories but
provided for major reductions in the assessment rates for institutions insured
by BIF. These reductions occurred because the balance in BIF has reached or
surpassed the "designated reserve ratio" set by law for the balance in the fund
to maintain with respect to BIF-insured deposits. These reduced assessment
levels have been continued by the FDIC. For similar reasons, the assessment
rates for institutions insured by SAIF also have been reduced. As a result of
these reduced rates, highly-rated banks (including Comerica's banking
subsidiaries) have and will experience significant reductions in deposit
insurance costs.
The Corporation's FDIC expenses decreased significantly by $16 million, or 66
percent, in 1996, primarily due to the FDIC adopting a new assessment rate
schedule for BIF members in the third quarter of 1995. The new rate schedule,
which continues to determine assessments based on a
10
<PAGE>
bank's risk-based capital levels, virtually eliminated each subsidiary bank's
BIF annual deposit insurance premium as of January 1, 1996. The Corporation's
SAIF-insured deposits continued to be assessed at a rate of 23 cents per $100 of
insured deposits through September 30, 1996. This BIF reduction translated into
a $21 million savings in FDIC insurance expense for the Corporation in 1996.
Offsetting this savings was a one-time charge of $5 million representing the
Corporation's portion of an assessment, levied on banks with SAIF-insured
deposits in order to recapitalize the SAIF. Beginning in 1997, deposit
insurance expense will approximate $3 million based on current deposit levels
and current deposit assessment rates.
COMPETITION
Banking is a highly competitive business. The Michigan banking subsidiary of the
Corporation competes primarily with Detroit and outstate Michigan banks for
loans, deposits and trust accounts. Through its offices in Arizona, California,
Colorado, Florida, Indiana, Illinois, Ohio and Texas, Comerica competes with
other financial institutions for various types of loans. Through its Florida
subsidiary, Comerica competes with many companies, including financial
institutions, for trust business.
At year-end 1996, Comerica Incorporated was the largest bank holding company
headquartered in Michigan in terms of total assets and deposits. Based on the
Interstate Act as described above, the Corporation believes that the level of
competition in all geographic markets will increase in the future. Comerica's
banking subsidiaries also face competition from other financial intermediaries,
including savings and loan associations, consumer finance companies, leasing
companies and credit unions.
EMPLOYEES
As of December 31, 1996, Comerica and its subsidiaries had 9,868 full-time and
2,101 part-time employees.
ITEM 2. PROPERTIES
The executive offices of the Corporation are located in the Comerica Tower at
Detroit Center, 500 Woodward Ave., Detroit, Michigan 48226. Comerica and its
subsidiaries occupy 15 floors of the building, which is leased through Comerica
Bank from an unaffiliated third party. This lease extends through January 2007.
As of December 31, 1996, Comerica Bank operated 271 offices within the State of
Michigan, of which 208 were owned and 63 were leased. Four other banking
affiliates operate 92 offices in California, Florida, and Texas. The affiliates
own 37 of their
11
<PAGE>
offices and lease 55 offices. One banking affiliate also operates from leased
space in Toledo, Ohio.
The Corporation owns an operations and check processing center in Livonia,
Michigan, a ten-story building in the central business district of Detroit that
houses certain departments of the Corporation and Comerica Bank and a building
in Oakland county used mainly for consumer lending functions.
In 1983, Comerica entered into a sale/leaseback agreement with an unaffiliated
party covering an operations center which was built in Auburn Hills, Michigan,
and now is occupied by various departments of the Corporation and Comerica Bank.
ITEM 3. LEGAL PROCEEDINGS
The response to this item is included under the caption "Other Matters" on page
30 of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1996, which is hereby incorporated by reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to shareholders in the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of Comerica Incorporated is traded on the New York Stock
Exchange (NYSE Trading Symbol: CMA). At March 11, 1997, there were approximately
17,973 holders of the Corporation's common stock.
Quarterly cash dividends were declared during 1996 and 1995 totaling $1.52 and
$1.37 per common share per year, respectively. The following table sets forth,
for the periods indicated, the high and low sale prices per share of the
Corporation's common stock as reported on the NYSE Composite Transactions Tape
for all quarters of 1996 and 1995.
12
<PAGE>
- -------------------------------------------------------------------------------
Quarter High Low Dividend Dividend*
Per Share Yield
- -------------------------------------------------------------------------------
1996
Fourth $59.375 $50.250 $ .39 2.9%
Third 54.000 40.125 $ .39 3.3
Second 44.875 40.250 $ .39 3.7
First 41.875 36.250 $ .35 3.6
1995
Fourth $42.750 $33.625 $ .35 3.7%
Third 36.750 31.875 $ .35 4.1
Second 33.125 27.250 $ .35 4.6
First 28.375 24.125 $ .32 4.9
- -------------------------------------------------------------------------------
* Dividend yield is calculated by annualizing the quarterly dividend per
share and dividing by an average of the high and low price in the quarter.
- -------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
The response to this item is included on page 13 of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1996, which is hereby
incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The response to this item is included on pages 14 through 30 of the
Corporation's Annual Report to Shareholders for the year ended December 31,
1996, which are hereby incorporated by reference.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is included on pages 15, 16, 18, 22, 23, 25, and 31
through 57 of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1996, which are hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this item will be included under the captions "Election of
Directors" and "Executive Officers of the Corporation" of the Corporation's
definitive Proxy Statement relating to the Annual Meeting of Shareholders to be
held on May 16, 1997, which are hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The response to this item will be included under the caption "Compensation of
Executive Officers" of the Corporation's definitive Proxy Statement relating to
the Annual Meeting of Shareholders to be held on May 16, 1997, which is hereby
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The response to this item will be included under the captions "Security
Ownership of Certain Beneficial Owners" and "Security Ownership of Management"
of the Corporation's definitive Proxy Statement relating to the Annual Meeting
of Shareholders to be held on May 16, 1997, which is hereby incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The response to this item will be included under the captions "Transactions of
Directors and Executive Officers with the Corporation" and "Certain Beneficial
Owners" and "Election of Directors" of the Corporation's definitive Proxy
Statement relating to the Annual Meeting of Shareholders to be held on May 16,
1997, which are hereby incorporated by reference.
14
<PAGE>
Comerica Incorporated and Subsidiaries
FORM 10-K CROSS-REFERENCE INDEX
- -------------------------------------------------------------------------------
Certain information required to be included in this Form 10-K is included in the
1996 Annual Report to Shareholders or in the 1997 Proxy Statement used in
connection with the 1997 annual meeting of shareholders to be held on May 16,
1997.
The following cross-reference index shows the page location in the 1996 Annual
Report or the section of the 1997 Proxy Statement of only that information which
is to be incorporated by reference into this Form 10-K.
All other sections of the 1996 Annual Report or the 1997 Proxy Statement are not
required in this Form 10-K and should not be considered a part thereof.
- -------------------------------------------------------------------------------
Page Number of 1996
Annual Report or Section
of 1997 Proxy Statement
PART I
ITEM I. Business...............................................Included herein
ITEM 2. Properties.............................................Included herein
ITEM 3. Legal Proceedings...................................................30
ITEM 4. Submission of Matters to a Vote of Security Holders -- no matters were
voted upon by security holders in the fourth quarter of 1996.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Security Holder
Matters...............................................Included herein
ITEM 6. Selected Financial Data.............................................13
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................14
ITEM 8. Financial Statements and Supplementary Data:
Comerica Incorporated and Subsidiaries
Consolidated Balance Sheets....................................31
Consolidated Statements of Income..............................32
Consolidated Statements of Changes in Shareholders' Equity.....33
Consolidated Statements of Cash Flows..........................34
Notes to Consolidated Financial Statements..........................35
Report of Independent Auditors......................................54
Statistical Disclosure by Bank Holding Companies:
Analysis of Net Interest Income - FTE..........................15
Rate-Volume Analysis - FTE.....................................16
Analysis of Investment Securities Portfolio - FTE..............25
Analysis of Investment Securities and Loans....................22
Allocation of the Allowance for Loan Losses....................23
Loan Maturities and Interest Rate Sensitivity..................23
Summary of Nonperforming Assets and Past Due Loans.............25
Cross-Border Outstandings......................................22
Analysis of the Allowance for Loan Losses......................18
Maturity Distribution of Domestic Certificates of Deposit of
$100,000 and Over.............................................23
Financial Ratios and Other Data................................55
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure - None.
PART III
ITEM 10. Directors and Executive Officers
of the Registrant...............................Election of Directors;
Executive Officers
ITEM 11. Executive Compensation..................................Compensation of
Executive Officers
15
<PAGE>
ITEM 12. Security Ownership of
Certain Beneficial Owners and Management.............Security Ownership
of Certain Owners and Security
Ownership of Management
ITEM 13. Certain Relationships and Related Transactions..........Transactions of
Directors and Executive
Officers with the Corporation;
Election of Directors
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements: The financial statements that are
filed as part of this report are listed under Item 8 in the
Form 10-K Cross-reference Index on page 15.
2. All of the schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are either not required under the
related instruction, the required information is contained
elsewhere in the Form 10-K, or the schedules are
inapplicable and therefore have been omitted.
Exhibits:
Exhibit Document Number*
3.1 Restated Certificate of Incorporation of Comerica
Incorporated, as amended
3.2 Amended and restated bylaws of Comerica Incorporated
4 Rights Agreement between Comerica Incorporated and
Comerica Bank**
10.1 Comerica Incorporated 1997 Long-Term Incentive Plan
10.2 Comerica Incorporated Management Incentive Plan, 1997
10.3 Comerica Incorporated Director Fee Deferral Plan
10.4 Benefit Equalization Plan for Employees of Comerica
Incorporated
10.5 Comerica Incorporated's Directors Retirement Plan***
16
<PAGE>
10.6 Manufacturers National Corporation's 1987 and 1989
Stock Option Plans for Key Employees***
10.7 Manufacturers National Corporation's Executive
Incentive Plan***
10.8 Manufacturers National Corporation's Key Employee
Retention Plan***
10.10 Form of Director Indemnification Agreement between
Comerica Incorporated and its directors
10.11 Employment Continuation Agreement with Eugene A.
Miller***
10.12 Severance Agreement with Michael T. Monahan *****
10.13 Management Continuation Agreement with Ralph W. Babb
Jr.*****
10.14 Employment Agreement with Ralph W. Babb Jr.*****
10.15 Comerica Incorporated Deferred Compensation Plan, 1997
Amendment and Restatement
10.16 Form of Comerica Incorporated Executive Officer
Continuity Agreement between registrant and listed
officers, January 1, 1997
10.17 Form of Comerica Incorporated Senior Officer Severance
Plan between registrant and listed officers, January 1,
1997
11 Statement regarding Computation of Per Share
Earnings****
13 Required portions of Registrant's 1996 Annual Report to
Shareholders
21 Subsidiaries of the Corporation
23 Consent of Ernst & Young LLP
(b) No reports on Form 8-K were filed by the Corporation during the
last quarter of 1996.
* This is the original copy of the 1996 Form 10-K and includes
all exhibits.
** A report was filed on Form 8-K dated June 18, 1996 regarding
the Registrant's Rights Agreement with Comerica Bank.
17
<PAGE>
*** Incorporated by reference from Registrant's Annual Report on
Form 10-K for the year ended December 31,1992 -- Commission
File Number 0-7269.
**** Incorporated by reference from note 11 on page 41 of
Registrant's Annual Report to Shareholders attached hereto
as Exhibit 13.
***** Incorporated by reference from Registrant's Annual Report
on Form 10-K for the year ended December 31,
1995--Commission File Number 1-10706.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized in the City of Detroit,
State of Michigan on the 21st day of March, 1997.
COMERICA INCORPORATED
Eugene A. Miller
Chairman and Chief Executive Officer
Ralph W. Babb Jr.
Executive Vice President and Chief Financial Officer
Arthur W. Hermann
Senior Vice President and Controller
(Chief Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities indicated on March
21, 1997.
BY DIRECTORS
E. Paul Casey
James F. Cordes
J. Philip DiNapoli
Max M. Fisher
18
<PAGE>
John D. Lewis
Patricia Shontz Longe, Ph.D.
Wayne B. Lyon
Gerald V. MacDonald
Eugene A. Miller
Michael T. Monahan
Alfred A. Piergallini
Howard F. Sims
Martin D. Walker
19
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION OF
COMERICA INCORPORATED
(the "Corporation")
FIRST
The name of the Corporation is Comerica Incorporated.
SECOND
The address of the registered office in the State of Delaware is 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name of the
registered agent at such address is The Corporation Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is:
To engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH
The total number of shares of all classes of stock which the Corporation shall
have authority to issue is 260,000,000 shares which shall be divided into two
classes as follows:
(a) 10,000,000 shares of Preferred Stock without par value (Preferred
Stock); and
(b) 250,000,000 shares of Common Stock of the par value of $5.00 per share
(Common Stock).
The designations and the powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions of the above classes of stock shall be as follows:
PART I: PREFERRED STOCK
(a) Shares of Preferred Stock may be issued in one or more series at such
time or times and for such consideration or considerations as the Board of
Directors may determine.
(b) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one or
more series, with such voting powers, full or limited but not to exceed one vote
per share, or without voting powers, and with such designations, preferences and
relative, participating, optional or other special rights, and
<PAGE>
qualifications, limitations or restriction thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issue thereof
adopted by the Board of Directors, and as are not stated and expressed in this
Restated Certificate of Incorporation, or any amendment thereto, including (but
without limiting the generality of the foregoing) the following:
(i) The designation of such series and number of shares comprising
such series, which number may (except where otherwise provided by the Board
of Directors in creating such series) be increased or decreased (but not
below the number of shares then outstanding) from time to time by action of
the Board of Directors.
(ii) The dividend rate or rates on the shares of such series and the
preference or relation which such dividends shall bear to the dividends
payable on any other class of capital stock or on any other series of
Preferred Stock, the terms and conditions upon which and the periods in
respect of which dividends shall be payable, whether and upon what
condition such dividends shall be cumulative and, if cumulative, the date
or dates from which dividends shall accumulate.
(iii) Whether the shares of such series shall be redeemable, and, if
redeemable, whether redeemable for cash, property or rights, including
securities of any other corporations, at the option of either the holder or
the Corporation or upon the happening of a specified event, the limitations
and restrictions with respect to such redemption, the time or times when,
the price or prices or rate or rates at which, the adjustments with which
and the manner in which such shares shall be redeemable, including the
manner of selection shares of such series for redemption if less than all
shares are to be redeemed.
(iv) The rights to which the holders of shares of such series shall be
entitled, and the preferences, if any, over any other series (or of any
other series over such series), upon the voluntary or involuntary
liquidation, dissolution, distribution or winding up of the Corporation,
which rights may vary depending on whether such liquidation, dissolution,
distribution or winding up is voluntary or involuntary, and, if voluntary,
may vary at different dates.
(v) Whether the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund, and, if so, whether
and upon what conditions such purchase, retirement or sinking fund shall be
cumulative or noncumulative, the extent to which and the manner in which
such fund shall be applied to the purchase or redemption of the shares of
such series for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof.
(vi) Whether the shares of such series shall be convertible into, or
exchangeable for, at the option of either the holder or the Corporation or
upon the happening of a specified event, shares of any other class or of
any other series of any class of capital stock
2
<PAGE>
of the Corporation, and, if so convertible or exchangeable, the times,
prices, rates, adjustments, and other terms and conditions of such
conversion or exchange.
(vii) The voting powers, full and/or limited, if any, of the shares of
such series, and whether and under what conditions the shares of such
series (alone or together with the shares of one or more other series
having similar Provisions) shall be entitled to vote separately as a single
class, for the election of one or more directors, or additional directors,
of the Corporation in case of dividend arrearages or other specified
events, or upon other matters.
(viii) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series.
(ix) Any other preferences, privileges and powers and relative,
participating, option or other special rights, and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of this
Restated Certificate of Incorporation.
(c) Unless and except to the extent otherwise required by law or provided
in the resolution or resolutions of the Board of Directors creating any series
of Preferred Stock pursuant to this Part I, the holders of the Preferred Stock
shall have no voting power with respect to any matter whatsoever. In no event
shall the Preferred Stock be entitled to more than one vote in respect of each
share of stock.
(d) Shares of Preferred Stock redeemed, converted, exchanged, purchased,
retired or surrendered to the Corporation, or which have been issued and
reacquired in any manner, may, upon compliance with any applicable provisions of
the General Corporation Law of the State of Delaware, be given the status of
authorized and unissued shares of Preferred Stock and may be reissued by the
Board of Directors as part of the series of which they were originally a part or
may be reclassified into and reissued as part of a new series or as a part of
any other series, all subject to the protective conditions or restrictions of
any outstanding series of Preferred Stock.
PART II: COMMON STOCK
(a) Except as otherwise required by law or by any amendment to this
Restated Certificate of Incorporation, each holder of Common Stock Shall have
one vote for each share of stock held by him of record on the books of the
Corporation on all matters voted upon by the stockholders.
(b) Subject to the preferential dividend rights, if any, applicable to
shares of Preferred Stock and subject to applicable requirements, if any, with
respect to the setting aside of sums for purchase, retirement or sinking funds
for Preferred Stock, the holders of Common Stock shall be
3
<PAGE>
entitled to receive, to the extent permitted by law, such dividends as may be
declared from time to time by the Board of Directors.
(c) In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
shares of Preferred Stock, holders of Common Stock shall be entitled to receive
all of the remaining assets of the Corporation of whatever kind available for
distribution to stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively. The Board of Directors may distribute
in kind to the holders of Common Stock such remaining assets of the Corporation
or may sell, transfer or otherwise dispose of all or any part of such remaining
assets to any other corporation, trust or entity, or any combination thereof,
and may sell all or any part of the consideration so received and distribute any
balance thereof in kind to holders of Common Stock. The merger or consolidation
of the Corporation into or with any other corporation, or the merger of any
other corporation into it, or any purchase or redemption of shares of stock of
the Corporation of any class, shall not be deemed to be a dissolution,
liquidation of winding up of the Corporation for the purposes of this paragraph.
(d) Such numbers of shares of Common Stock as may from time to time be
required for such purpose shall be reserved for issuance (i) upon conversion of
any shares of Preferred Stock or any obligation of the Corporation convertible
into shares of Common Stock which is at the time outstanding or issuable upon
exercise of any options or warrants at the time outstanding and (ii) upon
exercise of any options, warrants or rights at the time outstanding to purchase
shares of Common Stock.
FIFTH
The Corporation is to have perpetual existence.
SIXTH
The business and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three classes designated Class I, Class II, and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. At each annual meeting of
shareholders, successors to the class of directors whose term express at the
annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a
4
<PAGE>
decrease in the number of directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting for the year in which his
or her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Until June 18, 1995, vacancies on the
Board of Directors may be filled, and nominations of persons on behalf of the
Corporation will be made in accordance with Article III, Section 12 of the
Corporation's Bylaws. Thereafter, any vacancy on the Board of Directors that
results from an increase in the number of directors may be filled by a majority
of the Board of Directors then in office, and any other vacancy occurring in the
Board of Directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his or her predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of preferred stock issued by the Corporation shall have the right,
voting separately by class or series, to elect directors at an annual or special
meeting of Shareholders, the election, term of office, filling of vacancies and
other features of such directorships shall be governed by the terms of this
Restated Certificate of Incorporation applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Article Sixth unless
expressly provided by such terms.
Any amendment, change or repeal of this Article Sixth or any other amendment or
change of this Restated Certificate of Incorporation which will have the effect
of modifying or permitting circumvention of this Article Sixth, shall require
the favorable vote, at a meeting of the Shareholders of the Corporation, of the
holders of at least 75% of the then outstanding shares of capital stock of the
Corporation entitled to vote; provided, however, that such 75% vote shall not be
required for any such amendment, change or repeal recommended to Shareholders by
the affirmative vote of not less than three-fourths of the Board of Directors
then in office, and such amendment, change, or repeal so recommended shall
require only the vote, if any, required under the applicable provision of the
General Corporation Law of the State of Delaware.
SEVENTH
The directors shall have the power to make, alter, amend, change, add to or
repeal the Bylaws of the Corporation not inconsistent with the provisions of
this Restated Certificate of Incorporation. The affirmative vote of the holders
of not less than 75% of the outstanding shares of capital stock of the
Corporation entitled to vote shall be required for the approval and adoption of
any amendment, alteration, change, addition to or repeal of Article II, Section
(5) and Article III, Section (12) of the Bylaws of the Corporation proposed by
any Shareholder of the Corporation.
Any amendment, change or repeal of this Article Seventh, or any other amendment
of this Restated Certificate of Incorporation which will have the effect of
modifying or permitting circumvention of this Article Seventh, shall require the
favorable vote, at a meeting of the
5
<PAGE>
Shareholders of the Corporation, of the holders of at least 75% of the then
outstanding shares of capital stock of the Corporation entitled to vote;
provided, however, that such 75% vote shall not be required for any such
amendment, change or repeal recommended to Shareholders by the affirmative vote
of not less than three-fourths of the Board of Directors, and such amendment,
change, or repeal so recommended shall require only the vote, if any, required
under the applicable provision of the General Corporation Law of the State of
Delaware.
EIGHTH
I. The affirmative vote of (a) the holders of not less than 75% of the
outstanding shares of capital stock of the Corporation entitled to vote and (b)
the holders of not less than a majority of the outstanding shares of capital
stock of the Corporation entitled to vote excluding for purposes of determining
the affirmative vote required by this clause (b) all such shares of which a
"Related Person" (as hereinafter defined) shall be a "Beneficial Owner" (as
hereinafter defined), shall be required for the approval or authorization of any
"Business Combination" (as hereinafter defined) involving a Related Person;
provided, however, that the foregoing voting requirements set forth in clauses
(a) and (b) above shall not be applicable, and the provisions of Delaware law
relating to the percentage of Shareholder approval, if any, shall apply to any
such Business Combination if:
A. The "Continuing Directors" of the Corporation (as hereinafter defined)
by a three-fourths vote thereof have expressly approved the Business Combination
either in advance of or subsequent to the acquisition of outstanding shares of
capital stock of the Corporation that caused the Related Person to become a
Related Person; or
B. If each of the following conditions are satisfied:
1. The aggregate amount of the cash and the fair market value of
the property, securities or other consideration to be received per share of
any class or series of capital stock of the Corporation in the Business
Combination by holders of such capital stock of the Corporation, other than
the Related Person involved in the Business Combination, is not less than
the "Highest Per Share Price" or the "Highest Equivalent Price" (as these
terms are hereinafter defined), paid or to be paid by the Related Person in
acquiring any of such class or series of the capital stock of the
Corporation outside of such Business Combination; and
2. A proxy statement complying with the requirements of the
Securities Exchange Act of 1934, as amended, shall have been mailed to all
Shareholders of the Corporation for the purpose of soliciting Shareholder
approval of the Business Combination. The proxy statement shall contain at
the front thereof, in a prominent place, the position of the Continuing
Directors as to the advisability (or inadvisability) of the Business
Combination and, if deemed advisable by a majority of the Continuing
Directors, the opinion of an investment banking firm selected by the
Continuing Directors as to the
6
<PAGE>
fairness of the terms of the Business Combination, from the point of view
of the holders of the outstanding shares of capital stock of the
Corporation other than any Related Person.
For purposes of this Article Eighth:
1. The term "Business Combination" means (i) any merger, consolidation or
share exchange of the Corporation or any of its subsidiaries into or with any
member of any Related Person, in each case irrespective of which Corporation or
company is the surviving entity; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition to or with any member of any Related
Person (in a single transaction or a series of related transactions) of all or a
Substantial Part (as hereinafter defined) of the assets of the Corporation
(including without limitation any securities of a subsidiary) or a Substantial
Part of the assets of any of its subsidiaries; (iii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to or with the Corporation or to
or with any of its subsidiaries (in a single transaction or series of related
transactions) of all or a Substantial Part of the assets of any member of any
Related Person; (iv) the issuance or transfer of any securities of the
Corporation or any of its subsidiaries by the Corporation or any of its
subsidiaries to any member of any Related Person (other than an issuance or
transfer of securities which is effected on a pro rata basis to all Shareholders
of the Corporation); (v) the acquisition by the Corporation or any of its
subsidiaries of any securities of any member of any Related Person; and (vi) any
agreement, contract or other arrangement providing for any of the transactions
described in this definition of Business Combination.
2. The term "Related Person" shall mean any individual, corporation,
partnership or other person or entity, including any member of a "group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934 as in effect
at the date of the adoption of this Article by the Shareholders of the
Corporation; such act and such Rules and Regulations promulgated thereunder,
collectively and as so in effect, being hereinafter referred to as the "Exchange
Act"), and any "Affiliate" or "Associate" (as defined in Rule 12b-2 of the
Exchange Act) of any such individual, corporation, partnership or other person
or entity which, as of the record date for the determination of Shareholders
entitled to notice of and to vote on any Business Combination, or immediately
prior to the consummation of such transaction, together with their Affiliates
and Associates, are "Beneficial Owners" (as defined in Rule 13d-3 of the
Exchange Act) in the aggregate of ten percent or more of the outstanding shares
of any class or series of capital stock of the Corporation.
3. The term "Substantial Part" shall mean more than 10% of the fair
market value, as determined by three-fourths of the Continuing Directors, of the
total consolidated assets of the Corporation and its subsidiaries taken as a
whole, as of the end of its most recent fiscal year ending prior to the time the
determination is being made.
4. For the purposes of subparagraph B. 1. of Paragraph One of this
Article Eighth, the term "other consideration to be received" shall include,
without limitation, Common stock or
7
<PAGE>
other capital stock of the Corporation retained by Shareholders of the
Corporation other than Related Persons or parties to such Business Combination
in which the Corporation is the surviving corporation.
5. The term "Continuing Director" shall mean a director who either (i)
was a member of the Board of Directors of the Corporation immediately prior to
the time that the Related Person involved in a Business Combination became a
Related Person, or (ii) has been designated (before his or her initial election
as director) as a Continuing Director by a majority of the then Continuing
Directors.
6. A "Related Person" shall be deemed to have acquired a share of the
capital stock of the Corporation at the time when such Related Person became a
Beneficial Owner thereof. With respect to the shares owned by Affiliates,
Associates or other persons whose ownership is aggregated with that of a Related
Person under the foregoing definition of Related Person, if the price paid by
such Related Person for such shares is not determinable by the Continuing
Directors, such price shall be deemed to be the higher of (i) the price paid
upon the acquisition thereof by the Affiliate, Associate or other person or (ii)
the market price of the shares in question at the time when the Related Person
became a Beneficial Owner thereof.
7. The terms "Highest Per Share Price" and "Highest Equivalent Price" as
used in this Article Eighth shall mean the following: If there is only one
class of capital stock of the Corporation issued and outstanding, the Highest
Per Share Price shall mean the highest price that can be determined to have been
paid at any time, or to have been agreed to be paid, by the Related Person for
any share or shares of that class of capital stock. If there is more than one
class of capital stock of the Corporation issued and outstanding, the Highest
Equivalent Price shall mean with respect to each class and series of capital
stock of the Corporation, the amount determined by three-fourths of the
Continuing Directors, on whatever basis they believe is appropriate, to be the
highest per share price equivalent for each such class or series of the highest
price that can be determined to have been paid at any time, or to have been
agreed to be paid, by the Related Person for any share or shares of any class or
series of capital stock of the Corporation. In determining the Highest Per
Share Price and Highest Equivalent Price, all acquisitions by the Related Person
shall be taken into account regardless of whether the shares were acquired
before or after the Related Person became a Related Person. The Highest Per
Shares Price and the Highest Equivalent Price shall also include any brokerage
commissions, transfer taxes and soliciting dealers' fees paid by the Related
Person with respect to the shares of capital stock of the Corporation acquired
by the Related Person.
II. The Board of Directors of the Corporation shall have the power and duty to
determine for the purposes of this Article Eighth on the basis of information
then known to it, (i) whether any person is an Affiliate or Associate of another
person, (ii) whether any proposed sale, lease, exchange or other disposition of
part of the properties or assets of the Corporation involves a Substantial Part
of the properties or assets of the Corporation and (iii) the value of the
Highest Per
8
<PAGE>
Share Price and Highest Equivalent Price. Any such reasonable determination by
the Board shall be conclusive and binding for all purposes of this Article
Eighth.
III. Any amendment, change or repeal of this Article Eighth, or any other
amendment of this Restated Certificate of Incorporation which will have the
effect of modifying or permitting circumvention of this Article Eighth, shall
require the favorable vote, at a meeting of the Shareholders of the Corporation,
of (a) the holders of at least 75% of the then outstanding shares of capital
stock of the Corporation entitled to vote and (b) a majority of the outstanding
shares of capital stock of the Corporation entitled to vote of which a Related
Person is not a Beneficial Owner; provided, however, that this Paragraph III
shall not apply to, and such 75% and majority vote shall not be required for,
any such amendment, change or repeal recommended to Shareholders by the
affirmative vote of not less than three-fourths of the Continuing Directors, and
such amendment, change, or repeal so recommended shall require only the vote, if
any, required under the applicable provision of the General Corporation Law of
the State of Delaware.
NINTH
Any action required or permitted to be taken at any Annual or Special Meeting of
Shareholders of the Corporation, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of not less than 75% of the outstanding
shares of capital stock of the Corporation entitled to vote. Any amendment,
change or repeal of this Article Ninth, or any other amendment of this Restated
Certificate of Incorporation which will have the effect of modifying or
permitting circumvention of this Article Ninth, shall require the favorable
vote, at a meeting of the Shareholders of the Corporation, of the holders of at
leaste 75% of the then outstanding shares of capital stock of the Corporation
entitled to vote; provided, however, that such 75% vote shall not be required
for any such amendment, change or repeal recommended to Shareholders by the
affirmative vote of not less than three-fourths of the Board of Directors, and
such amendment, change, or repeal so recommended shall require only the vote, if
any, required under the applicable provision of the General Corporation Law of
the State of Delaware.
TENTH
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by the laws of Delaware, and all rights conferred
herein upon stockholders and directors are granted subject to this reservation.
Elections of directors need not be by written ballot unless the Bylaws of the
Corporation shall so provide.
9
<PAGE>
ELEVENTH
A director of the Corporation shall not be personally liable to the Corporation
or its Shareholders for monetary damages for breach of fiduciary duty as a
director except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its Shareholders; (ii) for act or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derived an improper personal
benefit.
<PAGE>
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF SERIES C
PARTICIPATING PREFERRED STOCK
COMERICA INCORPORATED
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Eugene A. Miller, President, and Judith C. Lalka, Secretary, of
Comerica Incorporated, a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors on January 26, 1988, adopted the following resolution
creating a series of 500,000 shares of Preferred Stock designated as Series C
Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of
the Corporation be, and it hereby is, created and that the designation
and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such
series and the qualifications, limitations or restrictions thereof are
as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series C Participating Preferred Stock" and the number of shares
constituting such series shall be 500,000.
Section 2. DIVIDENDS AND DISTRIBUTIONS. (A) The dividend rate on the
shares of Series C Participating Preferred Stock for each quarterly dividend
period (hereinafter referred to as a "quarterly dividend period"}, which
quarterly dividend periods shall commence on January 1, April 1, July 1 and
October 1 in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date") (or in the case of original issuance, from the date of
original issuance) and shall end on and include the day next preceding the first
date of the next quarterly dividend period. shall be equal (rounded to the
nearest cent) to the greater of (a) $10 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
cash, based upon the fair market value at the time the non-cash dividend or
other distribution is declared as determined in good faith by the Board of
Directors) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared (but not
withdrawn) on the Common Stock, $5.00 par value, of this Corporation (the
"Common Stock") during the immediately
<PAGE>
preceding quarterly dividend period, or, with respect to the first quarterly
dividend period, since the first issuance of any share or fraction of a share of
Series C Participating Preferred Stock. In the event the Corporation shall at
any time after January 26, 1988 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or number of shares, then in each such case the amount
to which holders of shares of Series C Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
C Participating Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $10 per share on the Series C
Participating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Participating Preferred Stock from the Quarterly Dividend
Payment Series C Participating Preferred Stock, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series C Participation Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series C
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Series C Participating Preferred Stock entitled to receive payment of
a dividend or distribution 30 days prior to the date fixed for the payment
thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series C
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series C Participating Preferred Stock shall entitle the holder thereof
to one vote on all matters submitted to a vote of the stockholders of the
Corporation. In the event Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding
2
<PAGE>
Common Stock into a smaller number of shares, then in each such case the number
of votes per share to which holders of shares of Series C Participating
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding is the number of shares of Common Stock that
were outstanding immediately prior to such event, provided, however, that in no
event shall any share of Series C Participating Preferred Stock have more than
one vote per share.
(B) Except as otherwise provided herein, by the Restated Certificate of
Incorporation or by la, the holders of shares of Series C Participating
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series C Participating Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a period
(herein called a "default period") which shall extend until such time when all
accrued and unpaid dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Series C Participating
Preferred Stock then all shares of Series C Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of the Series C Participating Preferred Stock
with dividends thereon, voting as a class, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right of the holders of
Series C Participating Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of preferred stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Series C Participating Preferred
Stock outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by the
holders of Series C Participating Preferred Stock of such voting right. At any
meeting at which the holders of Series C Participating Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or,if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Series C Participating
Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the required
number. After the holders of the Series C Participating Preferred Stock shall
have exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be increased
or decreased except by vote of the holders of Series C Participating Preferred
Stock as herein provided or pursuant to the rights of any equity
3
<PAGE>
securities ranking senior to or PARI PASSU with the Series C Participating
Preferred Stock.
(iii) unless the holders of Series C Participating Preferred Stock
shall, during an existing default period. have previously exercised their right
to elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series C Participating Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting of the
holders of Series C Participating Preferred Stock, which meeting shall thereupon
be called by the Chairman, the President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Series C
Participating Preferred Stock are entitled to vote pursuant to this paragraph
(C) (iii) shall be given to each holder of record of Series C Participating
Preferred Stock by mailing a copy of such notice to the holder at the holder's
last address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than 20 days and not later than 60 days
after such order or request, or in default of the calling of such meeting within
60 days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Series C Participating
Preferred Stock outstanding. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any event default period, the holders of Common Stock, and
other classes of Stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Series C
Participating Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the Directors
so elected by the holders of Series C Participating Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph (C)(iii) of this
Section 3) be filed by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of the stock which elected the Director
whose office shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series C Participating Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by the
holders of Series C Participating Preferred Stock as a Class shall terminate,
and (z) the number of Directors shall be such number as may be provided for in
the certificate of incorporation or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number
being subject, however, to change, thereafter in any manner provided by law or
in the certificate of incorporation or by-laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining directors.
4
<PAGE>
(D) Except as set forth herein, holders of Series C Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except tot he extent that are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Participating Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding) with the Series C Participating Preferred
Stock, except dividends paid ratably on the Series C Participating Preferred
Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled.;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Participating Preferred Stock,
purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series C Participating
Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series C Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series C Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5
<PAGE>
Section 5. REACQUIRED SHARES. Any shares of Series C Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding) to the Series C Participating Preferred Stock unless, prior thereto,
the holders of shares of Series C Participating Preferred Stock shall have
received $100 per share, plus accrued and unpaid dividends to the date of
distribution, whether or not earned or declared to the date of such payment (the
"Series C Liquidation Preference"). Following the payment of the full amount of
the Series C Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series C Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series C Liquidation Preference by (ii) 100 (as appropriately adjusted as
set forth in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series C Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series C Participating Preferred Stock and
Common Stock, respectively, holders of Series C Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series C Liquidation Preference an the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series C Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series C Participating Preferred Stock
were entitled immediately prior to such event pursuant to clause (ii) of
Subsection (A) above shall be adjusted by multiplying such amount by a fraction
the numerator
6
<PAGE>
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series C Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series C Participating Preferred Stock shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series C Participating
Preferred Stock shall not be redeemable.
Section 9. RANKING. The Series C Participating Preferred Stock shall
rank junior to the Adjustable Rate Cumulative Dividend Preferred Stock, Series A
and the $4.32 Cumulative Preferred Stock, Series B of the Corporation as to the
payment of dividends and as regards liquidation, dissolution and winding up and
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and as regards liquidation, dissolution and winding up,
unless the terms of any such series shall provide otherwise.
Section 10. AMENDMENT. The Restated Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series C
Participating Preferred Stock so as to affect them adversely without affirmative
vote of the holders of a majority or more of the outstanding shares of Series C
Participating Preferred Stock, voting separately as a class.
7
<PAGE>
Section 11. FRACTIONAL SHARES. Series C Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series C Participating Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Eugene A. Miller, its Chairman of the Board, President and Chief
Executive Officer, and attested by Judith C. Lalka, its Secretary, as of the
18th day of June, 1992.
COMERICA INCORPORATED
-----------------------------------------
By: Eugene A. Miller
Its: Chairman of the Board, President and
Chief Executive Officer
Attest:
- -----------------------------
By: Judith C. Lalka
Its: Secretary
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES D
PARTICIPATING PREFERRED STOCK
COMERICA INCORPORATED
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Eugene A. Miller, Chairman and Chief Executive Officer and Mark W. Yonkman,
Vice President and Assistant Secretary, of Comerica Incorporated, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the said Corporation, the said Board of
Directors on May 17, 1996, adopted the following resolution creating a series of
250,000 shares of Preferred Stock designated as Series D Participating Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of its Restated Certificate
of Incorporation, a series of Preferred Stock of the Corporation be, and it
hereby is, created and that the designation and amount thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series and the qualifications, limitations or
restrictions thereof are as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series D Participating Preferred Stock" and the number of shares
constituting such series shall be 250,000.
<PAGE>
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The dividend rate on the shares of Series D Participating
Preferred Stock for each quarterly dividend period (hereinafter referred to as a
"quarterly dividend period"), which quarterly dividend periods shall commence on
January 1, April 1, July 1 and October 1 in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date") (or in the case of
original issuance, from the date of original issuance) and shall end on and
include the day next preceding the first date of the next quarterly dividend
period, shall be equal (rounded to the nearest cent) to the greater of (a) $10
or (b) subject to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in cash, based upon the fair market value at
the time the non-cash dividend or other distribution is declared as determined
in good faith by the Board of Directors) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared (but not withdrawn) on the common stock, $5.00 par value,
of this Corporation (the "Common Stock") during the immediately preceding
quarterly dividend period, or, with respect to the first quarterly dividend
period, since the first issuance of any share or fraction of a share of Series D
Participating Preferred Stock. In the event the Corporation shall at any time
after May 17, 1996 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series D Participating Preferred Stock were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series D Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the
Series D Par-
2
<PAGE>
ticipating Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series D Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series D
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
D Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series D Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series D Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series D
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series D Participating Preferred Stock shall entitle the holder
thereof to one vote on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series D Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
3
<PAGE>
(B) Except as otherwise provided herein, by the Restated Certificate
of Incorporation or by law, the holders of shares of Series D Participating
Preferred Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any Series D Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series D
Participating Preferred Stock then outstanding shall have been declared and paid
or set apart for payment. During each default period, all holders of the Series
D Participating Preferred Stock with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, shall have the right to
elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series D Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of preferred stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Series D Participating Preferred
Stock outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by the
holders of Series D Participating Preferred Stock of such voting right. At any
meeting at which the holders of Series D Participating Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Series D Participating
Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the required
number. After the holders of the Series D Participating Preferred Stock shall
have exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be increased
or decreased except by vote of the holders of Series D Participating Preferred
Stock as herein provided or pursuant to the rights of any
4
<PAGE>
equity securities ranking senior to or PARI PASSU with the Series D
Participating Preferred Stock.
(iii) Unless the holders of Series D Participating Preferred
Stock shall, during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any stockholder
or stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Series D Participating Preferred Stock outstanding,
irrespective of series, may request, the calling of special meeting of the
holders of Series D Participating Preferred Stock, which meeting shall thereupon
be called by the Chairman, the President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of Series D
Participating Preferred Stock are entitled to vote pursuant to this Paragraph
(C)(iii) shall be given to each holder of record of Series D Participating
Preferred Stock by mailing a copy of such notice to the holder at the holder's
last address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than 20 days and not later than 60 days
after such order or request, or in default of the calling of such meeting within
60 days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less than
ten percent (10%) of the total number of shares of Series D Participating
Preferred Stock outstanding. Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Series D
Participating Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the Directors
so elected by the holders of Series D Participating Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in Paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this Paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
5
<PAGE>
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Series D Participating Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors elected by the
holders of Series D Participating Preferred Stock as a class shall terminate,
and (z) the number of Directors shall be such number as may be provided for in
the Restated Certificate of Incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the Restated Certificate of Incorporation or by-laws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the remaining
directors.
(D) Except as set forth herein, holders of Series D Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series D Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series D Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration, any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series D Participating
Preferred Stock;
(ii) declare or pay dividends on or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series D
Participating Preferred Stock, except dividends paid ratably on the
Series D Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
6
<PAGE>
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series D
Participating Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series D Participating Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares
of Series D Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series D Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series D Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution shall be made to
the holders of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Participating Preferred Stock unless,
prior thereto, the holders of shares of Series D Participating Preferred Stock
shall have received
7
<PAGE>
$1,000 per share, plus accrued and unpaid dividends to the date of distribution,
whether or not earned or declared to the date of such payment (the "Series D
Liquidation Preference"). Following the payment of the full amount of the
Series D Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series D Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series D Liquidation Preference by (ii) 1,000 (as appropriately adjusted as
set forth in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series D Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series D Participating Preferred Stock and
Common Stock, respectively, holders of Series D Participating Preferred Stock
and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series D Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series D Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of Series D Participating Preferred Stock were
entitled immediately prior to such event pursuant to clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the
8
<PAGE>
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series D Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series D Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. NO REDEMPTION. The shares of Series D Participating
Preferred Stock shall not be redeemable.
Section 9. RANKING. The Series D Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and as regards liquidation, dissolution and winding up,
unless the terms of any such series shall provide otherwise.
Section 10. AMENDMENT. The Restated Certificate of Incorporation of
the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series D Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority or more of the outstanding
shares of Series D Participating Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series D Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series D Participating Preferred Stock.
9
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 18th day
of June, 1996.
_______________________________________________
Name: Eugene A. Miller
Its: Chairman and Chief Executive Officer
Attest:
______________
Name: Mark W. Yonkman
Its: Vice President and Assistant Secretary
10
<PAGE>
CERTIFICATE OF DESIGNATION
PURSUANT TO SECTION 151(g) OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
--------------------------------------------
5,000,000 SHARES OF
FIXED/ADJUSTABLE RATE
NONCUMULATIVE PREFERRED STOCK
SERIES E
---------------------------------------------
COMERICA INCORPORATED, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the
following resolution was duly adopted by the Board of Directors of the
Corporation pursuant to authority conferred upon the Board of Directors by the
provisions of the Restated Certificate of Incorporation of the Corporation,
which authorizes the issuance of up to 10,000,000 shares of preferred stock
without par value, and by the Preferred Stock Designation Committee of the Board
of Directors (the "Stock Committee"), pursuant to authority conferred upon the
Stock Committee of the Board of Directors in accordance with Section 141(c) of
the General Corporation Law of the State of Delaware, by Article III, Section 8
of the Bylaws of the Corporation and by resolutions of the Board of Directors at
meetings of the Board of Directors duly held on March 15, 1996 and June 4, 1996,
and at a meeting of the Preferred Stock Designation Committee of the Board of
Directors duly held on June 18, 1996;
RESOLVED, that the issue of a series of preferred stock without par value
of this Corporation is hereby authorized and the designation, powers,
preferences and privileges, relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof, in addition to
those set forth in the Restated Certificate of Incorporation, as amended, of the
Corporation, are hereby fixed as follows:
FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK, SERIES E
(1) NUMBER OF SHARES AND DESIGNATION. Five million (5,000,000) shares of
the preferred stock without par value of the Corporation are hereby constituted
as a series of preferred stock without par value designated as "Fixed/Adjustable
Rate Noncumulative Preferred Stock, Series E" (hereinafter called the "Preferred
Stock, Series E").
<PAGE>
(2) DIVIDENDS.
(a) The holders of shares of the Preferred Stock, Series E, shall be
entitled to receive cash dividends, as, if and when declared by the Board of
Directors of the Corporation (the "Board of Directors") or by the Preferred
Stock Designation Committee of said Board of Directors (the "Stock Committee"),
out of funds legally available for that purpose, at the rate set forth below in
this Section (2) applied to the amount of $50 per share. Such dividends shall
be payable quarterly, as, if and when declared by the Board of Directors or by
the Stock Committee on January 1, April 1, July 1 and October 1 of each year,
commencing on October 1, 1996. Each such dividend shall be payable in arrears
to the holders of record of shares of the Preferred Stock, Series E, as they
appear on the stock register of the Corporation on such record dates, not more
than 30 nor less than 15 days preceding the payment dates thereof, as shall be
fixed by the Board of Directors or the Stock Committee. Dividends on Preferred
Stock, Series E shall not be cumulative and no rights shall accrue to the
holders of Preferred Stock, Series E by reason of the fact that the Corporation
may fail to declare or pay dividends on the Preferred Stock, Series E in any
amount in any year, whether or not the earnings of the Corporation in any year
were sufficient to pay such dividends in whole or in part.
(b) (i) Dividend periods ("Dividend Periods") shall commence on
January 1, April 1, July 1 and October 1 of each year other than the
initial Dividend Period, which shall commence on the date of original
issue of the Preferred Stock, Series E and shall end on and include
the calendar day next preceding the first day of the next Dividend
Period. The initial dividend on the shares of Preferred Stock, Series
E, for the period from the date of original issue thereof to but not
including October 1, 1996 will be $.95 per share of Preferred Stock,
Series E and such dividend shall be payable (if declared) on October
1, 1996. For each Dividend Period thereafter the dividend rate on the
shares of Preferred Stock, Series E shall be 6.84% per annum through
July 1, 2001. The amount of dividends payable for each full Dividend
Period occurring prior to July 1, 2001 for the Preferred Stock, Series
E, shall be computed by dividing the dividend rate of 6.84% per annum
by four and applying the resulting rate of 1.71% to the amount of $50
per share. For each Dividend Period beginning on or after July 1,
2001, the dividend rate on the shares of Preferred Stock, Series B
shall be the Applicable Rate (as defined below) per annum. The amount
of dividends payable for each full Dividend Period beginning on or
after July 1, 2001 shall be computed by dividing the Applicable Rate
per annum by four and applying the resulting rate to the amount of $50
per share. The amount of dividends payable for any period shorter or
longer than a full Dividend Period on the Preferred Stock, Series E,
shall be computed on the basis of twelve 30-day months, a 360-day year
and, for any Dividend Period of less than one month (other than the
initial Dividend Period), the actual number of days elapsed in such
period. Unless otherwise required by law, dividends payable with
respect to each share of Preferred Stock, Series E, shall be rounded
to the nearest one cent, with $.005 being rounded upward. Holders of
shares called for redemption on a redemption date between a dividend
payment record date
-2-
<PAGE>
and the dividend payment date shall not be entitled to receive the
dividend payable on such dividend payment date.
(ii) Except as provided below in this paragraph (ii), the
"Applicable Rate" per annum for any Dividend Period beginning on or
after July 1, 2001 will be equal to 0.625% plus the Effective Rate (as
defined below), but not less than 7.34% or more than 13.34% (without
taking into consideration any adjustments as described in paragraph
(viii) below). The "Effective Rate" for any Dividend Period beginning
on or after July 1, 2001 will be equal to the highest of the Treasury
Bill Rate, the Ten Year Constant Maturity Rate and the Thirty Year
Constant Maturity Rate (each as defined below) for such Dividend
Period. The Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Thirty Year Constant Maturity Rate will each be rounded to the
nearest five hundredths of a percent, with .025% being rounded upward.
In the event that the Corporation determines in good faith that for
any reason: (A) any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate
cannot be determined for any Dividend Period Beginning on or after
July 1, 2001, then the Effective Rate for such Dividend Period will be
equal to the higher of whichever two of such rates can be so
determined, (B) only one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can
be determined for any Dividend Period beginning on or after July 1,
2001, then the Effective Rate for such Dividend Period will be equal
to whichever such rate can be so determined; or (C) none of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Thirty
Year Constant Maturity Rate can be determined for any Dividend Period
beginning on or after July 1, 2001, then the Effective Rate for the
preceding Dividend Period will be continued for such Dividend Period.
(iii) Except as described below in this paragraph (iii), the
"Treasury Bill Rate" for each applicable Dividend Period will be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if
only one such rate is published during the relevant Calendar Period
(as defined below)) for three-month U.S. Treasury bills, as published
weekly by the Federal Reserve Board (as defined below) during the
Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the
Preferred Stock, Series E is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum market
discount rate during any such Calendar Period, then the Treasury Bill
Rate for such Dividend Period will be the arithmetic average of the
two most recent weekly per annum market discount rates (or the one
weekly per annum market discount rate, if only one such rate is
published during the relevant Calendar Period) for three-month U.S.
Treasury bills, as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum market
discount rate for three-month U.S.
-3-
<PAGE>
Treasury bills is not published by the Federal Reserve Board or by any
Federal Reserve Bank or by any U.S. Government department or agency
during such Calendar Period, then the Treasury Bill Rate for such
Dividend Period will be the arithmetic average of the two most recent
weekly per annum market discount rates (or the one weekly per annum
market discount rate, if only one such rate is published during the
relevant Calendar Period) for all of the U.S. Treasury bills then
having remaining maturities of not less than 80 nor more than 100
days, as published during such Calendar Period by the Federal Reserve
Board or, if the Federal Reserve Board does not publish such rates, by
any Federal Reserve Bank or by any U.S. Government department or
agency selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason no such U.S. Treasury
bill rates are published as provided above such Calendar Period, then
the Treasury Bill Rate for such Dividend Period will be the arithmetic
average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
non-interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation. In
the event that the Corporation determines in good faith that for any
reason the Corporation cannot determine the Treasury Bill Rate for any
applicable Dividend Period as provided above in this paragraph, the
Treasury Bill Rate for such applicable Dividend Period will be the
arithmetic average of the per annum market discount rates based upon
the closing bids during such Calendar Period for each of the issues of
marketable interest-bearing U.S. Treasury securities with a remaining
maturity of not less than 80 nor more than 100 days, as chosen and
quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by Corporation.
(iv) Except as described below in this paragraph (iv), the
"Ten Year Constant Maturity Rate" for each applicable Dividend Period
will be arithmetic average of the two most recent weekly per annum Ten
Year Average Yields (as defined below) (or the one weekly per annum
Ten Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the last ten
Calendar days preceding the Dividend Period for which the dividend
rate on the Preferred Stock, Series E is being determined. In the
event that the Federal Reserve Board does not publish such a weekly
per annum Ten Year Average Yield during such Calendar Period, then the
Ten Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum Ten Year
Average Yields (or the one weekly per annum Ten Year Average Yield, if
only one such yield is published during the relevant Calendar Period),
as published weekly
-4-
<PAGE>
during such Calendar Period by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the
even that a per annum Ten Year Average Yield is not published by the
Federal Reserve Board or by any Federal Reserve Bank or by any U.S.
Government department or agency during such Calendar Period, then the
Ten Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum average
yields to maturity (or the one weekly per annum average yield to
maturity, if only one such yield is published during the relevant
Calendar Period) for all of the actively traded marketable U.S.
Treasury fixed interest rate securities (other than Special Securities
(as defined below)) then having remaining maturities of not less
than eight nor more than twelve years, as published during such
Calendar Period by the Federal Reserve Board or, if the Federal
Reserve Board does not publish such yields, by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that the Corporation determines in good
faith that for any reason the Corporation cannot determine the Ten
Year Constant Maturity Rate for any applicable Dividend Period as
provided above in this paragraph, then the Ten Year Constant Maturity
Rate for such Dividend Period will be the arithmetic average of the
per annum average yields to maturity based upon the closing bids
during such Calendar Period for each of the issues of actively traded
marketable U.S. Treasury fixed interest rate securities (other than
Special Securities) with a final maturity date not less than eight nor
more than twelve years from the date of each such quotation, as chosen
and quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation.
(v) Except as described below in this paragraph (v), the
"Thirty Year Constant Maturity Rate" for each applicable Dividend
Period will be arithmetic average of the two most recent weekly per
annum Thirty Year Average Yields (as defined below) (or the one weekly
per annum Thirty Year Average Yield, if only one such yield is
published during the relevant Calendar Period), as published weekly by
the Federal Reserve Board during the Calendar Period immediately
preceding the last ten calendar days preceding the Dividend Period for
which the dividend rate on the Preferred Stock, Series E is being
determined. In the event that the Federal Reserve Board does not
publish such a weekly per annum Thirty Year Average Yield during such
Calendar Period, then the Thirty Year Constant Maturity Rate for such
Dividend Period will be the arithmetic average of the two most recent
weekly per annum Thirty Year Average Yields (or the one weekly per
annum Thirty Year Average Yield, if only one such yield is published
during the relevant Calendar Period), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a
per annum Thirty Year Average Yield is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency
-5-
<PAGE>
during such Calendar Period, then the Thirty Year Constant Maturity
Rate for such Dividend Period will be the arithmetic average of the
two most recent weekly per annum average yields to maturity (or the
one weekly per annum average yield to maturity, if only one such yield
is published during the relevant Calendar Period) for all of the
actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) then having remaining
maturities of not less than twenty-eight nor more than thirty years,
as published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board does not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason the Corporation cannot
determine the Thirty Year Constant Maturity Rate for any applicable
Dividend Period as provided above in this paragraph, then the Thirty
Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the per annum average yields to maturity based
upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date
not less than twenty-eight nor more than thirty years from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation.
(vi) The Applicable Rate with respect to each Dividend
Period beginning on or after July 1, 2001 will be calculated as
promptly as practicable by the Corporation according to the
appropriate method described above. The Corporation will cause notice
of each Applicable Rate to be enclosed with the dividend payment
checks next mailed to the holders of Preferred Stock, Series E.
(vii) As used above, the term "Calendar Period" means a
period of fourteen calendar days; the term "Federal Reserve Board"
means the Board of Governors of the Federal Reserve System; the term
"Special Securities" means securities which can, at the option of the
holder, be surrendered at face value in payment of any Federal estate
tax or which provide tax benefits to the holder and are priced to
reflect such tax benefits or which were originally issued at a deep or
substantial discount; the term "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant maturities of ten
years); and the term "Thirty Year Average Yield" means the average
yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty
years).
(viii) If one or more amendments to the Internal Revenue Code
of 1986, as amended (the "Code"), are enacted that change the
percentage of the dividends received deduction as specified in
Section 243(a)(1) of the Code or any successor
-6-
<PAGE>
provision (the "Dividends Received Percentage"), the amount of each
dividend payable per share of the Preferred Stock, Series E for
dividend payments made on or after the date of enactment of such
change shall be adjusted by multiplying the amount of the dividend
payable determined as described above (before adjustment) by a factor,
which shall be the number determined in accordance with the following
formula (the "DRD Formula"), and rounding the result to the nearest
cent:
I-[.35(I - .70)]
--------------
I-[.35(I - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage of the
dividends received deduction set forth in Section 243 (a)(?) of the
Code or any successor provision, will give rise to an adjustment.
Notwithstanding the foregoing provisions, in the event that, with
respect to any such amendment, the Corporation shall receive either an
unqualified opinion of nationally recognized independent tax counsel
selected by the Corporation and approved by Skadden, Arpa, Slate,
Meagher & Flom (which approval shall not be unreasonably withheld) or
a private letter ruling or similar form of authorization from the
Internal Revenue Service to the effect that such an amendment would
not apply to dividends payable on the Preferred Stock, Series E, then
any such amendment shall not result in the adjustment provided for
pursuant to the DRD Formula. The opinion referenced in the previous
sentence shall be based upon a specific exception in the legislation
amending the DRP or upon a published pronouncement of the Internal
Revenue Service addressing such legislation. Unless the context
otherwise requires, references to dividends in this Certificate of
Designations shall mean dividends as adjusted by the DRD Formula. The
Corporations's calculation of the dividends payable as so adjusted and
as certified accurate as to calculation and reasonable as to method by
the independent certified public accountants then regularly engaged by
the Corporation, shall be final and not subject to review.
(ix) If any amendment to the Code which reduces the
Dividends Received Percentage is enacted after a dividend payable on a
Dividend Payment Date has been declared, the amount of dividend
payable on such Dividend Payment Date will not be increased in
accordance with paragraph (viii) above, but instead, an amount equal
to the excess of (x) the product of the dividends paid by the
Corporation on such Dividend Payment Date and the DRD Formula (where
the DRP used in the DRD Formula would be equal to the reduced
Dividends Received Percentage) and (y) the dividends paid by the
Corporation on such Dividend Payment Date, will be payable to holders
of record on the next succeeding Dividend Payment Date in addition to
any other amounts payable on such date.
-7-
<PAGE>
(x) If, prior to January 2, 1997, an amendment to the Code
is enacted that reduces the Dividends Received Percentage and such
reduction retroactively applies to a Dividend Payment Date as to which
the Corporation previously paid dividends on the Preferred Stock,
Series E (each an "Affected Dividend Payment Date"), holders of the
Preferred Stock, Series E shall be entitled to receive as, if and when
declared by the Board of Directors or the Stock Committee, out of
funds legally available for that purpose, additional dividends (the
"Additional Dividends") on the next succeeding Dividend Payment Date
(or if such amendment is enacted after the dividend payable on such
Dividend Payment Date has been declared, on the second succeeding
Dividend Payment Date following the date of enactment) to holders of
record on such succeeding Dividend Payment Date in an amount equal to
the excess of (x) the product of the dividends paid by the Corporation
on each Affected Dividend Payment Date and the DRD Formula (where the
DRP used in the DRD Formula would be equal to the Dividends Received
Percentage applied to each Affected Dividend Payment Date) and (y) the
dividends paid by the Corporation on each Affected Dividend Payment
Date. Additional Dividends will not be paid in respect of the
enactment of any amendment to the Code if such amendment would not
result in an adjustment due to the Corporation having received either
an opinion of counsel or tax ruling referred to in paragraph
(viii) above. The Corporation shall only make one payment of
Additional Dividends.
(xi) In the event that the amount of dividend payable per
share of the Preferred Stock, Series E, shall be adjusted pursuant to
the DRD Formula and/or Additional Dividends are to be paid, the
Corporation will cause notice of each such adjustment and, if
applicable, any Additional Dividends, to be sent to the holders of the
Preferred Stock, Series E.
(c) So long as any shares of the Preferred Stock, Series E, are
outstanding, no full dividends shall be declared or paid or set apart for
payment on the preferred stock of the Corporation of any series ranking, as to
dividends, on a parity with or junior to the Preferred Stock, Series E, for any
period unless full dividends for the Dividend Period immediately preceding the
date of payment of such full dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Preferred Stock, Series E. When dividends are not
paid in full, as aforesaid, upon the shares of the Preferred Stock, Series E,
and any other preferred stock of the Corporation ranking on a parity as to
dividends with the Preferred Stock, Series E, all dividends declared upon shares
of the Preferred Stock, Series E, and any other preferred stock of the
Corporation ranking on a parity as to dividends (whether dividends on such other
preferred stock are cumulative or noncumulative) with the Preferred Stock,
Series E, shall be declared pro rata so that the amount of dividends declared
per share on the Preferred Stock, Series E, and such other preferred stock shall
in all cases bear to each other the same ratio that accrued dividends per share
on the shares of the Preferred Stock, Series E (but without any cumulation in
respect
-8-
<PAGE>
of unpaid dividends for Dividend Periods prior to the immediately preceding
Dividend Period on the Preferred Stock, Series E and any other noncumulative
preferred stock) and such other preferred stock bear to each other. Holders of
shares of the Preferred Stock, Series E shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full dividends, as
herein provided, on the Preferred Stock, Series E, Series E. No interest, or
sum of money in lieu of interest, shall be payable in respect of any dividend
payment on the Preferred Stock, Series E which may be in arrears.
(d) So long as any shares of the Preferred Stock, Series E are
outstanding, no dividend (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of stock
ranking junior to the Preferred Stock, Series E, as to dividends and upon
liquidation and other than as provided in subsection (c) of this Section (2))
shall be declared or paid or set aside for payment or other distribution
declared or made upon any stock of the Corporation ranking junior to or on a
parity with the Preferred Stock, Series E, as to dividends or upon liquidation,
nor shall any stock of the Corporation ranking junior to or on a parity with the
Preferred Stock, Series E, as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to the Preferred Stock, Series E, as to
dividends and upon liquidation) unless, in each case, full dividends for the
immediately preceding Dividend Period shall have been paid or set apart for
payment and the Corporation is not in default with respect to any redemption of
shares of Preferred Stock, Series E, announced by the Corporation pursuant to
Section (4) below.
(3) LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of any series or class or classes of
stock of the Corporation ranking junior to the Preferred Stock, Series E,
upon liquidation, dissolution or winding up, the holders of the shares of the
Preferred Stock, Series E shall be entitled to receive $50 per share plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon from the immediately preceding dividend payment date (but without
any cumulation for unpaid dividends for prior Dividend Periods on the Preferred
Stock, Series E) to the date of final distribution to such holders, but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of the Preferred
Stock, Series E, shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other preferred stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Preferred Stock,
Series E, then such assets, or the proceeds thereof, shall be distributed among
the holders of the shares of Preferred Stock, Series E, and any such other
preferred stock ratably in accordance with the respective amounts which would be
payable on such shares of Preferred Stock, Series E, and any such other
preferred stock if all amounts payable thereon were paid in full. For the
purposes of this
-9-
<PAGE>
Section (3), a consolidation or merger of the Corporation with one or more
corporations shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
(b) Subject to the rights of holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Preferred Stock,
Series E, as to distribution of assets upon liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of Preferred Stock, Series
E, as provided in this Section (3), but not prior thereto, any other series or
class or classes of stock ranking junior to the Preferred Stock, Series E, upon
liquidation shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the Preferred Stock, Series E, shall not be
entitled to share therein.
(4) REDEMPTION.
(a) Except as provided in subsections (b) and (c) of this Section (4), the
Preferred Stock, Series E, may not be redeemed prior to July 1, 2001. At any
time or from time to time on and after July 1, 2001, the Corporation, at its
option, may, with prior Federal Reserve Board approval to the extent then
required by applicable law, redeem shares of the Preferred Stock, Series E, in
whole or in part, out of funds legally available therefor, at a redemption price
of $50 per share, together in each case with accrued and unpaid dividends
(whether or not declared) from the immediately preceding dividend payment date
(but without any cumulation for unpaid dividends for prior Dividend Periods on
the Preferred Stock, Series E) to the date fixed for redemption.
(b) If the Dividends Received Percentage is equal to or less than 40%
and, as a result, the amount of dividends on the Preferred Stock, Series E
payable on any Dividend Payment Date will be or is adjusted upwards as
described in paragraph 2(b)(viii) above, the Corporation, at its option, with
prior Federal Reserve Board approval to the extent then required by
applicable law, may redeem all, but not less than all, of the outstanding
shares of the Preferred Stock, Series E, out of funds legally available
therefor, provided, that within sixty days of the date on which an amendment
to the Code is enacted which reduces the Dividends Received Percentage to 40%
or less, the Corporation sends notice to holders of the Preferred Stock,
Series E of such redemption in accordance with subsection (d) below. Any
Redemption of the Preferred Stock, Series E in accordance with this
subsection (b) shall be on notice as aforesaid at the applicable redemption
price set forth in the following table, in each case plus accrued and unpaid
dividends (whether or not declared) from the immediately preceding dividend
payment date (but without any cumulation for unpaid dividends for prior
Dividend Periods on the Preferred Stock, Series E) to the date fixed for
redemption.
-10-
<PAGE>
REDEMPTION PERIOD REDEMPTION PRICE PER SHARE
June 21, 1996 to June 30, 1997 $52.50
July 1, 1997 to June 30, 1998 52.00
July 1, 1998 to June 30, 1999 51.50
July 1, 1999 to June 30, 2000 51.00
July 1, 2000 to June 30, 2001 50.50
On or after July 1, 2001 50.00
(c) The Corporation, at its option, may, with prior Federal Reserve Board
approval to the extent then required by applicable law, redeem all, but not less
than all, of the outstanding shares of the Preferred Stock, Series E, out of
funds legally available therefor if the holders of the shares of the Preferred
Stock, Series E, shall be entitled to vote upon or consent to a merger or
consolidation of the Corporation as provided in Section 11 below and all of the
following conditions have been satisfied: (i) the Corporation shall have
requested the vote or consent of the holders of the Preferred Stock, Series E,
to the consummation of such merger or consolidation, stating in such request
that failing the requisite favorable vote or consent the Corporation will have
the option to redeem the Preferred Stock, Series E, (ii) the Corporation shall
not have received the favorable vote or consent requisite to the consummation of
the transaction within 60 days after making such written request (which shall be
deemed to have been made upon the mailing of the notice of any meeting of
holders of the Preferred Stock, Series E, to vote upon such merger or
consolidation or the mailing of the form of written consent to be signed by such
holders), and (iii) such transaction shall be consummated on the date fixed for
such redemption, which date shall be no more than one year after such request is
made. Any such redemption shall be on notice as set forth in subsection (d) of
this Section 4 at a redemption price of $50 per share of the Preferred Stock,
Series E, together with accrued and unpaid dividends, if any, from the
immediately preceding dividend payment date (but without any cumulation for
unpaid dividends for prior Dividend Periods on the Preferred Stock, Series E) to
the date fixed for redemption.
(d) In the event the Corporation shall redeem shares of Preferred Stock,
Series E, notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the redemption
date, to each holder of record of the shares to be redeemed, at such holder's
address as the same appears on the stock register of the Corporation. Each such
notice shall state: (1) the redemption date; (2) the number of shares of
Preferred Stock, Series E, to be redeemed and, if less than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (3) the redemption price; (4) the place or places where
certificates for such shares are to be surrendered for payment of the redemption
price; and (5) that dividends on the shares to be redeemed will cease to accrue
on such redemption date. Notice having been mailed as aforesaid, from and after
the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price, together with accrued
and unpaid dividends from the immediately preceding dividend payment date to the
date of redemption) dividends on the shares of the Preferred Stock, Series E, so
called for redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding, and all rights of the
-11-
<PAGE>
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price, together with accrued and unpaid
dividends from the immediately preceding dividend payment date, whether or not
declared) shall cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the redemption date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) having an office in the
Borough of Manhattan, City of New York, having a capital and surplus of at least
$50,000,000, funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the shares of
Preferred Stock, Series E, so called for redemption. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of two years from such redemption date shall
be released or repaid to the Corporation, after which the holder or holders of
such shares of Preferred Stock, Series E, so called for redemption shall look
only to the Corporation for payment of the funds necessary for such redemption.
Upon surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the applicable redemption price aforesaid,
together with accrued and unpaid dividends from the immediately preceding
dividend payment date to the date of redemption. If less than all the
outstanding shares of Preferred Stock, Series E, are to be redeemed, shares to
be redeemed shall be selected by the Corporation from outstanding shares of
Preferred Stock, Series E, not previously called for redemption by lot or pro
rata (as nearly as may be) or by any other method determined by the Corporation
in its sole discretion to be equitable. If fewer than all the shares
represented by any certificate are redeemed a new certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
(e) In no event shall the Corporation redeem less than all the outstanding
shares of Preferred Stock, Series E, pursuant to subsection (a) of this Section
(4) unless full dividends shall have been paid or declared and set apart for
payment upon all outstanding shares of Preferred Stock, Series E, for the
Dividend Period immediately preceding the date of redemption (but without any
cumulation for unpaid dividends for prior Dividend Periods on the Preferred
Stock, Series E).
(5) SHARES TO BE RETIRED. All shares of Preferred Stock, Series E,
purchased or redeemed by the Corporation shall be retired and canceled and the
Board of Directors shall cause to be taken all action necessary to restore such
shares to the status of authorized but unissued shares of preferred stock,
without designation as to series, and such shares may thereafter be issued, but
not as shares of Preferred Stock, Series E.
(6) CONVERSION OR EXCHANGE. The holders of shares of Preferred Stock,
Series E, shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock (or any other security) of
the Corporation.
-12-
<PAGE>
(7) RANKING. Any class or series of stock of the Corporation shall be
deemed to rank:
(i) prior to the Preferred Stock, Series E, as to dividends
or as to distribution of assets upon liquidation, dissolution or
winding up, if holders of such class shall be entitled to the receipt
of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the
holders of Preferred Stock, Series E;
(ii) on a parity with the Preferred Stock, Series E, as to
dividends or as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be
different from those of the Preferred Stock, Series E, if the holders
of such class of stock and the Preferred Stock, Series E (whether or
not such class of stock is cumulative or noncumulative as to payment of
dividends) shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the case
may be, in proportion to their respective amounts of accrued and
unpaid dividends per share or liquidation prices, without preference
or priority one over the other (except with respect to the cumulation
of dividends on such class of stock); and
(iii) junior to the Preferred Stock, Series E, as to dividends
or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be common stock or if the holders of
Preferred Stock, Series E, shall be entitled to receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up,
as the case may be, in preference or priorty to the holders of shares
of such stock. Accordingly, the Preferred Stock, Series E, shall be
deemed to rank on a parity with all other series of preferred stock of
the Corporation (whether or not such other series of preferred stock is
cumulative or noncumulative as to payment of dividends) outstanding on
the date on which this Certificate of Designation is first filed with
the Secretary of State of the State of Delaware.
(8) EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law, shares
of Preferred Stock, Series E, shall not have any rights, including preemptive
rights, or preferences other than those specifically set forth herein or as
provided by applicable law.
(9) NOTICES. All notices or communications, unless otherwise specified
in the Bylaws of the Corporation or the Restated Certificate of
Incorporation, as amended, shall be sufficiently given if in writing and
delivered in person or mailed by first-class mail, postage prepaid to the
holders of record of the Preferred Stock, Series E. Notice shall be deemed
given on the earlier of the date received or the date such notice is mailed.
(10) RECORD HOLDERS. The Corporation and the transfer agent for the
Preferred Stock, Series E, may deem and treat the record holder of any share of
such Preferred Stock as the true and
-13-
<PAGE>
lawful owner thereof for all purposes, and neither the Corporation nor such
transfer agent shall be affected by any notice to the contrary.
(11) VOTING RIGHTS. Except as hereinafter set forth in this Section (11) or
as otherwise from time to time required by law, the Preferred Stock, Series E,
shall have no voting rights. Whenever, at any time or times, dividends payable
on the Preferred Stock, Series E, shall be unpaid for such number of dividend
periods, whether or not consecutive, which shall in the aggregate contain not
less than 540 days, the holders of the outstanding Preferred Stock, Series E,
shall have the exclusive right, voting separately as a class with holders of
shares of any one or more other series of preferred stock ranking on a parity
with the Preferred Stock, Series E, either as to dividends (whether or not such
other series of preferred stock is cumulative or noncumulative as to payment of
dividends) or on the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable, to elect two directors of the Corporation at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting of
stockholders. At elections for such directors, each holder of the Preferred
Stock, Series E, shall be entitled to one vote for each share held (the holders
of shares of any other series of preferred stock ranking on such a parity being
entitled to such number of votes, if any, for each share of stock held as may be
granted to them). Upon the vesting of such right of such holders, the maximum
authorized number of members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled by vote of the
holders of such outstanding shares of the Preferred Stock, Series E (either
alone or together with the holders of shares of any one or more other series of
preferred stock ranking on such parity and upon which like voting rights have
been conferred and are exercisable) as hereinafter set forth. The right of such
holders of such shares of the Preferred Stock, Series E, voting separately as a
class, to elect (together with the holders of shares of any one or more other
series of preferred stock ranking on such a parity and upon which like voting
rights have been conferred and are exercisable) members of the Board of
Directors of the Corporation as aforesaid shall continue until such time as all
dividends on the Preferred Stock, Series E, shall have been paid in full for at
least one year, at which time such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned.
Upon any termination of the right of the holders of the Preferred Stock,
Series E, as a class to vote for directors as herein provided, the term of
office of all directors then in office elected by such holders voting as a class
shall terminate immediately. If the office of any director elected by such
holders voting as a class becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or otherwise, the remaining
director elected by such holders voting as a class may choose a successor who
shall hold office for the unexpired term in respect of which such vacancy
occurred. Whenever the term of office of the directors elected by such holders
voting as a class shall end and the special voting powers vested in such holders
as provided in this Section (11) shall have expired, the number of directors
shall automatically be decreased to such number as may be provided for in the
By-Laws irrespective of any increase made pursuant to the provisions of this
Section (11).
-14-
<PAGE>
So long as any shares of the Preferred Stock, Series E, remain outstanding,
the consent of the holders of at least two-thirds of the shares of the Preferred
Stock, Series E, outstanding at the time (voting separately as a class together
with all other series of preferred stock ranking on a parity with such series
either as to dividends (whether or not such other series of preferred stock is
cumulative or noncumulative as to payment of dividends) or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable) given in person or by proxy,
either in writing or at any special or annual meeting called for the purpose,
shall be necessary to permit, effect or validate any one or more of the
following:
(a) The authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior to
the Preferred Stock, Series E, with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, or
(b) The amendment, alteration or repeal, whether by merger, consolidation
or otherwise, of any of the provisions of the Restated Certificate of
Incorporation, as amended, or of the resolution contained in this Certificate of
Designations for the Preferred Stock, Series E, and the powers, preferences and
privileges, relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof which would materially and
adversely affect any right, preference, privilege or voting power of the
Preferred Stock, Series E, or of the holders thereof; provided, however, that
any increase in the amount of authorized preferred stock or the creation and
issuance of other series of preferred stock, or any increase in the amount of
authorized shares of the Preferred Stock, Series E, or of any other series of
preferred stock, in each case ranking on a parity with or junior to the
Preferred Stock, Series E, with respect to the payment of dividends (whether or
not such other series of preferred stock is cumulative or noncumulative as to
payment of dividends) and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to such vote would otherwise be required shall be
effected, all outstanding shares of the Preferred Stock, Series E, shall have
been redeemed or sufficient funds shall have been deposited in trust to effect
such redemption, scheduled to be consummated within three months after such
time.
-15-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by Mark W. Yonkman, its Vice President and Assistant
Secretary, as of the 18th day of June, 1996.
COMERICA INCORPORATED
By: /s/ Mark W. Yonkman
----------------------------------
Mark W. Yonkman
Its: Vice President and Assistant Secretary
-16-
<PAGE>
CERTIFICATE OF DESIGNATION
Pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware
-------------------------------------------
-------------------------------------------
5,000,000 SHARES OF
FIXED/ADJUSTABLE RATE
NONCUMULATIVE PREFERRED STOCK
SERIES E
-------------------------------------------
-------------------------------------------
COMERICA INCORPORATED, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), HEREBY CERTIFIES that the
following resolution was duly adopted by the Board of Directors of the
Corporation pursuant to authority conferred upon the Board of Directors by the
provisions of the Restated Certificate of Incorporation of the Corporation,
which authorizes the issuance of up to 10,000,000 shares of preferred stock
without par value, and by the Preferred Stock Designation Committee of the Board
of Directors (the "Stock Committee"), pursuant to authority conferred upon the
Stock Committee of the Board of Directors in accordance with Section 141(c) of
the General Corporation Law of the State of Delaware, by Article III, Section 8
of the Bylaws of the Corporation and by resolutions of the Board of Directors at
meetings of the Board of Directors duly held on March 15, 1996 and June 4, 1996,
and at a meeting of the Preferred Stock Designation Committee of the Board of
Directors duly held on June 18, 1996:
RESOLVED, that the issue of a series of preferred stock without par value
of this Corporation is hereby authorized and the designation, powers,
preferences and privileges, relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof, in addition
to those set forth in the Restated Certificate of Incorporation, as amended, of
the Corporation, are hereby fixed as follows:
FIXED/ADJUSTABLE RATE NONCUMULATIVE PREFERRED STOCK, SERIES E
(1) NUMBER OF SHARES AND DESIGNATION. Five million (5,000,000) shares of
the preferred stock without par value of the Corporation are hereby constituted
as a series of preferred stock without par value designated as "Fixed/Adjustable
Rate Noncumulative Preferred Stock, Series E" (hereinafter called the "Preferred
Stock, Series E").
<PAGE>
(2) DIVIDENDS.
(a) The holders of shares of the Preferred Stock, Series E, shall be
entitled to receive cash dividends, as, if and when declared by the Board of
Directors of the Corporation (the "Board of Directors") or by the Preferred
Stock Designation Committee of said Board of Directors (the "Stock Committee"),
out of funds legally available for that purpose, at the rate set forth below in
this Section (2) applied to the amount of $50 per share. Such dividends shall be
payable quarterly, as, if and when declared by the Board of Directors or by the
Stock Committee on January 1, April 1, July 1 and October 1 of each year,
commencing on October 1, 1996. Each such dividend shall be payable in arrears to
the holders of record of shares of the Preferred Stock, Series E, as they appear
on the stock register of the Corporation on such record dates, not more than 30
nor less than 15 days preceding the payment dates thereof, as shall be fixed by
the Board of Directors or the Stock Committee. Dividends on Preferred Stock,
Series E shall not be cumulative and no rights shall accrue to the holders of
Preferred Stock, Series E by reason of the fact that the Corporation may fail to
declare or pay dividends on the Preferred Stock, Series E in any amount in any
year, whether or not the earnings of the Corporation in any year were sufficient
to pay such dividends in whole or in part.
(b) (i) Dividend periods ("Dividend Periods") shall commence on
January 1, April 1, July 1 and October 1 of each year other than the
initial Dividend Period, which shall commence on the date of original
issue of the Preferred Stock, Series E and shall end on and include
the calendar day next preceding the first day of the next Dividend
Period. The initial dividend on the shares of Preferred Stock, Series
E, for the period from the date of original issue thereof to but not
including October 1, 1996 will be $.95 per share of Preferred Stock,
Series E and such dividend shall be payable (if declared) on October
1, 1996. For each Dividend Period thereafter the dividend rate on the
shares of Preferred Stock, Series E shall be 6.84% per annum through
July 1, 2001. The amount of dividends payable for each full Dividend
Period occurring prior to July 1, 2001 for the Preferred Stock, Series
E, shall be computed by dividing the dividend rate of 6.84% per annum
by four and applying the resulting rate of 1.71% to the amount of $50
per share. For each Dividend Period beginning on or after July 1,
2001, the dividend rate on the shares of Preferred Stock, Series E
shall be the Applicable Rate (as defined below) per annum. The amount
of dividends payable for each full Dividend Period beginning on or
after July 1, 2001 shall be computed by dividing the Applicable Rate
per annum by four and applying the resulting rate to the amount of $50
per share. The amount of dividends payable for any period shorter or
longer than a full Dividend Period on the Preferred Stock, Series E,
shall be computed on the basis of twelve 30-day months, a 360-day
year and, for any Dividend Period of less than one month (other than
the initial Dividend Period), the actual number of days elapsed in
such period. Unless otherwise required by law, dividends payable with
respect to each share of Preferred Stock, Series E, shall be rounded
to the nearest one cent, with $.005 being rounded upward. Holders of
shares called for redemption on a redemption date between a dividend
payment record date and the dividend payment date shall not be
entitled to receive the dividend payable on such dividend payment
date.
<PAGE>
(ii) Except as provided below in this paragraph (ii), the
"Applicable Rate" per annum for any Dividend Period beginning on or
after July 1, 2001 will be equal to 0.625% plus the Effective Rate
(as defined below), but not less than 7.34% or more than 13.34%
(without taking into consideration any adjustments as described in
paragraph (viii) below). The "Effective Rate" for any Dividend Period
beginning on or after July 1, 2001 will be equal to the highest of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate and the Thirty
Year Constant Maturity Rate (each as defined below) for such Dividend
Period. The Treasury Bill Rate, the Ten Year Constant Maturity Rate
and the Thirty Year Constant Maturity Rate will each be rounded to the
nearest five hundredths of a percent, with .025% being rounded upward.
In the event that the Corporation determines in good faith that for
any reason: (A) any one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate
cannot be determined for any Dividend Period beginning on or after
July 1, 2001, then the Effective Rate for such Dividend Period will be
equal to the higher of whichever two of such rates can be so
determined; (B) only one of the Treasury Bill Rate, the Ten Year
Constant Maturity Rate or the Thirty Year Constant Maturity Rate can
be determined for any Dividend Period beginning on or after July 1,
2001, then the Effective Rate for such Dividend Period will be equal
to whichever such rate can be so determined; or (C) none of the
Treasury Bill Rate, the Ten Year Constant Maturity Rate or the Thirty
Year Constant Maturity Rate can be determined for any Dividend Period
beginning on or after July 1, 2001, then the Effective Rate for the
preceding Dividend Period will be continued for such Dividend Period.
(iii) Except as described below in this paragraph (iii), the
"Treasury Bill Rate" for each applicable Dividend Period will be the
arithmetic average of the two most recent weekly per annum market
discount rates (or the one weekly per annum market discount rate, if
only one such rate is published during the relevant Calendar Period
(as defined below)) for three-month U.S. Treasury bills, as published
weekly by the Federal Reserve Board (as defined below) during the
Calendar Period immediately preceding the last ten calendar days
preceding the Dividend Period for which the dividend rate on the
Preferred Stock, Series E is being determined. In the event that the
Federal Reserve Board does not publish such a weekly per annum market
discount rate during any such Calendar Period, then the Treasury Bill
Rate for such Dividend Period will be the arithmetic average of the
two most recent weekly per annum market discount rates (or the one
weekly per annum market discount rate, if only one such rate is
published during the relevant Calendar Period) for three-month U.S.
Treasury bills, as published weekly during such Calendar Period by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that a per annum market
discount rate for three-month U.S. Treasury bills is not published by
the Federal Reserve Board or by any Federal Reserve Bank or by any
U.S. Government department or agency during such Calendar Period, then
the Treasury Bill Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum market discount rates
(or the one weekly per annum market discount rate, if only one such
rate is published during the relevant Calendar Period) for all of the
U.S.
<PAGE>
Treasury bills then having remaining maturities of not less than 80
nor more than 100 days, as published during such Calendar Period by
the Federal Reserve Board or, if the Federal Reserve Board does not
publish such rates, by any Federal Reserve Bank or by any U.S.
Government department or agency selected by the Corporation. In the
event that the Corporation determines in good faith that for any
reason no such U.S. Treasury bill rates are published as provided
above during such Calendar Period, then the Treasury Bill Rate for
such Dividend Period will be the arithmetic average of the per annum
market discount rates based upon the closing bids during such Calendar
Period for each of the issues of marketable non-interest-bearing U.S.
Treasury securities with a remaining maturity of not less than 80 nor
more than 100 days from the date of each such quotation, as chosen and
quoted daily for each business day in New York City (or less
frequently if daily quotations are not generally available) to the
Corporation by at least three recognized dealers in U.S. Government
securities selected by the Corporation. In the event that the
Corporation determines in good faith that for any reason the
Corporation cannot determine the Treasury Bill Rate for any applicable
Dividend Period as provided above in this paragraph, the Treasury Bill
Rate for such applicable Dividend Period will be the arithmetic
average of the per annum market discount rates based upon the closing
bids during such Calendar Period for each of the issues of marketable
interest-bearing U.S. Treasury securities with a remaining maturity of
not less than 80 nor more than 100 days, as chosen and quoted daily
for each business day in New York City (or less frequently if daily
quotations are not generally available) to the Corporation by at least
three recognized dealers in U.S. Government securities selected by the
Corporation.
(iv) Except as described below in this paragraph (iv), the "Ten
Year Constant Maturity Rate" for each applicable Dividend Period will
be the arithmetic average of the two most recent weekly per annum Ten
Year Average Yields (as defined below) (or the one weekly per annum
Ten Year Average Yield, if only one such yield is published during the
relevant Calendar Period), as published weekly by the Federal Reserve
Board during the Calendar Period immediately preceding the last ten
calendar days preceding the Dividend Period for which the dividend
rate on the Preferred Stock, Series E is being determined. In the
event that the Federal Reserve Board does not publish such a weekly
per annum Ten Year Average Yield during such Calendar Period, then the
Ten Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the two most recent weekly per annum Ten Year
Average Yields (or the one weekly per annum Ten Year Average Yield, if
only one such yield is published during the relevant Calendar Period),
as published weekly during such Calendar Period by any Federal Reserve
Bank or by any U.S. Government department or agency selected by the
Corporation. In the event that a per annum Ten Year Average Yield is
not published by the Federal Reserve Board or by any Federal Reserve
Bank or by any U.S. Government department or agency during such
Calendar Period, then the Ten Year Constant Maturity Rate for such
Dividend Period will be the arithmetic average of the two most recent
weekly per annum average yields to maturity (or the one weekly per
annum average yield to maturity, if only one such yield is published
during the relevant Calendar Period) for
<PAGE>
all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities (as defined below))
then having remaining maturities of not less than eight nor more than
twelve years, as published during such Calendar Period by the Federal
Reserve Board or, if the Federal Reserve Board does not publish such
yields, by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that
the Corporation determines in good faith that for any reason the
Corporation cannot determine the Ten Year Constant Maturity Rate for
any applicable Dividend Period as provided above in this paragraph,
then the Ten Year Constant Maturity Rate for such Dividend Period will
be the arithmetic average of the per annum average yields to maturity
based upon the closing bids during such Calendar Period for each of
the issues of actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) with a final maturity
date not less than eight nor more than twelve years from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation.
(v) Except as described below in this paragraph (v), the "Thirty
Year Constant Maturity Rate" for each applicable Dividend Period will
be the arithmetic average of the two most recent weekly per annum
Thirty Year Average Yields (as defined below) (or the one weekly per
annum Thirty Year Average Yield, if only one such yield is published
during the relevant Calendar Period), as published weekly by the
Federal Reserve Board during the Calendar Period immediately preceding
the last ten calendar days preceding the Dividend Period for which the
dividend rate on the Preferred Stock, Series E is being determined. In
the event that the Federal Reserve Board does not publish such a
weekly per annum Thirty Year Average Yield during such Calendar
Period, then the Thirty Year Constant Maturity Rate for such Dividend
Period will be the arithmetic average of the two most recent weekly
per annum Thirty Year Average Yields (or the one weekly per annum
Thirty Year Average Yield, if only one such yield is published during
the relevant Calendar Period), as published weekly during such
Calendar Period by any Federal Reserve Bank or by any U.S. Government
department or agency selected by the Corporation. In the event that a
per annum Thirty Year Average Yield is not published by the Federal
Reserve Board or by any Federal Reserve Bank or by any U.S. Government
department or agency during such Calendar Period, then the Thirty Year
Constant Maturity Rate for such Dividend Period will be the arithmetic
average of the two most recent weekly per annum average yields to
maturity (or the one weekly per annum average yield to maturity, if
only one such yield is published during the relevant Calendar Period)
for all of the actively traded marketable U.S. Treasury fixed interest
rate securities (other than Special Securities) then having remaining
maturities of not less than twenty-eight nor more than thirty years,
as published during such Calendar Period by the Federal Reserve Board
or, if the Federal Reserve Board does not publish such yields, by any
Federal Reserve Bank or by any U.S. Government department or agency
selected by the Corporation. In the event that the Corporation
determines in good faith that for any reason the Corporation cannot
<PAGE>
determine the Thirty Year Constant Maturity Rate for any applicable
Dividend Period as provided above in this paragraph, then the Thirty
Year Constant Maturity Rate for such Dividend Period will be the
arithmetic average of the per annum average yields to maturity based
upon the closing bids during such Calendar Period for each of the
issues of actively traded marketable U.S. Treasury fixed interest rate
securities (other than Special Securities) with a final maturity date
not less than twenty-eight nor more than thirty years from the date of
each such quotation, as chosen and quoted daily for each business day
in New York City (or less frequently if daily quotations are not
generally available) to the Corporation by at least three recognized
dealers in U.S. Government securities selected by the Corporation.
(vi) The Applicable Rate with respect to each Dividend Period
beginning on or after July 1, 2001 will be calculated as promptly as
practicable by the Corporation according to the appropriate method
described above. The Corporation will cause notice of each Applicable
Rate to be enclosed with the dividend payment checks next mailed to
the holders of Preferred Stock, Series E.
(vii) As used above, the term "Calendar Period" means a period of
fourteen calendar days; the term "Federal Reserve Board" means the
Board of Governors of the Federal Reserve System; the term "Special
Securities" means securities which can, at the option of the holder,
be surrendered at face value in payment of any Federal estate tax or
which provide tax benefits to the holder and are priced to reflect
such tax benefits or which were originally issued at a deep or
substantial discount; the term "Ten Year Average Yield" means the
average yield to maturity for actively traded marketable U.S. Treasury
fixed interest rate securities (adjusted to constant maturities of ten
years); and the term "Thirty Year Average Yield" means the average
yield to maturity for actively traded marketable U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of thirty
years).
(viii) If one or more amendments to the Internal Revenue Code of
1986, as amended (the "Code"), are enacted that change the percentage
of the dividends received deduction as specified in Section 243(a)(1)
of the Code or any successor provision (the "Dividends Received
Percentage"), the amount of each dividend payable per share of the
Preferred Stock, Series E for dividend payments made on or after the
date of enactment of such change shall be adjusted by multiplying the
amount of the dividend payable determined as described above (before
adjustment) by a factor, which shall be the number determined in
accordance with the following formula (the "DRD Formula"), and
rounding the result to the nearest cent:
1-[.35 (1 - .70)]
---------------
1-[.35 (1 - DRP)]
For the purposes of the DRD Formula, "DRP" means the Dividends
Received Percentage applicable to the dividend in question. No
amendment to the Code, other than a change in the percentage of the
dividends received deduction set forth in
<PAGE>
Section 243 (a)(1) of the Code or any successor provision, will give
rise to an adjustment. Notwithstanding the foregoing provisions, in
the event that, with respect to any such amendment, the Corporation
shall receive either an unqualified opinion of nationally recognized
independent tax counsel selected by the Corporation and approved by
Skadden, Arps, Slate, Meagher & Flom (which approval shall not be
unreasonably withheld) or a private letter ruling or similar form of
authorization from the Internal Revenue Service to the effect that
such an amendment would not apply to dividends payable on the
Preferred Stock, Series E, then any such amendment shall not result in
the adjustment provided for pursuant to the DRD Formula. The opinion
referenced in the previous sentence shall be based upon a specific
exception in the legislation amending the DRP or upon a published
pronouncement of the Internal Revenue Service addressing such
legislation. Unless the context otherwise requires, references to
dividends in this Certificate of Designations shall mean dividends as
adjusted by the DRD Formula. The Corporation's calculation of the
dividends payable as so adjusted and as certified accurate as to
calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Corporation, shall be
final and not subject to review.
(ix) If any amendment to the Code which reduces the Dividends
Received Percentage is enacted after a dividend payable on a Dividend
Payment Date has been declared, the amount of dividend payable on such
Dividend Payment Date will not be increased in accordance with
paragraph (viii) above, but instead, an amount equal to the excess of
(x) the product of the dividends paid by the Corporation on such
Dividend Payment Date and the DRD Formula (where the DRP used in the
DRD Formula would be equal to the reduced Dividends Received
Percentage) and (y) the dividends paid by the Corporation on such
Dividend Payment Date, will be payable to holders of record on the
next succeeding Dividend Payment Date in addition to any other amounts
payable on such date.
(x) If, prior to January 2, 1997, an amendment to the Code is
enacted that reduces the Dividends Received Percentage and such
reduction retroactively applies to a Dividend Payment Date as to which
the Corporation previously paid dividends on the Preferred Stock,
Series E (each an "Affected Dividend Payment Date"), holders of the
Preferred Stock, Series E shall be entitled to receive as, if and when
declared by the Board of Directors or the Stock Committee, out of
funds legally available for that purpose, additional dividends (the
"Additional Dividends") on the next succeeding Dividend Payment Date
(or if such amendment is enacted after the dividend payable on such
Dividend Payment Date has been declared, on the second succeeding
Dividend Payment Date following the date of enactment) to holders of
record on such succeeding Dividend Payment Date in an amount equal to
the excess of (x) the product of the dividends paid by the Corporation
on each Affected Dividend Payment Date and the DRD Formula (where the
DRP used in the DRD Formula would be equal to the Dividends Received
Percentage applied to each Affected Dividend Payment Date) and (y) the
dividends paid by the Corporation on each Affected Dividend Payment
Date. Additional Dividends will not be paid in
<PAGE>
respect of the enactment of any amendment to the Code if such
amendment would not result in an adjustment due to the Corporation
having received either an opinion of counsel or tax ruling referred to
in paragraph (viii) above. The Corporation shall only make one payment
of Additional Dividends.
(xi) In the event that the amount of dividend payable per share
of the Preferred Stock, Series E, shall be adjusted pursuant to the
DRD Formula and/or Additional Dividends are to be paid, the
Corporation will cause notice of each such adjustment and, if
applicable, any Additional Dividends, to be sent to the holders of the
Preferred Stock, Series E.
(c) So long as any shares of the Preferred Stock, Series E, are
outstanding, no full dividends shall be declared or paid or set apart for
payment on the preferred stock of the Corporation of any series ranking, as to
dividends, on a parity with or junior to the Preferred
Stock, Series E, for any period unless full dividends for the Dividend Period
immediately preceding the date of payment of such full dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for such payment on the Preferred Stock, Series E.
When dividends are not paid in full, as aforesaid, upon the shares of the
Preferred Stock, Series E, and any other preferred stock of the Corporation
ranking on a parity as to dividends with the Preferred Stock, Series E, all
dividends declared upon shares of the Preferred Stock, Series E, and any other
preferred stock of the Corporation ranking on a parity as to dividends (whether
dividends on such other preferred stock are cumulative or noncumulative) with
the Preferred Stock, Series E, shall be declared pro rata so that the amount of
dividends declared per share on the Preferred Stock, Series E, and such other
preferred stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the shares of the Preferred Stock, Series E (but
without any cumulation in respect of unpaid dividends for Dividend Periods prior
to the immediately preceding Dividend Period on the Preferred Stock, Series E
and any other noncumulative preferred stock) and such other preferred stock bear
to each other. Holders of shares of the Preferred Stock, Series E shall not be
entitled to any dividends, whether payable in cash, property or stock, in excess
of full dividends, as herein provided, on the Preferred Stock, Series E. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment on the Preferred Stock, Series E which may be in arrears.
(d) So long as any shares of the Preferred Stock, Series E are
outstanding, no dividend (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of stock
ranking junior to the Preferred Stock, Series E, as to dividends and upon
liquidation and other than as provided in subsection (c) of this Section (2))
shall be declared or paid or set aside for payment or other distribution
declared or made upon any stock of the Corporation ranking junior to or on a
parity with the Preferred Stock, Series E, as to dividends or upon liquidation,
nor shall any stock of the Corporation ranking junior to or on a parity with the
Preferred Stock, Series E, as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares of any
such stock) by the Corporation (except by conversion into or exchange for stock
of the Corporation ranking junior to the Preferred Stock, Series E, as to
dividends and upon liquidation) unless, in each case, full dividends for the
immediately preceding Dividend
<PAGE>
Period shall have been paid or set apart for payment and the Corporation is not
in default with respect to any redemption of shares of Preferred Stock, Series
E, announced by the Corporation pursuant to Section (4) below.
(3) LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of any series or class or classes of
stock of the Corporation ranking junior to the Preferred Stock, Series E, upon
liquidation, dissolution or winding up, the holders of the shares of the
Preferred Stock, Series E, shall be entitled to receive $50 per share plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon from the immediately preceding dividend payment date (but without
any cumulation for unpaid dividends for prior Dividend Periods on the Preferred
Stock, Series E) to the date of final distribution to such holders; but such
holders shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of the shares of the Preferred
Stock, Series E, shall be insufficient to pay in full the preferential amount
aforesaid and liquidating payments on any other preferred stock ranking, as to
liquidation, dissolution or winding up, on a parity with the Preferred Stock,
Series E, then such assets, or the proceeds thereof, shall be distributed among
the holders of shares of Preferred Stock, Series E, and any such other preferred
stock ratably in accordance with the respective amounts which would be payable
on such shares of Preferred Stock, Series E, and any such other preferred stock
if all amounts payable thereon were paid in full. For the purposes of this
Section (3), a consolidation or merger of the Corporation with one or more
corporations shall not be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary.
(b) Subject to the rights of holders of shares of any series or class or
classes of stock ranking on a parity with or prior to the Preferred Stock,
Series E, as to distribution of assets upon liquidation, dissolution or winding
up, upon any liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full to the holders of Preferred Stock, Series
E, as provided in this Section (3), but not prior thereto, any other series or
class or classes of stock ranking junior to the Preferred Stock, Series E, upon
liquidation shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed, and the holders of the Preferred Stock, Series E, shall not be
entitled to share therein.
(4) REDEMPTION.
(a) Except as provided in subsections (b) and (c) of this Section (4), the
Preferred Stock, Series E, may not be redeemed prior to July 1, 2001. At any
time or from time to time on and after July 1, 2001, the Corporation, at its
option, may, with prior Federal Reserve Board approval to the extent then
required by applicable law, redeem shares of the Preferred Stock, Series E, in
whole or in part, out of funds legally available therefor, at a redemption price
of $50 per share, together in each case with accrued and unpaid dividends
(whether or not declared) from the immediately preceding dividend payment date
(but without any cumulation for unpaid dividends for prior Dividend Periods on
the Preferred Stock, Series E) to the date fixed for redemption.
<PAGE>
(b) If the Dividends Received Percentage is equal to or less than 40% and,
as a result, the amount of dividends on the Preferred Stock, Series E payable on
any Dividend Payment Date will be or is adjusted upwards as described in
paragraph 2(b)(viii) above, the Corporation, at its option, with prior Federal
Reserve Board approval to the extent then required by applicable law, may redeem
all, but not less than all, of the outstanding shares of the Preferred Stock,
Series E, out of funds legally available therefor, provided, that within sixty
days of the date on which an amendment to the Code is enacted which reduces the
Dividends Received Percentage to 40% or less, the Corporation sends notice to
holders of the Preferred Stock, Series E of such redemption in accordance with
subsection (d) below. Any redemption of the Preferred Stock, Series E in
accordance with this subsection (b) shall be on notice as aforesaid at the
applicable redemption price set forth in the following table, in each case plus
accrued and unpaid dividends (whether or not declared) from the immediately
preceding dividend payment date (but without any cumulation for unpaid dividends
for prior Dividend Periods on the Preferred Stock, Series E) to the date fixed
for redemption.
REDEMPTION PERIOD REDEMPTION PRICE PER SHARE
----------------- --------------------------
June 21, 1996 to June 30, 1997 $52.50
July 1, 1997 to June 30, 1998 52.00
July 1, 1998 to June 30, 1999 51.50
July 1, 1999 to June 30, 2000 51.00
July 1, 2000 to June 30, 2001 50.50
On or after July 1, 2001 50.00
(c) The Corporation, at its option, may, with prior Federal Reserve Board
approval to the extent then required by applicable law, redeem all, but not less
than all, of the outstanding shares of the Preferred Stock, Series E, out of
funds legally available therefor if the holders of the shares of the Preferred
Stock, Series E, shall be entitled to vote upon or consent to a merger or
consolidation of the Corporation as provided in Section 11 below and all of the
following conditions have been satisfied: (i) the Corporation shall have
requested the vote or consent of the holders of the Preferred Stock, Series E,
to the consummation of such merger or consolidation, stating in such request
that failing the requisite favorable vote or consent the Corporation will have
the option to redeem the Preferred Stock, Series E, (ii) the Corporation shall
not have received the favorable vote or consent requisite to the consummation of
the transaction within 60 days after making such written request (which shall be
deemed to have been made upon the mailing of the notice of any meeting of
holders of the Preferred Stock, Series E, to vote upon such merger or
consolidation or the mailing of the form of written consent to be signed by such
holders), and (iii) such transaction shall be consummated on the date fixed for
such redemption, which date shall be no more than one year after such request is
made. Any such redemption shall be on notice as set forth in subsection (d) of
this Section 4 at a redemption price of $50 per share of the Preferred Stock,
Series E, together with accrued and unpaid dividends, if any, from the
immediately preceding dividend payment date (but without any cumulation for
unpaid dividends for prior Dividend Periods on the Preferred Stock, Series E) to
the date fixed for redemption.
(d) In the event the Corporation shall redeem shares of Preferred Stock,
Series E, notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor
<PAGE>
more than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed, at such holder's address as the same appears on the stock
register of the Corporation. Each such notice shall state: (1) the redemption
date; (2) the number of shares of Preferred Stock, Series E, to be redeemed and,
if less than all the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder; (3) the redemption price; (4)
the place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (5) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. Notice having been mailed
as aforesaid, from and after the redemption date (unless default shall be made
by the Corporation in providing money for the payment of the redemption price,
together with accrued and unpaid dividends from the immediately preceding
dividend payment date to the date of redemption) dividends on the shares of the
Preferred Stock, Series E, so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of the
holders thereof as stockholders of the Corporation (except the right to receive
from the Corporation the redemption price, together with accrued and unpaid
dividends from the immediately preceding dividend payment date, whether or not
declared) shall cease. The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the redemption date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Corporation) having an office in the
Borough of Manhattan, City of New York, having a capital and surplus of at least
$50,000,000, funds necessary for such redemption, in trust, with irrevocable
instructions that such funds be applied to the redemption of the shares of
Preferred Stock, Series E, so called for redemption. Any interest accrued on
such funds shall be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of two years from such redemption date shall
be released or repaid to the Corporation, after which the holder or holders of
such shares of Preferred Stock, Series E, so called for redemption shall look
only to the Corporation for payment of the funds necessary for such redemption.
Upon surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the applicable redemption price aforesaid,
together with accrued and unpaid dividends from the immediately preceding
dividend payment date to the date of redemption. If less than all the
outstanding shares of Preferred Stock, Series E, are to be redeemed, shares to
be redeemed shall be selected by the Corporation from outstanding shares of
Preferred Stock, Series E, not previously called for redemption by lot or pro
rata (as nearly as may be) or by any other method determined by the Corporation
in its sole discretion to be equitable. If fewer than all the shares represented
by any certificate are redeemed a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
(e) In no event shall the Corporation redeem less than all the outstanding
shares of Preferred Stock, Series E, pursuant to subsection (a) of this Section
(4) unless full dividends shall have been paid or declared and set apart for
payment upon all outstanding shares of Preferred Stock, Series E, for the
Dividend Period immediately preceding the date of redemption (but without any
cumulation for unpaid dividends for prior Dividend Periods on the Preferred
Stock, Series E).
(5) SHARES TO BE RETIRED. All shares of Preferred Stock, Series E,
purchased or redeemed by the Corporation shall be retired and canceled and the
Board of Directors shall cause to be taken all action necessary to restore such
shares to the status of authorized but unissued shares of preferred stock,
without designation as to series, and such shares may thereafter be issued, but
not as shares
<PAGE>
of Preferred Stock, Series E.
(6) CONVERSION OR EXCHANGE. The holders of shares of Preferred Stock,
Series E, shall not have any rights herein to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of capital stock (or any other security) of the
Corporation.
(7) RANKING. Any class or series of stock of the Corporation shall be
deemed to rank:
(i) prior to the Preferred Stock, Series E, as to dividends or
as to distribution of assets upon liquidation, dissolution or winding
up, if holders of such class shall be entitled to the receipt of
dividends or of amounts distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or priority to the
holders of Preferred Stock, Series E;
(ii) on a parity with the Preferred Stock, Series E, as to
dividends or as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share thereof be
different from those of the Preferred Stock, Series E, if the holders
of such class of stock and the Preferred Stock, Series E (whether or
not such class of stock is cumulative or noncumulative as to payment
of dividends) shall be entitled to the receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective amounts of accrued
and unpaid dividends per share or liquidation prices, without
preference or priority one over the other (except with respect to the
cumulation of dividends on such class of stock); and
(iii) junior to the Preferred Stock, Series E, as to dividends or
as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock shall be common stock or if the holders of
Preferred Stock, Series E, shall be entitled to receipt of dividends
or of amounts distributable upon dissolution, liquidation or winding
up, as the case may be, in preference or priority to the holders of
shares of such stock. Accordingly, the Preferred Stock, Series E,
shall be deemed to rank on a parity with all other series of preferred
stock of the Corporation (whether or not such other series of
preferred stock is cumulative or noncumulative as to payment of
dividends) outstanding on the date on which this Certificate of
Designation is first filed with the Secretary of State of the State of
Delaware.
(8) EXCLUSION OF OTHER RIGHTS. Unless otherwise required by law, shares of
Preferred Stock, Series E, shall not have any rights, including preemptive
rights, or preferences other than those specifically set forth herein or as
provided by applicable law.
(9) NOTICES. All notices or communications, unless otherwise specified in
the Bylaws of the Corporation or the Restated Certificate of Incorporation, as
amended, shall be sufficiently given if in writing and delivered in person or
mailed by first-class mail, postage prepaid to the holders of record of the
Preferred Stock, Series E. Notice shall be deemed given on the earlier of the
date
<PAGE>
received or the date such notice is mailed.
(10) RECORD HOLDERS. The Corporation and the transfer agent for the
Preferred Stock, Series E, may deem and treat the record holder of any share of
such Preferred Stock as the true and lawful owner thereof for all purposes, and
neither the Corporation nor such transfer agent shall be affected by any notice
to the contrary.
(11) VOTING RIGHTS. Except as hereinafter set forth in this Section (11) or
as otherwise from time to time required by law, the Preferred Stock, Series E,
shall have no voting rights. Whenever, at any time or times, dividends payable
on the Preferred Stock, Series E, shall be unpaid for such number of dividend
periods, whether or not consecutive, which shall in the aggregate contain not
less than 540 days, the holders of the outstanding Preferred Stock, Series E,
shall have the exclusive right, voting separately as a class with holders of
shares of any one or more other series of preferred stock ranking on a parity
with the Preferred Stock, Series E, either as to dividends (whether or not such
other series of preferred stock is cumulative or noncumulative as to payment of
dividends) or on the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable, to elect two directors of the Corporation at the Corporation's next
annual meeting of stockholders and at each subsequent annual meeting of
stockholders. At elections for such directors, each holder of the Preferred
Stock, Series E, shall be entitled to one vote for each share held (the holders
of shares of any other series of preferred stock ranking on such a parity being
entitled to such number of votes, if any, for each share of stock held as may be
granted to them). Upon the vesting of such right of such holders, the maximum
authorized number of members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be filled by vote of the
holders of such outstanding shares of the Preferred Stock, Series E (either
alone or together with the holders of shares of any one or more other series of
preferred stock ranking on such a parity and upon which like voting rights have
been conferred and are exercisable) as hereinafter set forth. The right of such
holders of such shares of the Preferred Stock, Series E, voting separately as a
class, to elect (together with the holders of shares of any one or more other
series of preferred stock ranking on such a parity and upon which like voting
rights have been conferred and are exercisable) members of the Board of
Directors of the Corporation as aforesaid shall continue until such time as all
dividends on the Preferred Stock, Series E, shall have been paid in full for at
least one year, at which time such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the event of each and every
subsequent default of the character above mentioned.
Upon any termination of the right of the holders of the Preferred Stock,
Series E, as a class to vote for directors as herein provided, the term of
office of all directors then in office elected by such holders voting as a class
shall terminate immediately. If the office of any director elected by such
holders voting as a class becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or otherwise, the remaining
director elected by such holders voting as a class may choose a successor who
shall hold office for the unexpired term in respect of which such vacancy
occurred. Whenever the term of office of the directors elected by such holders
voting as a class shall end and the special voting powers vested in such holders
as provided in this Section (11) shall have expired, the number of directors
shall automatically be decreased to such number as may be provided for in the
By-Laws irrespective of any increase made pursuant to the provisions of this
Section (11).
<PAGE>
So long as any shares of the Preferred Stock, Series E, remain outstanding,
the consent of the holders of at least two-thirds of the shares of the Preferred
Stock, Series E, outstanding at the time (voting separately as a class together
with all other series of preferred stock ranking on a parity with such series
either as to dividends (whether or not such other series of preferred stock is
cumulative or noncumulative as to payment of dividends) or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable) given in person or by proxy,
either in writing or at any special or annual meeting called for the purpose,
shall be necessary to permit, effect or validate any one or more of the
following:
(a) The authorization, creation or issuance, or any increase in the
authorized or issued amount, of any class or series of stock ranking prior to
the Preferred Stock, Series E, with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, or
(b) The amendment, alteration or repeal, whether by merger, consolidation
or otherwise, of any of the provisions of the Restated Certificate of
Incorporation, as amended, or of the resolution contained in this Certificate of
Designations for the Preferred Stock, Series E, and the powers, preferences and
privileges, relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof which would materially and
adversely affect any right, preference, privilege or voting power of the
Preferred Stock, Series E, or of the holders thereof; provided, however, that
any increase in the amount of authorized preferred stock or the creation and
issuance of other series of preferred stock, or any increase in the amount of
authorized shares of the Preferred Stock, Series E, or of any other series of
preferred stock, in each case ranking on a parity with or junior to the
Preferred Stock, Series E, with respect to the payment of dividends (whether or
not such other series of preferred stock is cumulative or noncumulative as to
payment of dividends) and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to such vote would otherwise be required shall be
effected, all outstanding shares of the Preferred Stock, Series E, shall have
been redeemed or sufficient funds shall have been deposited in trust to effect
such redemption, scheduled to be consummated within three months after such
time.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by Mark W. Yonkman, its Vice President and Assistant
Secretary, as of the 18th day of June, 1996.
COMERICA INCORPORATED
By: /S/ MARK W. YONKMAN
------------------------------
Mark W. Yonkman
Its: Vice President and Assistant Secretary
<PAGE>
EXHIBIT 3.2
AS AMENDED AND RESTATED
ON SEPTEMBER 20, 1996
AMENDED AND RESTATED
BYLAWS
OF
COMERICA INCORPORATED
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be in the
City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS
SECTION 1. PLACE OF MEETING. All meetings of the shareholders of this
Corporation shall be held at such time and place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting.
SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. The annual meeting of
shareholders shall be held on the third Friday of May, if not a legal holiday,
and if a legal holiday then the next secular day following, at 10:00 a.m., or at
such other date and time as shall be designated from time to time by the Board
of Directors and stated in the notice of the meeting. At said meeting,
shareholders shall elect by a plurality vote the Directors to be elected at such
meeting, and shall transact such other business as may properly be brought
before the meeting.
SECTION 3. NOTICE OF MEETING OF SHAREHOLDERS. Written notice of every
meeting of shareholders stating the place, date and hour of the meeting, and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given to each
<PAGE>
shareholder entitled to vote at such meeting not less than ten (10) nor more
than sixty (60) days before the date of the meeting.
SECTION 4. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each shareholder and the number of shares registered
in the name of each shareholder. Such list shall be open to the examination of
any shareholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
SECTION 5. SPECIAL MEETINGS OF SHAREHOLDERS. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, may be called by the Chairman of
the Board of Directors or, during the absence or disability of the Chairman or
while that office is vacant, by the President and shall be called by the
President or Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of shareholders owning, in the
aggregate, at least seventy-five percent (75%) in amount of the entire capital
stock of the Corporation issued and outstanding and entitled to vote at such
special meeting. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 6. QUORUM OF SHAREHOLDERS. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the shareholders, the
shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
SECTION 7. REQUIRED VOTE. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which a different vote is required by
statute or by the Certificate of Incorporation.
2
<PAGE>
Section 8. VOTING. Unless otherwise provided in the Certificate of
Incorporation or in a certificate filed pursuant to Section 151(g) of the
General Corporation Law of Delaware, as amended, each shareholder shall at every
meeting of the shareholders be entitled to one vote, in person or by proxy, for
each share of the capital stock having voting power held by such shareholder,
but no proxy shall be voted on after three (3) years from its date, unless the
proxy provides for a longer period.
Section 9. NATURE OF BUSINESS. At any meeting of shareholders, only
such business shall be conducted as shall have been brought before the meeting
by or at the direction of the Board of Directors or by any shareholder who
complies with the procedures set forth in this Section 9. No business may be
transacted at any meeting of shareholders, other than business that is either:
(a) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors (or any duly authorized
committee thereof);
(b) otherwise properly brought before such meeting of shareholders by
or at the direction of the Board of Directors (or any duly authorized committee
thereof); or
(c) in the case of an annual meeting of shareholders, otherwise
properly brought before such meeting by any shareholder (i) who is a shareholder
of record on the date of the giving of the notice provided for in this Section 9
and on the record date for the determination of shareholders entitled to vote at
such annual meeting of shareholders; and (ii) who complies with the notice
procedures set forth in this Section 9.
In addition to any other applicable requirements, for business to be properly
brought before an annual meeting of shareholders by a shareholder, such
shareholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, a shareholder's notice to the
Secretary of the Corporation must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than sixty (60) days nor
more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of shareholders; provided, however, that in the event
that the annual meeting of shareholders is called for a date that is not within
thirty (30) days before or after such anniversary date, notice by the
shareholder in order to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which notice of the
date of the annual meeting of shareholders was mailed or public disclosure of
the date of the annual meeting of shareholders was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary of the
Corporation must set forth as to each matter such shareholder proposes to bring
before the annual meeting of shareholders: (i) a brief description of the
business desired to be brought before the annual meeting of shareholders and the
reasons for conducting such business at the annual meeting of shareholders; (ii)
the name and record address of such shareholder; (iii) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by such shareholder as of the record
3
<PAGE>
date for the meeting (if such date shall then have been made publicly available
and shall have occurred); (iv) as of the date of such notice, a description of
all arrangements or understandings between such shareholder an any other person
or persons (including their names) in connection with the proposal of such
business by such shareholder and any material interest of such shareholder in
such business; (v) any other information which would be required to be disclosed
in a proxy statement or other filings required to be made in connection with the
solicitation of proxies for the proposal pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder if such shareholder were engaged in
such a solicitation; and (vi) a representation that such shareholder intends
to appear in person or by proxy at the annual meeting of shareholders to bring
such business before the meeting.
No business shall be conducted at the annual meeting of shareholders except
business brought before the annual meeting of shareholders in accordance with
the procedures set forth in this Section 9, provided however, that once business
has been properly brought before the annual meeting of shareholders in
accordance with such procedures, nothing in this Section 9 shall be deemed to
preclude discussion by any shareholder of any such business. If the Chairman of
an annual meeting of shareholders determines that business was not properly
brought before the annual meeting of shareholders in accordance with the
foregoing procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business shall not
be transacted. When a meeting is adjourned to another time or place, notice of
the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless the
adjournment is for more than 30 days, or unless after the adjournment a new
record date is fixed for the adjourned meeting, in which case notice of the
adjourned meeting shall be given to each shareholder of record entitled to vote
at the meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the original meeting as originally notified.
ARTICLE III
DIRECTORS
SECTION 1. POWERS. The business of the Corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the shareholders.
SECTION 2. LOCATION OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
SECTION 3. ORGANIZATION MEETING OF BOARD. The first meeting of each
newly elected Board of Directors shall be held at the place of holding the
annual meeting of shareholders, and immediately following the same, for the
purpose of electing officers
4
<PAGE>
and transacting any other business properly brought before it, provided that the
organization meeting in any year may be held at a different time and place than
that herein provided by a consent of a majority of the Directors of such new
Board. No notice of such meeting shall be necessary to the newly elected
Directors in order legally to constitute the meeting, provided a quorum shall be
present, unless said meeting is not held at the place of holding and immediately
following the annual meeting of shareholders.
SECTION 4. REGULAR MEETINGS OF BOARD. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
SECTION 5. SPECIAL MEETINGS OF BOARD. Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or, during the
absence or disability of the Chairman or while that office is vacant by the
President on one (1) day's notice to each director; and special meetings shall
be called by the President or Secretary on like notice on the written request of
five or more Directors.
SECTION 6. QUORUM AND REQUIRED VOTE. At all meetings of the Board of
Directors a majority of the total number of Directors shall constitute a quorum
for the transaction of business and the act of a majority of the Directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by statute or by
the Certificate of Incorporation. If a quorum shall not be present at any
meeting of the Board of Directors the Directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 7. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any Committee thereof may be taken without a meeting if all members of the Board
or Committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
Committee.
SECTION 8. COMMITTEES OF DIRECTORS.
(a) GENERAL AUTHORITY. The Board of Directors may, to the
fullest extent permitted by Section 141(c)(2) of the Delaware General
Corporation Law as the same may be hereinafter amended from time to time,
designate one or more Committees, each Committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any Committee, who may replace any absent or
disqualified member at any meeting of the Committee. In the absence or
disqualification of a member of a Committee, the member or members present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any
5
<PAGE>
such Committee, to the extent provided in the resolution of the Board of
Directors, or in these Bylaws shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such Committee shall have the
power or authority in reference to the following matters (except as permitted by
Delaware General Corporation Law as the same may be hereinafter amended from
time to time): (i) approving or adopting, or recommending to the stockholders,
any action or matter expressly required to be submitted to stockholders for
approval; or (ii) adopting, amending or repealing any Bylaw of the Corporation.
(b) DIRECTORS COMMITTEE. The Board of Directors may establish a
Directors Committee of the Board of Directors. The Directors Committee may:
(i) nominate candidates for election as Directors of the Corporation at any
meeting of shareholders called for election of Directors (an "Election
Meeting"); (ii) nominate candidates to fill any vacancies on the Board of
Directors which may exist from time to time; and (iii) have such other powers
and authority as the Board of Directors may delegate to it from time to time.
(c) MNC INDEMNIFICATION COMMITTEE. Until June 18, 1998, there
shall be an MNC Indemnification Committee consisting of all the directors of the
Corporation who were directors of Manufacturers National Corporation ("MNC")
immediately prior to June 18, 1992. The MNC Indemnification Committee shall
make all determinations necessary with respect to the Corporation's
indemnification obligations pursuant to Section 5.13 of the Agreement and Plan
of Merger, dated as of October 27, 1991, between the Corporation and MNC (the
"Merger Agreement").
(d) COMERICA INDEMNIFICATION COMMITTEE. Until June 18, 1998,
there shall be a Comerica Indemnification Committee consisting of all the
directors of the Corporation immediately prior to June 18, 1992. The Comerica
Indemnification Committee shall make all determinations necessary with respect
to the Corporation's indemnification obligations pursuant to the Corporation's
Bylaws prior to June 18, 1992.
Section 9. COMMITTEE MINUTES. Each Committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
required.
SECTION 10. COMPENSATION OF DIRECTORS. Unless otherwise restricted by
the Certificate of Incorporation, the Board of Directors shall have authority to
fix the compensation of Directors. The Directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as Director. No such payment shall preclude any Director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending Committee meetings.
6
<PAGE>
SECTION 11. PARTICIPATION IN MEETING BY TELEPHONE. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors or any Committee designated by the Board of Directors may
participate in a meeting of the Board of Directors or Committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
SECTION 12. NOMINATIONS OF DIRECTOR CANDIDATES. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation, except as may be otherwise provided in
the Certificate of Incorporation with respect to the right of holders of
preferred stock of the Corporation to nominate and elect a specified number of
directors in certain circumstances. Nominations of persons for election to the
Board of Directors may be made at any annual meeting of shareholders, or at any
special meeting of shareholders called for the purpose of electing directors,
shall be made:
(a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof, including the Directors' Committee); or
(b) by any shareholder of the Corporation: (i) who is a shareholder of
record on the date of the giving of the notice provided for in this Section 12
and on the record date for the determination of shareholders entitled to vote at
such meeting; and (ii) who complies with the notice procedures set forth in this
Section 12.
In addition to any other applicable requirements, for a nomination to be made by
a shareholder, such shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation. To be timely, a shareholder's
notice to the Secretary of the Corporation must be delivered to or mailed and
received at the principal executive offices of the Corporation (a) in the case
of an annual meeting of shareholders, not less than sixty (60) days nor more
than ninety (90) days prior to the anniversary date of the immediately preceding
annual meeting of shareholders; provided, however, that in the event that the
annual meeting of shareholders is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the shareholder in
order to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which notice of the date of the annual
meeting of shareholders was mailed or public disclosure of the date of the
annual meeting was made, whichever first occurs; and (b) in the case of a
special meeting of shareholders called for the purpose of electing directors,
not later than the close of business on the tenth (l0th) day following the day
on which notice of the date of the special meeting of shareholders was mailed or
public disclosure of the date of the special meeting of shareholders was made,
whichever first occurs.
7
<PAGE>
To be in proper written form, a shareholder's notice to the Secretary of the
Corporation must set forth:
(a) as to each person whom the shareholder proposes to nominate
for election as a director: (i) the name, age, business address and residence
address of the person; (ii) the principal occupation or employment of the
person; (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person as of the
record date for the meeting (if such date shall then have been made publicly
available and shall have occurred) and as of the date of such notice; and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
section 14 of the Exchange Act, and the rules and regulations promulgated
thereunder; and
(b) as to the shareholder giving the notice: (i) the name and
record address of such shareholder; (ii) the class or series and number
of shares of capital stock of the Corporation which are owned beneficially or of
record by such shareholder as of the record date for the meeting (if such date
shall then have been made publicly available and shall have occurred) and as of
the date of such notice; (iii) a description of all arrangements or
understandings between such shareholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nominations are
to be made by such shareholder; (iv) a representation that such shareholder
intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice; and (v) any other information relating to such shareholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by the
written consent to such nomination of each person proposed as a nominee and such
person's written consent to serve as a director if elected.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 12. If
the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
ARTICLE IV
NOTICES
SECTION 1. NOTICE. Whenever any notice is required to be given to any
director or shareholder under any provision of statute or of the Certificate of
Incorporation or of these Bylaws,
8
<PAGE>
it shall not be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such director or shareholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to Directors may also be given
orally in person or by telegram, telex, radiogram or cablegram, and such notice
shall be deemed to be given when the recipient receives the notice personally,
by telephone or when the notice, addressed as provided above, has been delivered
to the company, or to the equipment transmitting such notice.
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under any provision of statute or of the Certificate of Incorporation or
of these Bylaws, a written waiver thereof, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders, Directors,
or members of a Committee of Directors need be specified in any written waiver
of notice unless so required by the Certificate of Incorporation or these
Bylaws. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.
ARTICLE V
OFFICERS
SECTION 1. SELECTION. The Board of Directors may appoint such officers
and agents as it shall deem necessary who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. The officers so appointed may
include a Chairman of the Board, President, one or more Vice Chairmen, one or
more Vice Presidents (including Executive, Senior, First, regular and Assistant
Vice Presidents), a Secretary and a Treasurer, and one or more lesser officers
as may be deemed appropriate. The Chief Executive Officer may also appoint
officers of the level of Senior Vice President and below as he shall deem
necessary, at any time, which officers shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board or the Chief Executive Officer. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
otherwise provides.
SECTION 2. COMPENSATION. The salaries of all executive officers of the
Corporation shall be fixed by the Board of Directors.
9
<PAGE>
SECTION 3. TERM, REMOVAL AND VACANCIES. Each officer of the
Corporation shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Any officer
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Additionally, any
officer of the level of regular Vice President or below may also be removed at
any time by the Chief Executive Officer. Any vacancy occurring in any office of
the Corporation may be filled by the Board of Directors. Any vacancy occurring
in any office of the Corporation of the level of regular Vice President or below
may also be filled by the Chief Executive Officer.
SECTION 4. CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER.
(a) CHIEF EXECUTIVE OFFICER. At the first meeting of each
newly-elected Board of Directors, the Board shall designate the Chairman of the
Board or President as the chief executive officer of the Corporation; provided,
however, that if a motion is not made and carried to change the designation, the
designation shall be same as the designation for the preceding year; provided,
further, that the designation of the chief executive officer may be changed at
any regular or special meeting of the Board of Directors. The chief executive
officer shall be responsible to the Board of Directors for the general
supervision and management of the business and affairs of the Corporation. The
Chairman of the Board or President who is not the chief executive officer shall
be subject to the authority of the chief executive officer, but shall exercise
all of the powers and discharge all of the duties of the chief executive
officer, during the absence or disability of the chief executive officer.
(b) CHIEF OPERATING OFFICER. At any meeting of the Board of
Directors, the Board may designate a chief operating officer of the Corporation.
The chief operating officer shall perform such duties as may be delegated to him
or her by the Board of Directors, the Executive Committee of the Board or the
Chairman of the Board.
SECTION 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors shall be selected by, and from among the membership of, the
Board of Directors. He shall preside at all meetings of the shareholders and of
the Board of Directors. He shall perform such other duties and functions as
shall be assigned to him from time to time by the Board of Directors. He shall
be, ex officio, a member of all standing committees except the Select
Compensation Committee and the Audit and Legal Committee. Except where by law
the signature of the President of this Corporation is required, the Chairman of
the Board of Directors shall possess the same power and authority as the
President to sign all certificates, contracts, instruments, papers and documents
of every conceivable kind and character whatsoever, in the name of and on behalf
of this Corporation, which may be authorized by the Board of Directors. During
the absence or disability of the President, the Chairman of the Board of
Directors shall exercise all of the powers and discharge all of the duties of
the President.
10
<PAGE>
SECTION 6. PRESIDENT. The President shall be selected by, and from
among the membership of, the Board of Directors. During the absence or
disability of the Chairman of the Board of Directors, or while such office is
vacant, the President shall perform all duties and functions, and while so
acting shall have all of the powers and authority, of the Chairman of the Board
of Directors. The President shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors.
The President shall be, ex officio, a member of all standing committees except
the Select Compensation Committee and the Audit and Legal Committee.
SECTION 7. VICE CHAIRMEN. One or more Vice Chairmen may be chosen from
the membership of the Board. Unless the Board of Directors shall otherwise
provide by resolution duly adopted by it, such of the Vice Chairmen who are
members of the Board of Directors in the order specified by the Board of
Directors shall perform the duties and exercise the powers of the President
during the absence or disability of the President. The Vice Chairmen shall
perform such other duties as may be delegated to them by the Board of Directors,
any executive committee, or the President.
SECTION 8. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and shall record all the
proceedings thereof in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. The Secretary shall give, or
cause to be given, all notices required by statute, Bylaw or resolution, and
shall perform such other duties as may be prescribed by the Board of Directors
or President. The Secretary shall have custody of the corporate seal of the
Corporation and the Secretary and Assistant Secretaries shall have authority to
affix the same to any instrument when its use is required or appropriate.
SECTION 9. ASSISTANT SECRETARIES. The Assistant Secretary or Assistant
Secretaries shall, in the absence of the Secretary or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
SECTION 10. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his or her transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall deliver
to the Corporation, and shall keep in force, a bond, in such form, amount, and
with such surety or sureties as shall be satisfactory to the Board of Directors,
for the faithful performance of the duties of his or her office and for the
11
<PAGE>
restoration to the Corporation, in case of his or her death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his or her possession or under his or her
control belonging to the Corporation.
SECTION 11. ASSISTANT TREASURERS. The Assistant Treasurer or Assistant
Treasurers shall, in the absence of the Treasurer or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
SECTION 12. INDEMNIFICATION AND INSURANCE.
(a) To the fullest extent permitted by applicable law and
regulation, the Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he or she is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit, or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. Any person who is or was an agent of the Corporation may
be indemnified to the same extent as hereinabove provided. In addition, in the
event any such action, suit or proceeding is threatened or instituted against a
spouse to whom a director or officer is legally married at the time such
director or officer is covered under the indemnification provided herein which
action, suit or proceeding arises solely out of his or her status as the spouse
of a director or officer, including, without limitation, an action, suit or
proceeding that seeks damages recoverable from marital community property of the
director or officer and his or her spouse, property owned jointly by them or
property purported to have been transferred from the director or officer to his
or her spouse, then the spouse of the director or officer shall be indemnified
to the same extent as provided above. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, raise any inference that he
or she had reasonable cause to believe that his or her conduct was unlawful.
(b) To the fullest extent permitted by applicable law and
regulation, the Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Corporation to procure
12
<PAGE>
a judgment in its favor by reason of the fact that he or she is or was a
director, officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the Corporation, and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper. Any person
who is or was an agent of the Corporation may be indemnified to the same extent
as hereinabove provided. In addition, in the event any such action or suit is
threatened or instituted against a spouse to whom a director or officer is
legally married at the time such director or officer is covered under the
indemnification provided herein which action or suit arises solely out of his or
her status as the spouse of a director or officer, including, without
limitation, an action or suit that seeks damages recoverable from marital
community property of the director or officer and his or her spouse, property
owned jointly by them or property purported to have been transferred from the
director or officer to his or her spouse, then the spouse of the director or
officer shall be indemnified to the same extent as provided above.
(c) To the extent that a director, officer, spouse of the
director or officer, employee, or agent of the Corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in subsections (a) and (b) of this Section, or in defense of any claim, issue
or matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
(d) Any indemnification under subsections (a) and (b) of this
Section (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, spouse of the director or officer, employee, or agent is
proper in the circumstances because such person has met the applicable standard
of conduct set forth in subsections (a) and (b) of this Section. Such
determination shall be made (i)by a majority vote of Directors who were not
parties to the action, suit or proceeding, even if they constitute less than a
quorum, or (ii) if there are no such disinterested directors, or if a majority
of such disinterested directors so directs, by independent legal counsel chosen
by the entire Board of Directors, subject to the reasonable satisfaction of the
party seeking indemnification, in a written opinion, or (iii) by the
shareholders.
(e) Expenses (including attorney's fees) incurred by an officer,
director, or spouse of an officer or director, in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such
13
<PAGE>
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer or spouse to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Corporation
as authorized in this Section. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this Section shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
(g) The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, spouse of a director or
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section.
(h) For the purposes of this Section, references to "the
Corporation" include, in addition to the resulting or surviving corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers, spouses
of directors or officers, and employees or agents, so that any person who is or
was a director, officer, spouse of a director or officer, employee or agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section with respect to the
resulting or surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Section.
14
<PAGE>
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent, and with respect to any spouse of a director or
officer, shall continue following the time the director or officer spouse ceases
to be a director or officer even if the marriage of the individuals terminates
prior to the end of the period of coverage, and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(k) The Court of Chancery shall have exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this Section or under any agreement, vote of shareholders or
disinterested directors, or otherwise. The Court of Chancery may summarily
determine the Corporation's obligation to advance expenses (including attorneys'
fees).
SECTION 13. OFFICERS APPOINTED PURSUANT TO MERGER AGREEMENT. During the
period in which the Employment Agreement, dated as of February 20, 1992, between
the Corporation and Mr. Gerald V. MacDonald, and the Employment Agreement,
entered into as of February 20, 1992, between the Corporation and Mr. Eugene A.
Miller (the "Employment Agreements") are in effect, any modification, amendment
or failure to honor the terms of either of such Employment Agreements shall
require the affirmative vote of 75% of the members of the entire Board of
Directors.
ARTICLE VI
STOCK AND TRANSFERS
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairman of the Board of Directors, or the President or
a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation. If the Corporation shall be authorized to
issue more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the Certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests the designations,
preferences and relative, participating optional or other special rights
15
<PAGE>
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Any of or all of the signatures
on the certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in the place of any certificate theretofore issued by
the Corporation, alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing the issuance of a new
certificate the Board of Directors may, in its discretion and as a condition
present to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against it
with respect to the certificate alleged to have been lost, stolen or destroyed.
SECTION 3. TRANSFERS OF STOCK. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 4. FIXING RECORD DATE. In order that the Corporation may
determine the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of shareholders of record entitled
to notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 5. REGISTERED SHAREHOLDERS. The Corporation shall have the
right to treat the person registered on its books as the owner of shares as the
absolute owner thereof, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
16
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. The Board of Directors, subject to any
restrictions contained in its Certificate of Incorporation, may declare and pay
any dividends upon the shares of its capital stock either (a) out of surplus as
defined in and computed in accordance with the provisions of the governing
statute, or (b) in case there shall be no such surplus, out of its net profits
for the fiscal year in which the dividend is declared and/or the preceding
fiscal year. Dividends may be paid in cash, in property, or in shares of the
Corporation's capital stock, subject to the provisions of the statute and of the
Certificate of Incorporation.
SECTION 2. RESERVES. The Board of Directors shall have power and
authority to set apart, out of any funds available for dividends, such reserve
or reserves, for any proper purpose, as the Board in its discretion shall
approve, and the Board shall have the power and authority to abolish any reserve
created by the Board.
SECTION 3. VOTING SECURITIES. Unless otherwise directed by the Board,
the Chairman of the Board or President, or, in the case of their absence or
inability to act, the Vice Presidents, in order of their seniority, shall have
full power and authority on behalf of the Corporation to attend and to act and
to vote, or to execute in the name or on behalf of the Corporation a proxy
authorizing an agent or attorney-in-fact for the Corporation to attend and vote
at any meetings of security holders of Corporations in which the Corporation may
hold securities, and at such meetings he or his duly authorized agent or
attorney-in-fact shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have possessed and exercised if present. The Board by
resolution from time to time may confer like power upon any other person or
persons.
SECTION 4. CHECKS. All checks, drafts and orders for the payment of
money shall be signed in the name of the Corporation in such manner and by such
officer or officers or such other person or persons as the Board of Directors
shall from time to time designate for that purpose.
SECTION 5. CONTRACTS, CONVEYANCES, ETC. When the execution of any
contract, conveyance or other instruments has been authorized without
specification of the executing officers, the Chairman of the Board, President or
any Vice President, and the Secretary or Assistant Secretary, may execute the
same in the name and on behalf of this Corporation and may affix the corporate
seal thereto. The Board of Directors shall have power to designate the officers
and agents who shall have authority to execute any instrument in behalf of this
Corporation.
SECTION 6. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
17
<PAGE>
SECTION 7. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal" and "Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
SECTION 8. MICHIGAN CONTROL SHARE STATUTE. Pursuant to Section 794 of
the Michigan Business Corporation Act ("MBCA"), Chapter 7B of the MBCA shall not
apply to the Corporation or control share acquisitions (as such term is defined
in Section 791 of the MBCA) of the shares of the Corporation's capital stock.
ARTICLE VIII
AMENDMENTS
SECTION 1. AMENDMENT BY REGULAR VOTE. These bylaws may be altered,
amended or repealed or new Bylaws may be adopted by the shareholders or by the
Board of Directors, when such power is conferred upon the Board of Directors by
the Certificate of Incorporation, at any regular meeting of the shareholders or
of the Board of Directors or at any special meeting of the shareholders or of
the Board of Directors if notice of such alteration, amendment, repeal or
adoption of new Bylaws be contained in the notice of such special meeting.
SECTION 2. AMENDMENT BY 75% VOTE. The affirmative vote of 75% of the
total Board of Directors is required to alter, amend, repeal, add to or
otherwise change the effects of Article III, Sections 8(b), (c) or (d); Article
V, Section 13; or this Article VIII, Section 2 of the Corporation's Bylaws.
18
<PAGE>
Exhibit 10.1
COMERICA INCORPORATED
1997 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of Comerica's Long-Term Incentive Plan is to align the interests of
employees of the Corporation selected to receive awards with those of
shareholders by rewarding long term decision-making and actions for the
betterment of the Corporation. Accordingly, eligible individuals may receive
Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Awards
and Other Stock-Based Awards. Ownership of the Corporation's stock assists in
the attraction and retention of qualified employees, and provides them with
additional incentive to devote their best efforts to pursue and sustain the
Corporation's superior long-term performance. This enhances the value of the
Corporation for the benefit of its shareholders.
SECTION 2. DEFINITIONS.
A. "Affiliate" means (i) any entity that is controlled by the Corporation,
whether directly or indirectly, and (ii) any entity in which the
Corporation has a significant equity interest, as determined by the
Committee.
B. "Agreement" means a written agreement, in a form approved by the Committee,
which sets forth the terms and conditions of an Award. Agreements shall be
subject to the express terms and conditions set forth herein, and to such
other terms and conditions not inconsistent with the Plan as the Committee
shall deem appropriate.
C. "Award" means an Option, a Stock Appreciation Right, a Restricted Stock
Award, a Performance Award or an Other Stock-Based Award pursuant to the
Plan. Each Award shall be evidenced by an Agreement.
D. "Award Recipient" means an Eligible Individual who has received an Award
under the Plan.
E. "Beneficiary" means any person(s) designated by an Award Recipient on a
beneficiary designation form, or any person(s) entitled to receive any
amounts owing to such Award Recipient under this Plan upon his or her death
by reason of having been named in the Award Recipient's will or trust
agreement or having qualified as a taker of the Award Recipient's property
under the laws of intestacy. If an Award Recipient authorizes any person,
in writing, to exercise such individual's Options or SARs following the
Award Recipient's death, the term "Beneficiary" shall include any person in
whose favor such Options or SARs are exercised by the person authorized to
exercise the Options or SARs.
1
<PAGE>
F. "Board" means the Board of Directors of Comerica Incorporated.
G. "Code" means the Internal Revenue Code of 1986, as amended.
H. "Committee" means the committee appointed by the Board to administer the
Plan as provided herein. Unless otherwise determined by the Board, the
Compensation Committee of the Board shall be the Committee.
I. "Corporation" means Comerica Incorporated, a Delaware corporation, and its
Affiliates.
J. "Disabled" or "Disability" means "Totally Disabled" within the meaning of
such term as set forth in the Long-Term Disability Plan of Comerica
Incorporated (the provisions of which are incorporated herein by
reference), or as the Committee shall determine based on information
provided to it. However, with respect to the rules relating to Incentive
Stock Options, the term "Disabled" shall mean disabled as that term is
utilized in Sections 422 and 22(e)(3) of the Code, or any successor Code
provisions relating to ISOs.
K. "Eligible Individual" means any employee of the Corporation or any
Affiliate who the Committee determines to be an Eligible Individual.
Notwithstanding the foregoing, an Eligible Individual for purposes of
receipt of the grant of an ISO shall be limited to those individuals who
are eligible to receive ISOs under rules set forth in the Code and
applicable regulations.
L. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
M. "Fair Market Value" means the closing price of a Share on the New York
Stock Exchange as reported on the Composite Tape; if, however, there is no
trading of Shares on the date in question, then the closing price of the
Shares as so reported, on the last preceding date on which there was
trading shall instead be used to determine Fair Market Value. If Fair
Market Value for any date in question cannot be determined as provided
above, Fair Market Value shall be determined by the Committee by whatever
method or means the members, in the good faith exercise of their
discretion, at that time shall deem appropriate.
N. "Incentive Stock Option" or "ISO" means an Option granted pursuant to the
Plan that meets the requirements of Section 422 of the Code, or any
successor provision, and that is intended by the Committee to constitute an
ISO.
O. "Nonqualified Stock Option" or "NQSO" means an Option granted pursuant to
the Plan that is not intended to be an Incentive Stock Option.
P. "Option" means a Nonqualified Stock Option or an Incentive Stock Option.
Q. "Other Stock-Based Award" means any right granted under Section 6(E) of the
2
<PAGE>
Plan.
R. "Performance Award" means any Award made pursuant to Section 6(D) of the
Plan.
S. "Performance Measures" means, with respect to each Award, the criteria and
objectives, determined by the Committee, which must be met during the
applicable Performance Period or Restriction Period, as the case may be, as
a condition of the holder's receipt of payment with respect to, or
retention of, such Award. Such criteria and objectives may include, but
shall not be limited to, return on investments, cumulative earnings per
share, or return on shareholders' equity. The Performance Measures
pertinent to any Award shall be established at the time of the making of
such Award and shall be set forth in the Agreement covering such Award, but
may be revised by the Committee thereafter if and whenever its members
determine that, in light of events occurring or circumstances arising after
the date such Award is made, such revision is necessary or appropriate to
afford the recipient benefits substantially similar to those originally
intended with respect to such Award.
T. "Performance Period" means the period designated by the Committee during
which the Performance Measures applicable to an Award shall be measured.
The Performance Period shall be established on or before the time of the
making of the Award, and the length of any Performance Period shall be
within the discretion of the Committee.
U. "Plan" means the Comerica Incorporated 1997 Long-Term Incentive Plan.
V. "Restriction Period" means the period designated by the Committee during
which Shares of Restricted Stock remain forfeitable.
W. "Restricted Stock Award" means an award of Shares pursuant to Section 6(C)
of the Plan subject to such restrictions as may be imposed by the
Committee. Shares of restricted stock shall constitute issued and
outstanding Shares for all corporate purposes.
X. "Retirement" means retirement in accordance with the policies of the
Corporation or Affiliate which employs the Award Recipient.
Y. "Shares" means shares of Common Stock, $5.00 par value, of the Corporation
or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 8 of the Plan.
Z. "Stock Appreciation Right" or "SAR" means a right granted under Section
6(B) of the Plan.
AA. "Tax Withholding Date" shall mean the earliest date the obligation to
withhold tax with respect to an Award arises.
3
<PAGE>
SECTION 3. STOCK SUBJECT TO THE PLAN.
Shares which may be issued pursuant to Awards under the Plan may be either
authorized and unissued Shares, or authorized and issued Shares held in the
Corporation's Treasury, Shares purchased in the open market or in private
transactions or any combination of the foregoing. Subject to adjustment as
provided in Section 8, as of the first day of each calendar year during which
the Plan remains in effect, there shall be reserved for issuance for the purpose
of Awards under the Plan that number of Shares which equals 1.6 percent of the
Shares that were outstanding (including, for this purpose, any treasury shares)
as of the close of business on the preceding December 31st. Not more than 49%
of the Shares available for Awards each calendar year may be utilized for Awards
other than Options. Shares reserved for issuance in any calendar year may only
be utilized in connection with Awards made during the year in which they first
become available, and may not be carried forward and utilized for the purpose of
making Awards in future years. However, Shares covered by Awards which are
canceled or forfeited may be reutilized to make Awards. Not more than 2,000,000
Shares (subject to adjustment as provided in Section 8) shall be available for
issuance pursuant to the exercise of Incentive Stock Options. The maximum
number of Shares which may become subject to Awards to any Eligible Individual
during any calendar year shall be the lesser of (i) 10% of the Shares available
for Awards during such calendar year, or (ii) 200,000 Shares.
SECTION 4. ADMINISTRATION.
The Plan shall be administered by the Committee. In addition to any implied
powers and duties that may be needed to carry out the provisions of the Plan,
the Committee shall have all the powers vested in it by the terms of the Plan,
including exclusive authority to select Eligible Individuals, to make Awards, to
determine the type, size, terms and timing of Awards (which need not be
uniform), to accelerate the vesting of awards for any reason, including the
occurrence of a change in control of the Corporation or the termination of an
Award Recipient's employment, to permit or prohibit the transfer of Awards, and
to prescribe the form of the Agreements governing Awards. The Committee may
cancel all or any portion of any Award as a consequence of which the Award
Recipient shall forfeit the renumeration attributable to such cancelled Award or
portion thereof if, in its sole discretion, the Committee determines that the
Award Recipient has engaged in conduct detrimental to the Corporation.
The Committee may interpret the Plan and the Agreements entered into pursuant to
the Plan, establish, amend and rescind rules and regulations relating to the
Plan, make any other determinations it believes necessary or advisable in
connection with the administration of the Plan, and correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any Agreement in
the manner and to the extent the Committee deems appropriate.
Determinations of the Committee shall be made by a majority vote of its members
at a meeting at which a quorum is present or pursuant to a unanimous written
consent of its
4
<PAGE>
members. A majority of the members of the Committee shall constitute a quorum.
All Committee determinations shall be final, conclusive and binding on the
Corporation, any Award Recipient, Beneficiary or other interested party.
The Committee may authorize any one or more of its members, or any officer of
the Corporation, to execute and deliver documents on behalf of the Committee.
No member of the Committee shall be liable for any action or omission in
connection with the Plan, except for his or her own willful misconduct.
SECTION 5. ELIGIBILITY.
Awards may only be made to Eligible Individuals. No member of the Committee
shall be eligible to receive an Award under the Plan.
SECTION 6. AWARDS.
A. Options. The Committee may grant Options to Eligible Individuals in
accordance with the provisions of this subsection subject to such
additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine to be appropriate.
1. Exercise Price. The purchase price per Share under an Option shall be
determined by the Committee; provided, however, that such purchase
price shall not be less than 100% of the Fair Market Value of a Share
on the date of grant of such Option, and such purchase price may not
be decreased during the term of the Option other than pursuant to
Section 8.
2. Option Term. The term of each Option shall be fixed by the Committee.
3. Time and Manner of Exercise. The Committee shall determine the time
or times at which an Option may be exercised, and the manner in which
(including, without limitation, cash, Shares, other securities, other
Awards or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise
price) payment of the exercise price with respect thereto may be made,
or deemed to have been made. Any form of "cashless" exercise of an
Option which is legally permissible may be utilized under the Plan in
connection with the exercise of an Option.
4. Employment Status.
a. In General. Except as otherwise provided herein, any Option must
be exercised during the period of the Award Recipient's
employment with the Corporation or Affiliate.
b. Retirement. Upon the Retirement of the Award Recipient, any
Option held by such individual shall continue to be exercisable,
provided the
5
<PAGE>
term of the Option has not otherwise expired, for a period of
three years subsequent to the date of the Award Recipient's
Retirement (or, in the case of any ISO held by an optionee who is
not Disabled, for a period of three months subsequent to such
retirement date).
c. Disability. Upon the cessation of the Award Recipient's
employment due to Disability, any Option held by such individual
shall continue to be exercisable, provided the term of the Option
has not otherwise expired, for a period of three years subsequent
to the date of cessation of the Award Recipient's employment (or,
in the case of any ISO held by an optionee who is Disabled, for a
period of one year subsequent to such cessation date).
d. Termination of Employment. Upon the cessation of the Award
Recipient's employment for any reason other than Retirement,
Disability or death, any Option held by such individual shall
continue to be exercisable, provided the term of the Option has
not otherwise expired, for a period of ninety days after the date
of termination of the Award Recipient's employment.
e. Death. Upon the Award Recipient's death (whether during his or
her employment with the Corporation or an Affiliate or during any
applicable post-termination exercise period), any Option held by
such individual shall continue to be exercisable by the
Beneficiary(ies) of the decedent, provided the term of the Option
(as such term may have been shortened due to the Award
Recipient's Retirement, Disability or termination of employment
for any other reason) has not otherwise expired, for a period of
one year after the date of the Award Recipient's death (or, in
the case of ISOs, for a period of three months after the Award
Recipient's death).
f. Extension or Reduction of Exercise Period. In any of the
foregoing circumstances, the Committee may extend or shorten the
exercise period, but may not extend any such period beyond the
term of the Option as originally established (or, insofar as this
paragraph relates to SARs, the term of the SAR as originally
established). Further, with respect to ISOs, as a condition of
any such extension, the holder shall be required to deliver to
the Corporation a release which provides that such individual
will hold the Corporation and/or Affiliate harmless with respect
to any adverse tax consequences the individual may suffer by
reason of any such extension.
6
<PAGE>
5. Reload Options. With respect to Options granted pursuant to this
Plan, the Committee may grant "reload" options pursuant to which grant
the Award Recipient will receive a new Option when the payment of the
exercise price of a previously granted Option is made by the delivery
of Shares already owned by the Award Recipient pursuant to Section
6(A)(3) hereof, and/or when Shares are tendered or forfeited as
payment of the amount required to be withheld under applicable income
tax laws in connection with the exercise of an Option. Any such new
Option shall be an Option to purchase the number of Shares not
exceeding the sum of (A) the number of Shares tendered or forfeited to
satisfy the purchase price upon the exercise of the previously-granted
Option to which such "reload" option relates, and (B) the number of
Shares tendered or forfeited as payment of the amount to be withheld
under applicable income tax laws in connection with the exercise of
the Option to which such "reload" option relates. Such "reload"
Options shall have a per share exercise price equal to the Fair Market
Value as of the date of grant of the Shares covered by such Option.
B. Stock Appreciation Rights. The Committee may grant Stock Appreciation
Rights to Eligible Individuals in accordance with the provisions of this
subsection subject to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine to be appropriate. A Stock Appreciation Right granted under the
Plan shall confer on the Award Recipient a right to receive upon exercise
thereof the excess of (i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant
price of the Stock Appreciation Right as specified by the Committee, which
price shall not be less than 100% of the Fair Market Value of one Share on
the date of grant of the Stock Appreciation Right. Subject to the terms of
the Plan and any applicable Agreement, the grant price, term, manner of
exercise, dates of exercise, methods of settlement and any other terms and
conditions of any Stock Appreciation Right shall be those determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate. Except
as otherwise provided herein, any SAR must be exercised during the period
of the Award Recipient's employment with the Corporation or Affiliate. The
provisions of Section 6(A)(4)(b)-(f) hereof shall apply for purposes of
determining the exercise period in the event of the Award Recipient's
Retirement, Disability, death or other termination of employment.
C. Restricted Stock. The Committee may make Restricted Stock Awards to
Eligible Individuals in accordance with the provisions of this subsection
subject to such additional terms and conditions not inconsistent with the
provisions of the Plan as the Committee shall determine to be appropriate.
1. Nature of Restrictions. Restricted Stock Awards shall be subject to
such restrictions, including Performance Measures, as the Committee
may impose (including, without limitation, any limitation on the right
to vote a
7
<PAGE>
Share of restricted stock or the right to receive any dividend or
other right or property with respect thereto), which restrictions may
lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate. In
the event a Restricted Stock Award is made subject to restrictions
which are not performance-related, the minimum Restriction Period
shall be three years.
2. Stock Certificates. Shares of restricted stock under the Plan shall
be evidenced by issuance of a stock certificate(s), which shall be
held by the Corporation. Such certificate(s) shall be registered in
the name of the Award Recipient and shall bear an appropriate legend
which refers to the restrictions applicable to such Restricted Stock
Award. Alternatively, shares of restricted stock under the Plan may
be recorded in book entry form.
3. Forfeiture; Delivery of Shares. Except as otherwise determined by the
Committee, upon termination of an Award Recipient's employment (as
determined under criteria established by the Committee) during the
applicable Restriction Period, all Shares of restricted stock shall be
forfeited and reacquired by the Corporation. However, in such
circumstances, the Committee may waive, in whole or in part, any or
all remaining restrictions applicable to the Restricted Stock Award.
Shares comprising any Restricted Stock Award held by the Corporation
that are no longer subject to restrictions shall be delivered to the
Award Recipient (or his or her Beneficiary) promptly after the
applicable restrictions lapse or are waived.
D. Performance Awards. The Committee may grant Performance Awards to Eligible
Individuals in accordance with the provisions of this subsection subject to
such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall determine to be appropriate. A
Performance Award granted under the Plan (i) may be denominated or payable
in cash, Shares (including, without limitation, restricted Shares), other
securities, other Awards, or other property, and (ii) shall confer on the
Award Recipient the right to receive a payment upon the attainment of
Performance Measures during any Performance Period the Committee may
establish. Subject to the terms of the Plan and any applicable Award
Agreement, the Performance Measures to be achieved during any Performance
Period, the length of any Performance Period and the amount of any payment
or transfer to be made pursuant to any Performance Award shall be
determined by the Committee.
E. Other Stock-Based Awards. The Committee may grant Other Stock-Based Awards
to Eligible Individuals in accordance with the provisions of this
subsection and subject to such additional terms and conditions, including
Performance Measures, not inconsistent with the provisions of the Plan, as
the Committee shall determine. Other Stock-Based Awards may be denominated
or payable in, valued in whole or in part by reference to, or otherwise
based on or related to, Shares (including, without limitation, securities
convertible into Shares), as are deemed by the Committee to be consistent
with the purpose of the Plan;
8
<PAGE>
provided, however, that such grants must comply with applicable law.
F. General. Except as otherwise specified herein, the following provisions
shall relate to Awards under the Plan:
1. Consideration for Awards. Awards shall be made without monetary
consideration or for such minimal monetary consideration as may be
required by applicable law.
2. Separate or Tandem Awards. Awards may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with,
in fulfillment of, or in substitution for, any other Award or any
award made under any plan of the Company or any Affiliate other than
this Plan. Awards granted in addition to, or in tandem with, other
Awards, or in addition to, or in tandem with, awards made under any
such other plan of the Corporation or any Affiliate may be made either
at the same time as, or at a different time from, the making of such
other Awards or awards.
3. Forms of Payment under Awards. Subject to the terms of the Plan and
of any applicable Agreement, payments or transfers to be made by the
Corporation or an Affiliate upon the grant, exercise or payment of an
Award may be made in such form or forms as the Committee shall
determine (including, without limitation, cash, Shares, other
securities, other Awards or other property or any combination
thereof), and may be made in a single payment or transfer, in
installments or an a deferred basis, in each case in accordance with
rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment
or crediting of reasonable interest on installment or deferred
payments.
4. Limits on Transfer of Awards. No Award and no right under any such
Award shall be transferable by an Award Recipient otherwise than by
will or by the laws of intestacy; provided, however, that, an Award
Recipient may, in the manner established by the Committee, designate a
Beneficiary to exercise the rights of the Award Recipient and to
receive any property distributable with respect to any Award upon the
death of the Award Recipient. Each Award or right under any Award
shall be exercisable during the Award Recipient's lifetime only by the
Award Recipient or, if permissible under applicable law, by the Award
Recipient's guardian or legal representative. No Award or right under
any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the
Corporation or any Affiliate.
5. Term of Awards. Subject to any specific provisions of the Plan, the
term of each Award shall be for such period as may be determined by
the Committee.
9
<PAGE>
6. Securities Law Restrictions. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such restrictions as the
Committee may deem advisable under the Plan, or the rules, regulations
and other requirements of the Securities and Exchange Commission, the
New York Stock Exchange, any other exchange on which Shares may be
eligible to be traded or any applicable federal or state securities
laws, and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such
restrictions.
7. Limitation on Awards. The maximum amount of compensation payable with
respect to any Award to any Eligible Officer under the Plan which is
settled in cash will not exceed $2,500,000 for any calendar year.
SECTION 7. WITHHOLDING OF TAXES.
The Corporation will, if required by applicable law, withhold Federal, state
and/or local taxes in connection with the exercise or vesting of an Award.
Unless otherwise provided in the applicable Agreement, each Award Recipient may
satisfy any such tax withholding obligation by any of the following means, or by
a combination of such means: (i) a cash payment; (ii) by delivery to the
Corporation of already-owned Shares which have been held by the individual for
at least six months having a Fair Market Value, as of the Tax Withholding Date,
sufficient to satisfy the amount of the withholding tax obligation arising from
an exercise or vesting of an Award; (iii) by authorizing the Corporation to
withhold from the Shares otherwise issuable to the individual pursuant to the
exercise or vesting of an Award, a number of shares having a Fair Market Value,
as of the Tax Withholding Date, which will satisfy the amount of the withholding
tax obligation; or (iv) by a combination of such methods of payment. If the
amount requested is not paid, the Corporation may refuse to satisfy the Award.
SECTION 8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event the number of outstanding Shares changes as a result of any stock
split, stock dividend, recapitalization, merger, consolidation, reorganization,
combination, or exchange of shares, split-up, split-off, spin-off, liquidation
or other similar change in capitalization, or any distribution made to common
stockholders other than cash dividends, the number or kind of shares that may be
issued under the Plan pursuant to Section 3, and the number or kind of shares
subject to, or the exercise price per share under, any outstanding Award, shall
be automatically adjusted, and the Committee shall be authorized to make such
other equitable adjustment of any Award or Shares issuable pursuant thereto, or
in any Performance Measures relating to any Award, so that the value of the
interest of the individual shall not be decreased by reason of the occurrence of
such event. Any such adjustment shall be conclusive and binding.
SECTION 9. AMENDMENT AND TERMINATION.
10
<PAGE>
The Committee may amend, modify or terminate the Plan, at any time, in such
respects as it shall deem advisable. Any such amendment, modification or
termination of the Plan shall not, without the consent of any Award Recipient,
adversely affect his or her rights under an Award previously made.
SECTION 10. MISCELLANEOUS PROVISIONS.
A. No employee or other person shall have any claim or right to receive an
Award under the Plan.
B. Receipt of an Award shall not confer upon the Award Recipient any rights of
a shareholder with respect to any Shares subject to such Award except as
specifically provided in the Agreement relating to the Award.
C. The Plan, the making and exercise of Awards thereunder, and the obligations
of the Corporation to satisfy Awards shall be subject to all applicable
Federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required, and the Committee may
impose any additional restrictions with respect to Awards in order to
comply with any legal requirements applicable to Awards or to qualify for
any exemption it may deem appropriate.
D. The expenses of the Plan shall be borne by the Corporation.
E. By accepting an Award under the Plan or payment pursuant to any Award, each
Award Recipient, legal representative and Beneficiary shall be conclusively
deemed to have indicated his or her acceptance and ratification of, and
consent to, any action taken under the Plan by the Committee or the
Corporation.
F. Awards under the Plan shall be binding upon the Corporation, its
successors, and assigns.
G. Nothing in the Plan, or in any Agreement entered into pursuant to the Plan,
shall confer on an Award Recipient any right to continue in the employ of
the Corporation or any Affiliate, or in any way affect the Corporation's
(or such Affiliate's) right to terminate the individual's employment
without prior notice, at any time, for any reason or for no reason.
H. Participation in the Plan shall not affect an individual's eligibility to
participate in any other benefit or incentive plan of the Corporation.
I. A breach by any Award Recipient, his or her Beneficiary(ies), or legal
representative, of any restrictions, terms or conditions contained in the
Plan, any Agreement, or otherwise established by the Committee with respect
to any Award will, unless waived in whole or in part by the Committee,
cause a forfeiture of such Award.
J. The Plan shall be submitted to the shareholders of the Corporation for
their
11
<PAGE>
approval on May 16, 1997, or on such other date as may be fixed for the
next meeting of shareholders, and shall become effective upon such approval
and thereafter continue until terminated by the Committee.
K. Except to the extent superseded by Federal law, the provisions of this Plan
shall be interpreted and construed in accordance with the laws of the State
of Delaware.
12
<PAGE>
Exhibit 10.2
COMERICA INCORPORATED
MANAGEMENT INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the Comerica Incorporated Management Incentive Plan is to promote
and advance the interests of Comerica Incorporated (the "Corporation") and its
shareholders by enabling the Corporation to attract, retain and reward key
employees of the Corporation and its Affiliates, and to qualify incentive
compensation paid to Participants who are Covered Employees as performance-based
compensation within the meaning of Section 162(m) of the Code.
SECTION 2. DEFINITIONS.
The terms below shall have the following meanings:
a. "AFFILIATE" means (i) any entity that is controlled by the Corporation,
whether directly or indirectly, and (ii) any entity in which the
Corporation has a significant equity interest, as determined by the
Committee.
b. "ANNUAL BASE SALARY" means the participant's rate of annual salary as of
the last December 1st occurring during the Performance Period.
c. "BOARD" means the Board of Directors of the Corporation.
d. "CODE" means the Internal Revenue Code of 1986, as amended.
e. "COMMITTEE" means the committee appointed by the Board to administer the
Plan as provided herein. Unless otherwise determined by the Board, the
Compensation Committee of the Board shall be the Committee.
f. "CORPORATION" means Comerica Incorporated, a Delaware corporation, and its
successors and assigns.
g. "COVERED EMPLOYEE" means a "covered employee" within the meaning of Section
162(m) of the Code.
h. "INCENTIVE PAYMENT" means, with respect to each Participant, the amount he
or she may receive for the applicable Performance Period as established by
the Committee pursuant to the provisions of the Plan.
i. "PARTICIPANT" means any employee of the Corporation or an Affiliate who is
designated by the Committee as eligible to receive an Incentive Payment
under the Plan.
1
<PAGE>
j. "PERFORMANCE GOALS" mean (i) earnings per share, (ii) return on average
equity, (iii) return on average assets, or (iv) any other objective
performance goals as may be established by the Committee for a Performance
Period. Performance Goals may be absolute in their terms or measured
against or in relationship to other companies comparably, similarly or
otherwise situated and may be based on or adjusted for any other objective
goals, events, or occurrences established by the Committee for a
Performance Period. Such Performance Goals may be particular to a line of
business, subsidiary or other unit or may be based on the performance of
the Corporation generally. Such Performance Goals may cover such period as
may be specified by the Committee.
k. "PERFORMANCE PERIOD" means, with respect to any Incentive Payment for a
one-year performance period, the calendar year, and, with respect to any
Incentive Payment for a three-year performance period, the three-year
period specified by the Committee.
l. "PERFORMANCE TARGETS" mean the specific measures which must be satisfied in
connection with any Performance Goal prior to funding of any incentive
pool.
m. "PLAN" means the Comerica Incorporated Management Incentive Plan.
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have exclusive authority to
interpret the Plan, to promulgate, amend, and rescind rules and regulations
relating to it and to make all other determinations deemed necessary or
advisable in connection with the administration of the Plan, including, but not
limited to, determinations relating to eligibility, whether to make Incentive
Payments, the terms of any such payments, the time or times at which Performance
Goals are established, the Performance Periods to which Incentive Payments
relate, and the actual dollar amount of any Incentive Payment. The
determinations of the Committee pursuant to this authority shall be conclusive
and binding.
The Committee may, in its discretion, authorize the Chief Executive Officer of
the Corporation to act on its behalf, except with respect to matters relating to
such Chief Executive Officer or which are required to be certified by the
Committee under the Plan, or which are required to be handled exclusively by the
Committee under Code Section 162(m) or the regulations promulgated thereunder.
SECTION 4. ESTABLISHMENT OF PERFORMANCE GOALS AND INCENTIVE PAYMENTS.
a. ESTABLISHMENT OF PERFORMANCE GOALS. Prior to the completion of 25% of the
Performance Period or such earlier date as is required under Section 162(m)
of the Code, the Committee shall, in its sole discretion, for each such
Performance Period, determine and establish in writing the following:
2
<PAGE>
1. The Performance Goals applicable to the Performance Period; and
2. The Performance Targets pursuant to which the total amount which may
be available for payment to all Participants as Incentive Payments
based upon the relative level of attainment of the Performance Goals
may be calculated.
B. CERTIFICATION AND PAYMENT. After the end of each Performance Period, the
Committee shall:
1. Certify in writing, prior to the unconditional payment of any
Incentive Payment, the level of attainment of the Performance Goals
for the Performance Period;
2. Determine the total amount available for Incentive Payments based on
the relative level of attainment of such Performance Goals;
3. In its sole discretion, reduce the size of, or eliminate, the total
amount available for Incentive Payments for the Performance Period;
and
4. In its sole discretion, determine the share, if any, of the available
amount to be paid to each Participant as that Participant's Incentive
Payment, and authorize payment of such amount. In the case of a
Participant who is a Covered Employee, the Committee shall not be
authorized to increase the amount of the Incentive Payment for any
Performance Period determined with respect to any such individual by
reference to the applicable Performance Targets except to the extent
permitted under Section 162(m) of the Code and regulations thereunder.
C. CONDITIONAL PAYMENTS. The Committee may authorize a conditional payment of
a Participant's Incentive Payment prior to the end of a Performance Period
based upon the Committee's good faith determination of the projected size
of (i) the total amount which will become available for payment as
Incentive Payments for the Performance Period, and (ii) the amount
determined with respect to any such Participant by reference to the
Performance Targets.
D. OTHER APPLICABLE RULES.
1. Unless otherwise determined by the Committee with respect to any
Covered Employee or by the Corporation's Chief Executive Officer with
respect to any other Participant (unless otherwise required by
applicable law), no payment pursuant to this Plan shall be made to a
Participant unless the Participant is employed by the Corporation or
an Affiliate as of the date of payment.
2. Incentive Payments shall be subject to applicable federal, state and
local withholding taxes and other applicable withholding in accordance
with the Corporation's payroll practices as from time-to-time in
effect.
3. The maximum amount which may become payable to any Covered
3
<PAGE>
Employee in any calendar year as an Incentive Payment with respect to
all Performance Periods completed during such calendar year shall be
the lesser of (i) 200% of such Participant's Annual Base Salary, or
(ii) $2,500,000.
4. Incentive Payments calculated by reference to one-year Performance
Periods shall be payable in cash or shares of the Corporation's common
stock, $5.00 par value per share ("Shares"), and Incentive Payments
calculated by reference to three-year Performance Periods shall be
payable one-half in cash and one-half in Shares. Any such Shares
shall be awarded pursuant to the Corporation's long-term incentive
plan and may be subject to restrictions as may be determined by the
Committee. In each case, Incentive Payments shall be made as soon as
practical after the completion of the Performance Period.
5. A Participant shall have the right to defer payment of all or any
portion of any Incentive Payment as permitted under the provisions of
any deferred compensation plan maintained by the Corporation.
6. Until paid to a Participant, awards shall not be subject to the claims
of creditors and may not be assigned, alienated, transferred or
encumbered in any way other than by will or pursuant to laws of
intestacy.
SECTION 5. AMENDMENT OR TERMINATION.
The Committee may amend, modify or terminate the Plan in any respect at any time
without the consent of any Participant. Any such action may be taken without
the approval of the Corporation's shareholders unless shareholder approval is
required by applicable law. Termination of the Plan shall not affect any
Incentive Payments earned prior to, but payable on or after, the date of
termination, and any such payments shall continue to be subject to the terms of
the Plan notwithstanding its termination.
SECTION 6. CHANGE OF CONTROL.
Notwithstanding any other provision hereof, in the event of a "Change of Control
of the Company" as defined in the Comerica Incorporated Executive Officer
Continuity Agreements, the following provisions shall be applicable:
A. The Performance Periods then in effect will be deemed to have concluded on
the date of the Change of Control of the Company and the total amount
deemed to be available to fund the related incentive pools will be that
proportion of the amount (based upon the number of months in such
Performance Period elapsed through the date of Change of Control of the
Company) which would be available for funding assuming the Corporation had
attained Performance Goals at a level generating maximum funding for the
Performance Periods; and
B. The Committee, in its sole discretion, will approve the share of the
available
4
<PAGE>
amount payable to each Participant as that Participant's Incentive Payment
(provided that in all events the entire available amount as calculated
pursuant to Section 6(A) shall be paid to Participants as Incentive
Payments), and payments shall be made to each Participant as soon
thereafter as is practicable. Notwithstanding the foregoing, no Incentive
Payments will be made to any Participant pursuant to a three-year
Performance Period which shall be deemed to have concluded on the date of
the occurrence of a Change of Control of the Company unless the Participant
has completed more than two years of service under that Performance Period.
SECTION 7. EFFECTIVE DATE OF THE PLAN.
Subject to shareholder approval, the Plan shall generally be effective as of
January 1, 1997 provided, however, that with respect to three year Performance
Periods which began on or after January 1, 1995, the Plan shall be effective as
of January 1, 1995. The Plan shall remain in effect until terminated by the
Committee pursuant to Section 5.
SECTION 8. GENERAL PROVISIONS.
A. The establishment of the Plan shall not confer upon any Participant any
legal or equitable right against the Corporation or any Affiliate, except
as expressly provided in the Plan.
B. The Plan does not constitute an inducement or consideration for the
employment of any Participant, nor is it a contract between the
Corporation, or any Affiliate, and any Participant. Participation in the
Plan shall not give a Participant any right to be retained in the employ of
the Corporation or any Affiliate.
C. Nothing contained in this Plan shall prevent the Board or Committee from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required, and such arrangements
may be either generally applicable or applicable only in specific cases.
D. The Plan shall be governed, construed and administered in accordance with
the laws of the State of Delaware except to the extent such laws may be
superseded by federal law.
E. This Plan is intended to comply in all aspects with applicable law and
regulation, including, with respect to those Participants who are Covered
Employees, Section 162(m) of the Code. In case any one or more of the
provisions of this Plan shall be held invalid, illegal or unenforceable in
any respect under applicable law or regulation, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalid, illegal or unenforceable provision
shall be deemed null and void; however, to the extent permissible by law,
any provision which could be deemed null and void shall first be construed,
interpreted or revised retroactively to permit this Plan to be
5
<PAGE>
construed in compliance with all applicable laws including, without limitation,
Code Section 162(m), so as to carry out the intent of this Plan.
6
<PAGE>
EXHIBIT 10.3
COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN
(1997 AMENDMENT AND RESTATEMENT)
<PAGE>
COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN
TABLE OF CONTENTS
SECTION I. PURPOSE ..........................................................1
SECTION II. DEFINITIONS .....................................................2
A. Beneficiary(ies).....................................................2
B. Beneficiary Designation..............................................2
C. Cancellation of Deferral Election....................................2
D. Code.................................................................2
E. Committee............................................................2
F. Company..............................................................2
G. Corporate Secretary..................................................2
H. Deferral Election....................................................2
I. Director Fees........................................................3
J. Fee Deferral Account.................................................3
K. Participant..........................................................3
L. Plan.................................................................3
M. Plan Administrator...................................................3
N. Subsidiary...........................................................3
O. Unforeseeable Emergency..............................................3
SECTION III. ELIGIBILITY ....................................................4
SECTION IV. PROCEDURES RELATING TO DEFERRAL ELECTIONS .......................5
1. Submission to Corporate Secretary...............................5
2. Irrevocability..................................................5
3. Cancellation....................................................5
-i-
<PAGE>
SECTION V. FEE DEFERRAL ACCOUNTS AND
CREDITING OF EARNINGS THEREON.............................................6
SECTION VI. DISTRIBUTION OF DEFERRED FEES....................................7
A. Time and Manner .....................................................7
B. Installment Payments.................................................7
C. Hardship Distributions...............................................7
D. Cash Out Distributions...............................................8
SECTION VII. DESIGNATION OF BENEFICIARY......................................9
SECTION VIII. MISCELLANEOUS PROVISIONS......................................10
A. Nonalienation of Benefits...........................................10
B. Administration of Plan..............................................10
C. Amendment or Termination............................................10
D. Effective Date......................................................10
E. Statements to Participants..........................................11
F. Nonforfeitability of Participant Accounts...........................11
G. Successors Bound....................................................11
H. Governing Law and Rules of Construction.............................11
I. Ownership of Fee Deferrals..........................................12
EXHIBIT A - NOTICE OF ELECTION TO DEFER
THE PAYMENT OF DIRECTORS' FEES..........................................A-1
EXHIBIT B - NOTICE OF CANCELLATION OF DEFERRAL ELECTION.....................B-1
EXHIBIT C - BENEFICIARY DESIGNATION FORM....................................C-1
-ii-
<PAGE>
SECTION I.
PURPOSE.
The purpose of this Plan is to enable each director of the Company and each
director of any Subsidiary of the Company to defer the receipt of all or any
portion of his or her Director Fees.
-1-
<PAGE>
SECTION II.
DEFINITIONS.
The following words and phrases, wherever capitalized, shall have the
following meanings respectively:
A. "BENEFICIARY(IES)" means such individual(s) or entity(ies) designated
on the most recent Beneficiary Designation the director has submitted to the
Corporate Secretary.
B. "BENEFICIARY DESIGNATION" means a beneficiary designation on the form
attached hereto as Exhibit "C", as such form may be modified by the Plan
Administrator from time to time.
C. "CANCELLATION OF DEFERRAL ELECTION" means a written notice of
cancellation of election to defer unearned fees on the form attached hereto as
Exhibit "B", as such form may be modified by the Plan Administrator from time to
time.
D. "CODE" means the Internal Revenue Code of 1986, as amended.
E. "COMMITTEE" means the Directors' Committee of the Board of Directors
of Comerica Incorporated.
F. "COMPANY" means Comerica Incorporated, a Delaware corporation.
G. "CORPORATE SECRETARY" means the Secretary of Comerica Incorporated.
H. "DEFERRAL ELECTION" means a written election to defer the payment of
director fees on the form attached hereto as Exhibit "A", as such form may be
modified by the Plan Administrator from time to time.
-2-
<PAGE>
I. "DIRECTOR FEES" means a director's annual retainer, fees for attending
board meetings, fees for attending meetings of any committee of the board and
fees for serving as chairman of any committee of the board.
J. "FEE DEFERRAL ACCOUNT" means an account established under Section V
hereof in the name of each director who has submitted a Deferral Election under
the Plan to record Director Fees which have been deferred and earnings thereon.
K. "PARTICIPANT" means an eligible director who has submitted a Deferral
Election to the Corporate Secretary in accordance with the provisions of the
Plan, and who either has a Deferral Election currently in effect or for whom a
Fee Deferral Account is maintained under the Plan.
L. "PLAN" means the "Comerica Incorporated Director Fee Deferral Plan,"
the provisions of which are set forth herein, as it may be amended from time to
time.
M. "PLAN ADMINISTRATOR" means one or more individuals appointed by the
Committee to handle the day-to-day administration of the Plan.
N. "SUBSIDIARY" means any corporation a majority of whose stock is owned
by Comerica Incorporated.
O. "UNFORESEEABLE EMERGENCY" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (within the meaning of Code Section 152(a)) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
-3-
<PAGE>
SECTION III.
ELIGIBILITY.
Each director of the Company and each director of any Subsidiary of the
Company shall be eligible to participate in the Plan provided any such director
is not an employee of the Company or an employee of any Subsidiary of the
Company.
-4-
<PAGE>
SECTION IV.
PROCEDURES RELATING TO DEFERRAL ELECTIONS.
1. SUBMISSION TO CORPORATE SECRETARY. Any eligible director wishing
to participate in the Plan must submit a Deferral Election to the Corporate
Secretary at 500 Woodward, Detroit, Michigan 48226-3391 prior to the beginning
of the calendar year during which the fees are to be earned. However, any
newly-appointed or newly-elected director may submit a Deferral Election within
sixty days of his or her appointment or election. A Deferral Election may cover
all or any portion of an individual's Director Fees.
2. IRREVOCABILITY. Deferral Elections may not be modified or
revoked once a director has rendered the services that entitle the director to
the fees. If a director has submitted a Deferral Election relating to fees to
be earned in the future, he or she may modify such election by submitting a new
Deferral Election prior to the beginning of the calendar year in which the fees
will be earned. Any such Deferral Election will supersede any previous Deferral
Election as it related to fees to be earned in future years.
3. CANCELLATION. A Deferral Election may be cancelled by submitting
a Cancellation of Deferral Election. A director who cancels a Deferral Election
may not submit a new Deferral Election before the elapse of at least twelve
months from the effective date of the cancellation.
-5-
<PAGE>
SECTION V.
FEE DEFERRAL ACCOUNTS AND
CREDITING OF EARNINGS THEREON.
Director Fees which have been deferred under the Plan shall be credited to
a Fee Deferral Account maintained by the Company. As of the last day of each
month, each Fee Deferral Account shall be adjusted as follows:
A. The account shall first be charged with any distributions made during
the month;
B. The account shall then be credited with earnings for the month.
Earnings shall be computed by multiplying the balance of the account after the
adjustment referred to in Subsection A. by a fraction, the numerator of which is
the 5-year United States Treasury note yield (asked) as of the last business day
of the preceding quarter as published in the Wall Street Journal, and the
denominator of which is 12; and
C. The account shall then be credited with the amount, if any, of
Director Fees deferred during that month.
-6-
<PAGE>
SECTION VI.
DISTRIBUTION OF DEFERRED FEES.
A. TIME AND MANNER. Distribution of Fee Deferral Accounts shall be made
at such time and in such manner, i.e., a lump sum or installments, as the
Participant has specified in the Deferral Election(s) submitted to the Corporate
Secretary. A lump sum distribution shall be made on January 15th of the year
selected for distribution or, if the Participant has chosen to receive
installment payments, such installments shall commence on January 15th of the
year selected for installments to commence.
B. INSTALLMENT PAYMENTS. Installment payments under an installment
payment option may not exceed ten years. The amount of each installment payment
shall be determined by multiplying the balance of the Fee Deferral Account on
the date the installment is scheduled to be paid by a fraction, the numerator of
which is one and the denominator of which is the number of unpaid installments
remaining at such time. If a Participant who is receiving installment payments
dies prior to receiving the balance of his or her account, the unpaid balance
shall be paid in one lump sum to the Participant's Beneficiary(ies) not later
than the 15th day of the month following the month in which the Participant's
death occurred.
C. HARDSHIP DISTRIBUTIONS. In the event of an Unforeseeable Emergency
involving a Participant which occurs prior to distribution of the entire balance
of the Participant's Fee Deferral Account, the Committee may, in its sole
discretion, distribute to the Participant in a single sum an amount equal to
such portion of such account as shall be necessary, in the judgment of the
Committee, to alleviate the financial hardship occasioned by the
-7-
<PAGE>
Unforeseeable Emergency. Any Participant desiring a distribution under the Plan
on account of an Unforeseeable Emergency shall submit to the Committee a written
request for such distribution which sets forth in reasonable detail the
Unforeseeable Emergency which would cause the Participant severe financial
hardship, and the amount which the Participant believes to be necessary to
alleviate the financial hardship. In determining whether to grant any requested
hardship distribution, the Committee shall adhere to the requirements of Section
1.457-2(h)(4) of the Income Tax Regulations (or to any successor regulations
dealing with the same subject matter), the provisions of which are incorporated
herein by reference.
D. CASH OUT DISTRIBUTIONS. If, at the time an installment distribution
of a Fee Deferral Account in the name of any Participant is scheduled to
commence, the fair market value of such account does not exceed $10,000, then,
notwithstanding an election by the Participant that such account be distributed
in installments, the balance of such account shall be distributed to the
Participant in a single sum on or about the date the first installment is
scheduled to be made.
-8-
<PAGE>
SECTION VII.
DESIGNATION OF BENEFICIARY.
Upon becoming a Participant of the Plan, each director shall submit to the
Corporate Secretary a Beneficiary Designation on the form attached as Exhibit
"C" designating one or more Beneficiaries to whom payments otherwise due the
Participant shall be made in the event of the Participant's death before
distribution of the Participant's Fee Deferral Account has been completed. A
Beneficiary Designation will be effective only if it is signed by the
Participant and submitted to the Corporate Secretary before the Participant's
death. Any Beneficiary Designation submitted to the Corporate Secretary will
supersede any previous Beneficiary Designation so submitted. If the primary
beneficiary shall predecease the Participant or the primary beneficiary and the
Participant die in a common disaster under such circumstances that it is
impossible to determine who survived the other, amounts remaining unpaid at the
time of the Participant's death shall be paid to the alternate beneficiary(ies)
who survive the Participant. If there are no alternate beneficiaries living or
in existence at the date of the Participant's death, the balance of the account
shall be paid in one lump sum to the legal representative of the Participant's
estate.
-9-
<PAGE>
SECTION VIII.
MISCELLANEOUS PROVISIONS.
A. NONALIENATION OF BENEFITS. Neither the Participant nor any
Beneficiary designated by him or her shall have any right to alienate, assign,
or encumber any amount that is or may be payable hereunder, nor may any such
amount be subjected to attachment, garnishment, levy, execution or other legal
or equitable process for the debts, contracts, liabilities, engagements or acts
of any Participant or Beneficiary.
B. ADMINISTRATION OF PLAN. Full power and authority to construe,
interpret, and administer the Plan shall be vested in the Directors' Committee
of the Board of Directors of the Company. To the extent permitted by law, the
Committee may delegate any authority it possesses to the Plan Administrator. To
the extent the Committee has delegated authority concerning a matter to the Plan
Administrator, any reference in the Plan to the "Committee" insofar as it
pertains to such matter, shall refer likewise to the Plan Administrator.
Decisions of the Committee shall be final, conclusive, and binding upon all
parties.
C. AMENDMENT OR TERMINATION. The Board of Directors of the Company may
amend or terminate this Plan at any time. Any amendment or termination of this
Plan shall not affect the rights of Participants or Beneficiaries to the amounts
in Fee Deferral Accounts at the time of such amendment or termination. The Plan
Administrator may make any amendments to the Plan, including forms under the
Plan, recommended by the Company's legal counsel which are necessary or
appropriate to keep the Plan and forms
-10-
<PAGE>
in compliance with applicable laws. The Company reserves the right to
accelerate distribution of fees deferred hereunder in the event the Plan is
terminated.
D. EFFECTIVE DATE. This Plan is intended to constitute an amendment and
restatement of a prior plan maintained by the Company captioned "Comerica
Incorporated Plan for Deferring the Payment of Directors' Fees." The version of
the Plan contained in this document shall be effective to defer monies to be
earned from and after January 1, 1997, and the earnings rate contained in this
version of the Plan shall apply to existing accounts under the Plan beginning
January 1, 1997. Except for the earnings rate, monies deferred under prior
versions of the Plan shall remain subject to prior deferral elections.
E. STATEMENTS TO PARTICIPANTS. Statements will be provided to
Participants under the Plan on at least an annual basis.
F. NONFORFEITABILITY OF PARTICIPANT ACCOUNTS. Each Participant shall be
fully vested in his or her Fee Deferral Account.
G. SUCCESSORS BOUND. The contractual agreement between Comerica
Incorporated and each Participant resulting from the execution of a Deferral
Election shall be binding upon and inure to the benefit of Comerica
Incorporated, its successors and assigns, and to the Participant and to the
Participant's heirs, executors, administrators and other legal representatives.
H. GOVERNING LAW AND RULES OF CONSTRUCTION. This Plan shall be governed
in all respects, whether as to construction, validity or otherwise, by
applicable federal law and, to the extent that federal law is inapplicable, by
the laws of the State of Michigan. Each provision of this Plan shall be treated
as severable, to the end that, if any one or more
-11-
<PAGE>
provisions shall be adjudged or declared illegal, invalid or unenforceable, this
Plan shall be interpreted, and shall remain in full force and effect, as though
such provision or provisions had never been contained herein. It is the
intention of Comerica Incorporated that the Plan established hereunder be
"unfunded" for income tax purposes, and the provisions hereof shall be construed
in a manner to carry out that intention.
I. OWNERSHIP OF FEE DEFERRALS. Title to and beneficial ownership of any
assets, of whatever nature, which may be allocated by Comerica Incorporated to
any Fee Deferral Account in the name of any Participant shall at all times
remain with Comerica Incorporated, and no Participant or Beneficiary shall have
any property interest whatsoever in any specific assets of Comerica Incorporated
by reason of the establishment of the Plan. The rights of each Participant and
Beneficiary hereunder shall be limited to enforcing the unfunded, unsecured
promise of Comerica Incorporated to pay benefits under the Plan, and the status
of any Participant or Beneficiary shall be that of an unsecured general creditor
of Comerica Incorporated.
-12-
<PAGE>
EXHIBIT "A"
COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN
NOTICE OF ELECTION TO DEFER
THE PAYMENT OF DIRECTORS' FEES
A director who wishes to defer fees should check applicable boxes, complete
the other portions of the form, sign and date the form and return it to:
Secretary
Comerica Incorporated
500 Woodward Avenue
33rd Floor
Detroit, Michigan 48226-3391
A. BOARD ON WHICH I SERVE AS DIRECTOR:
/ / Comerica Incorporated
/ / Comerica Bank
/ / Comerica Bank-California
/ / Comerica Bank-Texas
/ / Comerica Bank & Trust, F.S.B.
B. ELECTION TO DEFER FEES. Pursuant to provisions of the
above-referenced Plan, I hereby elect to have the fees specified below which
become payable to me for rendering services as a member of the Board of
Directors on which I serve deferred in the manner specified below. It is
understood and agreed that this election shall become effective on the first day
of the calendar year following receipt of this Notice of Election by the
Secretary of Comerica Incorporated or on the first day of the month following
receipt thereof by such Secretary if I am newly-eligible to participate in the
Plan. I understand that this election shall be irrevocable with respect to fees
once I have performed the services which entitle me to receive such fees. This
election shall continue in effect until I modify or revoke it.
C. PERCENTAGE OF FEES TO BE DEFERRED
% of my Director Fees (Select up to 100%)
_____
A-1
<PAGE>
D. YEAR DISTRIBUTION OF DEFERRED FEES IS TO COMMENCE: 19 20
___ ___
Payments will be made or commence on January 15th of the year selected.
E. PAYMENT METHOD DESIRED:
/ / Lump Sum
/ / Installments over ____ years (you may choose 2 to 10 years).
(The balance of any Fee Deferral Account will be distributed in
one lump sum to the director's designated beneficiary if the
director dies before receipt of all installment payments).
F. FREQUENCY OF INSTALLMENTS:
/ / Annually
/ / Quarterly
Date:
-------------------------- -----------------------------------
Signature of Director
A-2
<PAGE>
EXHIBIT "B"
COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN
NOTICE OF CANCELLATION OF DEFERRAL ELECTION
A director who wishes to cancel a deferral election should sign and date
this form and return it to:
Secretary
Comerica Incorporated
500 Woodward Avenue
33rd Floor
Detroit, Michigan 48226-3391
Pursuant to provisions of the above-reference Plan, I hereby cancel my
deferral election under the Plan effective as of the first day of the month
following your receipt of this Notice of Cancellation of Deferral Election.
This cancellation shall apply only to unearned fees that would, but for this
cancellation, be deferred under my prior deferral election. Any fees I have
previously elected to defer that have already been earned through my rendering
of services shall remain subject to my prior deferral election.
Date:
-------------------------- -----------------------------------
Signature of Director
B-1
<PAGE>
EXHIBIT "C"
COMERICA INCORPORATED
DIRECTOR FEE DEFERRAL PLAN
BENEFICIARY DESIGNATION FORM
A director who is submitting an election to defer fees should complete this
form, sign and date it and return it to:
Secretary
Comerica Incorporated
500 Woodward Avenue
33rd Floor
Detroit, Michigan 48226-3391
Pursuant to the provisions of the Comerica Incorporated Director Fee
Deferral Plan (the "Plan"), I hereby designate the person(s) named below as
beneficiary of all sums held under the Plan which are owing to me at the time of
my death.
A. PRIMARY BENEFICIARY (Check one box and provide related information):
1. / / My spouse.
Name of Spouse Social Security #
--------------------- -----------
Address
-----------------------------------------
-----------------------------------------
2. / / The successor trustee(s) of my revocable living trust.
Caption Appearing on Trust Agreement
--------------------------------
Date of Original or Amended and Restated Trust Agreement
------------
Employer Identification Number
--------------------------------
3. / / The executor, administrator or personal representative of my
estate.
C-1
<PAGE>
4. / / Other (Each beneficiary must be over 18 years of age).
a. Name of Beneficiary
---------------------
Social Security #
---------------------
Relationship to Director
---------------------------------
Address
---------------------------------------
---------------------------------------
Portion of account to be distributed
to this beneficiary: %
--------------
b. Name of Beneficiary
--------------------
Social Security #
--------------------
Relationship to Director
--------------------------------
Address
--------------------------------------
--------------------------------------
Portion of account to be distributed
to this beneficiary: %
------------
(If you wish to name more than two beneficiaries, please submit
duplicate copies of this form and insert appropriate percentages.
Please sign and date each copy of this form which is submitted.)
B. ALTERNATE BENEFICIARY
If all persons named above as my primary beneficiary predecease me or such
person(s) and I die in a common disaster under such circumstances that it is
impossible to determine who survived the other, then I designate the following
person as alternate beneficiary to receive the sums that would otherwise have
been payable to the primary beneficiary if the primary beneficiary had survived.
Name of Alternate Beneficiary
-----------------------------------
Social Security or Employer Identification #
--------------------
Address
-----------------------------------------
-----------------------------------------
C-2
<PAGE>
This designation supersedes any previous Beneficiary Designation I may have
made with respect to deferred fees under the Plan, including prior versions of
the Plan. I reserve the right to change the beneficiary(ies) named herein in
accordance with the terms of the Plan. If there are no alternate beneficiaries
living or in existence at the date of my death, I understand that the balance of
my account will be paid to the legal representative of my estate.
------------------------------------ ---------------------------------
Signature of Director Date
------------------------------------ ---------------------------------
Signature of Witness Date
Witness may not be a named beneficiary
C-3
<PAGE>
Exhibit 10.4
BENEFIT EQUALIZATION PLAN FOR
EMPLOYEES OF COMERICA INCORPORATED
PREAMBLE
Comerica Incorporated maintains the Comerica Incorporated Retirement Plan
and Manufacturers National Corporation formerly maintained the Manufacturers
National Corporation Pension Plan. In June of 1992, Manufacturers National
Corporation merged into Comerica Incorporated. Effective as of December 31,
1993, the Manufacturers National Corporation Pension Plan was merged into the
Comerica Incorporated Retirement Plan.
Effective as of October 28, 1980, Comerica Incorporated established the
"Comerica Incorporated Nonqualified Retirement Income Guarantee Plan", the
purpose of which is to restore benefits not available to participants of the
Comerica Incorporated Retirement Plan due to tax law limitations. Manufacturers
National Corporation established the "Benefit Equalization Plan For Employees of
Manufacturers National Corporation" effective as of January 1, 1983 in order to
restore benefits not available to participants of the Manufacturers National
Corporation Pension Plan due to tax law limitations.
Due to the merger of the Manufacturers National Corporation Pension Plan
into the Comerica Incorporated Retirement Plan the raison d'etre for the Benefit
Equalization Plan For Employees of Manufacturers National Corporation
disappeared. As a consequence, the Board of Directors of Comerica Incorporated
approved the merger
-1-
<PAGE>
of the Comerica Incorporated Nonqualified Retirement Income Guarantee Plan into
the Benefit Equalization Plan For Employees of Manufacturers National
Corporation, the renaming of the latter plan as the Benefit Equalization Plan
For Employees of Comerica Incorporated and the amendment and restatement of such
plan as renamed to provide as set forth herein.
-2-
<PAGE>
Section 1. PURPOSE AND EFFECTIVE DATE.
The sole purpose of this Plan is to assure that Participants who have a
vested right to receive benefits under the Qualified Plan will receive the same
value of benefits they would receive but for the limitations on contributions
and benefits contained in ERISA and Sections 401(a)(17), 415 and 416 of the
Code, and, also, but for the nonrecognition under the Qualified Plan of deferred
incentive compensation under the Manufacturers Incentive Compensation Plans.
This Plan is not intended to and shall not be construed so as to provide any
Participant receiving benefits under the Qualified Plan, and where applicable,
this Plan, with benefits which, in the aggregate, either have a greater or
lesser value than the benefit which would result from the calculation made under
the applicable provisions of the Qualified Plan without giving effect to the
benefit limitation provisions of ERISA and the Code and regulations promulgated
thereunder, or the nonrecognition of compensation deferred under the
Manufacturers Incentive Compensation Plans. The provisions of this restated
Plan shall be effective as of December 31, 1993.
-3-
<PAGE>
Section 2. DEFINITIONS.
The following words and phrases, wherever capitalized, shall have the
following meanings respectively:
A. "CODE" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
B. "COMPANY" means Comerica Incorporated, a Delaware corporation.
C. "ERISA" means the Employee Retirement Income Security Act of 1974
(Public Law 93-406), as from time to time amended.
D. "MANUFACTURERS INCENTIVE COMPENSATION PLANS" means the following
plans: (i) the Manufacturers National Corporation Executive Incentive Plan;
(ii) the Manufacturers National Corporation Trust Investment Incentive Plan;
(iii) the Manufacturers National Corporation Institutional Trust Sales and
Servicing Plans; (iv) the Manufacturers National Corporation Private Banking
Sales and Servicing Plans; (v) the Manufacturers National Corporation incentive
plans for: Foreign Exchange Trading, Mergers and Acquisitions, and Commercial
Mortgage Banking Services; and (vi) any similar incentive compensation plans
formerly maintained by Manufacturers National Corporation for employees of its
business units as determined by the Company's Employee Benefits Committee.
E. "PARTICIPANT" means an individual who at the time in question is
participating in the Plan pursuant to Section 3.
-4-
<PAGE>
F. "PLAN" means the plan set forth herein which is to be known as the
"Benefit Equalization Plan For Employees of Comerica Incorporated."
G. "QUALIFIED PLAN" means the Comerica Incorporated Retirement Plan (1994
Amendment and Restatement).
-5-
<PAGE>
Section 3. ELIGIBILITY AND PARTICIPATION.
Any participant of the Qualified Plan whose benefits thereunder are limited
by the provisions of Sections 401(a)(17), 415 and/or 416 of the Code or by the
nonrecognition under the Qualified Plan of compensation deferred under any of
the Manufacturers Incentive Compensation Plans shall automatically participate
in and accrue benefits under this Plan.
-6-
<PAGE>
Section 4. AMOUNT OF BENEFITS.
The benefits payable under this Plan shall equal the excess, if any, of:
(a) the benefits which would have been paid to such Participant for his or
her life only at normal retirement under the Qualified Plan if the
provisions of such plan were administered and benefits paid without
regard to the special benefit limitations added to such plan to
conform it to Sections 401(a)(17), 415 and 416 of the Code, and
including in the benefit calculation compensation of the Participant
which was deferred under the Manufacturers Incentive Compensation
Plans and which is not otherwise recognized under the Qualified Plan,
over
(b) the benefits which would be payable to such Participant for his or her
life only at normal retirement under the Qualified Plan;
such excess then to be converted to its actuarial equivalent (as that term is
defined in the Qualified Plan) to account for (i) the benefit commencement date
of the benefit under this Plan, using the early retirement pension reduction
factors set forth in the Qualified Plan, and (ii) the payment method determined
pursuant to the following paragraph and computed in each case on the assumption
that the assets in the Qualified Plan are sufficient to pay all vested benefits.
(If the benefit commencement date under this Plan is earlier than the earliest
date upon which benefits are payable to such Participant under the Qualified
Plan, then such excess
-7-
<PAGE>
shall be further reduced by 5/12 percent for each month or fraction thereof from
the commencement of the benefit under this Plan until the date on which such
Participant would attain age 55.)
Calculation of the amount of benefits under this Plan shall disregard the
method of payment selected by the Participant under the Qualified Plan. The
method of payment under this Plan shall be in the form of a 50% joint and
survivor annuity with the Participant's spouse as the joint annuitant. The
benefit under this Plan shall be calculated using the age of the joint annuitant
(if any) at the date benefits commence under this Plan. If the Participant has
no spouse, then the benefit under this Plan shall be paid in the form of an
annuity for the life of the Participant.
Nothing herein shall restrict the right of the Company to amend the
Qualified Plan and the computations under this section shall be made according
to the terms of the Qualified Plan in effect at the time the benefits first
become payable.
-8-
<PAGE>
Section 5. PAYMENT OF BENEFITS AND ESTABLISHMENT OF TRUST.
A. Payment of benefits under this Plan shall commence on the first day of
the month next succeeding the day on which the Participant terminates employment
with the Company.
B. The Company may establish a Trust to be entitled "Trust for the
Benefit Equalization Plan for Employees of Comerica Incorporated" with Comerica
Bank of Detroit, Michigan as Trustee. If the Company establishes a Trust, the
Company intends, but is not obligated to, fund the Trust with an amount which,
on the same actuarial basis employed with respect to the funding of the
Qualified Plan, is expected to provide funds equal to the sum of the expected
benefits under this Plan. The Company shall augment the funds in the Trust from
time to time as required. The assets of the Trust shall at all times be subject
to levy by the Company's general creditors and Participants of this Plan shall
have no greater right to the Trust assets than other unsecured general creditors
of the Company.
-9-
<PAGE>
Section 6. RIGHTS OF EMPLOYEES.
A. Except to the extent provided in Section 7 below, no employee or
spouse or beneficiary of an employee shall at any time have any vested rights to
receive the benefits provided by this Plan.
B. No right or interest of any Participant in the Plan shall be
assignable or transferable, otherwise than by will or the laws of descent or
pursuant to a beneficiary designation, nor shall such right or interest be
subject to any lien directly, by operation of law, or otherwise, including
execution, levy, garnishment, attachment, pledge and bankruptcy.
-10-
<PAGE>
Section 7. AMENDMENT AND DISCONTINUANCE.
The Company expects to continue this Plan indefinitely, but reserves the
right to amend or discontinue it if, in its sole judgment, such an amendment or
discontinuance is deemed necessary or desirable. In the event the Company does
amend or discontinue this Plan, the Company shall be liable for any benefits
that shall have accrued under this Plan to those persons who are eligible under
Section 3 as of the date of such amendment or discontinuance, such accrued
benefits to be determined as though the employee had terminated employment at
the date of such amendment or discontinuance.
-11-
<PAGE>
Section 8. ADMINISTRATION.
A. This Plan shall be administered by the Employee Benefits Committee of
the Company as an unfunded plan which is not intended to meet the qualification
requirements of Section 401 of the Code. The Committee shall have full power to
construe and interpret the Plan, and the Committee's decisions in all matters
involving the interpretation and application of this Plan shall be conclusive.
The claims procedure of the Qualified Plan shall apply to this Plan.
B. The Plan shall at all times be maintained by the Company and
administered by the Committee as a plan wholly separate from the Qualified Plan.
-12-
<PAGE>
Section 9. ADDITIONAL BENEFIT.
In addition to the purpose of Section 1 of this Plan, this Section shall,
for individuals who are (or may be later) specifically named by resolution of
the Board of Directors of the Company, increase the benefit determined under
Section 4(a) of this Plan by including in the benefit calculation all of the
individual's service with the Company (and its predecessors) from the date of
the individual's initial participation in the Qualified Plan until the
individual's retirement date and disregarding any breaks in service occurring
before January 1, 1990; provided, however, that each named individual shall be
entitled to an additional benefit derived from this Section only if the
individual's employment with the Company continues until or after the date he or
she attains age 62.
Each individual who is specifically named by resolution of the Board of
Directors to be entitled to the benefit established by this Section shall
receive such benefits upon the condition that during the period such individual
is entitled to payments of deferred compensation under this Section, he will not
directly or indirectly enter into or engage in any banking or related businesses
in the geographic area served by the Company either as an individual on his own
account, as a partner or joint venturer, as an employe or agent, or as an
officer or director of a competing organization.
The Compensation Committee of the Board of Directors of the Company may, in
its sole discretion and by way of a resolution of
-13-
<PAGE>
the Committee, waive or modify the age 62 employment requirement and the
noncompetition requirement for any named individual as well as any other
restrictions imposed on the individuals by the provisions hereof. Any
additional benefit derived from this Section shall be treated as a benefit
payable under Section 4 for the purpose of Sections 4, 5, 6, and 7 of this Plan.
-14-
<PAGE>
Exhibit 10.10
COMERICA INCORPORATED
Comerica Tower at Detroit Center
500 Woodward
Detroit, Michigan 48226
Date
Dear FIELD(1)
This will confirm the agreement (Agreement) between you and Comerica
Incorporated (the Corporation) concerning indemnification of you by the
Corporation with respect to expenses, liabilities and losses including
attorneys' fees, judgments, fines and amounts paid or to be paid in settlement
actually and reasonably incurred by you (indemnified costs) in connection with
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (proceeding) (whether or not by or in
the right of the Corporation) in which you are involved, as a party or
otherwise, by reason of your acting or having acted at any time as a director or
officer of the Corporation.
In view of recent developments with respect to the terms, availability and
cost of directors and officers liability insurance (D&O Insurance), the
Corporation is entering into this Agreement pursuant to the authority contained
in its Bylaws and the provisions of the General Corporation Law of Delaware
(Delaware Law), including the provision thereof to the effect that the
indemnification authorized thereby is not exclusive. That provision of Delaware
Law suggests that contracts may be entered into between a corporation organized
under Delaware Law and its directors and officers with respect to
indemnification of such persons.
In order to induce you to continue to act as a director or officer of the
Corporation, the Corporation desires to provide you with the broadest indemnity
which it is permitted by law to extend.
In consideration of the foregoing and of your service as a director or
officer after the date of this Agreement the Corporation agrees as follows:
BASIC INDEMNIFICATION ARRANGEMENT
1. To the fullest extent permitted by applicable law and regulation,
as currently in effect or hereafter amended, the Corporation
shall indemnify you and hold you harmless from and against, and
if paid by you, to reimburse you for, any indemnified costs
incurred by you in connection with any proceedings arising by
reason of the fact that you are or at any time in the past were a
director or officer of the Corporation or are or were serving or
at any time shall serve at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise including
service with respect to employee benefit plans, to the extent of
the highest and most advantageous to you of any combination of
(a) the benefits provided by the indemnification provisions of
the Corporation's Bylaws as in effect on the date hereof; (b) the
benefits provided by the indemnification provisions of the
Corporation's Bylaws in effect at the time such indemnified costs
are incurred by you; (c) the benefits allowable under the
Delaware Law in effect at the date hereof or as the same may
hereafter be amended; (d) the benefits allowable under the law of
the jurisdiction under which the Corporation is organized at the
time
<PAGE>
such indemnified costs are incurred by you; (e) the benefits available
under any D&O Insurance or other liability insurance obtained by the
Corporation; and (f) the benefits available to the fullest extent
authorized to be provided to you by the Corporation under the
non-exclusivity provisions of the Bylaws of the Corporation and the
Delaware Law.
2. To the fullest extent permitted by applicable law and regulation,
as currently in effect or hereafter amended, the Corporation
shall pay any and all expenses in connection with a proceeding
arising by reason of the fact that you are or at any time in the
past were a director or officer of the Corporation as the same
are incurred and in advance of the final disposition of any such
proceeding, regardless of whether the directors of the
Corporation have previously authorized such payments, upon
receipt from you, unless not required by the law of the state of
incorporation of the Corporation, of an undertaking by or on your
behalf to repay such amount if it shall ultimately be determined
that you are not entitled to be indemnified by the Corporation
for such expenses under applicable law, the Corporation's Bylaws
or this Agreement or otherwise.
SPOUSAL INDEMNIFICATION
The Corporation further agrees to indemnify your spouse to whom you are
legally married at any time you are covered under the indemnification provided
herein (even if you do not remain married to such spouse during the entire
period of coverage) against third party actions, suits or proceedings or direct
or derivative actions or suits for the same period, to the same extent and
subject to the same standards, limitations, obligations and conditions you are
provided indemnification herein in the event your spouse (or former spouse)
becomes involved in an action, suit or proceeding solely by reason of your
spouse's status as your spouse, including without limitation, any action, suit
or proceeding that seeks damages recoverable from marital community property,
jointly-owned property or property purported to have been transferred from you
to your spouse (or former spouse). Your spouse or former spouse may also be
entitled to advancement of expenses to the same extent you would be hereunder,
and the Corporation may maintain insurance to cover its obligation hereunder
with respect to your spouse (or former spouse) or set aside assets in a trust or
escrow fund for such purpose.
ENFORCEMENT COSTS
To pay any and all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by you to enforce your rights hereunder.
INSURANCE
The Corporation will purchase and maintain in effect for your benefit one
or more valid, binding and enforceable policy or policies of D&O Insurance
provided that the Corporation shall not be required to purchase and maintain the
same if such insurance is not reasonably available or if in the reasonable
business judgment of the then directors of the Corporation the cost for such
insurance is substantially
2
<PAGE>
disproportionate to the coverage provided or the coverage provided is so limited
by exclusions that the benefits provided by such insurance are insufficient.
The Corporation agrees that the provisions hereof shall remain in effect
regardless of whether D&O Insurance or other liability insurance coverage is at
any time obtained or retained by the Corporation and that any benefits granted
to you hereunder shall be in addition to any indemnification benefits provided
to you by any entity other than the Corporation; except that any payments made
under an insurance policy or from any other source shall reduce the obligations
of the Corporation hereunder.
PARTIAL INDEMNIFICATION
If you are entitled under any provision of this Agreement to
indemnification for some claims but not as to other claims or for some portion
of expenses but not for the total amount thereof, the Corporation shall
nevertheless indemnify you for the portion of such claims and expenses to which
you are entitled to indemnification.
LIMITATIONS ON INDEMNIFICATION
No indemnification, reimbursement or payment shall be required of the
Corporation hereunder except to the extent it is provided from policies of
insurance carried by the Corporation:
(1) with respect to any claim as to which you shall have been finally
adjudged by a court of competent jurisdiction to (a) have acted
with bad faith, (b) be liable for acts or omissions which involve
intentional misconduct, a knowing violation of law or of your
duty of loyalty to the Corporation or its shareholders, (c) have
authorized a redemption of or dividend on the Corporation's stock
which is prohibited by Delaware Law or (d) have effected any
transaction from which you have derived an improper personal
benefit within the meaning of Section 102(b)(7) of the Delaware
Law, except to the extent that such court, or another court
having jurisdiction, shall determine upon application that,
despite the adjudication of liability, but in view of all the
circumstances of the case, you are fairly and reasonably entitled
to indemnity for such indemnified costs as the court shall deem
proper;
(2) with respect to any payment determined by final judgment of a
court, or other tribunal having jurisdiction over the question,
to be unlawful; and
(3) with respect to any obligation of yours under Section 16(b) of
the Securities Exchange Act of 1934, as amended. and
(4) with respect to any liability or expense (including any penalty,
judgment or legal expense) sustained in connection with an
administrative or civil enforcement action which is initiated by
a federal banking agency and results in a final adjudication or
finding against you; if such indemnification, reimbursement or
payment, on the date thereof, is a prohibited indemnification
payment under Part 359 of Title 12, Chapter
3
<PAGE>
III of the Code of Federal Regulations as amended and in effect
on the date of such payment.
ESTABLISHMENT OF TRUST
The Corporation may (but shall not be obligated to) dedicate assets of the
Corporation as collateral security for the funding of its obligations under this
Agreement and under similar agreements with other directors, officers, employees
and agents by depositing assets or bank letters of credit in trust or escrow,
establishing reserve accounts, funding self-insurance arrangements or otherwise
on such terms as the Corporation may determine.
LEGAL DEFENSE
You shall provide to the Corporation prompt written notice of any
proceeding brought, threatened, asserted or commenced against you with respect
to which you may assert a right to indemnification hereunder. You shall not
make any admission or effect any settlement without the Corporation's written
consent unless you shall have determined to undertake your own defense in such
matter and have waived the benefits of this Agreement. The Corporation shall
not settle any proceeding to which you are a party in any manner which would
impose any penalty on you without your written consent. Neither you nor the
Corporation will unreasonably withhold consent to any proposed settlement.
Except as otherwise provided below, to the extent that it may wish to do so, the
Corporation jointly with any other indemnifying party similarly notified will be
entitled to assume your defense in any proceeding, with counsel mutually
satisfactory to you and the Corporation. After notice from the Corporation to
you of the Corporation's election so to assume such defense, the Corporation
will not be liable to you under this Agreement for any legal or other expenses
subsequently incurred by you in connection with the defense thereof other than
reasonable costs of investigation or as otherwise provided below. You shall
have the right to employ counsel in such proceeding but the fees and expenses of
such counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at your expense unless (a) the employment of counsel by
you has been authorized by the Corporation, (b) you shall have reasonably
concluded that there may be a conflict of interest between you and the
Corporation in the conduct of the defense of such action, or (c) the Corporation
shall not in fact have employed counsel to assume the defense of such action; in
each of these cases the fees and expenses of counsel shall be at the expense of
the Corporation. The Corporation shall not be entitled to assume your defense
in any proceeding brought by or on behalf of the Corporation or as to which you
shall have made the conclusion provided for in clause (b) above.
INDEMNIFICATION - SECURITIES ACT LIABILITIES
You agree that it will not be a breach of this Agreement for the
Corporation to undertake with the Securities and Exchange Commission in
connection with the registration for sale of any securities of the Corporation
that, in the event a claim for indemnification against liabilities under the
Securities Act of 1933 (Act) (other than the payment of expenses incurred in the
successful defense of any such action, suit or proceeding) is asserted in
connection with such securities being registered, the Corporation will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of competent jurisdiction the question of whether
or not such indemnification by it is against public policy as
4
<PAGE>
expressed in the Act and will be governed by the final adjudication of such
issue.
NO PERSONAL LIABILITY
You agree that neither the stockholders nor the directors nor any officer,
employee, representative or agent of the Corporation shall be personally liable
for the satisfaction of the Corporation's obligations under this Agreement, and
you shall look solely to the assets of the Corporation for satisfaction of any
claims hereunder.
CONTINUING RIGHTS
Your rights and the obligation of the Corporation hereunder shall continue
in full force and effect despite any subsequent amendment or modification of the
Bylaws as such are in effect on the date hereof or any action by the directors
or shareholders of the Corporation.
DURATION OF AGREEMENT
This Agreement shall continue until and terminate upon the later of: (a)
10 years after the date that you shall have ceased to serve as a director,
officer, employee, agent or fiduciary of the Corporation or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which you served at the request of the Corporation; or (b) the final
termination of all pending proceedings in respect of which rights of
indemnification or advancement of expenses are granted under this Agreement.
GOVERNING LAW
This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the laws of the State of Delaware and the
rights provided to you hereunder shall not be deemed exclusive of any other
rights you may be or become entitled to in respect of indemnity for your actions
as a director or officer of the Corporation.
SEVERABILITY
The provisions of this Agreement are severable and if any provision or
portion hereof, shall for any reason be held illegal, invalid or unenforceable,
such determination shall not affect any other provision or portion hereof or any
rights existing otherwise than under this Agreement.
SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, personal representatives,
successors and assigns.
5
<PAGE>
COMERICA INCORPORATED
By ________________________________
George W. Madison
Executive Vice President
General Counsel and Corporate
Secretary
Accepted:
____________________________________
Director or Officer
6
<PAGE>
EXHIBIT 10.5
COMERICA INCORPORATED
DEFERRED COMPENSATION PLAN
(1997 AMENDMENT AND RESTATEMENT)
<PAGE>
COMERICA INCORPORATED
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE I. PURPOSE AND INTENT. . . . . . . . . . . . . . . . . . . . . . I-1
ARTICLE II. DEFINITIONS
A. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .II-1
(1) Account . . . . . . . . . . . . . . . . . . . . . . . . . . .II-1
(2) Adoption Agreement. . . . . . . . . . . . . . . . . . . . . .II-1
(3) Beneficiary(ies). . . . . . . . . . . . . . . . . . . . . . .II-1
(4) Board . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-1
(5) Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-1
(6) Comerica Stock Fund . . . . . . . . . . . . . . . . . . . . .II-1
(7) Comerica Stock. . . . . . . . . . . . . . . . . . . . . . . .11-1
(8) Committee . . . . . . . . . . . . . . . . . . . . . . . . . .II-1
(9) Compensation. . . . . . . . . . . . . . . . . . . . . . . . .II-1
(10) Compensation Deferral . . . . . . . . . . . . . . . . . . . .II-1
(11) Deferral Period . . . . . . . . . . . . . . . . . . . . . . .II-2
(12) Disabled and Disability . . . . . . . . . . . . . . . . . . .II-2
(13) Eligible Employee . . . . . . . . . . . . . . . . . . . . . .II-2
(14) Employer. . . . . . . . . . . . . . . . . . . . . . . . . . .II-2
(15) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-2
(16) Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . .II-2
(17) Participant . . . . . . . . . . . . . . . . . . . . . . . . .II-2
(18) Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-2
(19) Plan Administrator(s) . . . . . . . . . . . . . . . . . . . .II-2
(20) Retirement. . . . . . . . . . . . . . . . . . . . . . . . . .II-2
(21) Section 16 Insider. . . . . . . . . . . . . . . . . . . . . .II-3
(22) Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .II-3
(23) Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . .II-3
(24) Unforeseeable Emergency . . . . . . . . . . . . . . . . . . .II-3
ARTICLE III. ELECTION TO PARTICIPATE IN THE PLAN
A. Completion of Adoption Agreement . . . . . . . . . . . . . . . . III-1
B. Contents of Adoption Agreement . . . . . . . . . . . . . . . . . III-1
C. Effect of Entering Into Adoption Agreement . . . . . . . . . . . III-1
D. Special Rules Applicable to Adoption Agreement
and Deferral of Compensation . . . . . . . . . . . . . . . . . . III-1
(1) Deferral Election to be Made Before
Compensation is Earned. . . . . . . . . . . . . . . . . . . III-1
(2) Irrevocability of Deferral Election . . . . . . . . . . . . III-1
(3) Cancellation of Deferral Election . . . . . . . . . . . . . III-2
E. Deferrals By Committee . . . . . . . . . . . . . . . . . . . . . III-4
- i -
<PAGE>
ARTICLE IV. DEFERRED COMPENSATION ACCOUNTS AND INVESTMENT
OF DEFERRED COMPENSATION
A. Deferred Compensation Accounts . . . . . . . . . . . . . . . . . .IV-1
B. Earnings on Compensation Deferrals . . . . . . . . . . . . . . . .IV-1
C. Contribution of Compensation Deferrals to Trust. . . . . . . . . .IV-1
D. Insulation from Liability. . . . . . . . . . . . . . . . . . . . .IV-2
E. Ownership of Compensation Deferrals. . . . . . . . . . . . . . . .IV-2
F. Special Rule Application to Section 16 Insiders. . . . . . . . . .IV-2
ARTICLE V. DISTRIBUTION OF COMPENSATION DEFERRALS
A. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
(1) Employment Through Deferral Period. . . . . . . . . . . . . . V-1
(2) Termination Prior to End of Deferral Period . . . . . . . . . V-1
(3) Death of Participant Prior to End of
Installment Distribution Period . . . . . . . . . . . . . . . V-2
(4) Hardship Distributions. . . . . . . . . . . . . . . . . . . . V-2
(5) Cash Out Distributions. . . . . . . . . . . . . . . . . . . . V-2
B. Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . V-2
(1) Beneficiary Designation Must be Filed Prior to Participant's
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
(2) Absence of Beneficiary. . . . . . . . . . . . . . . . . . . . V-3
ARTICLE VI. AMENDMENT OR TERMINATION
A. Amendment and Termination of Plan. . . . . . . . . . . . . . . . .VI-1
ARTICLE VII. AUDITING OF ACCOUNTS AND STATEMENTS
TO PARTICIPANTS
A. Auditing of Accounts . . . . . . . . . . . . . . . . . . . . . . VII-1
B. Statements to Participants . . . . . . . . . . . . . . . . . . . VII-1
C. Fees and Expenses of Administration. . . . . . . . . . . . . . . VII-1
ARTICLE VIII. MISCELLANEOUS PROVISIONS
A. Nonforfeitability of Participant Accounts. . . . . . . . . . . .VIII-1
B. Prohibition Against Assignment . . . . . . . . . . . . . . . . .VIII-1
C. No Employment Contract . . . . . . . . . . . . . . . . . . . . .VIII-1
D. Successors Bound . . . . . . . . . . . . . . . . . . . . . . . .VIII-1
E. Prohibition Against Loans. . . . . . . . . . . . . . . . . . . .VIII-1
F. Administration By Committee. . . . . . . . . . . . . . . . . . .VIII-1
G. Governing Law and Rules of Construction. . . . . . . . . . . . .VIII-1
H. Power to Interpret . . . . . . . . . . . . . . . . . . . . . . .VIII-2
I. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . .VIII-2
- ii -
<PAGE>
ARTICLE I.
PURPOSE AND INTENT.
The Plan enables Eligible Employees to defer receipt of all or a portion of
their Compensation to provide additional income for them subsequent to
retirement, disability or termination of employment. It is the intention of
Comerica Incorporated that the Plan cover only employees who are management or
highly-compensated employees within the meaning of sections 201(2), 301(a)(3),
and 401(a)(1) of ERISA.
I-1
<PAGE>
ARTICLE II.
DEFINITIONS.
A. DEFINITIONS. The following words and phrases, wherever capitalized,
shall have the following meanings respectively:
(1) "ACCOUNT(S)" means the account established for each Participant under
Article IV(A) hereof.
(2) "ADOPTION AGREEMENT" means the Adoption Agreement in the form attached
hereto as Exhibit A, as it may be revised from time to time.
(3) "BENEFICIARY(IES)" means the person(s), natural or corporate, in
whatever capacity, designated by a Participant pursuant to this Plan, or the
person otherwise deemed to constitute the Participant's beneficiary under
Article V(B)(2) hereof.
(4) "BOARD" means the Board of Directors of Comerica Incorporated.
(5) "CODE" means the Internal Revenue Code of 1986, as amended.
(6) "COMERICA STOCK FUND" means an investment option established under the
Plan pursuant to which a Participant may request investment of sums deferred
under the Plan in units whose value is tied to the market value of shares of
Comerica Stock.
(7) "COMERICA STOCK" means shares of common stock of Comerica
Incorporated, $5.00 par value.
II-1
<PAGE>
(8) "COMMITTEE" means the Compensation Committee of the Board, or such
other committee appointed by the Board to administer the Plan.
(9) "COMPENSATION" means gross salary from the Employer including base
salary, incentive compensation, bonuses, overtime, commissions and any other
form of cash remuneration approved by the Committee.
(10) "COMPENSATION DEFERRAL(S)" means the amount of Compensation a
Participant has elected to defer, pursuant to an Adoption Agreement and, where
the context requires, shall also include earnings on such amounts.
(11) "DEFERRAL PERIOD" means the period during which a Participant elects
to defer receipt of Compensation under the Plan.
(12) "DISABLED" OR "DISABILITY" means "disabled" under the Comerica
Incorporated Long-Term Disability Plan or under the Comerica Incorporated
Executive Long-Term Disability Plan, whichever such plan covers the individual.
(13) "ELIGIBLE EMPLOYEE" means an individual employed by an Employer who
is: (i) eligible to receive compensation under the Comerica Incorporated Annual
Management Incentive Program; (ii) eligible to receive compensation under an
incentive program sponsored by any business unit of the Employer, provided the
Compensation the individual expects to earn in the year his
II-2
<PAGE>
deferral election is operative is approximately $100,000; or (iii) approved for
participation by the Committee on the basis of high earning potential and other
relevant factors consistent with the Plan.
(14)"EMPLOYER" means Comerica Incorporated, a Delaware corporation, and its
subsidiary corporations, and any successor entity which may succeed the Employer
and its subsidiary corporations.
(15) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(16) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(17) "PARTICIPANT" means an Eligible Employee whose Adoption Agreement has
been accepted by the Committee pursuant to Article III(A) hereof, and who either
has a deferral election currently in effect or an Account balance under the
Plan.
(18) "PLAN" means the unfunded, nonqualified elective deferred compensation
plan the provisions of which are set forth herein, as they may be amended from
time to time.
(19) "PLAN ADMINISTRATOR(S)" means the individual(s) appointed by the
Committee to handle the day-to-day administration of the Plan.
II-3
<PAGE>
(20) "RETIREMENT" means retirement under the Comerica Incorporated
Retirement Plan.
(21) "SECTION 16 INSIDER" means any Participant who is designated by the
Company as a reporting person under Section 16 of the Exchange Act.
(22) "TRUST" means such trust as may be established by Comerica
Incorporated in connection with this Plan.
(23) "TRUSTEE" means the entity selected by Comerica Incorporated as
trustee of the Trust.
(24) "UNFORESEEABLE EMERGENCY" means a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (within the meaning of Code Section 152(a)) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
II-4
<PAGE>
ARTICLE III.
ELECTION TO PARTICIPATE IN THE PLAN.
A. COMPLETION OF ADOPTION AGREEMENT. An Eligible Employee who wishes to
become a Participant in the Plan must complete and sign an Adoption Agreement.
Any Adoption Agreement received by the Committee shall become binding upon the
Committee's acceptance thereof. In the Adoption Agreement, the Employee shall
indicate the Compensation the Participant wishes to defer. An Eligible Employee
must file a separate Adoption Agreement with respect to each year's Compensation
he or she wishes to defer.
B. CONTENTS OF ADOPTION AGREEMENT. Each Adoption Agreement shall: (i)
designate the amount of Compensation to be deferred in whole percentages or in
whole dollars; (ii) request that the Employer defer payment of the Compensation
to the Participant until the year the Participant retires; (iii) state how the
Participant wishes to receive payment of the Compensation Deferrals at
retirement; and (iv) contain other provisions the Committee deems appropriate.
C. EFFECT OF ENTERING INTO ADOPTION AGREEMENT. Upon the Committee's
acceptance of a Participant's Adoption Agreement, the Participant shall be (i)
bound by the provisions of the Plan and by the provisions of any agreement
governing the Trust; (ii) bound by the provisions of the Adoption Agreement; and
(iii) deemed to have
III-1
<PAGE>
assumed the risks of deferral, including, without limitation, the risk of poor
investment performance and the risk that Comerica Incorporated may become
insolvent.
D. SPECIAL RULES APPLICABLE TO ADOPTION AGREEMENTS AND DEFERRAL OF
COMPENSATION.
(1) DEFERRAL ELECTION TO BE MADE BEFORE COMPENSATION IS EARNED. In no
event shall any Compensation which has been earned by a Participant prior to the
date such Participant's Adoption Agreement has been accepted by the Committee be
deferred under the Plan. Further, the effective date of any Adoption Agreement
shall not be earlier than the first day of the calendar year which begins after
the Adoption Agreement is signed by the Participant and accepted by the
Committee. Notwithstanding the preceding sentence, an Adoption Agreement
delivered to the Committee within 60 days of the effective date of the Plan may
defer Compensation to be earned in the remaining portion of the year in which it
is delivered; and, provided further, an Adoption Agreement delivered to the
Committee within 30 days of the date an individual first becomes eligible to
participate in the Plan may defer Compensation to be earned in the remaining
portion of the year in which it is delivered.
(2) IRREVOCABILITY OF DEFERRAL ELECTION. Except as provided in Article
III(D)(3) and V(A)(4) below, the provisions of the Adoption Agreement relating
to a Participant's election to defer
III-2
<PAGE>
Compensation and the Participant's selection of the time and manner of payment
of Compensation Deferrals shall be irrevocable.
(3) CANCELLATION OF DEFERRAL ELECTION. In the event of an Unforeseeable
Emergency, the Committee may, in its sole discretion, permit the Participant to
cancel an election to defer Compensation, in whole or in part, and permit the
Participant to receive at the otherwise scheduled payment date whatever portion
of the amount subject to the deferral election as is necessary, in the judgment
of the Committee, to alleviate the financial hardship occasioned by the
Unforeseeable Emergency.
Any Participant who seeks to cancel a deferral election on account of an
Unforeseeable Emergency shall submit to the Committee a written request which
sets forth in reasonable detail the Unforeseeable Emergency, and the amount of
the Compensation Deferral which the Participant believes to be necessary to
remedy it. In determining whether to grant any Participant's request to cancel
a deferral election on the basis of Unforeseeable Emergency, the Committee shall
adhere to the requirements of Section 1.457-2(h)(4) of the Income Tax
Regulations, the provisions of which are incorporated herein by reference. Any
Participant who is permitted to cancel a deferral election shall not again be
eligible to submit a deferral election until the calendar year following the
calendar year in which such cancellation is permitted.
III-3
<PAGE>
If a Participant receives a hardship distribution under the Comerica
Incorporated Preferred Savings Plan, the Participant's deferral election
hereunder shall be automatically cancelled to the extent it would defer the
Participant's receipt of any Compensation the Participant would earn during a
twelve-month period beginning on the date of the Participant's receipt of such
hardship distribution. Any Participant whose deferral election is automatically
cancelled in accordance with the provisions hereof shall not again be eligible
to submit a deferral election until the next enrollment period after the elapse
of at least 12 months following the Participant's receipt of a hardship
distribution.
E. DEFERRALS BY COMMITTEE. At its discretion, the Committee may defer
any Compensation payable to an Eligible Employee pursuant to a notice to the
Eligible Employee. Any Compensation payable to an Eligible Employee which is
deferred by the Committee shall be paid to the Eligible Employee in a manner
determined by the Committee, i.e., a lump sum or installments, upon his or her
termination of employment. Any Compensation deferred under the Plan by the
Committee shall be invested in the investment option under the Plan which most
closely approximates a money market fund pending the Employer's receipt of an
investment request from the Eligible Employee. It shall be the Eligible
Employee's obligation to submit an investment request to the Employer if any
Compensation
III-4
<PAGE>
deferred by the Committee is to be invested in any fund other than a money
market fund. Also, upon the death of the Eligible Employee on behalf of whom
the Compensation is deferred prior to distribution of all Compensation deferred
by the Committee and the earnings thereon, unless the Eligible Employee has
delivered a beneficiary designation form to the Committee with respect to the
sums deferred by the Committee, the balance will be distributed to the
Beneficiary(ies) listed on the most recent beneficiary designation form
delivered to the Committee with respect to other Compensation deferred by the
Eligible Employee under the Plan. If the Eligible Employee has not designated a
Beneficiary(ies) with respect to sums deferred by the Committee and has not
deferred other Compensation under the Plan (or submitted a beneficiary
designation form with respect to any such deferrals), the Compensation deferred
by the Committee and any earnings thereon shall be payable to the Eligible
Employee's estate upon his or her death.
III-5
<PAGE>
ARTICLE IV.
DEFERRED COMPENSATION ACCOUNTS
AND INVESTMENT OF DEFERRED COMPENSATION.
A. DEFERRED COMPENSATION ACCOUNTS. The Plan Administrator shall establish
a book reserve account in the name of each Participant. As soon as is
administratively feasible following the date Compensation subject to a
Participant's deferral election would otherwise be paid to the Participant, the
Plan Administrator shall credit the Compensation being deferred to the
Participant's Account. Each Participant's Account shall further be credited
with earnings or charged with losses resulting from the deemed investment of the
Compensation Deferrals credited to the Account as though the Compensation
Deferrals had been invested in the investments selected by the Participant as
provided below, and shall be charged with any distributions, any federal and
state income tax withholdings, any social security tax as may be required by law
and by any further amounts, including administrative fees and expenses, the
Employer is either required to withhold or determines are appropriate charges to
such Participant's Account.
B. EARNINGS ON COMPENSATION DEFERRALS. At the time a Participant submits
an Adoption Agreement, and from time to time thereafter at intervals to be
determined by the Committee, each
IV-1
<PAGE>
Participant shall direct, in a form approved by and in accordance with
procedures established by the Committee, how the Participant chooses the balance
in his Account to be deemed to be invested among investment options to be made
available by the Committee. In lieu of making investment options available to
Participants, Comerica Incorporated may credit deferred sums with a reasonable
rate of interest to reflect the time value of money.
Comerica Incorporated shall be under no obligation to acquire any of the
investments selected by any Participant, and any investments actually made by it
with Compensation Deferrals will be acquired solely in the name of Comerica
Incorporated, and will remain the sole property of Comerica Incorporated.
C. CONTRIBUTION OF COMPENSATION DEFERRALS TO TRUST. In the sole discretion
of Comerica Incorporated, all or any portion of the Compensation Deferrals
credited to any Participant's Account may be contributed to a Trust established
by Comerica Incorporated in connection with the Plan. No Participant or
Beneficiary shall have the right to direct or require that Comerica Incorporated
contribute the Participant's Compensation Deferrals to the Trust. Any
Compensation Deferrals so contributed shall be held, invested and administered
to provide benefits under the Plan except as otherwise required in the agreement
governing the Trust.
IV-2
<PAGE>
D. INSULATION FROM LIABILITY. No member of the Committee or officer,
employee or director of any Employer shall be liable to any person for any
action taken or omitted in connection with the administration of this Plan or
Trust unless attributable to such individual's own fraud or willful misconduct.
E. OWNERSHIP OF COMPENSATION DEFERRALS. Title to and beneficial ownership
of any assets, of whatever nature, which may be allocated by Comerica
Incorporated to any Account in the name of any Participant shall at all times
remain with Comerica Incorporated, and no Participant or Beneficiary shall have
any property interest whatsoever in any specific assets of Comerica Incorporated
by reason of the establishment of the Plan nor shall the rights of any
Participant or Beneficiary to payments under the Plan be increased by reason of
Comerica Incorporated's contribution of Compensation Deferrals to the Trust.
The rights of each Participant and Beneficiary hereunder shall be limited to
enforcing the unfunded, unsecured promise of the Participant's Employer to pay
benefits under the Plan, and the status of any Participant or Beneficiary shall
be that of an unsecured general creditor of Comerica Incorporated. Participants
and Beneficiaries shall not be deemed to be parties to any trust agreement
Comerica Incorporated enters into with the Trustee.
IV-3
<PAGE>
F. SPECIAL RULE APPLICABLE TO SECTION 16 INSIDERS.
1. Notwithstanding the foregoing, effective November 1, 1996, the
following restrictions on reallocation of accounts shall be applicable with
respect to any Participant who is a Section 16 Insider:
(A) A Section 16 Insider may not direct a reallocation of monies out of
any investment funds other than the Comerica Stock Fund into the
Comerica Stock Fund if, within the previous six months, he or she (or
any other person whose transactions are attributed to the Section 16
Insider under Section 16 of the Exchange Act) either (i) disposed of
shares of Comerica Stock in the open market or pursuant to a private
transaction, or (ii) made an election under the Plan (or under any
other plan sponsored by the Company) that resulted in a disposition of
equity securities of the Company within the meaning of that term under
Section 16 of the Exchange Act.
(B) A Section 16 Insider may not direct a reallocation of monies out of
the Comerica Stock Fund into any other investment funds if, within the
previous six months, he or she (or any other person whose transactions
are attributed to the Section 16 Insider under Section 16 of
IV-4
<PAGE>
the Exchange Act) either (i) acquired shares of Comerica Stock in the
open market or pursuant to a private transaction; or (ii) made an
election under the Plan (or under any other plan sponsored by the
Company) that resulted in an acquisition of equity securities of the
Company within the meaning of that term under Section 16 of the
Exchange Act.
To the extent consistent with rules under Section 16 of the Exchange Act,
the foregoing prohibitions shall not be applicable if the reallocation is in
connection with the Section 16 Insider's death, disability, retirement or
termination of employment.
2. Notwithstanding any other provision of the Plan, effective November 1,
1996, except in the circumstances of death, disability, retirement or other
termination of employment, a Section 16 Insider shall not be permitted to
receive a cash distribution from the Plan which is funded to any extent by a
disposition of his or her interest in the Comerica Stock Fund if, within the
previous six months, he or she (or any other person whose transactions are
attributed to the Section 16 Insider under Section 16 of the Exchange Act)
either (i) acquired shares of Comerica Stock in the open market or pursuant to a
private transaction; or (ii) made an election under the Plan (or under any
IV-5
<PAGE>
other Plan sponsored by the Company) that resulted in an acquisition of equity
securities of the Company within the meaning of that term under Section 16 of
the Exchange Act.
IV-6
<PAGE>
ARTICLE V.
DISTRIBUTION OF COMPENSATION DEFERRALS.
A. IN GENERAL. The benefits payable hereunder as deferred compensation
shall be paid to the Participant or to the Participant's Beneficiary as follows:
(1) EMPLOYMENT THROUGH DEFERRAL PERIOD. If the Participant's employment
with an Employer continues until the last day of the Deferral Period, Comerica
Incorporated shall, as soon as administratively feasible following the end of
the Deferral Period, distribute, or commence to distribute, the balance of the
Account in the name of the Participant in cash in any manner described below
which is selected by the Participant in the Participant's Adoption Agreement:
(i) a single sum; (ii) annual installments over 5 years, (iii) annual
installments over 10 years; or (iv) annual installments over 15 years.
For purposes of determining the amount of annual installments, X shall
equal the number of years over which benefits will be paid as elected by the
Participant. Comerica Incorporated shall pay to the Participant or to the
Participant's Beneficiary an amount equal to 1/X of the fair market value of the
Account in the Participant's name, such value to be determined by the Committee
as of the earliest convenient date, as determined by the Committee, which
V-1
<PAGE>
occurs prior to the date the payment is to be made. On approximately the same
date of the following year, Comerica Incorporated shall pay to the Participant
or to the Participant's Beneficiary an amount equal to 1/X-1 of the fair market
value of such Account, such value to be determined by the Committee as of the
earliest convenient date, as determined by the Committee, which occurs prior to
the date the payment is to be made. On approximately the same date of the
following year, Comerica Incorporated shall pay to the Participant or to the
Participant's Beneficiary an amount equal to 1/X-2 of the fair market value of
such Account, such value to be determined by the Committee as of the earliest
convenient date, as determined by the Committee, which occurs prior to the date
the payment is to be made, and similar payments shall be made on approximately
the same date of each succeeding year until a total of X annual payments have
been made with the last such payment being in an amount equal to the fair market
value of the Account in the name of the Participant determined as of the date
such amount is paid.
(2) TERMINATION PRIOR TO END OF DEFERRAL PERIOD. If the Participant's
employment with the Employer terminates prior to the last day of the Deferral
Period (unless such termination is due to the Participant's Disability), then
notwithstanding the manner of
V-2
<PAGE>
distribution selected by the Participant, Comerica Incorporated shall distribute
or direct the Trustee to distribute an amount equal to the fair market value of
the Account in the name of the Participant as of the earliest convenient date,
as determined by the Committee, which occurs subsequent to the date the
Participant's employment terminates. Such amount shall be distributed to the
Participant or to the Participant's Beneficiary in a single sum as soon as is
administratively feasible following the Participant's termination date.
If the Participant's employment terminates prior to the last day of the
Deferral Period because the Participant has become Disabled, then
notwithstanding the distribution date selected by the Participant in the
Participant's Adoption Agreement, an amount equal to the fair market value of
the Account in the name of the Participant as of the earliest convenient date,
as determined by the Committee, which occurs subsequent to the date the
Participant's employment terminates, shall be distributed, or commence to be
distributed, as soon as administratively feasible following his termination
date, such distribution to be made in the manner specified in the Participant's
Adoption Agreement.
(3) DEATH OF PARTICIPANT PRIOR TO END OF INSTALLMENT DISTRIBUTION PERIOD.
If the Participant dies before a total X
V-3
<PAGE>
annual payments are made hereunder, then an amount equal to the fair market
value of the Account in the name of the Participant as of the earliest
convenient date, as determined by the Committee, which occurs subsequent to the
date of the Participant's death shall be distributed in a single sum to the
Participant's Beneficiary, such distribution to be made as soon as is
administratively feasible following the date of the Participant's death.
(4) HARDSHIP DISTRIBUTIONS. In the event of an Unforeseeable Emergency
involving a Participant which occurs prior to distribution of the entire balance
of the Account in the name of the Participant, the Committee may, in its sole
discretion, distribute to the Participant in a single sum an amount equal to
such portion of the Account in the Participant's name as shall be necessary in
the judgment of the Committee to alleviate the financial hardship occasioned by
the Unforeseeable Emergency. Any Participant desiring a distribution under the
Plan on account of an Unforeseeable Emergency shall submit to the Committee a
written request for such distribution which sets forth in reasonable detail the
Unforeseeable Emergency which would cause the Participant severe financial
hardship, and the amount which the Participant believes to be necessary to
alleviate the financial hardship. In
V-4
<PAGE>
determining whether to grant any requested hardship distribution, the Committee
shall adhere to the requirements of the Income Tax Regulations referred to in
Article III(D)(3) hereof.
(5) CASH OUT DISTRIBUTIONS. If, at the time an installment distribution
of an Account in the name of any Participant is scheduled to commence, the fair
market value of such Account does not exceed $3,500 then, notwithstanding an
election by the Participant that such Account be distributed in installments,
the balance of such Account shall be distributed to the Participant in a single
sum on or about the date the first installment is scheduled to be made.
B. DESIGNATION OF BENEFICIARY. A Participant shall deliver to the
Committee a written designation of Beneficiary(ies) under the Plan, which
designation may from time to time be amended or revoked without notice to, or
consent of, any previously designated Beneficiary.
(1) BENEFICIARY DESIGNATION MUST BE FILED PRIOR TO PARTICIPANT'S DEATH.
No designation of Beneficiary, and no amendment or revocation thereof, shall
become effective if delivered to the Committee after such Participant's death,
unless the Committee shall determine such designation, amendment or revocation
to be valid.
V-5
<PAGE>
(2) ABSENCE OF BENEFICIARY. In the absence of an effective designation of
Beneficiary, or if no Beneficiary designated shall survive the Participant, then
the balance of the Account in the name of the Participant shall be paid to the
Participant's estate.
V-6
<PAGE>
ARTICLE VI.
AMENDMENT OR TERMINATION.
A. AMENDMENT AND TERMINATION OF PLAN. This Plan may be amended or
terminated at any time in the sole discretion of the Committee by a written
instrument executed by the Committee. No such amendment shall affect the time
of payment of any Compensation earned prior to the time of such amendment or
termination except as the Committee may determine to be necessary to carry out
the purpose of the Plan.
Written notice of any such amendment or termination shall be given to each
Participant. Upon termination of the Plan, Comerica Incorporated shall
distribute to each Participant or Beneficiary, or direct that the Trustee so
distribute, the amounts which would have been distributed to such Participant or
Beneficiary under the Plan had the Participant's employment with an Employer
terminated at the time of termination of the Plan. In addition, no such
amendment shall make the Trust revocable.
VI-1
<PAGE>
ARTICLE VII.
AUDITING OF ACCOUNTS AND STATEMENTS
TO PARTICIPANTS.
A. AUDITING OF ACCOUNTS. The Plan shall be audited from time to time as
directed by the Committee by auditors selected by the Committee.
B. STATEMENTS TO PARTICIPANTS. Statements will be provided to
Participants under the Plan on at least an annual basis.
C. FEES AND EXPENSES OF ADMINISTRATION. Fees of the Trustee and expenses
of administration of the Plan shall be deducted from Accounts.
VII-1
<PAGE>
ARTICLE VIII.
MISCELLANEOUS PROVISIONS.
A. NONFORFEITABILITY OF PARTICIPANT ACCOUNTS. Each Participant shall be
fully vested in his or her Account.
B. PROHIBITION AGAINST ASSIGNMENT. Benefits payable to Participants and
their Beneficiaries under the Plan may not be anticipated, assigned (either at
law or in equity), alienated, sold, transferred, pledged or encumbered in any
manner, nor may they be subjected to attachment, garnishment, levy, execution or
other legal or equitable process for the debts, contracts, liabilities,
engagements or acts of any Participant or Beneficiary.
C. NO EMPLOYMENT CONTRACT. Nothing in the Plan is intended to be
construed, or shall be construed, as constituting an employment contract between
the Employer and any Participant nor shall any Plan provision affect the
Employer's right to discharge any Participant for any reason or for no reason.
D. SUCCESSORS BOUND. The contractual agreement between Comerica
Incorporated and each Participant resulting from the execution of an Adoption
Agreement shall be binding upon and inure to the benefit of Comerica
Incorporated, its successors and assigns, and to the Participant and to the
Participant's heirs, executors, administrators and other legal representatives.
VIII-1
<PAGE>
E. PROHIBITION AGAINST LOANS. The Participant may not borrow any
Compensation Deferrals from Comerica Incorporated nor utilize his or her Account
as security for any loan from the Employer.
F. ADMINISTRATION BY COMMITTEE. Responsibility for administration of the
Plan shall be vested in the Committee. To the extent permitted by law, the
Committee may delegate any authority it possesses to the Plan Administrator(s).
To the extent the Committee has delegated authority concerning a matter to the
Plan Administrator(s), any reference in the Plan to the "Committee" insofar as
it pertains to such matter, shall refer likewise to the Plan Administrator(s).
G. GOVERNING LAW AND RULES OF CONSTRUCTION. This Plan shall be governed in
all respects, whether as to construction, validity or otherwise, by applicable
federal law and, to the extent that federal law is inapplicable, by the laws of
the State of Michigan. Each provision of this Plan shall be treated as
severable, to the end that, if any one or more provisions shall be adjudged or
declared illegal, invalid or unenforceable, this Plan shall be interpreted, and
shall remain in full force and effect, as though such provision or provisions
had never been contained herein. It is the intention of Comerica Incorporated
that the Plan established hereunder be "unfunded" for income tax purposes and
for purposes of
VIII-2
<PAGE>
Title I of ERISA, and the provisions hereof shall be construed in a manner to
carry out that intention.
H. POWER TO INTERPRET. This Plan shall be interpreted and effectuated to
comply with the applicable requirements of ERISA, the Code and other applicable
tax law principles; and all such applicable requirements are hereby incorporated
herein by reference. Subject to the above, the Committee shall have power to
construe and interpret this Plan, including but not limited to all provisions of
this Plan relating to eligibility for benefits and the amount, manner and time
of payment of benefits, any such construction and interpretation by the
Committee and any action taken thereon in good faith by the Plan
Administrator(s) to be final and conclusive upon any affected party. The
Committee shall also have power to correct any defect, supply any omission, or
reconcile any inconsistency in such manner and to such extent as the Committee
shall deem proper to carry out and put into effect this Plan; and any
construction made or other action taken by the Committee pursuant to this
Article VIII(H) shall be binding upon such other party and may be relied upon by
such other party.
VIII-3
<PAGE>
I. EFFECTIVE DATE. The effective date of this amendment and restatement
shall be January 1, 1997, except as otherwise expressly stated herein.
IN THE PRESENCE OF: COMERICA INCORPORATED
By:
- ------------------------------ ----------------------------
Its:
- ------------------------------ ---------------------------
VIII-4
<PAGE>
EXHIBIT 10.16
COMERICA INCORPORATED
EXECUTIVE OFFICER CONTINUITY AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1.PURPOSE, ESTABLISHMENT AND TERM
1.1. Purpose and Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Term of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2.NATURE OF RIGHTS UNDER AGREEMENT
2.1. Contractual Rights to Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Effect on Other Benefits and Rights as Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3.DEFINITIONS AND CONSTRUCTION
3.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
A. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
B. Annual Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
C. Annual Management Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
D. Beneficial Owner or Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
E. Benefit Equalization Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
F. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
G. Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
H. Change of Control of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
I. Claims Arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
J. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
K. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
L. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
M. Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
N. Deferred Compensation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
O. Disability or Diabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
P. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Q. Employee Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
R. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
S. Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
T. Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
U. Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
V. Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
W. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
X. Official Employment Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Y. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Z. Potential Change of Control of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
AA. Preferred Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AB. Qualifying Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AC. Receipt and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AD. Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AE. Retirement or Retiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AF. Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AG. Severance Benefit(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-ii-
<PAGE>
ARTICLE 4.
CONTINUATION OF COMPENSATION AND
SEVERANCE BENEFITS
<TABLE>
<S> <C> <C>
4.1. Continuation of Compensation Through Date of
Termination and Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. Continuation of Compensation Through
Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
B. Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2. Qualifying Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3. Description of Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4. Effect of Death, Disability or Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.5. Effect of Termination for Cause
or Other Than for Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 5.
FORM AND TIMING OF SEVERANCE BENEFITS
5.1. Form and Timing of Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2. Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 6.SUCCESSORS
6.1. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2. Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-iii-
<PAGE>
ARTICLE 7.
ADMINISTRATION AND CONFIDENTIALITY OF INFORMATION;
OBLIGATIONS OF EXECUTIVE UPON A POTENTIAL CHANGE OF CONTROL
<TABLE>
<S> <C> <C>
7.1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Obligations of Executive Upon a Potential
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 8.MISCELLANEOUS PROVISIONS
8.1. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4. Claims and Disputes; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.5. Limitation of Company's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
-iv-
<PAGE>
COMERICA INCORPORATED
EXECUTIVE OFFICER CONTINUITY AGREEMENT
AGREEMENT by and between Comerica Incorporated, a Delaware corporation
(the "Company") and ____________________ ("Executive"), dated as of the 1st day
of January, 1996.
-1-
<PAGE>
ARTICLE 1.
PURPOSE, ESTABLISHMENT AND TERM
1.1 Purpose and Establishment. The Board of Directors of the
Company (the "Board"), has determined that it is in the best interests of the
Company and its shareholders that the Company maintain the continued dedication
of Executive, notwithstanding the possibility, threat or occurrence of a Change
of Control of the Company (as defined below). To alleviate the inevitable
distraction associated with a pending or threatened Change of Control of the
Company and to encourage Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control of the Company, the Board believes that it is imperative that it take
steps, consistent with those taken by other similarly situated organizations,
to provide Executive with compensation and benefits arrangements upon a Change
of Control of the Company which ensure that the compensation and benefits
expectations of Executive will be satisfied. In order to accomplish the
foregoing objectives, the Board has caused the Company to enter into this
Agreement. Upon the execution of this Agreement by Executive and approval by
the Board, this Agreement shall become effective as of January 1, 1996 (the
"Effective Date"), and shall remain in effect as provided in Section 1.2
herein.
1.2. Term of the Agreement. The term of this Agreement will commence
on the Effective Date and continue through December 31, 1998. Beginning January
1, 1999, and each third succeeding January 1st thereafter, the term of this
Agreement shall be extended automatically for three additional years unless the
Committee delivers written notice to Executive at least fifteen months prior to
the end of the original term, or any extended term, that the
-2-
<PAGE>
Agreement will not be extended. Upon the delivery of such written notice to
Executive, the term of the Agreement will expire at the end of the original
term, or extended term, then in progress; provided, however, that if a Change
of Control of the Company occurs during the original term or during any
extended term of this Agreement, this Agreement will not expire until the
elapse of the longer of the following periods: (i) the period which ends on the
last day of the twenty-fourth month subsequent to the month in which the Change
of Control of the Company occurs (or, in the case of a Change of Control of the
Company described in Section 3.1.H(3) or (4) hereof, the period which ends on
the earlier of (a) the last day of the twenty-fourth month subsequent to the
month in which consummation of the transaction, approval of which constitutes
the Change of Control of the Company, occurs, or (b) the last day of the
thirtieth month subsequent to the month in which the Change of Control of the
Company occurs); or (ii) the period which ends on the date all benefits owing
to Executive hereunder have been paid.
-3-
<PAGE>
ARTICLE 2.
NATURE OF RIGHTS UNDER AGREEMENT
2.1. Contractual Rights to Benefits. This Agreement establishes a
contractual right to the Severance Benefits Executive may become entitled to
hereunder following the occurrence of a Change of Control of the Company.
2.2 Effect on Other Benefits and Rights as Employee. Entry into
this Agreement shall not affect Executive's right to receive any amounts
payable to Executive under any benefit, incentive, retirement, or other plan or
arrangement, or under any employment agreement, except to the extent that the
express provisions of such other agreement, plan or arrangement preclude the
payment of or provide for offset of benefits thereunder upon receipt of
benefits under this Agreement. Further, Executive's entry into this Agreement
shall not adversely affect Executive's rights as an Employee of the Company,
whether those rights exist now or arise hereafter.
2.3. Employment Status. The provisions hereof shall not be deemed
to create a contract between the Company and Executive to employ Executive for
any fixed period of time. Executive's employment with the Company may be
terminated at will by either the Company or Executive, with or without Cause,
subject to fulfillment by the Company of its obligation to provide such
Severance Benefits as may be required hereunder.
-4-
<PAGE>
ARTICLE 3.
DEFINITIONS AND CONSTRUCTION
3.1. Definitions. Whenever used in the Agreement, the following
terms shall have the meanings set forth below, and when the meaning is
intended, the initial letter of the term is capitalized.
AH. "Agreement" means the Comerica Incorporated
Executive Officer Continuity Agreement as
herein set forth.
AI. "Annual Base Salary" means Executive's rate
of annual salary in effect, except as
otherwise specifically provided herein, as of
the date a Change of Control of the Company
occurs, or if such rate is higher as of the
date Executive experiences a Qualifying
Circumstance, Executive's rate of annual
salary in effect as of the date he or she
experiences a Qualifying Circumstance.
Annual Base Salary shall include (i) any
amount which is contributed by the Company
pursuant to an elective deferral which is not
includable in Executive's gross income under
Code Sections 125 or 402(e)(3) and (ii) any
amount contributed by the Company to the
Deferred Compensation Plan pursuant to
Executive's election.
AJ. "Annual Management Incentive Program" means
the Comerica Incorporated annual management
incentive program or any plan or program
adopted or implemented by the Company as a
successor to such program.
AK. "Beneficial Owner" or "Beneficial Ownership"
or "Beneficially Owns" or "Beneficially
Owned" shall have
-5-
<PAGE>
the meanings ascribed to such terms in
Exchange Act Rule 13d-3.
AL. "Benefit Equalization Plan" means the Benefit
Equalization Plan For Employees of Comerica
Incorporated or any plan adopted by the
Company as a successor to such plan.
AM. "Board" means the Board of Directors of
Comerica Incorporated.
AN. "Cause" shall be deemed to have arisen if
Executive has conducted himself or herself in
a manner described in (1) or (2) below:
(1) If Executive has willfully and
continually failed to perform
substantially all of his or her
duties with the Company or one of
its affiliates (unless such failure
occurs (i) as a result of
Executive's incapacity precipitated
by physical or mental illness or
(ii) after Executive's issuance of a
Notice of Termination for Good
Reason pursuant to Section 4.6
hereof), after a written demand to
perform is delivered to Executive by
the Board or Chief Executive Officer
of the Company which demand must
specifically identify the manner in
which the Board or Chief Executive
Officer believes that Executive has
not performed substantially all of
his or her duties, provided that
Executive fails to remedy the
situation within ten (10) business
days of receiving such notice; or
-6-
<PAGE>
(2) If Executive has engaged willfully
in illegal or gross misconduct which
is materially and demonstrably
injurious to the Company, monetarily
or otherwise. However, no act, or
failure to act, on Executive's part
shall be considered "willful" unless
Executive took such action (or
failed to take such action) other
than in good faith and without
reasonable belief that his or her
action or omission was in the best
interests of the Company.
AO. "Change of Control of the Company" shall be
deemed to have occurred if, during the term
of this Agreement, the conditions set forth
in any of the following paragraphs shall have
been satisfied:
(1) any Person is or becomes the
Beneficial Owner, directly or
indirectly, of securities of the
Company (not including in the
securities Beneficially Owned by
such Person any securities acquired
directly from the Company or its
affiliates) which represent 26% or
more of the combined voting power of
the Company's then outstanding
securities; or
(2) during any period of up to two
consecutive years (not including any
period prior to the Effective Date
of this Agreement), individuals who
constitute the Board at the
beginning of such period and any new
director (other than a director
whose initial assumption of office
is in connection with an actual or
threatened election contest,
including
-7-
<PAGE>
but not limited to, a consent
solicitation relating to the
election of directors of the
Company, as such terms are used in
Rule 14a-11 of Regulation 14A under
the Exchange Act) whose election by
the Board or nomination for election
by the Company's stockholders was
approved by a vote of at least
two-thirds (2/3rds) of the directors
then still in office who either were
directors at the beginning of the
period or whose election or
nomination for election was
previously so approved, cease for
any reason to constitute a majority
of the Board; or
(3) the shareholders of the Company (i)
approve a merger or consolidation of
the Company with any other
corporation, or (ii) approve the
issuance of voting securities of the
Company pursuant to applicable stock
exchange requirements in connection
with a merger or consolidation of
the Company or any direct or
indirect subsidiary of the Company
with any other corporation, other
than in either (i) or (ii) above a
merger or consolidation which would
result in the voting securities of
the Company outstanding immediately
prior thereto continuing to
represent (either by remaining
outstanding or by being converted
into voting securities of the
surviving entity), in combination
with shares owned by any trustee or
other fiduciary holding securities
under an employee benefit plan of
the Company, at least 75% of the
combined voting
-8-
<PAGE>
power of the voting securities of the
Company or such surviving entity
outstanding immediately after such
merger or consolidation; or
(4) the shareholders of the Company approve a
plan of complete liquidation of the Company
or an agreement to sell or dispose of all or
substantially all of the Company's assets.
AP. "Claims Arbiter" means such person or persons
as the Company designates to mediate disputes
involving the Agreement. No such person
shall be an employee of the Company.
AQ. "Code" means the Internal Revenue Code of
1986, as amended. All references to sections
of the Code shall be deemed to refer to any
successor provisions to such sections.
AR. "Committee" means the Compensation Committee
of the Board of Directors of Comerica Incorporated.
AS. "Company" means Comerica Incorporated, a
Delaware corporation (including any and all
subsidiaries), and any successor to its
business and/or assets which assumes this
Agreement by operation of law, or otherwise
(except in determining, under Section 3.1.H.
hereof, whether or not a Change of Control of
the Company has occurred in connection with
any such succession).
AT. "Company Shares" means shares of $5.00 par
value common stock of the Company or any
equity securities into which such shares have
been converted.
-9-
<PAGE>
AU. "Deferred Compensation Plan" means the
Comerica Incorporated Deferred Compensation
Plan, the Manufacturers National Corporation
Executive Incentive Plan, or any plan adopted
by the Company as a successor to either such
plan.
AV. "Disability" or "Disabled" means "Totally
Disabled" within the meaning of such term as
set forth in the Long-Term Disability Plan
of Comerica Incorporated, the provisions of
which are incorporated herein by reference.
AW. "Effective Date" means January 1, 1996.
AX. "Employee Options" means options to purchase
Company Shares granted pursuant to the Long-Term
Incentive Plan.
AY. "Exchange Act" means the Securities Exchange
Act of 1934, as amended. All references to
sections of the Exchange Act shall be deemed
to refer to any successor provisions to such
sections.
AZ. "Executive" means the senior officer of the
Company who has signed this Agreement as Executive.
BA. "Expiration Date" means the date the
Agreement expires, as provided in Section 1.2 herein.
BB. "Good Reason" to justify Executive's decision
to terminate his or her employment means the
occurrence (without the express written
consent of Executive) of any one or more of
the following acts by the Company, or
failures by the Company to act, unless any
such act or failure to act is corrected prior
to Executive's Official Employment
Termination Date:
-10-
<PAGE>
(1) Assignment of any duties to Executive
inconsistent with his or her position as an
executive officer of the Company or a substantial
reduction in the nature of Executive's
responsibilities compared to his or her
responsibilities as they existed immediately
prior to the occurrence of the Change of Control
of the Company;
(2) Relocation of Executive's principal work station
to a location more than sixty miles away from
Executive's principal office at the time of the
occurrence of the Change of Control of the
Company;
(3) Any reduction in the amount of Executive's Annual
Base Salary from the rate in effect on the date a
Change of Control of the Company occurs or a
reduction in Executive's salary range of 15% or
more from his or her salary range in effect on
the date a Change of Control of the Company
occurs;
(4) Failure to pay to Executive his or her (i) Annual
Base Salary on the date scheduled for payment
unless Executive has voluntarily deferred the
receipt of any amount not paid, (ii) annual bonus
under the Annual Management Incentive Program (or
under any other short-term compensation plan in
which Executive was eligible to participate
before the occurrence of a Change of Control of
the Company) at the normal payment time unless
non-payment of the bonus is attributable to the
Company's failure to attain a level of
performance which would generate a bonus pool or
to inadequate performance by Executive, or (iii)
deferred compensation under the Deferred
Compensation Plan
-11-
<PAGE>
(or under any other deferred compensation program
of the Company), within sixty days of the date
such compensation is scheduled to be paid;
(5) (i) Discontinuance of any compensation plan in
which Executive is eligible to participate
immediately prior to the occurrence of the Change
of Control of the Company which provides benefits
material vis-a-vis Executive's overall
remuneration (including, but not limited to, the
Annual Management Incentive Program, the
Long-Term Incentive Plan, the Preferred Savings
Plan, the Retirement Plan, the Benefit
Equalization Plan, the Deferred Compensation
Plan, or any substitute plans adopted by the
Company prior to the occurrence of the Change of
Control of the Company), unless an equitable
arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to
any such plan, or (ii) failure to continue
Executive's coverage under any such plan or
arrangement on a basis at least as favorable,
both in terms of the amount of benefits provided
and the level of Executive's coverage relative to
other executives, as existed at the time of the
occurrence of the Change of Control of the
Company;
(6) (i) Failure to continue to provide coverage
(and/or benefits) to Executive similar to that he
or she enjoyed under the company-sponsored life
insurance, medical, health and accident,
disability or other welfare benefit or material
fringe benefit plans at the time of the
occurrence of the Change of Control
-12-
<PAGE>
of the Company, or (ii) the taking of any action
which would materially reduce, directly or
indirectly, any such coverage or which would
deprive Executive of any material welfare or fringe
benefit he or she enjoyed at the time of the
occurrence of the Change of Control of the Company,
provided, in either situation, the Company's
action occurs other than as a result of an
across-the-board adjustment in coverage and/or
benefits which affects all senior officers of the
Company and all senior officers of any Person in
control of the Company;
(7) Failure to obtain a satisfactory agreement from
any successor to assume the Company's obligations
under this Plan, as required under Section 6.1
hereof; and
(8) The taking of action by the Company which purports
to terminate Executive's employment without
providing Executive a Notice of Termination which
satisfies the requirements of Section 3.1.W.
hereof.
Executive's right to resign for Good Reason shall
not be affected by his or her incapacity due to
physical or mental illness nor shall Executive's
continuation of employment following the occurrence
of any circumstance constituting Good Reason
constitute consent to such circumstance or a waiver
of rights hereunder.
-13-
<PAGE>
BC. "Long-Term Incentive Plan" means the Comerica
Incorporated Long Term Incentive Plan or any plan
adopted by the Company as a successor to such
plan.
BD. "Notice of Termination" means a written notice
which shall indicate the specific termination
provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of Executive's employment under the
provision so indicated. Further, a Notice of
Termination for Cause is required to include a
copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters
of the entire membership of the Board at a
meeting of the Board which was called and held
for the purpose of considering such termination
after reasonable notice to Executive and an
opportunity for Executive, together with
Executive's counsel, to be heard before the Board
(i) which finds that, in the good faith opinion
of the Board, Executive was guilty of conduct set
forth in clause (1) and/or (2) of the definition
of Cause herein, and (ii) which specifies the
particulars thereof in detail.
BE. "Official Employment Termination Date", with
respect to any purported termination of
Executive's employment after the occurrence of a
Change of Control of the Company and during the
term of this Agreement, means: (i) if
Executive's employment is terminated due to Disability,
thirty days after Notice of Termination is given
(provided that Executive shall not have returned to the
full-time performance of his or her duties during
such thirty-day period), and (ii) if Executive's
employment is
-14-
<PAGE>
terminated for any other reason, the date specified in
the Notice of Termination [which, in the case of a
termination by either the Company or Executive, shall be
not less than thirty days (except in the case of a
termination for Cause or except in the case where the
event constituting Good Reason occurred during the last
thirty days of the term of this Agreement)] from the date
such Notice of Termination is given.
BF. "Person" shall have the meaning set forth in
Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) the
Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities
under an employee benefit plan sponsored by the
Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities
pursuant to an offering of such securities, or
(iv) a corporation, owned directly or indirectly,
by the stockholders of the Company, in which
their ownership interests are in substantially
the same proportions as their ownership interests
in stock of the Company.
BG. "Potential Change of Control of the Company"
shall be deemed to have occurred if the
conditions set forth in any one of the following
paragraphs shall have been satisfied:
(1) the Company enters into an agreement, the
consummation of which would result in the
occurrence of a Change of Control of the
Company;
(2) the Company or any Person publicly announces
an intention to take or to consider taking
actions
-15-
<PAGE>
which, if consummated, would constitute a
Change of Control of the Company;
(3) any Person who is, or becomes, the Beneficial
Owner, directly or indirectly, of securities
of the Company, which represent 10% or more
of the combined voting power of the Company's
then outstanding securities, increases such
Person's Beneficial Ownership of such
securities by 5% or more over the percentage
so owned by such Person on the Effective
Date; or
(4) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a
Potential Change of Control of the Company
has occurred.
BH. "Preferred Savings Plan" means the Comerica
Incorporated Preferred Savings Plan or any plan
adopted by the Company as a successor to such
plan.
BI. "Qualifying Circumstance" means any of the events
described in Section 4.2 hereof.
BJ. "Receipt and Release" means a receipt for payment
of benefits hereunder and a release of claims
against the Company in the form set forth in
Exhibit A. The provisions of Exhibit A are
incorporated herein by reference.
DD. "Restricted Shares" means Company Shares granted
to Executive under the Long-Term Incentive Plan
subject to restrictions.
EE. "Retirement" or "Retiring" shall be deemed to be
the reason for the termination by the Company or
Executive of Executive's employment if
Executive's employment is terminated in
accordance with (i) the Company's
-16-
<PAGE>
retirement policy (excluding its early retirement
policy), which applies to its salaried employees,
as in effect immediately prior to the occurrence
of the Change of Control of the Company, or (ii)
any retirement arrangement which Executive has
consented to.
FF. "Retirement Plan" means the Comerica Incorporated
Retirement Plan or any plan adopted by the
Company as a successor to such plan.
GG. "Severance Benefit(s)" means the items of
severance compensation as provided in Article 4
hereof.
-17-
<PAGE>
3.2. Gender and Number. The masculine, feminine and neuter, wherever
used in the Plan, shall refer to either the masculine, feminine or neuter; and,
unless the context otherwise requires, the singular shall include the plural and
the plural the singular.
3.3. Severability. In the event any provision of this Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity of the
provision shall not affect the remaining provisions of the Agreement, and the
Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.
3.4. Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by Executive and by the Chairman of the Committee.
3.5. Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Delaware shall be the controlling law in
all matters relating to this Agreement.
-18-
<PAGE>
ARTICLE 4.
CONTINUATION OF COMPENSATION AND
SEVERANCE BENEFITS
4.1. Continuation of Compensation Through Date of Termination and
Severance Benefits.
A. Continuation of Compensation Through Date of Termination.
Following a Change of Control of the Company and during the term of this
Agreement, during any period that Executive fails to perform Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall pay Executive's full base salary to Executive
at the rate in effect at the commencement of any such period, together with all
compensation and benefits payable to Executive under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period, until Executive's employment is terminated by the Company
for Disability. Further, the Company shall pay Executive's normal
post-termination compensation and benefits to Executive as such payments become
due. Such post- termination compensation and benefits shall be determined
under, and paid in accordance with, the Company's retirement, insurance and
other compensation or benefit plans, programs and arrangements.
If Executive's employment shall be terminated for any reason following
the occurrence of a Change of Control of the Company and during the term of
this Agreement, the Company shall pay Executive's full salary to Executive
through Executive's Official Employment Termination Date at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to Executive through Executive's Official
-19-
<PAGE>
Employment Termination Date under the terms of any compensation or benefit
plan, program or arrangement maintained by the Company during such period.
Further, the Company shall pay Executive's normal post-termination compensation
and benefits to Executive as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements.
B. Severance Benefits. Executive shall be entitled to receive the
Severance Benefits described in Section 4.3 hereof provided there has been a
Change of Control of the Company, not later than the end of the twenty-fourth
month which begins after the month in which the Change of Control of the Company
occurs(1), Executive experiences a Qualifying Circumstance and Executive signs a
Receipt and Release and delivers it to the Company. Executive shall not be
entitled to receive Severance Benefits if his or her employment is terminated
for Cause or ends as a result of Executive becoming Disabled, Retiring, dying or
resigning without Good Reason.
4.2. Qualifying Circumstance. The occurrence or deemed occurrence of
any one or more of the following events not later than the end of the period
referred to in Section 4.1.B. (or not
- - ---------------
(1)In the case of a Change of Control of the Company described in
Section 3.1.H.(3) or (4) hereof, the period during which Executive must
experience a Qualifying Circumstance in order to become entitled to Severance
Benefits shall be, in lieu of the period referred to above, the period which
ends on the earlier of (a) the last day of the twenty-fourth month subsequent to
the month in which consummation of the transaction, approval of which
constitutes the Change of Control of the Company, occurs, or (b) the last day of
the thirtieth month subsequent to the month in which the Change of Control of
the Company occurs.
-20-
<PAGE>
later than the period referred to in footnote (1), if applicable) shall be
considered to be a Qualifying Circumstance:
BK. A successor company fails or refuses to assume the Company's
obligations under this Agreement;
BL. The Company or any successor company breaches any of the
provisions of this Agreement;
BM. Executive's employment with the Company ends unless his or her
employment is terminated for Cause, or ends as a result of
Executive becoming Disabled, Retiring, dying or resigning
without Good Reason; or
D. Executive's resigns for Good Reason.
Executive's employment shall be deemed to have been terminated
following a Change of Control of the Company by Executive with
Good Reason if Executive's employment is terminated prior to
the occurrence of a Change of Control of the Company without
Cause at the direction of a Person who has entered into an
agreement with the Company the consummation of which will
constitute a Change of Control of the Company or if Executive
terminates his employment with Good Reason prior to the
occurrence of a Change of Control of the Company (determined by
treating a Potential Change of Control of the Company as a
Change of Control of the Company in applying the definition of
Good Reason) if the circumstance or event which constitutes
Good Reason occurs at the direction of such Person.
4.3. Description of Severance Benefits. The following items
constitute the Severance Benefits Executive may receive
hereunder:
BN. A severance payment equal to 2.99 times Executive's Annual
Base Salary; provided, however, that the amount of this
payment, together with other amounts and/or benefits Executive
receives hereunder (or under other plans,
-21-
<PAGE>
agreements, or arrangements sponsored by the Company or to
which the Company is a party) as a result of the occurrence of
the Change of Control of the Company which constitute
"parachute payments" under Section 280G of the Code may not
exceed the maximum amount deductible under Section 280G of the
Code, and, if necessary to remain within the deduction
limitation imposed by Code Section 280G, this severance
payment shall be reduced to the maximum amount (but not below
zero) which may be paid without loss of the Company's
deduction under Code Section 280G;
BO. An amount (in lieu of any amounts Executive may be entitled to
receive as an eligible participant under the Annual Management
Incentive Program) equal to the sum of (i) any incentive
compensation Executive earned (or, if such amount has not yet
been determined, the amount he or she would have earned
assuming the Company's annual profit plan performance
threshold was achieved) under the Annual Management Incentive
Program for the fiscal year immediately preceding the year in
which Executive's Official Employment Termination Date occurs,
provided any such sum has not yet been paid; (ii) any
incentive compensation Executive earned under the Annual
Management Incentive Program with respect to any multi-year
performance period which was completed on or prior to
Executive's Official Employment Termination Date provided any
such sum has not yet been paid; and (iii) a pro rata portion
of the aggregate estimated value of all incentive compensation
awards to Executive relating to all
-22-
<PAGE>
uncompleted one-year performance periods(2) under the Annual
Management Incentive Program calculated by assuming the
Company's annual profit plan performance threshold was
achieved(3);
BP. Early lapse of restrictions applicable to all Restricted
Shares which were awarded to Executive under the Long-Term
Incentive Plan prior to the time a Change of Control of the
Company occurs (or, in the case of a Change of Control of the
Company described in Section 3.1.H(3) or (4) hereof, any such
shares awarded prior to consummation of the transaction,
approval of which constitutes the Change of Control of the
Company), and acceleration of vesting of all outstanding
Employee Options granted to Executive under the Long-Term
Incentive Plan prior to the time a Change of Control of the
Company occurs (or, in the case of a Change of Control of the
Company described in Section 3.1.H(3) or (4) hereof, any such
options granted prior to consummation of the transaction,
approval of which constitutes the Change of Control of the
Company);
- - ---------------
(2)Executive shall not be entitled to receive a pro rata payment with
respect to awards to be computed under multi-year performance periods which
have not been completed on or prior to Executive's Official Employment
Termination Date.
(3)The pro rata portion of any such award shall be the amount payable
(i) assuming the Company's performance threshold in the annual profit plan for
the year in which Executive's Official Employment Termination Date occurs was
achieved, and (ii) that a multiplier was utilized based on the multiplier which
would have applied had that performance occurred in the prior fiscal year, said
amount to be multiplied by a fraction, the numerator of which is the number of
full months which elapsed from the beginning of the performance period through
Executive's Official Employment Termination Date and the denominator of which
is twelve.
-23-
<PAGE>
BQ. Continuation of medical, dental, accident, and life insurance
coverage for three full years subsequent to the Official
Employment Termination Date; provided, however, that this
coverage will be discontinued prior to the end of the
three-year period if Executive receives substantially similar
benefits from a subsequent employer (or such benefits are made
available to Executive without cost during such period), as
determined by the Committee (and any such benefits actually
received by Executive or made available to Executive shall be
reported to the Company by Executive); and, provided, further,
that if the value of the coverage to be provided under this
subsection causes a reduction in the Severance Benefits to be
paid to Executive and such benefits are thereafter reduced by
reason of Executive's receipt of similar benefits, the Company
shall, at the time such benefits are reduced, pay to Executive
the lesser of (i) the amount by which Executive's Severance
Benefits were previously reduced, or (ii) the maximum amount
which can be paid to Executive without such amount being, or
causing any other payment to be, nondeductible by reason of
Section 280G of the Code; and
BR. Payment by the Company of all legal fees and expenses incurred
by Executive in connection with the resolution of issues
regarding his or her rights under this Agreement; provided
however, that such fees and expenses shall not exceed five
percent of the amount of the Severance Benefits payable to
Executive under this Agreement determined without reduction
for taxes thereon.
-24-
<PAGE>
4.4. Effect of Death, Disability or Retirement. If, during the term of
this Agreement, Executive (i) dies, (ii) fails to perform his or her duties with
the Company on a full-time basis for six consecutive months due to Disability,
and fails to recommence the full-time performance of his or her duties within
thirty days after a written Notice of Termination is given to Executive (which
notice may be given after Executive fails to perform his or her duties with the
Company on a full-time basis for five consecutive months due to Disability), or
(iii) ends his or her employment by Retiring, this Plan shall expire as of the
date of Executive's death, Official Employment Termination Date or date of
Retirement, as the case may be, without any obligation on the part of the
Company or its successors to pay any Severance Benefits to or with respect to
Executive hereunder.
4.5. Effect of Termination for Cause or Other Than for Good Reason.
Following a Change of Control of the Company, if Executive's employment is
terminated either (i) by the Company for Cause; or (ii) by Executive without
Good Reason, subject to Section 4.1.A. hereof, the Company shall have no further
obligations to Executive under this Agreement.
4.6. Notice of Termination. After a Change of Control of the Company
and during the term of this Agreement, any purported termination of Executive's
employment (other than by reason of death), shall be communicated by a Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 8.3 hereof, and no purported termination which fails to comply with this
requirement shall be effective.
-25-
<PAGE>
ARTICLE 5.
FORM AND TIMING OF SEVERANCE BENEFITS
5.1. Form and Timing of Severance Benefits. Following Executive's
satisfaction of the applicable conditions, the Severance Benefits shall be paid
or provided in the manner and at the times hereinafter set forth. Severance
Benefits described in Sections 4.3.A. and 4.3.B. hereof shall be paid in cash
(except as otherwise provided herein) to Executive in a single lump sum as soon
as practicable following Executive's Official Employment Termination Date,
provided, however, that if the amounts of such payments cannot be finally
determined within ninety days after such date, the Company shall pay Executive
an estimate of the amount Executive is entitled to receive not later than such
ninetieth day. Such estimate shall be determined in good faith by the Company.
The Company shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2) of the Code) as soon as the final
amount thereof can be determined. If the estimated payments exceed the amount
subsequently determined to be due, any excess shall constitute a loan by the
Company to Executive, which shall be repayable to the Company on the fifth
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). At the time that payments are
made hereunder, the Company shall provide
-26-
<PAGE>
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations.
If a decision is rendered by a court or a determination is made by the
Internal Revenue Service that the aggregate "parachute payments" which were
paid to or for Executive's benefit exceeded the maximum amount deductible under
Code Section 280G, and such decision or determination has become final, then
Executive shall be obligated to repay to the Company upon demand an amount
equal to the sum of (i) the excess of the aggregate "parachute payments" which
were paid to or for Executive's benefit over the aggregate "parachute payments"
that could have been paid to or for Executive's benefit without loss of
deduction under Section 280G of the Code with respect to any portion of such
"parachute payments", and (ii) interest on the amount set forth in clause (i)
of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code from
the date of Executive's receipt of such excess until the date of Executive's
repayment thereof.
Early lapse of restrictions relating to Restricted Shares and
acceleration of vesting of Employee Options under Section 4.3.C. shall occur as
of Executive's Official Employment Termination Date. Severance Benefits
described in Section 4.3.D. hereof shall be provided to Executive beginning on
the Official Employment
-27-
<PAGE>
Termination Date, and subject to Section 4.3.D hereof, shall continue for three
full calendar years from such date. Payments of Executive's legal fees and
expenses by the Company referred to in Section 4.3.E. hereof shall be made
within thirty days after written requests by Executive for payment accompanied
by such evidence of payment or incurrence of fees and expenses as the Company
may reasonably require.
5.2. Withholding of Taxes. Company shall withhold from any amounts
payable under this Agreement all Federal, state, city, or other taxes as
legally required.
-28-
<PAGE>
ARTICLE 6.
SUCCESSORS
6.1. Successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) of all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to receive Severance Benefits from the
Company in the same amount and on the same terms as Executive would be entitled
to hereunder if Executive voluntarily terminated his or her employment for Good
Reason after the occurrence of a Change of Control of the Company, except, for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed to be Executive's Official Employment
Termination Date.
6.2. Beneficiaries. This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
Executive should die
-29-
<PAGE>
while any amount would still be payable to him or her hereunder had he or she
continued to live, all such amounts, unless otherwise provided herein, shall be
paid to Executive's estate or, if the Company is satisfied that there will be
no probate proceeding involving Executive's estate, and Executive has executed
a will which does not specifically refer to the Severance Benefits hereunder
but which pours over the residue of Executive's estate to a trustee under a
revocable inter vivos trust established by Executive during his or her
lifetime, then all such amounts shall be paid to the trustee or successor
trustee of such trust.
-30-
<PAGE>
ARTICLE 7.
ADMINISTRATION AND CONFIDENTIALITY OF INFORMATION;
OBLIGATIONS OF EXECUTIVE UPON A POTENTIAL CHANGE OF CONTROL
7.1 Administration. This Agreement shall be administered by the
Board, as advised by the Committee. In such advisory capacity, and with the
approval of a majority of the Board concerning all such actions hereunder, the
Committee, to the extent any of its actions are not contrary to the express
provisions of the Agreement, is authorized to interpret this Agreement, to
prescribe and rescind rules and regulations, to provide conditions and
assurances deemed necessary and advisable to protect the interests of the
Company, to recommend individuals for participation, and to make all other
determinations necessary or advisable in connection with the administration of
this Agreement.
In fulfilling its administrative duties hereunder, the Board and the
Committee may rely on outside counsel, independent accountants, or other
consultants to render advice or assistance, and shall be indemnified by the
Company for acting in reliance on such advice.
7.2 Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by Executive
during Executive's employment by the Company or any of its affiliated
-31-
<PAGE>
companies and which shall not be or have become public knowledge (other than by
acts by Executive or representatives of Executive in violation of this
Agreement). After termination of Executive's employment with the Company,
Executive shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 7.2 constitute a basis for deferring or withholding any amounts
otherwise payable to Executive under this Agreement.
7.3 Obligations of Executive Upon a Potential Change of Control.
Executive agrees that, subject to the terms and conditions of this Agreement,
in the event of the occurrence of a Potential Change of Control of the Company
during the term of this Agreement, he or she will remain in the employ of the
Company until the earliest of (i) a date which is six months from the date such
Potential Change of Control of the Company occurs; (ii) the date of occurrence
of a Change of Control of the Company; (iii) the date of termination by
Executive of his or her employment for Good Reason (determined by treating the
Potential Change of Control of the Company as a Change of Control of the
Company in applying the definition of Good Reason), by reason of death,
Disability or Retirement; or (iv) the date of termination by the Company of
Executive's employment.
-32-
<PAGE>
ARTICLE 8.
MISCELLANEOUS PROVISIONS
8.1. Entire Agreement. This Agreement shall constitute the entire
agreement between the Company and Executive and shall supersede those provisions
of any employment agreement between Executive and the Company or severance plan
sponsored by the Company which agreement or plan, as the case may be, affects
Executive's rights to receive benefits as a result of his or her termination of
employment following the occurrence of a Change of Control of the Company. In
all other respects, any employment agreement or plan shall continue in full
force and effect, and is hereby ratified and confirmed.
8.2. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same instrument.
8.3. Notices. Except as otherwise specified herein, for purposes of
this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses set forth below, or to
such other address as either party may have furnished to the other in
-33-
<PAGE>
writing in accordance herewith, except that notice of change of address shall
be effective only upon actual receipt:
To the Company:
Executive Vice President of Corporate
Staff and Human Resources
Comerica Tower at Detroit Center
500 Woodward Avenue, 31st Floor
Detroit, Michigan 48226
To Executive (current home address):
-------------------------------------
8.4. Claims and Disputes; Arbitration. Claims for benefits under this
Agreement shall be made in writing to the Company. If the claim is rejected or
not acted upon within thirty days, a copy of the claim shall be presented to the
Claims Arbiter. The Claims Arbiter shall provide a reasonable opportunity (not
to exceed thirty days) for both parties to present relevant evidence and shall
schedule a hearing if required by applicable law or if the Claims Arbiter
otherwise determines to hold a hearing. The Claims Arbiter shall, within a
reasonable period of time but not later than thirty days after receipt of the
claim or the date of a hearing, whichever is later, provide written notice of
disposition of the claim. If the claim is denied in whole or in part, such
notice shall also set forth:
-34-
<PAGE>
A. The specific reason or reasons for denial; and
B. Specific reference to the pertinent provisions of the
Agreement upon which the denial is based.
Unless waived by the Company in writing, Executive shall be required to
exhaust his or her remedies under the foregoing claims procedure as a condition
precedent to filing a claim for arbitration in accordance with the following
paragraph.
Any controversy arising out of or relating to this Agreement, or
alleged breach thereof, shall be settled by binding arbitration in Wayne
County, Michigan in accordance with the laws of the State of Michigan by three
arbitrators, one of whom shall be appointed by the Company, one by Executive
(or in the event of his or her death, Executive's legal representative) and the
third of whom shall be appointed by the first two arbitrators. The arbitration
shall be conducted as a de novo review in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. Judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
8.5 Limitation of Company's Liability. Notwithstanding any other
provision hereof, the Company shall not be liable for any actual or potential
loss or diminution of value Executive may incur or allege due to legal,
financial accounting and/or internal Company policy restrictions applicable to
Executive by reason of his or her position with the Company, including, without
limitation, restrictions imposed by Section 16 of the Exchange Act,
-35-
<PAGE>
the Securities Act of 1933, as amended, the Company's internal trading blackout
policy and the pooling-of-interest financial accounting rules applicable to
dispositions of stock by "affiliates". Executive further agrees that he or she
will not make any claim against the Company for reimbursement or otherwise in
connection with any adverse financial consequences he or she may incur in
complying with such rules and policy.
IN WITNESS WHEREOF, Executive has hereunto set Executive's hand, and
pursuant to authorization from its Board, the Company has caused this Agreement
to be executed in its name on its behalf, all as of the day and year first
written above.
EXECUTIVE: COMERICA INCORPORATED
By
-------------------------- ------------------------------
Richard A. Collister
--------------------------
Title
---------------------------
Executive Vice President
-36-
<PAGE>
Exhibit A to
Comerica Incorporated
Executive Officer
Continuity Agreement
RECEIPT AND RELEASE
Executive hereby acknowledges that he or she has been advised by
Comerica Incorporated (the "Company") that he or she is entitled to receive a
severance payment in the net amount of _______________ _____________________
Dollars ($___________) under Sections 4.3.A. and 4.3.B. of the Comerica
Incorporated Executive Officer Continuity Agreement (the "Agreement") and that
said sum is the correct amount owing to him or her under Sections 4.3.A. and
4.3.B. of the Agreement. Upon receipt by Executive of a check from the Company
payable to the order of Executive in the above amount which is backed by
sufficient funds, Executive hereby agrees to refrain from making any claim
against the Company or any of its affiliates (or against any successors of the
Company or of any of its affiliates) for any further sums under Sections 4.3.A.
and 4.3.B. of the Agreement. Executive further reaffirms and agrees to honor
all obligations Executive has under the Agreement.
EXECUTIVE
Dated: _____________________ ________________________________
<PAGE>
NAMES OF EMPLOYEES WHO ARE
PARTICIPANTS OF THE
COMERICA INCORPORATED
EXECUTIVE OFFICER CONTINUITY AGREEMENT
(Effective Date of Coverage January 1, 1996)
LEWIS, J.
FULTON, J.
JOHNSON, T.
GREENE, D.
HAGGERTY, J.
MARCINELLI, R.
STEPHENS, D.
WHITE, D.
BERAN, J.
BUTTIGIEG III, J.
COLLISTER, R.
ESHELMAN, G.
GUMMER, C.
MADISON, G.
TALBOTT, F
<PAGE>
EXHIBIT 10.17
COMERICA INCORPORATED
SENIOR OFFICER SEVERANCE PLAN
-i-
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.PURPOSE, ESTABLISHMENT AND TERM
<TABLE>
<S> <C> <C>
1.1. Purpose and Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Term of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2.NATURE OF RIGHTS UNDER PLAN
2.1. Contractual Rights to Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Effect on Other Benefits and Rights as Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3.DEFINITIONS AND CONSTRUCTION
3.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Annual Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Annual Management Incentive Program . . . . . . . . . . . . . . . . . . . . . . 5
C. Beneficial Owner or Beneficial Ownership . . . . . . . . . . . . . . . . . . . 5
D. Benefit Equalization Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
E. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
F. Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
G. Change of Control of the Company . . . . . . . . . . . . . . . . . . . . . . . 7
H. Claims Arbiter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
I. Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
J. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
K. Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
L. Company Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
M. Deferred Compensation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 10
N. Disability or Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
O. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
P. Employee Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Q. Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
R. Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
S. Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
T. Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
U. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
V. Official Employment Termination Date . . . . . . . . . . . . . . . . . . . . . 15
W. Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
X. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Y. Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Z. Potential Change of Control of the Company . . . . . . . . . . . . . . . . . . 17
AA. Preferred Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AB. Qualifying Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AC. Restricted Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AD. Retirement or Retiring . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
AE. Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
AF. Severance Agreement and Release . . . . . . . . . . . . . . . . . . . . . . . . 19
AG. Severance Benefit(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2. Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4. Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.5. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-ii-
<PAGE>
ARTICLE 4.
CONTINUATION OF COMPENSATION AND
SEVERANCE BENEFITS
<TABLE>
<S> <C> <C>
4.1. Continuation of Compensation Through Date of
Termination and Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. Continuation of Compensation Through
Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
B. Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2. Qualifying Circumstance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3. Description of Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4. Effect of Death, Disability or Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.5. Effect of Termination for Cause
or Other Than for Good Reason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5.
FORM AND TIMING OF SEVERANCE BENEFITS
5.1. Form and Timing of Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2. Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 6.SUCCESSORS
6.1. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2. Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 7.
ADMINISTRATION AND CONFIDENTIALITY OF INFORMATION;
OBLIGATIONS OF PARTICIPANT UPON A POTENTIAL CHANGE OF CONTROL
7.1 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3 Obligations of Participant Upon a Potential
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 8.MISCELLANEOUS PROVISIONS
8.1. Entire Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3. Claims and Disputes; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4. Limitation of Company's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
-iv-
<PAGE>
ARTICLE 1.
PURPOSE, ESTABLISHMENT AND TERM
1.1 Purpose and Establishment. The Board of Directors of the
Company (the "Board"), has determined that it is in the best interests of the
Company and its shareholders that the Company maintain the continued dedication
of Participants (as defined below) of this Plan, notwithstanding the
possibility, threat or occurrence of a Change of Control of the Company (as
defined below). To alleviate the inevitable distraction associated with a
pending or threatened Change of Control of the Company and to encourage the
full attention and dedication to the Company of Plan Participants currently and
in the event of any threatened or pending Change of Control of the Company, the
Board believes that it is imperative that it take steps, consistent with those
taken by other similarly situated organizations, to provide Participants with
compensation and benefits arrangements upon a Change of Control of the Company
which ensure that the compensation and benefits expectations of Participants
will be satisfied. In order to accomplish the foregoing objectives, the Board
has established the Plan the provisions of which are embodied herein. This
Plan shall become effective January 1, 1996 (the "Effective Date"), and shall
remain in effect as provided in Section 1.2 herein.
-1-
<PAGE>
1.2. Term of Plan. The term of this Plan will commence on the
Effective Date and continue through December 31, 1998; provided, however, that
if a Change of Control of the Company occurs during the term of this Plan, the
term of this Plan will not expire until the elapse of the longer of the
following periods: (i) the period which ends on the last day of the
twenty-fourth month subsequent to the month in which the Change of Control of
the Company occurs (or, in the case of a Change of Control of the Company
described in Section 3.1.G(3) or (4) hereof, the period which ends on the
earlier of (a) the last day of the twenty-fourth month subsequent to the month
in which consummation of the transaction, approval of which constitutes the
Change of Control of the Company, occurs, or (b) the last day of the thirtieth
month subsequent to the month in which the Change of Control of the Company
occurs), or (ii) the period which ends on the date all benefits owing to
Participant hereunder have been paid.
-2-
<PAGE>
ARTICLE 2.
NATURE OF RIGHTS UNDER PLAN
2.1. Contractual Rights to Benefits. This Plan establishes a
contractual right to the Severance Benefits Participant may become entitled to
hereunder following the occurrence of a Change of Control of the Company.
2.2 Effect on Other Benefits and Rights as Employee. Coverage
under this Plan shall not affect Participant's right to receive any amounts
payable to Participant under any benefit, incentive, retirement, or other plan
or arrangement, or under any employment agreement, except to the extent that
the express provisions of such other agreement, plan or arrangement preclude
the payment of or provide for offset of benefits thereunder upon receipt of
benefits under this Plan. Further, coverage of Participant under this Plan
shall not adversely affect Participant's rights as an Employee of the Company,
whether those rights exist now or arise hereafter.
2.3. Employment Status. The provisions hereof shall not be deemed
to create a contract between the Company and Participant to employ Participant
for any fixed period of time. Participant's employment with the Company may be
terminated at will by either the Company or Participant, with or without Cause,
subject to fulfillment by the Company of its obligation to provide such
Severance Benefits as may be required hereunder.
-3-
<PAGE>
ARTICLE 3.
DEFINITIONS AND CONSTRUCTION
3.1. Definitions. Whenever used in the Plan, the following terms
shall have the meanings set forth below, and when the meaning is intended, the
initial letter of the term is capitalized.
AH. "Annual Base Salary" means Participant's rate
of annual salary in effect, except as
otherwise specifically provided herein, as of
the date a Change of Control of the Company
occurs, or if such rate is higher as of the
date Participant experiences a Qualifying
Circumstance, Participant's rate of annual
salary in effect as of the date he or she
experiences a Qualifying Circumstance;
provided, however, that if Participant is
compensated on a commission basis and does
not have a rate of annual salary,
Participant's salary level utilized for the
purpose of determining Participant's benefit
credits under the Comerica Incorporated
Preferred Compensation Plan shall be
considered Participant's rate of annual
salary. Annual Base Salary shall include (i)
any amount which is contributed by the
Company pursuant to an elective deferral
which is not includible in the Participant's
gross income under Code Sections 125 or
402(e)(3) and (ii) any amount contributed by
the Company to the Deferred Compensation Plan
pursuant to Participant's election.
AI. "Annual Management Incentive Program" means
the Comerica Incorporated annual management
incentive program or any
-4-
<PAGE>
plan or program adopted or implemented by the
Company as a successor to such program.
AJ. "Beneficial Owner" or "Beneficial Ownership"
or "Beneficially Owns" or "Beneficially
Owned" shall have the meanings ascribed to
such terms in Exchange Act Rule 13d-3.
AK. "Benefit Equalization Plan" means the Benefit
Equalization Plan For Employees of Comerica
Incorporated or any plan adopted by the
Company as a successor to such plan.
AL. "Board" means the Board of Directors of
Comerica Incorporated.
AM. "Cause" shall be deemed to have arisen if
Participant has conducted himself or herself
in a manner described in (1) or (2) below:
(1) If Participant has willfully and
continually failed to perform
substantially all of his or her
duties with the Company or one of
its affiliates (unless such failure
occurs (i) as a result of
Participant's incapacity
precipitated by physical or mental
illness or (ii) after the
Participant's issuance of a Notice
of Termination for Good Reason
pursuant to Section 4.6 hereof),
after a written demand to perform is
delivered to Participant by the
Board or Chief Executive Officer of
the Company which demand must
specifically identify the manner in
which the Board or Chief Executive
Officer
-5-
<PAGE>
believes that Participant has not
performed substantially all of his
or her duties, provided that
Participant fails to remedy the
situation within ten (10) business
days of receiving such notice; or
(2) If Participant has engaged willfully
in illegal or gross misconduct which
is materially and demonstrably
injurious to the Company, monetarily
or otherwise. However, no act, or
failure to act, on Participant's
part shall be considered "willful"
unless Participant took such action
(or failed to take such action)
other than in good faith and without
reasonable belief that his or her
action or omission was in the best
interests of the Company.
AN. "Change of Control of the Company" shall be
deemed to have occurred if, during the term
of this Plan, the conditions set forth in any
of the following paragraphs shall have been
satisfied:
(1) any Person is or becomes the
Beneficial Owner, directly
or indirectly, of securities
of the Company (not including
in the securities
Beneficially Owned by such
Person any securities
acquired directly from the
Company or its affiliates)
which represent 26% or more
of the combined voting power
of the Company's then
outstanding securities; or
-6-
<PAGE>
(2) during any period of up to two
consecutive years (not
including any period prior to
the Effective Date of this
Plan), individuals who
constitute the Board at the
beginning of such period and
any new director (other than
a director whose initial
assumption of office is in
connection with an actual or
threatened election contest,
including but not limited to,
a consent solicitation
relating to the election of
directors of the Company, as
such terms are used in Rule
14a-11 of Regulation 14A
under the Exchange Act) whose
election by the Board or
nomination for election by
the Company's stockholders
was approved by a vote of at
least two-thirds (2/3rds) of
the directors then still in
office who either were
directors at the beginning of
the period or whose election
or nomination for election
was previously so approved,
cease for any reason to
constitute a majority of the
Board; or
(3) the shareholders of the Company
(i) approve a merger or
consolidation of the Company
with any other corporation,
or (ii) approve the issuance
of voting securities of the
Company pursuant to
applicable stock exchange
requirements in connection
with a merger or
consolidation of the Company
or any direct or indirect
subsidiary of the Company
with any other corporation,
other than in either (i) or
(ii) above a merger or
consolidation
-7-
<PAGE>
which would result in the voting
securities of the Company
outstanding immediately prior
thereto continuing to
represent (either by
remaining outstanding or by
being converted into voting
securities of the surviving
entity), in combination with
shares owned by any trustee
or other fiduciary holding
securities under an employee
benefit plan of the Company,
at least 75% of the combined
voting power of the voting
securities of the Company or
such surviving entity
outstanding immediately after
such merger or consolidation;
or
(4) the shareholders of the Company
approve a plan of complete
liquidation of the Company or
an agreement to sell or
dispose of all or
substantially all of the
Company's assets.
AO. "Claims Arbiter" means such person or persons
as the Company designates to mediate disputes
involving the Plan. No such person shall be
an employee of the Company.
AP. "Code" means the Internal Revenue Code of
1986, as amended. All references to sections
of the Code shall be deemed to refer to any
successor provisions to such sections.
AQ. "Committee" means the Compensation Committee
of the Board of Directors of Comerica Incorporated.
AR. "Company" means Comerica Incorporated, a
Delaware corporation (including any and all
subsidiaries), and any
-8-
<PAGE>
successor to its business and/or assets which
assumes this Plan by operation of law, or
otherwise (except in determining, under
Section 3.1.G. hereof, whether or not a
Change of Control of the Company has occurred
in connection with any such succession).
AS. "Company Shares" means shares of $5.00 par
value common stock of the Company or any
equity securities into which such shares have
been converted.
AT. "Deferred Compensation Plan" means the
Comerica Incorporated Deferred Compensation
Plan, the Manufacturers National Corporation
Executive Incentive Plan, or any plan adopted
by the Company as a successor to either such
plan.
AU. "Disability" or "Disabled" means "Totally
Disabled" within the meaning of such term as
set forth in the Long-Term Disability Plan
of Comerica Incorporated, the provisions of
which are incorporated herein by reference.
AV. "Effective Date" means January 1, 1996.
AW. "Employee Options" means options to purchase
Company Shares granted pursuant to the Long-Term
Incentive Plan.
AX. "Exchange Act" means the Securities Exchange
Act of 1934, as amended. All references to
sections of the Exchange Act shall be deemed
to refer to any successor provisions to such
sections.
AY. "Expiration Date" means the date the Plan
expires, as provided in Section 1.2 herein.
-9-
<PAGE>
AZ. "Good Reason" to justify a Participant's
decision to terminate his or her employment
means the occurrence (without the express
written consent of Participant) of any one or
more of the following acts by the Company, or
failures by the Company to act, unless any
such act or failure to act is corrected prior
to Participant's Official Employment
Termination Date:
(1) Assignment of any duties to
Participant inconsistent with his or
her position as a Senior Vice
President of the Company or a
substantial reduction in the nature
of Participant's responsibilities
compared to his or her
responsibilities as they existed
immediately prior to the occurrence
of the Change of Control of the
Company;
(2) Relocation of Participant's
principal work station to a location
more than sixty miles away from
Participant's principal office at
the time of the occurrence of the
Change of Control of the Company;
(3) Any reduction in the amount of
Participant's Annual Base Salary
from the rate in effect on the date
a Change of Control of the Company
occurs or a reduction in
Participant's salary range of 15% or
more from his or her salary range in
effect on the date a Change of
Control of the Company occurs;
(4) Failure to pay to Participant his or
her (i) Annual Base Salary
(including any commissions owing to
Participant) on the date scheduled
for payment unless Participant has
voluntarily deferred the receipt of
any amount not paid, (ii) annual
bonus
-10-
<PAGE>
under the Annual Management Incentive
Program (or under any other
short-term compensation plan in
which Participant was eligible to
participate before the occurrence of
a Change of Control of the Company)
at the normal payment time unless
non-payment of the bonus is
attributable to the Company's
failure to attain a level of
performance which would generate a
bonus pool or to inadequate
performance by Participant, or (iii)
deferred compensation under the
Deferred Compensation Plan (or under
any other deferred compensation
program of the Company), within
sixty days of the date such
compensation is scheduled to be
paid;
(5) (i) Discontinuance of any
compensation plan in which
Participant is eligible to
participate immediately prior to the
occurrence of the Change of Control
of the Company which provides
benefits material vis-a-vis
Participant's overall remuneration
(including, but not limited to, the
Annual Management Incentive Program,
the Long-Term Incentive Plan, the
Preferred Savings Plan, the
Retirement Plan, the Benefit
Equalization Plan, the Deferred
Compensation Plan, or any substitute
plans adopted by the Company prior
to the occurrence of the Change of
Control of the Company), unless an
equitable arrangement (embodied in
an ongoing substitute or alternative
plan) has been made with respect to
any such plan, or (ii) failure to
continue Participant's coverage
under any such plan or arrangement
on a basis at least as favorable,
-11-
<PAGE>
both in terms of the amount of benefits
provided and the level of
Participant's coverage relative to
other executives, as existed at the
time of the occurrence of the Change
of Control of the Company;
(6) (i) Failure to continue to provide
coverage (and/or benefits) to
Participant similar to that he or
she enjoyed under the
company-sponsored life insurance,
medical, health and accident,
disability or other welfare benefit
or material fringe benefit plans at
the time of the occurrence of the
Change of Control of the Company, or
(ii) the taking of any action which
would materially reduce, directly or
indirectly, any such coverage or
which would deprive Participant of
any material welfare or fringe
benefit he or she enjoyed at the
time of the occurrence of the Change
of Control of the Company, provided,
in either situation, the Company's
action occurs other than as a result
of an across-the-board adjustment
in coverage and/or benefits which
affects all senior officers of the
Company and all senior officers of
any Person in control of the
Company;
(7) Failure to obtain a satisfactory
agreement from any successor to
assume the Company's obligations
under this Plan, as required under
Section 6.1 hereof; and
(8) The taking of action by the Company
which purports to terminate
Participant's employment without
providing Participant a Notice of
Termination which
-12-
<PAGE>
satisfies the requirements of Section
3.1.U. hereof.
Participant's right to resign for Good Reason shall
not be affected by his or her incapacity due to
physical or mental illness nor shall Participant's
continuation of employment following the occurrence
of any circumstance constituting Good Reason
constitute consent to such circumstance or a waiver
of rights hereunder.
BA. "Long-Term Incentive Plan" means the Comerica
Incorporated Long Term Incentive Plan or any plan
adopted by the Company as a successor to such plan.
BB. "Notice of Termination" means a written notice which
shall indicate the specific termination provision in
this Plan relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Participant's
employment under the provision so indicated.
Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly
adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board
at a meeting of the Board which was called and held
for the purpose of considering such termination after
reasonable notice to Participant and an opportunity
for Participant, together with Participant's counsel,
to be heard before the Board (i) which finds that, in
the good faith opinion of the Board, Participant was
guilty of conduct set forth in clause (1) and/or (2)
of the definition of Cause
-13-
<PAGE>
herein, and (ii) which specifies the particulars
thereof in detail.
BC. "Official Employment Termination Date", with respect
to any purported termination of Participant's
employment after the occurrence of a Change of
Control of the Company and during the term of this
Plan, means: (i) if Participant's employment is
terminated due to Disability, thirty days after
Notice of Termination is given (provided that
Participant shall not have returned to the full-time
performance of his or her duties during such
thirty-day period), and (ii) if Participant's
employment is terminated for any other reason, the
date specified in the Notice of Termination [which,
in the case of a termination by either the Company or
Participant, shall be not less than thirty days
(except in the case of a termination for Cause or
except in the case where the event constituting Good
Reason occurred during the last thirty days of the
term of this Plan)] from the date such Notice of
Termination is given.
BD. "Participant" means any senior officer of the Company
whose name appears on Exhibit B hereto as an employee
covered by this Plan.
BE. "Person" shall have the meaning set forth in Section
3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person
shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary
holding securities
-14-
<PAGE>
under an employee benefit plan sponsored by the
Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a
corporation, owned directly or indirectly, by the
stockholders of the Company, in which their ownership
interests are in substantially the same proportions
as their ownership interests in stock of the Company.
BF. "Plan" means the Comerica Incorporated Senior Officer
Severance Plan as herein set forth.
BG. "Potential Change of Control of the Company" shall be
deemed to have occurred if the conditions set forth
in any one of the following paragraphs shall have
been satisfied:
(1) the Company enters into an agreement, the
consummation of which would result in the
occurrence of a Change of Control of the Company;
(2) the Company or any Person publicly announces an
intention to take or to consider taking actions
which, if consummated, would constitute a Change
of Control of the Company;
(3) any Person who is, or becomes, the Beneficial
Owner, directly or indirectly, of securities of
the Company, which represent 10% or more of the
combined voting power of the Company's then
outstanding securities, increases such Person's
Beneficial Ownership of such securities by 5% or
-15-
<PAGE>
more over the percentage so owned by such Person on
the Effective Date; or
(4) the Board adopts a resolution to the effect that, for
purposes of this Plan, a Potential Change of Control
of the Company has occurred.
BH. "Preferred Savings Plan" means the Comerica Incorporated
Preferred Savings Plan or any plan adopted by the Company as a
successor to such plan.
BI. "Qualifying Circumstance" means any of the events described in
Section 4.2 hereof.
BJ. "Restricted Shares" means Company Shares granted to
Participant under the Long-Term Incentive Plan subject to
restrictions.
BK. "Retirement" or "Retiring" shall be deemed to be the reason
for the termination by the Company or Participant of
Participant's employment if Participant's employment is
terminated in accordance with (i) the Company's retirement
policy (excluding its early retirement policy), which applies
to its salaried employees, as in effect immediately prior to
the occurrence of the Change of Control of the Company, or
(ii) any retirement arrangement which Participant has
consented to.
BL. "Retirement Plan" means the Comerica Incorporated Retirement
Plan or any plan adopted by the Company as a successor to such
plan.
BM. "Severance Agreement and Release" means a receipt for payment
of benefits hereunder and a settlement of and
-16-
<PAGE>
release of all claims against the Company in the form set
forth in Exhibit A, including any modification of such form by
the Company prior to Participant's Official Employment
Termination Date. The provisions of Exhibit A, including any
modifications thereof adopted by the Company, are incorporated
herein by reference.
BN. "Severance Benefit(s)" means the items of severance
compensation as provided in Article 4 hereof.
3.2. Gender and Number. The masculine, feminine and neuter, wherever
used in the Plan, shall refer to either the masculine, feminine or neuter; and,
unless the context otherwise requires, the singular shall include the plural and
the plural the singular.
3.3. Severability. In the event any provision of this Plan shall be
held illegal or invalid for any reason, the illegality or invalidity of the
provision shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.
3.4. Modification. No provision of this Plan may be modified, waived,
or discharged unless Participant consents in writing to such modification,
waiver, or discharge.
3.5. Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Delaware shall be the controlling law in
all matters relating to this Plan.
-17-
<PAGE>
ARTICLE 4.
CONTINUATION OF COMPENSATION AND
SEVERANCE BENEFITS
4.1. Continuation of Compensation Through Date of Termination and
Severance Benefits.
A. Continuation of Compensation Through Date of Termination.
Following a Change of Control of the Company and during the term of this Plan,
during any period that Participant fails to perform Participant's full-time
duties with the Company as a result of incapacity due to physical or mental
illness, the Company shall pay Participant's full base salary to Participant at
the rate in effect at the commencement of any such period (or shall pay
commissions earned at the scheduled payment date), together with all
compensation and benefits payable to Participant under the terms of any
compensation or benefit plan, program or arrangement maintained by the Company
during such period, until Participant's employment is terminated by the Company
for Disability. Further, the Company shall pay Participant's normal
post-termination compensation and benefits to Participant as such payments
become due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements.
If Participant's employment shall be terminated for any reason
following a Change of Control of the Company and during the term of this Plan,
the Company shall pay Participant's full salary to Participant through
Participant's Official Employment Termination Date at the rate in effect at the
time the Notice of Termination is
-18-
<PAGE>
given, together with all compensation and benefits payable to Participant
through Participant's Official Employment Termination Date under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company during such period. Further, the Company shall pay Participant's
normal post-termination compensation and benefits to Participant as such
payments become due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements.
B. Severance Benefits. Participant shall be entitled to receive
the Severance Benefits described in Section 4.3 hereof provided there has been
a Change of Control of the Company, not later than the end of the twenty-fourth
month which begins after the month in which the Change of Control of the
Company occurs(1), Participant experiences a Qualifying Circumstance and
Participant signs a Severance Agreement and Release and delivers it to the
Company. Participant shall not be entitled to receive Severance Benefits if his
or her employment is terminated for Cause or ends as a result of Participant
becoming Disabled, Retiring, dying or resigning without Good Reason.
- - ---------------
(1)In the case of a Change of Control of the Company
described in Section 3.1.G.(3) or (4) hereof, the period
during which Participant must experience a Qualifying
Circumstance in order to become entitled to Severance Benefits
shall be, in lieu of the period referred to above, the period
which ends on the earlier of (a) the last day of the
twenty-fourth month subsequent to the month in which
consummation of the transaction, approval of which constitutes
the Change of Control of the Company, occurs, or (b) the last
day of the thirtieth month subsequent to the month in which
the Change of Control of the Company occurs.
-19-
<PAGE>
4.2. Qualifying Circumstance. The occurrence or deemed occurrence of
any one or more of the following events not later than the end of period
referred to in Section 4.1.B. (or not later than the period referred to in
footnote (1), if applicable) shall be considered a Qualifying Circumstance:
BO. A successor company fails or refuses to assume the
Company's obligations under this Plan;
BP. The Company or any successor company breaches any of the
provisions of this Plan;
BQ. Participant's employment with the Company ends unless his
or her employment is terminated for Cause, or ends as a result of
Participant becoming Disabled, Retiring, dying or resigning
without Good Reason; or
-20-
<PAGE>
BR. Participant resigns for Good Reason.
Participant's employment shall be deemed to have been terminated
following a Change of Control of the Company by Participant with Good Reason if
Participant's employment is terminated prior to the occurrence of a Change of
Control of the Company without Cause at the direction of a Person who has
entered into an agreement with the Company the consummation of which will
constitute a Change of Control of the Company or if Participant terminates his
employment with Good Reason prior to the occurrence of a Change of Control of
the Company (determined by treating a Potential Change of Control of the
Company as a Change of Control of the Company in applying the definition of
Good Reason) if the circumstance or event which constitutes Good Reason occurs
at the direction of such Person.
4.3. Description of Severance Benefits. The following items
constitute the Severance Benefits Participant may receive hereunder:
BS. A severance payment equal to two times Participant's
Annual Base Salary; provided, however, that the
amount of this payment, together with other amounts
and/or benefits Participant receives hereunder (or
under other plans, agreements, or arrangements
sponsored by the Company or to which the Company is a
party) as a result of the occurrence of the Change of
Control of the Company which constitute "parachute
payments" under Section 280G of the Code may not
exceed the maximum amount deductible under Section
280G of the Code, and, if necessary to remain
-21-
<PAGE>
within the deduction limitation imposed by Code
Section 280G, this severance payment shall be reduced
to the maximum amount (but not below zero) which may
be paid without loss of the Company's deduction under
Code Section 280G;
BT. An amount (in lieu of any amounts Participant may be
entitled to receive as an eligible participant under
the Annual Management Incentive Program) equal to the
sum of (i) any incentive compensation Participant
earned (or, if such amount has not yet been
determined, the amount he or she would have earned
assuming the Company's annual profit plan performance
threshold was achieved) under the Annual Management
Incentive Program for the fiscal year immediately
preceding the year in which Participant's Official
Employment Termination Date occurs, provided any such
sum has not yet been paid; (ii) any incentive
compensation Participant earned under the Annual
Management Incentive Program with respect to any
multi-year performance period which was completed on
or prior to Participant's Official Employment
Termination Date provided any such sum has not yet
been paid; and (iii) a pro rata portion of the
aggregate estimated value of all incentive
compensation awards to Participant relating to all
uncompleted one-year performance periods (2) under
the Annual Management Incentive Program calculated by
- - ---------------
(2)Participant shall not be entitled to receive a pro rata payment
with respect to awards to be computed under multi-year performance periods
which have not been completed on or prior to Participant's Official Employment
Termination Date.
-22-
<PAGE>
assuming the Company's annual profit plan performance
threshold was achieved (3).
BU. Early lapse of restrictions applicable to all
Restricted Shares which were awarded to Participant
under the Long-Term Incentive Plan prior to the time
a Change of Control of the Company occurs (or, in the
case of a Change of Control of the Company described
in Section 3.1.G(3) or (4) hereof, any such shares
awarded prior to consummation of the transaction,
approval of which constitutes the Change of Control
of the Company), and acceleration of vesting of all
outstanding Employee Options granted to Participant
under the Long-Term Incentive Plan prior to the time
a Change of Control of the Company occurs (or, in the
case of a Change of Control of the Company described
in Section 3.1.G(3) or (4) hereof, any such options
granted prior to consummation of the transaction,
approval of which constitutes the Change of Control
of the Company);
BV. $10,000 for payment of premiums to continue employee
benefit plan coverage offered to terminating
employees subsequent to Participant's Official
Employment Termination Date; and
- - ---------------
(3)The pro rata portion of any such award shall be the amount payable
(i) assuming the Company's performance threshold in the annual profit plan for
the year in which Participant's Official Employment Termination Date occurs was
achieved, and (ii) that a multiplier was utilized based on the multiplier which
would have applied had that performance occurred in the prior fiscal year, said
amount to be multiplied by a fraction, the numerator of which is the number of
full months which elapsed from the beginning of the performance period through
Participant's Official Employment Termination Date and the denominator of which
is twelve.
-23-
<PAGE>
BW. Outplacement services under a program to be selected
by the Company.
4.4. Effect of Death, Disability or Retirement. If, during the term of
this Plan, Participant (i) dies, (ii) fails to perform his or her duties with
the Company on a full-time basis for six consecutive months due to Disability,
and fails to recommence the full-time performance of his or her duties within
thirty days after a written Notice of Termination is given to Participant (which
notice may be given after Participant fails to perform his or her duties with
the Company on a full-time basis for five consecutive months due to Disability),
or (iii) ends his or her employment by Retiring, this Plan shall expire as of
the date of Participant's death, Official Employment Termination Date or date of
Retirement, as the case may be, without any obligation on the part of the
Company or its successors to pay any Severance Benefits to or with respect to
Participant hereunder.
4.5. Effect of Termination for Cause or Other Than for Good Reason.
Following a Change of Control of the Company, if Participant's employment is
terminated either (i) by the Company for Cause; or (ii) by Participant without
Good Reason, subject to Section 4.1.A. hereof, the Company shall have no further
obligations to Participant under this Plan.
4.6. Notice of Termination. After a Change of Control of the Company
and during the term of this Plan, any purported termination of Participant's
employment (other than by reason of death), shall be communicated by a Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 8.2 hereof, and
-24-
<PAGE>
no purported termination which fails to comply with this requirement shall be
effective.
-25-
<PAGE>
ARTICLE 5.
FORM AND TIMING OF SEVERANCE BENEFITS
5.1. Form and Timing of Severance Benefits. Following Executive's
satisfaction of the applicable conditions, the Severance Benefits shall be paid
or provided in the manner and at the times hereinafter set forth. Severance
Benefits described in Sections 4.3.A., 4.3.B. and 4.3.D. hereof shall be paid in
cash (except as otherwise provided herein) to Participant in a single lump sum
as soon as practicable following Participant's Official Employment Termination
Date; provided, however, that if the amounts of such payments cannot be finally
determined within ninety days after such date, the Company shall pay Participant
an estimate of the amount Participant is entitled to receive not later than such
ninetieth day. Such estimate shall be determined in good faith by the Company.
The Company shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2) of the Code) as soon as the final amount
thereof can be determined. If the estimated payments exceed the amount
subsequently determined to be due, any excess shall constitute a loan by the
Company to Participant, which shall be repayable to the Company on the fifth
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). At the time that payments are
made hereunder, the Company shall provide
-26-
<PAGE>
Participant with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations.
If a decision is rendered by a court or a determination is made by the
Internal Revenue Service that the aggregate "parachute payments" which were
paid to or for Participant's benefit exceeded the maximum amount deductible
under Code Section 280G, and such decision or determination has become final,
then Participant shall be obligated to repay to the Company upon demand an
amount equal to the sum of (i) the excess of the aggregate "parachute payments"
which were paid to or for Participant's benefit over the aggregate "parachute
payments" that could have been paid to or for Participant's benefit without
loss of deduction under Section 280G of the Code with respect to any portion of
such "parachute payments", and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in Section 1274(b)(2)(B) of the Code
from the date of Participant's receipt of such excess until the date of
Participant's repayment thereof.
Early lapse of restrictions relating to Restricted Shares and
acceleration of vesting of Employee Options under Section 4.3.C. shall occur as
of Participant's Official Employment Termination Date. Severance Benefits
described in Section 4.3.E. hereof shall
-27-
<PAGE>
be provided to Participant as soon as practical after Participant's Official
Employment Termination Date.
5.2. Withholding of Taxes. Company shall withhold from any amounts
payable under this Plan all Federal, state, city, or other taxes as legally
required.
-28-
<PAGE>
ARTICLE 6.
SUCCESSORS
6.1. Successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) of all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Plan in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. Failure of the Company to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Plan and
shall entitle Participant to receive Severance Benefits from the Company in the
same amount and on the same terms as Participant would be entitled to hereunder
if he voluntarily terminated his employment for Good Reason after the occurrence
of a Change of Control of the Company, except, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed to be Participant's Official Employment Termination Date.
6.2. Beneficiaries. This Plan shall inure to the benefit of and be
enforceable by Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If
Participant should die
-29-
<PAGE>
while any amount would still be payable to him or her hereunder had he or she
continued to live, all such amounts, unless otherwise provided herein, shall be
paid to Participant's estate or, if the Company is satisfied that there will be
no probate proceeding involving Participant's estate, and Participant has
executed a will which does not specifically refer to the Severance Benefits
hereunder but which pours over the residue of Participant's estate to a trustee
under a revocable inter vivos trust established by Participant during his or
her lifetime, then all such amounts shall be paid to the trustee or successor
trustee of such trust.
-30-
<PAGE>
ARTICLE 7.
ADMINISTRATION AND CONFIDENTIALITY OF INFORMATION;
OBLIGATIONS OF PARTICIPANT UPON A POTENTIAL CHANGE OF CONTROL
7.1 Administration. This Plan shall be administered by the Board,
as advised by the Committee. In such advisory capacity, and with the approval
of a majority of the Board concerning all such actions hereunder, the
Committee, to the extent any of its actions are not contrary to the express
provisions of the Plan, is authorized to interpret this Plan, to prescribe and
rescind rules and regulations, to provide conditions and assurances deemed
necessary and advisable to protect the interests of the Company, to recommend
individuals for participation, and to make all other determinations necessary
or advisable in connection with the administration of this Plan.
In fulfilling its administrative duties hereunder, the Board and the
Committee may rely on outside counsel, independent accountants, or other
consultants to render advice or assistance, and shall be indemnified by the
Company for acting in reliance on such advice.
7.2 Confidential Information. Participant shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
Participant during Participant's employment by the Company or any of its
affiliated
-31-
<PAGE>
companies and which shall not be or have become public knowledge (other than by
acts by Participant or representatives of Participant in violation of this
Plan). After termination of Participant's employment with the Company,
Participant shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 7.2 constitute a basis for deferring or withholding any amounts
otherwise payable to Participant under this Plan.
7.3 Obligations of Participant Upon a Potential Change of Control.
As a condition of participation in this Plan, Participant agrees that, subject
to the terms and conditions of this Plan, in the event of the occurrence of a
Potential Change of Control of the Company during the term of this Plan, he or
she will remain in the employ of the Company until the earliest of (i) a date
which is six months from the date such Potential Change of Control of the
Company occurs; (ii) the date of occurrence of a Change of Control of the
Company; (iii) the date of termination by Participant of his or her employment
for Good Reason (determined by treating the Potential Change of Control of the
Company as a Change of Control of the Company in applying the definition of
Good Reason), by reason of death, Disability or Retirement; or (iv) the date of
termination by the Company of Participant's employment.
-32-
<PAGE>
ARTICLE 8.
MISCELLANEOUS PROVISIONS
8.1. Entire Plan. This Plan shall constitute the entire plan governing
the payment of severance benefits by the Company to Participant and shall
supersede those provisions of any employment agreement between Participant and
the Company or severance plan sponsored by the Company which agreement or plan,
as the case may be, affects Participant's rights to receive benefits as a result
of his or her termination of employment following the occurrence of a Change of
Control of the Company. In all other respects, any employment agreement or plan
shall continue in full force and effect, and is hereby ratified and confirmed.
8.2. Notices. Except as otherwise specified herein, for purposes of
this Plan, notices and all other communications provided for in the Plan shall
be in writing and shall be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
-33-
<PAGE>
To the Company:
Executive Vice President of Corporate
Staff and Human Resources
Comerica Tower at Detroit Center
500 Woodward Avenue, 31st Floor
Detroit, Michigan 48226
To the Participant:
At current address on file with Human Resources
8.3. Claims and Disputes; Arbitration. Claims for benefits under this
Plan shall be made in writing to the Company. If the claim is rejected or not
acted upon within thirty days, a copy of the claim shall be presented to the
Claims Arbiter. The Claims Arbiter shall provide a reasonable opportunity (not
to exceed thirty days) for both parties to present relevant evidence and shall
schedule a hearing if required by applicable law or if the Claims Arbiter
otherwise determines to hold a hearing. The Claims Arbiter shall, within a
reasonable period of time but not later than thirty days after receipt of the
claim or the date of a hearing, whichever is later, provide written notice of
disposition of the claim. If the claim is denied in whole or in part, such
notice shall also set forth:
A. The specific reason or reasons for denial; and
B. Specific reference to the pertinent provisions of the Plan upon
which the denial is based.
-34-
<PAGE>
Unless waived by the Company in writing, Participant shall be required to
exhaust his or her remedies under the foregoing claims procedure as a
condition precedent to filing a claim for arbitration in accordance with the
following paragraph.
Any controversy arising out of or relating to this Plan, or alleged
breach thereof, shall be settled by binding arbitration in Wayne County,
Michigan in accordance with the laws of the State of Michigan by three
arbitrators, one of whom shall be appointed by the Company, one by Participant
(or in the event of his or her death, Participant's legal representative) and
the third of whom shall be appointed by the first two arbitrators. The
arbitration shall be conducted as a de novo review in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof.
8.4 Limitation of Company's Liability. Notwithstanding any other
provision hereof, the Company shall not be liable for any actual or potential
loss or diminution of value Participant may incur or allege due to legal,
financial accounting and/or internal Company policy restrictions applicable to
Participant by reason of his or her position with the Company, including,
without limitation, restrictions imposed by Section 16 of the Exchange Act, the
Securities Act of 1933, as amended, the Company's internal
-35-
<PAGE>
trading blackout policy and the pooling-of-interest financial accounting rules
applicable to dispositions of stock by "affiliates". Participant further
agrees that he or she will not make any claim against the Company for
reimbursement or otherwise in connection with any adverse financial
consequences he or she may incur in complying with such rules and policy.
-36-
<PAGE>
Exhibit A to
Comerica Incorporated
Senior Officer
Severance Plan
SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release (hereinafter referred to as the
"Release") is entered into between _____________________ (hereinafter referred
to as "Participant") and Comerica Incorporated, a Delaware corporation
(together with its affiliates being hereinafter referred to as "Comerica").
1. Participant was employed by Comerica and was covered under the
Comerica Incorporated Senior Officer Severance Plan (the "Plan"). As a result
of a change of control of Comerica and the termination of Participant's
employment, Participant is eligible to receive benefits under the Plan provided
Participant signs this Release. Participant is not entitled to receive any
benefits under the Plan if Participant fails to sign this Release.
2. Comerica hereby acknowledges that Participant is entitled to
receive a severance payment in the net amount of _______________ dollars
($_____________) under Sections 4.3.A. and 4.3.B. of the Plan and a payment in
the net amount of ___________________ dollars ($_____________) under Section
4.3.D. of the Plan, and Participant acknowledges that said sums are the correct
amounts owning to Participant under Sections 4.3.A., 4.3.B. and 4.3.D. of the
Plan. Comerica also acknowledges that Participant is entitled to receive other
benefits under Sections 4.3.C. and 4.3.E. of the Plan.
3. Continuation of employee benefit plan coverage, with respect to
which Participant is receiving an amount under Section
-1-
<PAGE>
4.3.D. of the Plan to defray the premiums, will begin on the date of
termination of Participant's employment.
4. Except for payments and benefits under the Plan and under the
Comerica Incorporated Retirement Plan and Comerica Incorporated Preferred
Savings Plan, Participant acknowledges that he or she is not entitled to
receive any other payments or benefits from Comerica.
5. In consideration of payment to Participant of the amounts and
provision of benefits under the Plan, Participant agrees for himself (or
herself) and on behalf of all people who may act on his or her behalf
(including, but not limited to, Participant's family members, heirs, executors,
administrators, personal representatives, agents and/or legal
representatives), to forever and fully release and discharge Comerica, and all
former, current and future employees, directors, officers, agents and
successors of Comerica, from any and all claims, causes of action, charges,
contracts, grievances, demands, and/or other liability of any nature
whatsoever, that Participant ever had by reason of or arising out of any
matter, cause and/or event occurring on or prior to the date of signing of this
Release. This shall include, but not be limited to, any and all claims of any
nature which may have arisen on or prior to the date of signing of this Release
and which are in any way related to Participant's employment, termination of
employment, any and all claims relating to forced resignation, constructive
discharge, libel, slander, deprivation of due process, wrongful discharge,
discrimination, harassment of any nature, breach of contract, breach of implied
contract, infliction of emotional
-2-
<PAGE>
distress, detrimental reliance, invasion of privacy, negligence, interference
with contractual or other relationships, retaliatory discharge or treatment
and/or termination in violation of public policy. This Release also
specifically includes, but is not limited to, any and all claims under common
law or any federal, state and/or local law, regulation, executive order, rule
and/or ordinance, and/or any and all claims which could have been alleged in
any litigation or administrative proceeding between Participant and any of the
persons and/or entities released. This Release shall further include, but not
be limited to, any right, claim or demand, which may have arisen on or prior to
the date of signing of this Release, which Participant may have pursuant to the
Michigan Payment of Wages and Fringe Benefits Act, the Whistleblowers'
Protection Act, the Fair Labor Standards Act, the Equal Pay Act, the Age
Discrimination in Employment Act, the Elliott-Larsen Civil Rights Act, Title
VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the
Michigan Handicappers' Civil Rights Act, the Employee Retirement Income
Security Act and/or any other federal, state and/or local law, executive order,
rule, ordinance or regulation.
6. Participant promises never to file a lawsuit, grievance,
administrative charge or any other type of action asserting any claims which
are released in Section 5. of this Release. Further, Participant acknowledges
that he or she has received a copy of the Plan and reaffirms and agrees to
honor all obligations Participant has under the Plan.
-3-
<PAGE>
7. The parties agree that this Release will forever and for all time
bar any action and/or claim of Participant based on circumstances or events
which occurred on or prior to the time of the signing of this Release.
8. This Release constitutes the entire agreement between Participant
and Comerica relating to the subject matter within, and supersedes any other
agreements and understandings between the parties relating to such subject
matter. Comerica has not made any promises to Participant with respect to such
subject matter other than those contained herein.
9. Comerica advises Participant to consult with an attorney prior to
signing this Release. Participant shall have forty-five days in which to
consider this Release. The forty-five day period shall not begin to run until
Comerica informs Participant, in writing, in a manner calculated to be
understood by the average individual eligible to participate in the Plan, as to
(i) any class, unit, or group of individuals covered by the Plan, any
eligibility factors for the Plan, and any time limits applicable to the Plan;
and (ii) the job titles and ages of all individuals eligible or selected for
the Plan, and the ages of all individuals in the same job classification or
organizational unit who are not eligible or selected for participation in the
Plan.
10. Following the signing of this Release, Participant shall have
seven days within which he or she may revoke this Release, by hand delivering
or mailing (certified mail suggested) during such seven-day period, a written
notice of revocation to:
-4-
<PAGE>
Executive Vice President of Corporate
Staff and Human Resources
Comerica Tower at Detroit Center
500 Woodward Avenue, 31st Floor
Detroit, Michigan 48226
This Release shall not become effective or enforceable until the revocation
period provided in this section has expired. If Participant fails to sign this
Release, or if Participant revokes this Release, Participant will not receive
any payments or benefits described herein and must return all payments and
benefits which may have been made under the Plan.
11. Participant acknowledges that he or she has had sufficient time
to review this Release and has carefully read and understands its contents.
Participant has had the full opportunity to consult with an attorney regarding
the terms hereof. Participant acknowledges that he or she is knowingly and
voluntarily signing this Release with full knowledge of its terms.
The parties have signed this Release on the dates set forth below.
COMERICA INCORPORATED
Dated:___________________ By:_____________________________
Its:____________________________
PARTICIPANT
Dated:___________________ ________________________________
-5-
<PAGE>
Exhibit B to Comerica Incorporated
Senior Officer Severance Plan
NAMES OF EMPLOYEES WHO ARE
PARTICIPANTS OF THE COMERICA
INCORPORATED SENIOR OFFICER SEVERANCE PLAN
DAVID, L.
DEYO, J.
ELLIS, P.
FAUBION, P.
FISHER, T.
GADDY JR., F.
GOLDMAN, A
GOYNE, J.
GREGORY III, E.M.
HAWKINS, S.
HERMANN, A.
HUGLEY, S.
KACZMAREK, W.
KILLIAN, J.
LINDENBERG, G.
LOVE, J.
MCMAHON, E.
MORAN, J.
MULVAHILL, K.
OGDEN, T.
RANSDELL, D.
SHOBE, M.
TIETJEN, J.
BAKER, M.E.
BALL JR. F.
BELANGER, G.
CARLETON, L.
DANIELS, T.
EARLY, T.
EASTHAM, L.
FIEDLER, D.
GARAVAGLIA, J.
JANISSE, R.
KAWAMOTO, D.
LAMB, J.
LYONS, R.
MAGDOWSKI, A.
MARKS, R.
MIMS, E.
OLSEN, R.
ONG, M.
RONAN, P.
<PAGE>
TIERNEY, M.
WELLER, P.
WELSHER, P.
ZARB, E.
<PAGE>
1996 HIGHLIGHTS
FOCUSED ON PERFORMANCE
- - Initiated a major corporate program to improve efficiency, revenue and
customer service. Comerica expects to ultimately realize annual pre-tax
benefits of approximately $110 million. As a result of the program,
Comerica recorded a pre-tax restructuring charge in 1996 of $90 million
($60 million after tax, or $0.53 per share).
- - Earned 15.98 percent on average common shareholders' equity (18.33 percent
excluding the restructuring charge), compared to 16.46 percent in 1995.
- - Returned 1.22 percent on average assets (1.40 percent excluding the
restructuring charge), compared to 1.21 percent in 1995.
REPORTED RECORD EARNINGS
- - Recorded net income of $417 million, or $3.55 per share (excluding the
restructuring charge, net income for 1996 increased $60 million to $477
million, or $4.08 per share), compared with $413 million, or $3.54 per
share for 1995.
SUSTAINED GROWTH
- - Maintained average total assets at $34 billion (increased 2 percent
excluding the sale of Comerica Bank-Illinois).
- - Reached $25 billion in average total loans, an 8 percent increase (10
percent increase excluding the sale of Comerica Bank-Illinois).
- - Reached $22 billion in average total deposits, a 3 percent increase (5
percent increase excluding the sale of Comerica Bank-Illinois).
- - Increased average shareholders' equity $176 million to $2.7 billion.
ENHANCED SHAREHOLDERS' RETURN
- - Announced a share buyback program for 15 million shares and repurchased 13
million shares in 1996.
- - Raised the quarterly cash dividend 11 percent to $0.39 per share.
- - Declared annual cash dividends of $1.52 per share.
IMPLEMENTED KEY STRATEGIES
- - Completed the acquisition of the $1.1 billion Metrobank in California for
$125 million of common stock.
- - Divested the following businesses after determining that the investment in
these companies did not provide a superior return to shareholders.
- Sold the $1.4 billion Illinois bank subsidiary for approximately $160
million in cash and recorded a $6 million pre-tax gain.
- Sold the business and certain assets of John V. Carr & Son, Inc., the
wholly owned customs brokerage and freight forwarding subsidiary,
which resulted in a $9 million pre-tax charge.
- Announced the sale of the bond indenture services business, which
closed in the first quarter of 1997.
- Completed a merchant services strategic alliance with National Data
Corporation (NDC) to enhance services to customers and gain
operational efficiencies using NDC's technical expertise and recorded
a gain of $13 million.
- - Issued 5 million shares of Fixed/Adjustable Rate Noncumulative Preferred
Stock, Series E, with a stated value of $50 per share, to economically
support capital ratios during the share repurchase program.
RETURN ON AVERAGE ASSETS
(IN PERCENTAGES)
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's return on average assets (in
percentages) from 1992 to 1996 compared to an industry average.
1992 1993 1994 1995 1996
--------------------------------------
Comerica 0.91 1.25 1.23 1.21 1.22
Excluding Restructuring Charge 1.25 1.40
Industry Average 0.83 1.15 1.11 1.12 1.26
EARNINGS PERFORMANCE
NET INTEREST INCOME
Net interest income, on a fully taxable equivalent (FTE) basis, is the
difference between interest earned on assets, including certain yield related
fees, and interest paid on liabilities. Adjustments are made to the yields on
tax-exempt assets in order to present tax-exempt income and fully taxable income
on a comparable basis. Net interest income (FTE) comprised 74 percent of net
revenues, compared to 73 percent in 1995 and 74 percent in 1994.
NET INTEREST INCOME
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's net interest income -- FTE (in
millions), with a line showing net interest margin -- FTE (percent of earning
assets), from 1992 to 1996.
1992 1993 1994 1995 1996
--------------------------------------
Net Interest Income (FTE) 1,159 1,163 1,254 1,321 1,427
Net Interest Margin (FTE) 4.73 4.65 4.32 4.19 4.54
14
<PAGE>
TABLE 2: ANALYSIS OF NET INTEREST INCOME-FTE
<TABLE>
<CAPTION>
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
(dollar amounts in millions) BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial loans $12,686 $1,041 8.21% $11,302 $ 989 8.75% $ 9,598 $ 709 7.38%
International loans 1,541 102 6.64 1,257 89 7.06 1,107 62 5.58
Real estate construction loans 707 65 9.22 541 52 9.52 403 32 7.85
Commercial mortgage loans 3,483 324 9.29 3,157 297 9.40 2,916 248 8.52
Residential mortgage loans 1,960 153 7.83 2,450 191 7.80 2,175 162 7.46
Consumer loans 4,624 457 9.88 4,569 461 10.10 3,795 358 9.44
Lease financing 351 24 6.82 285 19 6.65 217 14 6.48
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans (1) 25,352 2,166 8.54 23,561 2,098 8.90 20,211 1,585 7.84
Taxable securities 5,528 371 6.63 7,226 473 6.52 7,542 444 5.89
Securities exempt from federal
income taxes 295 28 9.96 399 41 10.43 462 49 10.51
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities 5,823 399 6.79 7,625 514 6.72 8,004 493 6.15
Interest-bearing deposits with banks 32 2 5.71 126 8 6.39 552 22 3.96
Federal funds sold and securities
purchased under agreements to resell 95 5 5.35 124 7 5.97 116 5 4.06
Trading account securities 4 1 7.94 5 -- 6.51 5 -- 1.67
Loans held for sale 64 5 7.68 96 8 7.75 150 11 7.31
- ----------------------------------------------------------------------------------------------------------------------------------
Total earning assets 31,370 2,578 8.20 31,537 2,635 8.35 29,038 2,116 7.28
Cash and due from banks 1,576 1,500 1,532
Allowance for loan losses (361) (340) (322)
Accrued income and other assets 1,610 1,432 1,203
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $34,195 $34,129 $31,451
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Money market and NOW accounts $ 6,913 231 3.33 $ 6,411 217 3.39 $ 6,592 173 2.62
Savings deposits 2,026 44 2.18 2,277 48 2.14 2,536 53 2.08
Certificates of deposit 6,887 365 5.30 6,358 344 5.41 5,681 239 4.21
Foreign office deposits (2) 843 46 5.46 1,842 112 6.07 1,816 78 4.28
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 16,669 686 4.11 16,888 721 4.27 16,625 543 3.26
Federal funds purchased and securities
sold under agreements to repurchase 2,106 112 5.31 2,816 166 5.88 2,817 121 4.31
Other borrowed funds 1,999 107 5.36 2,313 136 5.87 2,002 79 3.92
Medium- and long-term debt 4,745 295 6.22 4,510 289 6.41 2,708 148 5.46
Other (3) -- (49) -- -- 2 -- -- (29) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing sources 25,519 1,151 4.51 26,527 1,314 4.95 24,152 862 3.57
Noninterest-bearing deposits 5,589 4,767 4,700
Accrued expenses and other liabilities 400 324 286
Preferred stock 133 -- --
Common shareholders' equity 2,554 2,511 2,313
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity $34,195 $34,129 $31,451
------- ------- -------
------- ------- -------
Net interest income/rate spread (FTE) $1,427 3.69 $1,321 3.40 $1,254 3.71
------ ------ ------
------ ------ ------
FTE adjustment (4) $ 15 $ 21 $ 24
------ ------ ------
------ ------ ------
Impact of net noninterest-bearing
sources of funds 0.85 0.79 0.61
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest margin (as a percent of
average earning assets) (FTE) 4.54% 4.19% 4.32%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Nonaccrual loans are included in average balances reported and are used to
calculate rates.
(2) Includes substantially all deposits by foreign depositors; deposits are in
excess of $100,000.
(3) Net interest rate swap (income)/expense. If swap (income)/expense were
allocated, average rates on total loans would have been 8.66% in 1996,
8.84% in 1995 and 7.75% in 1994; average rates on medium- and long-term
debt would have been 5.80% in 1996, 6.14% in 1995 and 5.10% in 1994.
(4) The FTE adjustment is computed using a federal income tax rate of 35%.
15
<PAGE>
Net interest income (FTE) rose 8 percent to $1,427 million in 1996. The primary
cause was an improvement in net interest margin due to a favorable change in the
mix of earning assets, the basis for which was a 12 percent increase in average
commercial loans.
The net interest margin for 1996 increased 35 basis points to 4.54 percent
from 4.19 percent last year, principally due to a favorable shift in the mix
of earning assets. The Corporation primarily funded the growth in higher
yielding loans with sales of thin margin, floating rate investment securities
and runoff of fixed rate investment securities. This shifted the structure of
the balance sheet, placing a heavier emphasis on higher spread loans and
reducing the reliance on investment securities.
TABLE 3: RATE-VOLUME ANALYSIS-FTE
<TABLE>
<CAPTION>
1996 / 1995 1995 / 1994
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE INCREASE NET INCREASE INCREASE NET
(DECREASE) (DECREASE) INCREASE (DECREASE) (DECREASE) INCREASE
(in millions) DUE TO RATE DUE TO VOLUME* (DECREASE) DUE TO RATE DUE TO VOLUME* (DECREASE)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income (FTE)
Commercial loans $ (62) $114 $ 52 $131 $149 $280
International loans (6) 19 13 16 11 27
Real estate construction loans (2) 15 13 7 13 20
Commercial mortgage loans (3) 30 27 26 23 49
Residential mortgage loans 1 (39) (38) 7 22 29
Consumer loans (10) 6 (4) 25 78 103
Lease financing -- 5 5 -- 5 5
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans (82) 150 68 212 301 513
Taxable securities 12 (114) (102) 48 (19) 29
Securities exempt from federal income
taxes (3) (10) (13) (1) (7) (8)
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities 9 (124) (115) 47 (26) 21
Interest-bearing deposits with banks (1) (5) (6) 13 (27) (14)
Federal funds sold and securities
purchased under agreements to resell (1) (1) (2) 2 -- 2
Trading account securities 1 -- 1 -- -- --
Loans held for sale -- (3) (3) 1 (4) (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest income (FTE) (74) 17 (57) 275 244 519
Interest expense
Money market and NOW accounts (3) 17 14 50 (6) 44
Savings deposits 1 (5) (4) 1 (6) (5)
Certificates of deposit (7) 28 21 68 37 105
Foreign office deposits (11) (55) (66) 32 2 34
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits (20) (15) (35) 151 27 178
Federal funds purchased and securities
sold under agreements to repurchase (16) (38) (54) 45 -- 45
Other borrowed funds (12) (17) (29) 39 18 57
Medium- and long-term debt (9) 15 6 26 115 141
Other (1) (51) -- (51) 31 -- 31
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest expense (108) (55) (163) 292 160 452
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income (FTE) $ 34 $ 72 $106 $(17) $ 84 $ 67
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Rate/volume variances are allocated to variances due to volume.
(1) Net interest rate swap income.
16
<PAGE>
The Corporation implemented various asset and liability management strategies in
1996 to minimize exposure to net interest margin risk, which represents the
potential reduction in net interest income that may result from rate spread
compression between, for example, prime and market rates or core deposit and
money market rates. Such strategies included permitting investment securities to
run off in order to facilitate growth in higher-yielding loans. Off-balance
sheet interest rate swaps were also entered into during the first half of the
year to effectively fix the high yields on certain variable rate loans and alter
the interest rate characteristics of debt issued throughout the year. Refer to
page 26 of this financial review for additional information regarding the
Corporation's asset and liability management policies.
In 1995, net interest income (FTE) increased 5 percent over 1994, benefiting
from strong growth in average earning assets, primarily commercial and consumer
loans. However, the net interest margin for 1995 declined 13 basis points from
1994, principally from competition in asset pricing and continued compression in
rate spreads caused by higher funding costs. In addition, significant loan
growth coupled with runoff in investment securities and temporary investments
shifted the balance sheet structure to an asset sensitive position for most of
1995.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents management's assessment of possible
losses inherent in the Corporation's loan portfolio and is determined based on
the application of projected loss ratios to risk-rated loans, both individually
and by category. Projected loss ratios incorporate factors such as recent loan
loss experience, current economic conditions and trends, geographic dispersion
of borrowers, trends with respect to past due and nonaccrual amounts, risk
characteristics of various categories and concentrations of loans, and transfer
risks. The provision for loan losses reflects management's evaluation of the
adequacy of the allowance for loan losses. This evaluation is performed on a
quarterly basis.
The provision for loan losses was $114 million in 1996, compared to $87 million
in 1995 and $56 million in 1994. The provision increase in 1996 primarily
reflects higher net charge-offs related to bankcard portfolios, mostly generated
with early 1995 promotions. Management took steps in 1995 to reduce potential
losses in the consumer loan portfolio by tightening the credit criteria used for
bank-card marketing purposes. In late 1995, the Corporation sold $333 million of
the bankcard portfolio. Net charge-offs related to the sold portfolio accounted
for $27 million of the $28 million increase in total net charge-offs between
1994 and 1995.
Total net charge-offs increased to $85 million in 1996, compared to $76 million
and $48 million in 1995 and 1994, respectively. The ratio of net loans charged
off to average total loans increased to 0.33 percent in 1996 from 0.32 percent
in 1995. Commercial loan net charge-offs as a percentage of average commercial
loans were 0.12 percent for 1996, the same as in 1995. Consumer loan net charge-
offs as a percentage of average consumer loans were 1.57 percent and 1.31
percent for 1996 and 1995, respectively. The rise in net consumer loan charge-
offs was primarily the result of bankcard charge-offs.
NET LOANS CHARGED OFF TO AVERAGE LOANS
(IN PERCENTAGES)
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's net loans charged off to average loans
(in percentages) from 1992 to 1996 compared to an industry average.
1992 1993 1994 1995 1996
--------------------------------------
Comerica 0.57 0.43 0.24 0.32 0.33
Industry Average 1.42 0.96 0.51 0.53 0.51
At December 31, 1996, the allowance for loan losses was $367 million, an
increase of $26 million since year-end 1995. Due to the magnitude of loan
growth during 1996, the allowance as a percentage of total loans remained at
1.40 percent, the same as December 31, 1995. However, the allowance as a
percentage of total nonperforming assets increased significantly to 263
percent at December 31, 1996 from 209 percent at year-end 1995.
An estimated allocation of the allowance for loan losses is provided in Table 8
on page 23. The increase in the allowance allocated to consumer loans primarily
reflects a higher level of past due bankcard accounts similar to that
experienced by the industry as a whole.
NONINTEREST INCOME
Year Ended December 31
(in millions) 1996 1995 1994
- ------------------------------------------------------------------------------
Income from fiduciary activities $133 $125 $122
Service charges on deposit accounts 140 130 124
Revolving credit fees 23 36 24
Securities gains 14 12 3
Other 186 160 136
- ------------------------------------------------------------------------------
Subtotal 496 463 409
Customhouse broker fees 11 36 41
- ------------------------------------------------------------------------------
Total noninterest income $507 $499 $450
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
17
<PAGE>
TABLE 4: ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Year Ended December 31
(dollar amounts in millions) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $341 $326 $299 $308 $279
Allowance of institutions and loans purchased/sold (3) 4 19 -- 17
Loans charged off
Domestic
Commercial 33 33 25 36 47
Real estate construction 1 3 1 1 4
Commercial mortgage 5 8 17 20 8
Residential mortgage 1 2 -- 1 1
Consumer 86 73 40 52 60
Lease financing -- -- -- -- 1
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans charged off 126 119 83 110 121
Recoveries
Domestic
Commercial 18 19 15 18 9
Real estate construction 1 3 -- -- 1
Commercial mortgage 9 8 5 2 1
Residential mortgage -- -- -- -- 1
Consumer 13 13 14 12 10
International -- -- 1 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total recoveries 41 43 35 32 22
- ----------------------------------------------------------------------------------------------------------------------------------
Net loans charged off 85 76 48 78 99
Provision for loan losses 114 87 56 69 111
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at end of period $367 $341 $326 $299 $308
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of allowance for loan losses to total loans
at end of period 1.40% 1.40% 1.47% 1.56% 1.69%
Ratio of net loans charged off during the period
to average loans outstanding during the period 0.33% 0.32% 0.24% 0.43% 0.57%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest income increased $8 million, or 2 percent, to $507 million in 1996,
compared to $499 million and $450 million in 1995 and 1994, respectively. After
adjusting for acquisitions, divestitures and the large nonrecurring items
discussed below, noninterest income rose $13 million, or 3 percent, in 1996.
Income from fiduciary activities increased $8 million, or 7 percent, in 1996,
compared to an increase of $3 million, or 3 percent, in 1995. The increase in
1996 reflects comparable rates of increase for both Personal Trust and
Institutional Trust income. The increase in both Personal Trust and
Institutional Trust income, from the prior year, was primarily due to an
expanded customer base and improved market values of assets under management
resulting from market performance. Total trust assets under management increased
to $107 billion at December 31, 1996 from $91 billion at year-end 1995.
Discretionary funds, which represent trust assets over which the Corporation has
investment management authority, increased $4 billion to $26 billion from $22
billion in 1995. This increase resulted primarily from increases in the
Institutional Trust category.
Service charges on deposit accounts rose $10 million, or 8 percent, in 1996
compared to an increase of $6 million, or 5 percent, in 1995. The increase was
comparable for both retail and commercial accounts. The increases were primarily
the result of revised fees, growth in demand deposit activity, and lower earning
credit allowances.
Customhouse broker fees were down $25 million in 1996 reflecting the sale of
John V. Carr & Son, Inc. in the second quarter of 1996.
Revolving credit fee income decreased $13 million, or 37 percent, in 1996
compared to a $12 million, or 47 percent, increase in 1995. The lower fees were
primarily due to transfer of fees and associated costs to a merchant services
joint venture with National Data Corporation and decline in the bankcard
portfolio from the sale of $333 million of receivables at the end of 1995.
Securities gains increased slightly between 1996 and 1995 as both years included
gains on the sale of Latin American debt (principally Brady bonds) and U.S.
government agency securities.
18
<PAGE>
Other noninterest income grew $26 million, or 17 percent, in 1996. Excluding the
impact of acquisitions and divestitures, other noninterest income rose 13
percent. This increase was primarily due to significant nonrecurring items in
1996 which included a $13 million gain on the merchant services joint venture,
$9 million of interest on a State of Michigan tax refund and a $6 million gain
on the sale of Comerica Bank- Illinois; offset by a $9 million write-off related
to the sale of John V. Carr & Son, Inc. Other noninterest income also increased
due to management's continued emphasis on revenue growth through sales of
nontraditional bank products such as life insurance, annuities and mutual funds.
Commissions and fees related to these products increased $7 million, or
53 percent, in 1996 from $13 million in 1995.
NONINTEREST INCOME
(in millions)
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's noninterest income (in millions) from
1992 to 1996.
1992 1993 1994 1995 1996
--------------------------------------
399 449 450 499 507
There were no significant nonrecurring items included in other noninterest
income in 1995. In 1994, other noninterest income included a $7 million gain on
bulk sales of originated mortgage servicing rights and $7 million in gains on
international loan sales.
NONINTEREST EXPENSES
Year Ended December 31
(in millions) 1996 1995 1994
- ------------------------------------------------------------------------------
Salaries $475 $466 $455
Employee benefits 86 96 94
- ------------------------------------------------------------------------------
Total salaries and employee benefits 561 562 549
Net occupancy expense 99 99 99
Equipment expense 69 68 68
FDIC insurance expense 8 24 44
Telecommunications expense 29 29 27
Other 303 304 248
- ------------------------------------------------------------------------------
Subtotal 1,069 1,086 1,035
Restructuring charge 90 -- 7
- ------------------------------------------------------------------------------
Total noninterest expenses $1,159 $1,086 $1,042
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Noninterest expenses increased 7 percent to $1,159 million in 1996 (decreased 2
percent to $1,069 million, excluding the restructuring charge), compared to
$1,086 million in 1995 and $1,042 million in 1994. Excluding the effect of
acquisitions, divestitures, the restructuring charge and the large nonrecurring
items discussed later, noninterest expenses declined 1 percent in 1996.
A pre-tax restructuring charge of $90 million was recorded in 1996 in connection
with a major program to improve efficiency, revenue and customer service. The
charge included $48 million for termination benefits, $21 million for occupancy
and equipment write-offs and $21 million for other costs. Estimated annual
benefits of $110 million (cost savings of $85 million and revenue enhancements
of $25 million) are anticipated from the program. Projected completion of the
implementation plan is the middle of 1998, so a substantial portion of the
estimated benefits will not impact annual results until 1998 and full, annual
realization is not expected until 1999. As a result of the program, nearly 1,900
employee positions, about 15 percent of total positions, are being eliminated.
Total salaries expense increased $9 million, or 2 percent, in 1996 versus $11
million, or 3 percent, in 1995. Excluding the effect of acquisitions and
divestitures, salaries declined slightly during the year reflecting a decline in
staff levels offset by increased incentives tied to performance and annual merit
increases. The number of full-time equivalent employees decreased 896, or 7
percent, from year-end 1995, excluding acquisitions and divestitures. SFAS No.
123, "Accounting for Stock-Based Compensation," was issued by the Financial
Accounting Standards Board (FASB) and is effective for 1996 financial
statements. The Corporation adopted the disclosure-only provisions of SFAS No.
123 and so will continue determining compensation expense for stock options in
accordance with APB Opinion No. 25,"Accounting for Stock Issued to Employees" as
permitted by the new standard. If the recognition provisions of SFAS No. 123 had
been adopted as of the beginning of 1996, the effect on 1996 net income would
have been immaterial.
Employee benefits expense decreased $10 million, or 10 percent, in 1996 versus
an increase of $2 million, or 2 percent, in 1995. After adjusting for
acquisitions and divestitures, employee benefits decreased 9 percent largely due
to expense reductions derived from company-owned life insurance contracts.
Net occupancy and equipment expenses, on a combined basis, remained relatively
flat in 1996 compared to 1995, as costs from acquisitions were offset by cost
reductions relative to divestitures.
The Federal Deposit Insurance Corporation (FDIC) expenses decreased
significantly by $16 million, or 66 percent, in 1996, primarily due to the FDIC
adopting a new assessment rate schedule for Bank Insurance Fund (BIF) members in
the third quarter of 1995. The new rate schedule, which continues to determine
assessments based on a bank's risk-based capital levels, virtually eliminated
each subsidiary bank's BIF annual deposit insurance premium as of January 1,
1996. The Corporation's Savings Association Insurance Fund (SAIF) insured
deposits continued to be assessed at a rate of 23 cents per $100 of insured
deposits through September 30, 1996. This BIF rate reduction translated into a
$21 million savings in FDIC insurance expense for the Corporation in 1996.
Offsetting this savings was a one-time charge of $5 million representing the
Corporation's portion of an assessment, levied on banks with SAIF-insured
deposits in order to recapitalize the SAIF. Beginning in 1997, deposit insurance
expense will approximate $3 million based on current deposit levels and current
deposit assessment rates.
19
<PAGE>
NONINTEREST EXPENSES
(in millions)
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's noninterest expenses (in millions) from
1992 to 1996.
1992 1993 1994 1995 1996
--------------------------------------
Excluding Restructuring Charge 952 1,025 1,042 1,086 1,069
Restructuring Charge 128 90
Other noninterest expenses decreased $1 million in 1996, compared to a $56
million increase in 1995. Other noninterest expenses in 1996 and 1995 included
losses of $18 million and $15 million (excluding $1 million of costs to sell),
respectively, on the sale of a portion of the bankcard portfolio. Loss-sharing
provisions in the sales agreement expose the Corporation to maximum losses of
$50 million over the first 42 months following the sale (December 1995). Loss
rates in 1996 exceeded initial estimates, resulting in the additional charge for
projected losses over the remaining 30 months. Excluding acquisitions,
divestitures, and the above large nonrecurring item, other noninterest expenses
decreased $13 million, or 4 percent. The decrease reflects management's
continued efforts to control expenses.
The Corporation's efficiency ratio is defined as total noninterest expenses
divided by the sum of net interest revenue (FTE) and noninterest income,
excluding securities gains/losses. The ratio was 60.36 percent in 1996 (55.67
percent excluding the restructuring charge), compared to 60.09 percent in 1995
and 61.28 percent in 1994.
INCOME TAXES
The provision for income taxes was $229 million in 1996, compared to $212
million in 1995 and $195 million in 1994. The effective tax rate, computed by
dividing the provision for income taxes by income before income taxes, was 35.4
percent for 1996, compared to 33.9 percent in 1995 and 33.5 percent in 1994. The
increase in the effective tax rate over prior years reflects relatively lower
levels of tax-exempt interest income.
STRATEGIC LINES OF BUSINESS
The Corporation has strategically aligned its operations into three major lines
of business: the Business Bank, the Individual Bank and the Investment Bank.
Table 5 on page 21 presents the financial results of these business lines for
the years ended December 31, 1996 and 1995.
Lines of business results are produced by the Corporation's internal management
accounting system. This system measures financial results based on the internal
organizational structure of the Corporation; therefore, the information
presented is not necessarily comparable with similar information for any other
financial institution. The management accounting system assigns balance sheet
and income statement items to each line of business using certain methodologies
which are constantly being refined. For comparability purposes, both 1996 and
1995 amounts are based on methodologies in effect at December 31, 1996. These
methodologies, which are briefly summarized in the following paragraph, may be
modified as management accounting systems are enhanced and changes occur in the
organizational structure or product lines.
The Corporation's internal funds transfer pricing system records cost of funds
or credit for funds using a combination of matched maturity funding for certain
assets and liabilities and a blended rate based on various maturities for the
remaining assets and liabilities. The loan loss provision is assigned based on
the amount necessary to maintain an allowance for loan losses adequate for that
line of business. Noninterest income and expenses directly attributable to
a line of business are assigned to that business. Direct expenses incurred by
areas whose services support the overall Corporation are allocated to the
business lines as follows: Product processing expenditures are allocated based
on standard unit costs applied to actual volume measurements; administrative
expenses are allocated based on estimated time expended; and corporate overhead
is assigned based on the ratio of a line of business' noninterest expenses to
total noninterest expenses incurred by all business lines. Common equity is
allocated based on credit, operational and business risks.
The following discussion provides information about each line of business, along
with an explanation of factors impacting 1996 performance.
The Business Bank is comprised of middle market lending, asset-based lending,
large corporate banking, international financial services and institutional
trust. This line of business meets the needs of medium-size businesses,
multinational corporations, and governmental entities by offering various
products and services, including commercial loans and lines of credit, deposits,
cash management, institutional trust, international trade finance, letters of
credit and foreign exchange management services.
Net income increased $57 million, or 26 percent, in 1996, principally due to
additional net interest income resulting from 13 percent average loan growth,
excluding the sale of the Corporation's Illinois subsidiary, and a lower
provision for loan losses. The sale of the Illinois subsidiary and the
Corporation's customhouse brokerage subsidiary during 1996 did not have a
material impact on net income.
20
<PAGE>
TABLE 5: STRATEGIC LINES OF BUSINESS FINANCIAL RESULTS
<TABLE>
<CAPTION>
Business Bank Individual Bank Investment Bank* Other Total
- ----------------------------------------------------------------------------------------------------------------------------------
(dollar amounts in millions) 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS SUMMARY
Net interest income (FTE) $ 632 $ 518 $ 777 $ 759 $ (1) $ (2) $ 19 $ 46 $ 1,427 $ 1,321
Provision for loan losses 1 34 111 92 n/a n/a 2 (39) 114 87
Noninterest income 178 204 277 255 42 30 10 10 507 499
Noninterest expenses 370 341 658 658 44 27 87 60 1,159 1,086
Provision for income taxes 160 125 101 92 (1) -- (16) 17 244 234
Net income (loss) 279 222 184 172 (2) 1 (44) 18 417 413
SELECTED AVERAGE BALANCES
Assets $17,460 $15,357 $ 9,821 $ 9,481 $ 9 $ 10 $6,905 $9,281 $34,195 $34,129
Loans 16,211 14,594 9,147 8,746 n/a n/a (6) 221 25,352 23,561
Deposits 4,061 2,867 17,229 16,551 n/a n/a 968 2,237 22,258 21,655
Common equity 972 847 703 848 3 3 876 813 2,554 2,511
STATISTICAL DATA
Return on average assets 1.60% 1.45% 1.03% 0.99% (22.81)% 5.70% (0.27)% 0.09% 1.22% 1.21%
Return on average common
equity 28.74 26.27 26.13 20.30 (68.43) 19.00 (5.02) 2.23 15.98 16.46
Efficiency ratio 46.05 47.89 62.46 64.83 107.78 96.91 384.04 116.69 60.36 60.09
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Revenues and associated expenses resulting from Investment Bank activities
are distributed to the business line which manages the customer
relationship.
n/a Not applicable
The Individual Bank includes consumer lending, consumer deposit gathering,
mortgage loan origination and servicing, small business banking (annual sales
under $5 million) and private banking. This line of business offers a variety of
consumer products, including deposit accounts, direct and indirect installment
loans, credit cards, home equity lines of credit and residential mortgage loans.
In addition, a full range of financial services is provided to small businesses,
area merchants and municipalities. Private lending and personal trust services
also are provided to meet the personal financial needs of affluent individuals
(as defined by individual net income or wealth).
Net income increased $12 million, or 7 percent, in 1996, as higher revenues were
partially offset by an increase in the provision for loan losses.
The Investment Bank is responsible for the sale of mutual fund and annuity
products, as well as life, disability and long-term care insurance products.
This line of business also offers capital market products, manages loan
syndications and provides investment management and advisory services,
investment banking and discount securities brokerage services.
Operating results remained relatively flat from 1995 to 1996 as revenues were
reinvested in training and the development of products and services.
The Other category includes the income and expense impact of cash and loan loss
reserves not assigned to specific business lines, miscellaneous other items of a
corporate nature, and certain direct expenses not allocated to business lines.
The Corporation's securities portfolio and asset and liability management
activities are also reflected in these amounts.
Net income decreased $62 million in 1996 as a result of the restructuring
charge.
BALANCE SHEET AND CAPITAL FUNDS ANALYSIS
Total assets were $34.2 billion at year-end 1996, representing a $1.3 billion
decrease from $35.5 billion on December 31, 1995. On an average basis, total
assets remained relatively flat with $34.2 billion in 1996 compared to $34.1
billion in 1995.
EARNING ASSETS
Total earning assets were $31.1 billion at year-end 1996, representing a $1.0
billion decrease from $32.1 billion on December 31, 1995. On an average basis,
total earning assets were $31.4 billion in 1996 compared to $31.5 billion in
1995. Earning assets were relatively flat as $2.1 billion of investment
securities were either sold or allowed to mature to fund the $1.8 billion or 7
percent increase in loans; and $1.2 billion of earning assets were divested with
the sale of the Illinois subsidiary.
The average balance of domestic commercial loans, which is comprised of
commercial and commercial mortgage loans, increased $1.7 billion, or 12 percent,
from 1995. Real estate construction loans also rose an average $166 million, or
31 percent, in 1996. The commercial portfolio, especially small business and
middle market loans, continues to grow in all the Corporation's markets. This
growth, along with an increase of approximately 30 percent in commercial loan
commitments to extend credit, is attributable to effective marketing efforts,
strong customer relationships and continued economic strength in the commercial
loan markets.
21
<PAGE>
TABLE 6: ANALYSIS OF INVESTMENT SECURITIES AND LOANS
<TABLE>
<CAPTION>
December 31
(in millions) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment securities available for sale
U.S. government and agency securities $ 3,968 $ 6,038 $ 2,674 $ 2,164 $ n/a
State and municipal securities 228 371 -- -- n/a
Other securities 604 450 232 158 n/a
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities available for sale 4,800 6,859 2,906 2,322 n/a
Investment securities held to maturity
U.S. government and agency securities -- -- 4,462 3,232 3,824
State and municipal securities -- -- 422 513 693
Other securities -- -- 86 233 646
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities held to maturity -- -- 4,970 3,978 5,163
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment securities $ 4,800 $ 6,859 $ 7,876 $ 6,300 $ 5,163
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial loans $13,520 $12,041 $10,634 $ 9,087 $ 8,213
International loans
Government and official institutions 11 6 18 143 156
Banks and other financial institutions 323 583 660 671 323
Other 1,372 796 517 322 257
- ----------------------------------------------------------------------------------------------------------------------------------
Total international loans 1,706 1,385 1,195 1,136 736
Real estate construction loans 751 641 414 437 471
Commercial mortgage loans 3,446 3,254 3,056 2,700 2,666
Residential mortgage loans 1,744 2,221 2,436 1,857 2,126
Consumer loans 4,634 4,570 4,215 3,674 3,836
Lease financing 406 330 259 209 167
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans $26,207 $24,442 $22,209 $19,100 $18,215
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
n/a Not applicable
Average international loans increased $284 million, consisting largely of loans
originated to facilitate trade with limited cross-border risk. The growth also
reflects the increasing global activity of the Corporation's traditional
customer base. Risk management practices in international lending include
structuring bilateral arrangements or participating in bank facilities which
secure repayment from sources external to the borrower's country. Accordingly,
such international outstandings are excluded from cross-border risk of that
country. Mexican cross-border risk of $268 million, 0.78 percent of assets, was
the only country exposure exceeding 0.75 percent of assets at December 31, 1996.
No country exceeded 0.75 percent of assets at December 31, 1995 or 1994.
Average residential mortgage loans decreased $490 million primarily due to
management's decision to sell the majority of mortgage originations. Average
consumer loans rose $55 million representing increases in average installment
loans offset by decreases in revolving credit and bankcard loans. Average
installment loan balances increased $356 million, while average bankcard loans
and revolving credit loans decreased $241 million and $60 million, respectively.
The bankcard portfolio declined largely as a result of selling $333 million of
the bankcard portfolio in late 1995 along with a temporary curtailment of credit
card promotions through much of 1996. Increases in average installment loans
reflect continued expansion in California and Texas markets related to marine
and recreational vehicle loan products, as well as growth in fixed rate home
equity loans.
Average investment securities declined to $5.8 billion in 1996, compared to $7.6
billion in 1995, reflecting sales and runoff of securities primarily to fund
growth in higher-yielding loans and to divest lower earning variable rate
assets. Average U.S. government and agency securities decreased $1,988 million
and average state and municipal securities decreased $105 million, while average
other securities increased $291 million. The Corporation shifted away from
purchasing on-balance-sheet securities to balance interest rate sensitivity and
preserve net interest margin to purchasing off-balance sheet interest rate swaps
that accomplish the same interest risk reduction objective. The decline in U.S.
government and agency securities principally resulted from sales and pay downs,
while the tax-exempt portfolio of state and municipal securities continued to
decrease as reduced tax advantages for these types of securities deterred
additional investment. Other securities consist primarily of collateralized
mortgage obligations (CMOs), Brady bonds and Eurobonds. The increase in other
securities during the year was largely a result of Eurobond purchases.
22
<PAGE>
TABLE 7: LOAN MATURITIES AND INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
After One
December 31, 1996 Within But Within After
(in millions) One Year* Five Years Five Years Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial loans $ 9,990 $2,840 $ 690 $13,520
Commercial mortgage loans 1,123 1,790 533 3,446
International loans 1,598 105 3 1,706
Real estate construction loans 494 200 57 751
- ----------------------------------------------------------------------------------------------------------------------------------
Total $13,205 $4,935 $1,283 $19,423
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Loans maturing after one year
Predetermined interest rates $2,199 $ 728
Floating interest rates 2,736 555
- ----------------------------------------------------------------------------------------------------------------------------------
Total $4,935 $1,283
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes demand loans, loans having no stated repayment schedule or
maturity and overdrafts.
TABLE 8: ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
December 31 Percent Percent Percent Percent Percent
(dollar amounts in Allocated of Total Allocated of Total Allocated of Total Allocated of Total Allocated of Total
millions) Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic
Commercial $ 98 52% $118 49% $119 48% $123 48% $120 45%
Real estate
construction 6 3 5 3 6 2 4 2 9 2
Commercial mortgage 27 13 33 13 35 14 26 14 37 15
Residential mortgage 2 7 2 9 2 11 3 10 6 12
Consumer 120 18 84 19 60 19 60 19 59 21
Lease financing 1 1 1 1 1 1 1 1 2 1
International 3 6 2 6 3 5 18 6 39 4
Unallocated 110 -- 96 -- 100 -- 64 -- 36 --
- ----------------------------------------------------------------------------------------------------------------------------------
Total $367 100% $341 100% $326 100% $299 100% $308 100%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER EARNING ASSETS
Short-term investments in interest-bearing deposits with banks, federal funds
sold, and securities purchased under agreements to resell provide a range of
maturities under one year to supplement corporate liquidity. Interest-bearing
deposits with banks are investments with banks in developed countries or foreign
banks' international banking facilities located in the United States. Federal
funds sold provide a vehicle to control the reserve position and serve
correspondent banks, as well as offer supplemental earnings opportunities. As a
result of the emphasis on higher yielding loans, short-term investments declined
on average $124 million during 1996.
Loans held for sale totaled $38 million at the end of 1996, down from $512
million in 1995. This decrease represents the bankcard portfolio sold in late
1995, which settled in early 1996.
TABLE 9: MATURITY DISTRIBUTION OF DOMESTIC CERTIFICATES OF DEPOSIT OF $100,000
AND OVER
December 31
(in millions) 1996
- ------------------------------------------------------------------------------
Three months or less $1,391
Over three months to six months 279
Over six months to twelve months 255
Over twelve months 279
- ------------------------------------------------------------------------------
Total $2,204
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
DEPOSITS AND BORROWED FUNDS
Average deposits rose $603 million, or 3 percent, from 1995. Excluding the
impact of acquisitions and divestitures, deposits would have decreased 2
percent, reflecting a managed decline in foreign deposits due to more attractive
funding alternatives such as medium-term notes, along with the continued trend
of interest-sensitive customers investing in higher yielding deposit
alternatives, including mutual funds. Total deposits increased less than 1
percent during 1995, excluding acquisitions and divestitures.
23
<PAGE>
Average demand deposits grew $822 million, or 17 percent, from 1995 largely due
to the growth in related commercial loan business and the acquisition of
Metrobank. Average certificates of deposit increased $529 million or 8 percent,
from 1995 largely due to various deposit promotions and the acquisition of
Metrobank. Growth in these categories was offset by a decrease in average
foreign office deposits of $999 million, or 54 percent, reflecting a managed
decline due to more attractive funding alternatives such as medium-term notes.
While deposit balances increased slightly, there was continued reliance on
medium-term debt (both domestic and European), and long-term debt to provide the
necessary funding to support expanding loan volumes. The interest rates
associated with medium-term debt create a funding source with maturities ranging
from one month to 15 years and durations that are similar to deposit
liabilities. Long-term subordinated notes help maintain the bank's total capital
ratio at the level that qualifies for the lowest FDIC risk-based insurance
premium and supports acquisition activity. The Corporation issued $150 million
of long-term notes during the year. Medium-term debt decreased $550 million,
representing the net result of the issuance of $2.1 billion and the maturity of
$2.6 billion of notes during 1996. Further information on the Corporation's
medium- and long-term debt is included in Note 9 to the consolidated financial
statements on page 40.
CAPITAL
Shareholders' equity was $2.6 billion at December 31, 1996, the same as December
31, 1995. During the year, the Corporation authorized the repurchase of up to 15
million shares of Comerica common stock. Coupled with other authorizations to
acquire shares, Comerica repurchased 13 million shares equaling more than $600
million of capital during 1996. The combination of a nonredeemable preferred
stock issue, the sale of Comerica Bank-Illinois and retained earnings were the
principal sources of capital and liquidity that enabled the Corporation to
accomplish this initiative. Comerica continues to maintain its capital ratios
beyond the limits established by the Federal Reserve Board for a "well
capitalized" bank.
The remaining change in capital is the net effect of increases in capital from
retained earnings of $238 million, $129 million of common stock issued for
acquisitions, $35 million of common stock for employee stock plans, the issuance
of $250 million in nonredeemable preferred stock, and a change of $19 million in
the value of the Corporation's available for sale securities.
At December 31, 1996, the Corporation and all of its banking subsidiaries
exceeded the ratios required for an institution to be considered "well
capitalized" by the standards developed under the Federal Deposit Insurance
Corporation Improvement Act of 1991. See Note 17 of the consolidated financial
statements on page 45 for the capital ratios.
The Corporation declared common dividends totaling $170 million on net income
applicable to common stock of $408 million, representing a dividend payout ratio
of 43 percent (37 percent excluding the after-tax impact of the restructuring
charge). The payout ratio in 1995 was 39 percent. The board of directors has
targeted a payout ratio of between 30 to 40 percent, although this target is
constantly reassessed by the board in light of changing market and industry
conditions.
ASSET QUALITY
NONPERFORMING ASSETS
The Corporation's policies regarding nonaccrual loans reflect the importance of
identifying troubled loans early. Consumer loans are directly charged off no
later than 180 days past due, or earlier if deemed uncollectible. Loans other
than consumer are generally placed on nonaccrual status when management
determines that principal or interest may not be fully collectible, but no later
than when the loan is 90 days past due on principal or interest unless it is
fully collateralized and in the process of collection. Loan amounts in excess of
probable future cash collections are charged off at the time the loan is placed
on nonaccrual status to an amount that represents management's assessment of the
ultimate collectibility of the loan. Interest previously accrued but not
collected on nonaccrual loans is charged against current income. Income on such
loans is then recognized only to the extent that cash is received and where the
future collection of principal is probable.
NONPERFORMING ASSETS TO LOANS AND OTHER REAL ESTATE
(IN PERCENTAGES)
[EDGAR REPRESENTATION OF GRAPHIC]
Bar graph depicting the Corporation's nonperforming assets to loans and other
real estate (in percentages) from 1992 to 1996 compared to an industry
average.
1992 1993 1994 1995 1996
--------------------------------------
Comerica 1.50 1.09 0.92 0.67 0.53
Industry Average 4.62 2.81 1.67 1.23 0.79
Nonperforming assets as a percent of total loans and other real estate were 0.53
percent and 0.67 percent at year-end 1996 and 1995, respectively. This decline
reflects the continued improvement in the quality of the loan portfolio and
favorable economic conditions in the Corporation's markets. Nonaccrual loans at
December 31, 1996 decreased 21 percent to $103 million from year-end 1995. The
nonaccrual loan table on page 26 indicates the percentage of nonaccrual loan
value to original contractual value and demonstrates the conservative and prompt
nature of the corporate charge-off and payment application policy.
24
<PAGE>
TABLE 10: ANALYSIS OF INVESTMENT SECURITIES PORTFOLIO-FTE
<TABLE>
<CAPTION>
Maturity+
------------------------------------------------------------------------------------------------ Weighted
December 31, 1996 Within 1 Year 1-5 Years 5-10 Years After 10 Years Total Average
(dollar amounts ------------------------------------------------------------------------------------------------ Maturity
in millions) Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Yrs./Mos.
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Available for sale
U.S. Treasury $119 5.59% $123 5.50% $ -- --% $ -- --% $ 242 5.54% 1/6
U.S. government
and agency 140 5.51 323 6.47 153 7.14 3,110 6.57 3,726 6.55 11/4
State and municipal
securities 41 9.51 127 9.20 45 9.70 15 9.89 228 9.40 3/9
Other bonds, notes
and debentures 240 7.66 111 7.57 61 8.27 110 7.33 522 7.64 6/5
Federal Reserve
Bank stock and
other -- -- -- -- -- -- -- -- 82 -- --
investments*
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment
securities
available
for sale $540 6.79% $684 6.98% $259 7.85% $3,235 6.61% $4,800 6.75% 9/11
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Balances are excluded in the calculation of total yield.
+ Based on final contractual maturity.
TABLE 11: SUMMARY OF NONPERFORMING ASSETS AND PAST DUE LOANS
<TABLE>
<CAPTION>
December 31
(dollar amounts in millions) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming assets
Nonaccrual loans
Commercial loans $ 72 $ 87 $ 89 $ 71 $ 75
Real estate construction loans 3 7 17 19 28
Real estate mortgage loans (principally commercial) 28 37 56 64 120
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 103 131 162 154 223
Reduced-rate loans 8 3 2 5 1
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 111 134 164 159 224
Other real estate 29 29 40 50 49
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 140 $ 163 $204 $ 209 $ 273
- ----------------------------------------------------------------------------------------------------------------------------------
Nonperforming loans as a percentage of total loans 0.42% 0.55% 0.74% 0.83% 1.23%
Nonperforming assets as a percentage of total loans
and other real estate 0.53% 0.67% 0.92% 1.09% 1.50%
Allowance for loan losses as a percentage of total
nonperforming assets 263% 209% 160% 143% 113%
Loans past due 90 days--domestic $ 52 $ 57 $ 39 $ 46 $ 100
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
NONACCRUAL LOANS
December 31
(dollar amounts in millions) 1996 1995
- --------------------------------------------------------------------------------
Carrying value $103 $131
Contractual value 147 181
Carrying value as a percentage
of contractual value 70% 72%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other real estate owned (ORE) remained at $29 million as sales and write-downs
of properties offset ORE additions. The largest addition in 1996 was a $10
million property from an acquisition.
CONCENTRATION OF CREDIT
Loans to companies and individuals involved with the automotive industry,
including suppliers, manufacturers and dealers, represented the largest
significant industry concentration at December 31, 1996. These loans totaled
$4.3 billion, or 16 percent of total loans at December 31, 1996, and included
floor plan loans to automobile dealers of $1,209 million and $1,083 million at
December 31, 1996 and 1995, respectively. All other industry concentrations
individually represented less than 5 percent of total loans at year-end 1996.
Automotive industry loans at year-end 1995 totaled approximately $4.5 billion,
or 18 percent of total loans.
The Corporation has successfully operated in the Michigan economy in spite of a
loan concentration and several downturns in the auto industry. There were no
automotive industry-related loans larger than $3 million on nonaccrual status as
of year-end 1996. In addition, there were no significant automotive industry-
related charge-offs during the year.
COMMERCIAL REAL ESTATE LENDING
The real estate construction loan portfolio contains loans made to long-time
customers in local markets with satisfactory project completion experience. The
portfolio has approximately 1,025 loans, of which 80 percent have balances of
less than $1 million. The largest real estate construction loan has a balance of
approximately $20 million.
The commercial mortgage loan portfolio, 52 percent of which relates to owner-
occupied properties, also consists of loans to long-time customers. Of the
approximately 7,309 loans in the portfolio, 89 percent have balances under $1
million, and the largest loan is less than $20 million. Additionally, the
Corporation's policy requires a 75 percent or less loan-to-value (LTV) ratio for
all commercial mortgage and real estate construction loans. This policy is well
within bank regulatory limits.
The geographic distribution of the real estate construction and commercial
mortgage loan portfolios is also an important determinant in evaluating credit
risk. The following table indicates the diversification of the portfolios
throughout the markets served by the Corporation.
GEOGRAPHIC DISTRIBUTION
December 31, 1996 Real Estate Commercial
(in millions) Construction Mortgage
- --------------------------------------------------------------------------------
Michigan $288 $2,043
California 110 523
Texas 258 358
Florida 39 124
Other 56 398
- --------------------------------------------------------------------------------
Total $751 $3,446
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET AND LIABILITY MANAGEMENT
The principal objective of asset and liability management
is to maximize net interest income while operating within acceptable limits
established for interest rate risk and maintaining adequate levels of funding
and liquidity. The Corporation utilizes various on- and off-balance sheet
financial instruments to manage the extent to which net interest income may be
affected by fluctuations in interest rates. Corporate policies and risk limits
pertaining to asset and liability management activities are established by the
Asset Liability Policy Committee (ALPC) and approved by the board of directors.
Adherence to these policies is governed by the ALPC, which is comprised of
executive and senior management from various areas of the Corporation, including
finance, lending, investments, and deposit gathering, who meet regularly to
execute asset and liability management strategies.
INTEREST RATE SENSITIVITY
Interest rate risk arises in the normal course of business due to differences in
the repricing and maturity characteristics of assets and liabilities. Since no
single measurement system satisfies all management objectives, a combination of
techniques are used to manage interest rate risk, including simulation analysis,
asset and liability repricing schedules and duration of equity. The results of
these interest rate risk measurement systems are reviewed regularly by the ALPC.
Net interest income is frequently evaluated under various balance sheet and
interest rate scenarios. The results of this analysis provide the information
needed to assess the proper balance sheet structure. An unexpected change in the
pace of economic activity, whether domestically or internationally, could
translate into a materially different interest rate environment than currently
expected. A process is maintained where management evaluates "base" net interest
income under what is believed to be the most likely balance sheet structure and
interest rate environment. This "base" net interest income is then evaluated
against interest rate scenarios that are taken up and down 200 basis points from
the most likely rate environment. In addition, adjustments to asset prepayment
levels, yield curves, and overall balance sheet mix and growth assumptions are
made to be consistent with each interest rate environment. The measurement of
risk exposure at year-end 1996 for a 200 basis point decline in short-term
interest rates identified approximately $9 million of net interest income at
risk during 1997. If short-
26
<PAGE>
term interest rates rise 200 basis points, the Corporation would have
approximately $15 million of net interest income at risk. Corporate policy
limits adverse change to no more than 5 percent of management's most likely net
interest income forecast. In either case, the Corporation is within the policy
guideline.
While most assets and liabilities reprice either at maturity or in accordance
with their contractual terms, several balance sheet components demonstrate
characteristics that require adjustments to more accurately reflect repricing
and cash flow behavior. Assumptions based on historical pricing relationships
and anticipated market reactions are made to certain core deposit categories to
reflect the elasticity of the changes in the related interest rates relative to
the changes in market interest rates. In addition, estimates are made concerning
early loan and security repayments. Prepayment assumptions are based on the
expertise of portfolio managers along with input from financial markets.
Consideration is given to current and future interest rate levels. While
management recognizes the limited ability of a traditional gap schedule to
accurately portray interest rate risk, adjustments are made to provide a more
accurate picture of the Corporation's interest rate risk profile. This
additional interest rate risk measurement tool provides a directional outlook on
the impact of changes in interest rates.
As market rates approach expected turning points, management adjusts the
interest rate sensitivity of the Corporation. This sensitivity is measured as a
percentage of earning assets. The operating range for interest rate sensitivity,
on an elasticity-adjusted basis, is between an asset sensitive position of 10
percent of earning assets and a liability sensitive position of 10 percent of
earning assets.
The table on page 28 shows the interest sensitivity gap as of year-end 1996 and
1995. The report reflects the contractual repricing and payment schedules of
assets and liabilities, including an estimate of all early loan and security
repayments which adds $1.2 billion of rate sensitivity to the 1996 year-end gap.
In addition, the schedule identifies the adjustment for the price elasticity on
certain core deposits.
The Corporation was liability sensitive for the first half of 1996, due to gap
reduction initiatives put in place in the fourth quarter of 1995 and the first
quarter of 1996. Deposit growth and investment security runoff moved the
Corporation to an asset sensitive position in the latter half of 1996. The
Corporation had a one-year asset sensitive gap of $547 million, or 2 percent of
earning assets, as of December 31, 1996. This compares to a $215 million
liability sensitive gap, or 1 percent of earning assets, on December 31, 1995.
Management anticipates material growth in asset sensitivity throughout 1997, and
will continue to look at both on- and off-balance sheet alternatives to hedge
this increased asset sensitivity and achieve the desired interest rate risk
profile for the Corporation.
RISK MANAGEMENT DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS
RISK MANAGEMENT NOTIONAL ACTIVITY
Interest Foreign
Rate Exchange
(in millions) Contracts Contracts Totals
- --------------------------------------------------------------------------------
Balances at December 31, 1994 $3,891 $ 123 $4,014
Additions 3,673 3,160 6,833
Maturities/amortizations (1,445) (3,004) (4,449)
- --------------------------------------------------------------------------------
Balances at December 31, 1995 $6,119 $ 279 $6,398
Additions 4,026 4,762 8,788
Maturities/amortizations (1,925) (4,559) (6,484)
- --------------------------------------------------------------------------------
Balances at December 31, 1996 $8,220 $ 482 $8,702
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Corporation utilizes interest rate swaps predominantly as asset and
liability management tools with the overall objectives of managing the
sensitivity of net interest income to changes in interest rates. To accomplish
this objective, interest rate swaps are used primarily to modify the interest
rate characteristics of certain assets and liabilities (e.g., from a floating
rate to a fixed rate, a fixed rate to a floating rate, or from one floating rate
index to another). This strategy assists management in achieving interest rate
risk objectives.
At December 31, 1996 and 1995, the notional amount of risk management interest
rate swaps totaled $8,015 million and $5,925 million, respectively. The fair
value of risk management interest rate swaps at December 31, 1996 was a negative
$55 million, compared to a positive $68 million at December 31, 1995. For the
year ended December 31, 1996, risk management interest rate swaps generated $49
million of net interest income, compared to $2 million in net interest expense
for the year ended December 31, 1995. These off-balance sheet instruments
represented 82 percent and 83 percent of total derivative financial instruments
and foreign exchange contracts, including commitments, at year-end 1996 and
1995, respectively.
Table 13 summarizes the expected maturity distribution of the notional amount of
risk management interest rate swaps and provides the weighted average interest
rates associated with amounts to be received or paid as of December 31, 1996.
The swaps have been grouped by the assets and liabilities to which they have
been designated.
In addition to interest rate swaps, the Corporation employs various other types
of off-balance sheet derivative and foreign exchange contracts to mitigate
exposures to interest rate and foreign currency risks associated with specific
assets and liabilities (e.g., loans or deposits denominated in foreign
currencies, mortgages held for sale, and originated mortgage servicing rights).
Such instruments include interest rate caps and floors, purchased put options,
foreign exchange forward contracts, foreign exchange generic swap agreements,
and cross-currency swaps. The aggregate notional amounts of these risk
management derivative and foreign exchange contracts at December 31, 1996 and
1995, were $687 million and $473 million, respectively.
27
<PAGE>
TABLE 12: SCHEDULE OF RATE SENSITIVE ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
Interest Sensitivity Period Interest Sensitivity Period
- ----------------------------------------------------------------------------------------------------------------------------------
Within Over Within Over
(dollar amounts in millions) One Year One Year Total One Year One Year Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ -- $ 1,902 $ 1,902 $ -- $ 2,028 $ 2,028
Short-term investments 98 5 103 736 14 750
Investment securities 1,428 3,372 4,800 2,678 4,181 6,859
Commercial loans
(including lease financing) 12,489 1,437 13,926 11,050 1,321 12,371
International loans 1,706 -- 1,706 1,385 -- 1,385
Real estate related loans 3,662 2,279 5,941 3,611 2,505 6,116
Consumer loans 2,201 2,433 4,634 2,591 1,979 4,570
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans 20,058 6,149 26,207 18,637 5,805 24,442
Other assets 615 579 1,194 711 680 1,391
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $22,199 $12,007 $34,206 $22,762 $12,708 $35,470
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
Noninterest-bearing $ 570 $ 6,143 $ 6,713 $ 521 $ 5,059 $ 5,580
Savings -- 1,770 1,770 -- 2,204 2,204
Money market and NOW 5,351 1,631 6,982 4,798 1,770 6,568
Certificates of deposit 5,056 1,550 6,606 5,289 1,400 6,689
Foreign office 295 1 296 2,125 1 2,126
- ----------------------------------------------------------------------------------------------------------------------------------
Total deposits 11,272 11,095 22,367 12,733 10,434 23,167
Short-term borrowings 4,489 -- 4,489 4,674 -- 4,674
Medium- and long-term debt 2,842 1,400 4,242 3,044 1,600 4,644
Other liabilities 177 315 492 62 315 377
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 18,780 12,810 31,590 20,513 12,349 32,862
Shareholders' equity (23) 2,639 2,616 (4) 2,612 2,608
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders'
equity $18,757 $15,449 $34,206 $20,509 $14,961 $35,470
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Sensitivity impact of interest rate swaps $(4,676) $ 4,676 -- $(3,875) $ 3,875 --
Sensitivity impact of unsettled swap
and security purchases (43) 43 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Interest sensitivity gap (1,277) 1,277 -- (1,622) 1,622 --
Gap as a percentage of earning assets (4)% 4% -- (5)% 5% --
Sensitivity impact from elasticity
adjustments (1) 1,824 (1,824) -- 1,407 (1,407) --
- ----------------------------------------------------------------------------------------------------------------------------------
Interest sensitivity gap with elasticity
adjustments $ 547 $ (547) -- $ (215) $ 215 --
Gap as a percentage of earning assets 2% (2)% -- (1)% 1% --
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Elasticity adjustments for NOW, savings and money market deposit accounts
are based on historical pricing relationships dating back to 1985 as well as
expected future pricing relationships.
28
<PAGE>
TABLE 13: REMAINING EXPECTED MATURITY OF RISK MANAGEMENT INTEREST RATE SWAPS
<TABLE>
<CAPTION>
2002- Dec. 31
(amounts in millions) 1997 1998 1999 2000 2001 2023 Total 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VARIABLE RATE ASSET DESIGNATION:
Receive fixed swaps
Generic $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 50
Amortizing 84 100 -- -- -- -- 184 200
Index amortizing 1,465 861 1,083 690 328 587 5,014 3,688
Weighted average: (1)
Receive rate 5.65% 6.25% 6.40% 6.14% 6.45% 6.33% 6.11% 6.02%
Pay rate 5.56% 5.55% 5.53% 5.59% 5.55% 5.60% 5.56% 5.84%
Floating/floating swaps (3) $ -- $ -- $ 25 $ -- $ -- $ -- $ 25 $ --
- ----------------------------------------------------------------------------------------------------------------------------------
FIXED RATE ASSET DESIGNATION:
Pay fixed swaps
Generic $ -- $ -- $ 2 $ -- $ -- $ -- $ 2 $ 37
Index amortizing 23 3 3 11 -- -- 40 --
Weighted average: (1)
Receive rate 5.56% 5.67% 5.65% 5.67% --% --% 5.60% 5.76%
Pay rate 5.07% 5.34% 6.70% 5.34% --% --% 5.35% 7.14%
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIUM- AND LONG-TERM
DEBT DESIGNATION:
Generic receive fixed swaps $1,300 $ -- $ -- $ 200 $ -- $ 850 $2,350 $1,375
Weighted average: (1)
Receive rate 5.82% --% --% 6.91% --% 7.78% 6.62% 7.01%
Pay rate 5.40% --% --% 5.50% --% 5.74% 5.53% 5.80%
Generic pay fixed swaps $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ 25
Weighted average: (1)
Receive rate --% --% --% --% --% --% --% 5.70%
Pay rate --% --% --% --% --% --% --% 8.28%
Floating/floating swaps $ 400 $ -- $ -- $ -- $ -- $ -- $ 400 $ 550
Weighted average: (2)
Receive rate 5.32% --% --% --% --% --% 5.32% 5.76%
Pay rate 5.39% --% --% --% --% --% 5.39% 5.75%
- ----------------------------------------------------------------------------------------------------------------------------------
Total notional amount $3,272 $ 964 $1,113 $ 901 $ 328 $1,437 $8,015 $5,925
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Variable rates paid or received are based primarily on one-month and three-
month LIBOR rates paid or received at December 31, 1996.
(2) Variable rates paid are based on LIBOR at December 31, 1996, while variable
rates received are based on prime.
(3) Variable rate paid was 5.68%, based on LIBOR at December 31, 1996, while
variable rate received represents the return on a principal only total return
swap. This return is based on principal paydowns of the referenced security as
well as changes in market value.
29
<PAGE>
In 1996, the FASB issued an Exposure Draft on accounting for derivative and
similar financial instruments and for hedging activities. This Exposure Draft
would introduce significant volatility in earnings and could affect how the
Corporation balances interest rate sensitivity in the future. Management does
not believe the proposed accounting model will accurately account for and report
Comerica's use of derivatives and has expressed this opinion to the FASB.
Further information regarding risk management derivative financial instruments
and foreign exchange contracts is provided in Notes 8, 9 and 18 to the
consolidated financial statements.
LIQUIDITY
Liquidity is the ability to meet financial obligations through the maturity or
sale of existing assets or acquisition of additional funds. Liquidity
requirements are satisfied with various funding sources, including a $7.5
billion medium-term note program which allows the Michigan, California and Texas
banks to issue debt with maturities ranging between one month and 15 years. The
Michigan bank has an additional $2 billion European note program. At year-end
1996, unissued debt related to the two programs totaled $5.6 billion.
In addition, liquid assets totaled $6.8 billion, at December 31, 1996. The
Corporation also had available $1.2 billion from a collateralized borrowing
account with the Federal Reserve Bank at year-end 1996. Purchased funds at
December 31, 1996, excluding certificates of deposit with maturities beyond one
year, approximated $6.7 billion.
Another source of liquidity for the parent company is dividends from its
subsidiaries. As discussed in Note 17 to the consolidated financial statements
on page 45, subsidiary banks are subject to regulation and may be limited in
their ability to pay dividends or transfer funds to the holding
company. During 1997, the subsidiary banks can pay dividends of up to $371
million plus current net profits without prior regulatory approval. One measure
of current parent company liquidity is investment in subsidiaries, as a percent
of shareholders' equity. An amount over 100 percent represents the reliance on
subsidiary dividends to repay liabilities. As of December 31, 1996, the ratio
was 108 percent.
CUSTOMER INITIATED AND OTHER DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN
EXCHANGE CONTRACTS
CUSTOMER INITIATED AND OTHER NOTIONAL ACTIVITY
Interest Foreign
Rate Exchange
(in millions) Contracts Contracts Totals
- --------------------------------------------------------------------------------
Balances at December 31, 1994 $ 328 $ 503 $ 831
Additions 375 32,642 33,017
Maturities/amortizations (290) (32,825) (33,115)
Terminations (50) -- (50)
- --------------------------------------------------------------------------------
Balances at December 31, 1995 $ 363 $ 320 $ 683
Additions 237 37,571 37,808
Maturities/amortizations (210) (37,247) (37,457)
- --------------------------------------------------------------------------------
Balances at December 31, 1996 $ 390 $ 644 $ 1,034
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On a limited basis, the Corporation writes interest rate caps and enters into
foreign exchange contracts and interest rate swaps to accommodate the needs of
customers requesting such services. At December 31, 1996 and 1995, customer
initiated activity represented 11 percent and 10 percent, respectively of total
derivative and foreign exchange contracts, including commitments. Refer to Note
18 to the consolidated financial statements on page 45 for further information
regarding customer initiated and other derivative financial instruments and
foreign exchange contracts.
OTHER MATTERS
In June 1996, the FASB issued Statement on Financial Accounting Standards No.
125 on "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." The statement changes the accounting for
transfers and extinguishments occurring after December 31, 1996. SFAS No. 125 is
not expected to materially impact the Corporation.
As disclosed in Note 19 to the consolidated financial statements on page 48, a
lawsuit was filed on July 24, 1990, by the State of Michigan against a
subsidiary bank involving hazardous waste issues. The Corporation's motion for
summary judgment was granted, and the Circuit Court of Appeals, on December 19,
1996, upheld that judgment.
Many of the Corporation's computer systems contain programming code that will
not function properly on January 1, 2000. The Corporation is working to ensure
all systems will function properly at that date. Current estimates of costs to
remedy potential problems are not expected to be material to the years 1997-9.
Forward-looking statements in the preceding financial review are based on
current expectations, but there are numerous factors that could cause variances
in these factors as economic, industry and competitive positions change.
30
<PAGE>
CONSOLIDATED BALANCE SHEETS
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
December 31
(in thousands, except share data) 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,901,760 $ 2,028,375
Interest-bearing deposits with banks 27,329 23,568
Federal funds sold and securities purchased under agreements to resell 32,200 203,798
Trading account securities 6,009 10,668
Loans held for sale 38,069 511,562
Investment securities available for sale 4,800,034 6,859,310
Commercial loans 13,520,246 12,041,009
International loans 1,706,388 1,384,814
Real estate construction loans 750,760 641,432
Commercial mortgage loans 3,445,562 3,254,041
Residential mortgage loans 1,743,876 2,221,359
Consumer loans 4,634,258 4,570,015
Lease financing 405,618 329,608
- ----------------------------------------------------------------------------------------------------------------------------------
Total loans 26,206,708 24,442,278
Less allowance for loan losses (367,165) (341,344)
- ----------------------------------------------------------------------------------------------------------------------------------
Net loans 25,839,543 24,100,934
Premises and equipment 407,663 455,002
Customers' liability on acceptances outstanding 33,102 21,135
Accrued income and other assets 1,120,362 1,255,522
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets $34,206,071 $35,469,874
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand deposits (noninterest-bearing) $ 6,712,985 $ 5,579,536
Interest-bearing deposits 15,357,840 15,461,213
Deposits in foreign offices 296,348 2,126,466
- ----------------------------------------------------------------------------------------------------------------------------------
Total deposits 22,367,173 23,167,215
Federal funds purchased and securities sold
under agreements to repurchase 1,395,540 3,206,612
Other borrowed funds 3,093,651 1,467,550
Acceptances outstanding 33,102 21,135
Accrued expenses and other liabilities 459,267 355,219
Medium- and long-term debt 4,241,769 4,644,416
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 31,590,502 32,862,147
Nonredeemable preferred stock--$50 stated value
Authorized--5,000,000 shares
Issued--5,000,000 shares in 1996 250,000 --
Common stock--$5 par value
Authorized--250,000,000 shares
Issued--107,297,345 shares in 1996 and 115,094,531 shares in 1995 536,487 575,473
Capital surplus -- 410,618
Unrealized gains and losses on investment securities available for sale (22,789) (4,141)
Retained earnings 1,854,116 1,640,980
Deferred compensation (2,245) (1,974)
Less cost of common stock in treasury--490,704 shares in 1995 -- (13,229)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 2,615,569 2,607,727
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $34,206,071 $35,469,874
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
(in thousands, except per share data) 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,160,981 $2,090,854 $1,577,329
Interest on investment securities
Taxable 372,331 473,759 446,307
Exempt from federal income tax 17,443 26,189 30,645
- -------------------------------------------------------------------------------------------------------
Total interest on investment securities 389,774 499,948 476,952
Trading account interest 210 227 70
Interest on federal funds sold and securities
purchased under agreements to resell 5,068 7,402 4,717
Interest on time deposits with banks 1,827 8,032 21,858
Interest on loans held for sale 4,920 7,461 10,998
- -------------------------------------------------------------------------------------------------------
Total interest income 2,562,780 2,613,924 2,091,924
INTEREST EXPENSE
Interest on deposits 685,539 721,475 542,727
Interest on short-term borrowings
Federal funds purchased and securities
sold under agreements to repurchase 111,729 165,544 121,390
Other borrowed funds 107,155 135,667 78,546
Interest on medium- and long-term debt 294,990 288,990 147,942
Net interest rate swap (income)/expense (48,911) 2,365 (28,808)
- -------------------------------------------------------------------------------------------------------
Total interest expense 1,150,502 1,314,041 861,797
- -------------------------------------------------------------------------------------------------------
Net interest income 1,412,278 1,299,883 1,230,127
Provision for loan losses 114,000 86,500 56,000
- -------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,298,278 1,213,383 1,174,127
NONINTEREST INCOME
Income from fiduciary activities 133,482 125,038 121,755
Service charges on deposit accounts 140,436 130,249 123,626
Customhouse broker fees 10,764 36,086 40,662
Revolving credit fees 22,670 36,248 24,743
Securities gains 13,588 11,748 3,461
Other noninterest income 186,014 159,356 135,943
- -------------------------------------------------------------------------------------------------------
Total noninterest income 506,954 498,725 450,190
NONINTEREST EXPENSES
Salaries and employee benefits 560,784 562,159 548,607
Net occupancy expense 99,211 98,945 98,885
Equipment expense 68,827 67,872 67,319
FDIC insurance expense 8,139 23,817 44,276
Telecommunications expense 29,092 29,644 27,304
Restructuring charge (including merger and integration in 1994) 90,000 - 7,000
Other noninterest expenses 302,973 303,977 248,831
- -------------------------------------------------------------------------------------------------------
Total noninterest expenses 1,159,026 1,086,414 1,042,222
- -------------------------------------------------------------------------------------------------------
Income before income taxes 646,206 625,694 582,095
Provision for income taxes 229,045 212,328 194,853
- -------------------------------------------------------------------------------------------------------
NET INCOME $ 417,161 $ 413,366 $ 387,242
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net income applicable to common stock $ 408,136 $ 413,366 $ 387,242
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net income per common share $ 3.55 $ 3.54 $ 3.28
Average common and common equivalent shares 114,854 116,894 118,160
Cash dividends declared on common stock $ 170,067 $ 158,309 $ 145,098
Dividends per common share $ 1.52 $ 1.37 $ 1.24
- -------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
32 Comerica Incorporated
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Non-
redeemable Unrealized Total
Preferred Common Capital Gains Retained Deferred Treasury Shareholders'
(in thousands, except share data) Stock Stock Surplus and (Losses) Earnings Compensation Stock Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1994 $ -- $596,473 $525,668 $ 27,473 $1,155,280 $ (1,482) $(121,754) $2,181,658
Net income for 1994 -- -- -- -- 387,242 -- -- 387,242
Cash dividends declared
on common stock -- -- -- -- (145,098) -- -- (145,098)
Purchase of 2,810,564 shares
of common stock -- -- -- -- -- -- (76,280) (76,280)
Issuance of common stock:
Employee stock plans -- -- 1,170 -- (3,161) (797) 7,702 4,914
Acquisition of Pacific Western -- -- -- -- (3,858) -- 125,221 121,363
Amortization of deferred
compensation -- -- -- -- -- 493 -- 493
Change in unrealized
gains/(losses) on investment
securities available for sale -- -- -- (82,512) -- -- -- (82,512)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1994 $ -- $596,473 $526,838 $(55,039) $1,390,405 $ (1,786) $ (65,111) $2,391,780
Net income for 1995 -- -- -- -- 413,366 -- -- 413,366
Cash dividends declared
on common stock -- -- -- -- (158,309) -- -- (158,309)
Purchase of 1,405,500
shares of common stock -- -- -- -- -- -- (38,725) (38,725)
Purchase and retirement
of 4,200,000 shares
of common stock -- (21,000) (118,931) -- -- -- -- (139,931)
Issuance of common stock:
Employee stock plans -- -- 1,261 -- (4,482) (1,034) 14,957 10,702
Acquisitions -- -- 1,450 -- -- -- 75,650 77,100
Amortization of deferred
compensation -- -- -- -- -- 846 -- 846
Change in unrealized
gains/(losses) on investment
securities available for sale -- -- -- 50,898 -- -- -- 50,898
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1995 $ -- $575,473 $410,618 $ (4,141) $1,640,980 $ (1,974) $ (13,229) $2,607,727
Net income for 1996 -- -- -- -- 417,161 -- -- 417,161
Issuance of preferred stock 250,000 -- (3,256) -- -- -- -- 246,744
Cash dividends declared:
Preferred stock -- -- -- -- (9,025) -- -- (9,025)
Common stock -- -- -- -- (170,067) -- -- (170,067)
Purchase and retirement
of 12,176,496 shares
of common stock -- (60,883) (519,924) -- (5,065) -- (36,324) (622,196)
Issuance of common stock:
Employee stock plans -- 897 14,090 -- (20,076) (1,197) 40,295 34,009
Acquisitions -- 21,000 98,472 -- 208 -- 9,258 128,938
Amortization of deferred
compensation -- -- -- -- -- 926 -- 926
Change in unrealized
gains/(losses) on investment
securities available for sale -- -- -- (18,648) -- -- -- (18,648)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1996 $250,000 $536,487 $ -- $(22,789) $1,854,116 $ (2,245) $ -- $2,615,569
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
( ) Indicates deduction.
See notes to consolidated financial statements.
Comerica Incorporated 33
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended December 31
(in thousands)
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 417,161 $ 413,366 $ 387,242
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 114,000 86,500 56,000
Depreciation 66,776 64,014 59,819
Restructuring charge 90,000 (6,127) (19,733)
Net (increase) decrease in trading account securities 4,659 (6,336) (732)
Net (increase) decrease in loans held for sale 473,493 (420,015) 239,120
Net (increase) decrease in accrued income receivable 924 (26,749) (43,495)
Net increase (decrease) in accrued expenses (39,720) 96,645 (31,845)
Net amortization of intangibles 30,803 29,016 25,597
Funding for employee benefit plans (25,000) (200,000) (59,719)
Other, net 187,438 (178,874) 91,433
- --------------------------------------------------------------------------------------------------------------------
Total adjustments 903,373 (561,926) 316,445
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 1,320,534 (148,560) 703,687
INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits with banks (3,705) 363,870 647,600
Net (increase) decrease in federal funds sold and securities
purchased under agreements to resell 4,898 (122,498) 1,045,789
Proceeds from sale of investment securities available for sale 1,211,250 103,531 3,001
Proceeds from maturity of investment securities available for sale 1,531,012 837,412 565,445
Purchases of investment securities available for sale (643,796) (211,222) (1,150,178)
Proceeds from maturity of investment securities held to maturity -- 788,620 1,429,966
Purchases of investment securities held to maturity -- (223,579) (2,197,840)
Net increase in loans (other than loans purchased) (1,852,199) (1,908,266) (2,224,057)
Purchase of loans (77,805) (48,349) (257,043)
Fixed assets, net (46,038) (62,334) (78,454)
Net (increase) decrease in customers' liability on acceptances outstanding (12,341) 13,097 4,580
Net cash provided by acquisitions/sales 200,459 19,224 58,626
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 311,735 (450,494) (2,152,565)
FINANCING ACTIVITIES
Net increase (decrease) in deposits (825,859) 130,276 304,768
Net increase (decrease) in short-term borrowings (129,056) 468,754 (1,056,522)
Net increase (decrease) in acceptances outstanding 12,341 (13,097) (4,580)
Proceeds from issuance of medium- and long-term debt 2,251,000 2,960,000 3,550,000
Repayments and purchases of medium- and long-term debt (2,553,650) (2,418,171) (912,613)
Proceeds from issuance of preferred stock 246,744 -- --
Proceeds from issuance of common stock 35,206 11,736 5,711
Purchase of common stock for treasury and retirement (622,196) (178,656) (76,280)
Dividends paid (173,414) (155,726) (139,988)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (1,758,884) 805,116 1,670,496
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks (126,615) 206,062 221,618
Cash and due from banks at beginning of year 2,028,375 1,822,313 1,600,695
- --------------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of year $1,901,760 $2,028,375 $1,822,313
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Interest paid $1,201,146 $1,274,101 $ 862,563
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Income taxes paid $ 212,530 $ 180,134 $ 171,851
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Noncash investing and financing activities
Loan transfers to other real estate $ 10,534 $ 23,908 $ 26,598
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Stock issued for acquisitions $ 128,938 $ 77,100 $ 121,363
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Loan transfers to investment securities $ -- $ -- $ 91,538
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
34 Comerica Incorporated
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COMERICA INCORPORATED AND SUBSIDIARIES
NOTE 1
- --------------------------------------------------------------------------------
ACCOUNTING POLICIES
ORGANIZATION
Comerica Incorporated is a registered bank holding company headquartered in
Detroit, Michigan. The Corporation's principal lines of business are the
Business Bank, the Individual Bank and the Investment Bank. The core businesses
are tailored to each of the Corporation's four primary geographic markets:
Michigan, Texas, California and Florida.
The accounting and reporting policies of Comerica Incorporated and its
subsidiaries conform to generally accepted accounting principles and prevailing
practices within the banking industry. Management makes estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying footnotes. Actual results could differ from these estimates.
The following is a summary of the more significant accounting and reporting
policies.
CONSOLIDATION
The consolidated financial statements include the accounts of the Corporation
and its subsidiaries after elimination of all significant intercompany accounts
and transactions. Prior years' financial statements are reclassified to conform
with current financial statement presentation.
For acquisitions accounted for as pooling-of-interests combinations, the
historical consolidated financial statements are restated to include the
accounts and results of operations. For acquisitions using the purchase method
of accounting, the assets acquired and liabilities assumed are adjusted to fair
market values at the date of acquisition, and the resulting net discount or
premium is accreted or amortized into income over the remaining lives of the
relevant assets and liabilities. Goodwill representing the excess of cost over
the net book value of identifiable assets acquired is amortized on a straight-
line basis over periods ranging from 10 to 30 years (weighted average of 17
years). Core deposit intangible assets are amortized on an accelerated method
over 10 years.
LOANS HELD FOR SALE
Loans, normally mortgages, held for sale are carried at the lower of cost or
market. Market value is determined in the aggregate.
SECURITIES
Investment securities held to maturity are those securities which management has
the ability and positive intent to hold to maturity. Investment securities held
to maturity are stated at cost, adjusted for amortization of premium and
accretion of discount.
Investment securities that fail to meet the ability and positive intent criteria
are accounted for as securities available for sale, and stated at fair value
with unrealized gains and losses, net of income taxes, reported as a component
of shareholders' equity.
Trading account securities are carried at market value. Realized and unrealized
gains or losses on trading securities are included in noninterest income.
Gains or losses on the sale of securities are computed based on the adjusted
cost of the specific security.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation, computed on the straight-line method, is charged to
operations over the estimated useful lives of the properties. Leasehold
improvements are amortized over the terms of their respective leases or the
estimated useful lives of the improvements, whichever is shorter.
ALLOWANCE FOR LOAN LOSSES
The allowance is maintained at a level adequate to absorb losses inherent in the
loan portfolio. Management determines the adequacy of the allowance by applying
projected loss ratios to the risk ratings of loans both individually and by
category. The projected loss ratios incorporate such factors as recent loss
experience, current economic conditions, the risk characteristics of the various
categories and concentrations of loans, transfer risk and other pertinent
factors. Loans which are deemed uncollectible are charged off and deducted from
the allowance. The provision for loan losses and recoveries on loans previously
charged off are added to the allowance.
NONPERFORMING ASSETS
Nonperforming assets are comprised of loans for which the accrual of interest
has been discontinued, loans for which the terms have been renegotiated to less
than market rates due to a serious weakening of the borrower's financial
condition, and other real estate which has been acquired primarily through
foreclosure and is awaiting disposition.
Consumer loans are generally not placed on nonaccrual status and are directly
charged off no later than 180 days past due, or earlier if deemed uncollectible.
Loans other than consumer are generally placed on nonaccrual status when
principal or interest is past due 90 days or more and/or when, in the opinion of
management, full collection of principal or interest is unlikely. At the time a
loan is placed on nonaccrual status, interest previously accrued but not
collected is charged against current income. Income on such loans is then
recognized only to the extent that cash is received and where future collection
of principal is probable.
Comerica Incorporated 35
<PAGE>
NOTE 1 (CONTINUED)
- --------------------------------------------------------------------------------
ACCOUNTING POLICIES
Other real estate acquired is carried at the lower of cost or fair value, minus
estimated costs to sell. When the property is acquired through foreclosure, any
excess of the related loan balance over fair value is charged to the allowance
for loan losses. Subsequent write-downs, operating expenses, and losses upon
sale, if any, are charged to noninterest expenses.
PENSION COSTS
Pension costs are charged to salaries and employee benefits expense and funded
consistent with the requirements of federal law and regulations.
POSTRETIREMENT BENEFITS
Postretirement benefits are recognized in the financial statements during the
employee's active service period.
DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS
Interest rate and foreign exchange swaps, interest rate caps and floors, and
futures and forward contracts may be used to manage the Corporation's exposure
to interest rate and foreign currency risks. These instruments, with the
exception of futures and forwards, are accounted for on an accrual basis. Net
interest income or expense, including premiums paid or received, is recognized
over the life of the contract and reported as an adjustment to interest expense.
Realized gains and losses on futures and forwards are generally deferred and
amortized over the life of the contract as an adjustment to net interest income.
Gains or losses on early termination of risk management derivative financial
instruments are deferred and amortized as an adjustment to the yields of the
related assets or liabilities over their remaining contractual life. If the
designated asset or liability matures, or is disposed of or extinguished, any
unrealized gains or losses on the related derivative instrument are recognized
currently and reported as an adjustment to interest expense.
Foreign exchange futures and forward contracts, foreign currency options,
interest rate caps, and interest rate swap agreements executed as a service to
customers are accounted for on a mark-to-market basis. As a result, the fair
values of these instruments are recorded in the consolidated balance sheet with
both realized and unrealized gains and losses recognized currently in
noninterest income.
INCOME TAXES
Provisions for income taxes are based on amounts reported in the statements of
income (after exclusion of nontaxable income such as interest on state and
municipal securities) and include deferred income taxes on temporary differences
between the tax basis and financial reporting basis of assets and liabilities.
STATEMENTS OF CASH FLOWS
For the purpose of presentation in the statements of cash flows, cash and cash
equivalents are defined as those amounts included in the balance sheet caption,
"Cash and due from banks."
LOAN ORIGINATION FEES AND COSTS
Loan origination and commitment fees are deferred and recognized over the life
of the related loan or over the commitment period as a yield adjustment. Loan
fees on unused commitments and fees related to loans sold are recognized
currently as other noninterest income.
NOTE 2
- --------------------------------------------------------------------------------
ACQUISITIONS
During the years ended December 31, 1996, 1995 and 1994, Comerica made the
following acquisitions, which were accounted for as purchases:
FMV of FMV of
Assets Liabilities Purchase Intangibles
(in millions) Acquired Assumed Price Recorded
- --------------------------------------------------------------------------
During 1996
Metrobank $1,083 $1,020 $125 $62
During 1995
University Bank & Trust 456 422 69 35
QuestStar Bank, N.A. 205 193 25 13
During 1994
Pacific Western Bancshares 959 908 121 70
Lockwood Banc Group 305 288 44 27
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
36 Comerica Incorporated
<PAGE>
NOTE 3
- --------------------------------------------------------------------------------
INVESTMENT SECURITIES
Information concerning investment securities as shown in the consolidated
balance sheets of the Corporation was as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
(in thousands) Cost Gains Losses Fair Value
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1996
U.S. government and
agency securities $4,011,022 $ 22,702 $ 65,375 $3,968,349
State and municipal
securities 220,173 7,866 196 227,843
Other securities 603,873 654 685 603,842
- -------------------------------------------------------------------------------------
Total securities
available for sale $4,835,068 $ 31,222 $ 66,256 $4,800,034
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
December 31, 1995
U.S. government and
agency securities $6,052,184 $ 41,585 $ 55,429 $6,038,340
State and municipal
securities 353,612 17,618 389 370,841
Other securities 459,887 12,682 22,440 450,129
- -------------------------------------------------------------------------------------
Total securities
available for sale $6,865,683 $ 71,885 $ 78,258 $6,859,310
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
The cost and estimated fair values of debt securities by contractual maturity
were as follows (securities with multiple maturity dates are classified in the
period of final maturity). Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
December 31, 1996 Estimated
(in thousands) Cost Fair Value
- -----------------------------------------------------------------
Contractual maturity
Within one year $ 423,356 $ 424,047
Over one year to
five years 356,382 359,436
Over five years to
ten years 105,318 107,610
Over ten years 75,113 75,777
- -----------------------------------------------------------------
Subtotal securities 960,169 966,870
Mortgage-backed
securities 3,792,782 3,751,125
Equity and other
nondebt securities 82,117 82,039
- -----------------------------------------------------------------
Total securities
available for sale $4,835,068 $4,800,034
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Sales and calls of investment securities available for sale and calls of
investment securities held to maturity resulted in realized gains and losses as
follows:
Year Ended December 31 Available for Sale Held to Maturity
- ----------------------------------------------------------------------------
(in thousands) 1996 1995 1996 1995
- ----------------------------------------------------------------------------
Securities gains $14,945 $11,729 $ -- $ 456
Securities losses (1,357) (350) -- (87)
- ----------------------------------------------------------------------------
Total $13,588 $11,379 $ -- $ 369
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Assets, principally securities, carried at approximately $3.5 billion at
December 31, 1996, were pledged to secure public deposits (including State of
Michigan deposits of $62 million at December 31, 1996), and for other purposes
as required by law.
All held to maturity securities were redesignated to the available for sale
category in December 1995 in accordance with the one-time provisions issued in
conjunction with the FASB's Special Report, "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities." At the date of transfer the amortized cost of the held to maturity
securities was $4.6 billion. The net unrealized loss related to the redesignated
securities totaled $9 million.
Comerica Incorporated 37
<PAGE>
NOTE 4
- --------------------------------------------------------------------------------
NONPERFORMING ASSETS
The following table summarizes nonperforming assets and loans which are
contractually past due 90 days or more as to interest or principal payments.
Nonperforming assets consist of nonaccrual loans, reduced-rate loans and other
real estate. Nonaccrual loans are those on which interest is not being
recognized. Reduced-rate loans are those on which interest has been renegotiated
to lower than market rates because of the weakened financial condition of the
borrower.
Nonaccrual and reduced-rate loans are included in loans on the consolidated
balance sheet.
December 31
(in thousands) 1996 1995
- -------------------------------------------------------------
Nonaccrual loans
Commercial loans $ 71,991 $ 87,195
Real estate construction loans 3,576 6,578
Commercial mortgage loans 22,567 31,123
Residential mortgage loans 5,160 5,507
- -------------------------------------------------------------
Total 103,294 130,403
Reduced-rate loans 8,009 3,244
- -------------------------------------------------------------
Total nonperforming loans 111,303 133,647
Other real estate 28,398 29,384
- -------------------------------------------------------------
Total nonperforming assets $139,701 $163,031
- -------------------------------------------------------------
- -------------------------------------------------------------
Loans past due 90 days $ 51,748 $ 57,134
- -------------------------------------------------------------
- -------------------------------------------------------------
Gross interest income that would
have been recorded had the
nonaccrual and reduced-rate
loans performed in accordance
with original terms $ 11,119 $ 18,925
- -------------------------------------------------------------
- -------------------------------------------------------------
Interest income recognized $ 2,681 $ 3,427
- -------------------------------------------------------------
- -------------------------------------------------------------
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," as amended by
SFAS No. 118, was adopted January 1, 1995. The statements consider a loan
impaired when it is probable that payment of interest and principal will not be
made in accordance with the contractual terms of the loan agreement. Consistent
with this definition, all nonaccrual and reduced-rate loans (with the exception
of residential mortgage and consumer loans) are impaired. The adoption of these
accounting standards had no effect on the financial position or results of
operations of the Corporation.
December 31
(in thousands) 1996 1995
- -------------------------------------------------------------
Average impaired loans for the year $114,253 $148,087
Total period-end impaired loans 98,050 135,034
Period-end impaired loans
requiring an allowance 59,960 89,209
Impairment allowance 19,528 26,578
- -------------------------------------------------------------
- -------------------------------------------------------------
Those impaired loans not requiring an allowance represent loans for which the
fair value exceeded the recorded investment in the loan. Fifty percent of the
total impaired loans at December 31, 1996 are evaluated based on fair value of
related collateral. Remaining loan impairment is based on the present value of
expected future cash flows discounted at the loan's effective interest rate.
NOTE 5
- --------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES
An analysis of changes in the allowance for loan losses follows:
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------
Balance at January 1 $341,344 $326,195 $298,685
Allowance of institutions and
loans purchased/sold (3,630) 4,668 19,467
Loans charged off (125,912) (119,028) (83,086)
Recoveries on loans previously
charged off 41,363 43,009 35,129
- --------------------------------------------------------------------------
Net loans charged off (84,549) (76,019) (47,957)
Provision for loan losses 114,000 86,500 56,000
- --------------------------------------------------------------------------
Balance at December 31 $367,165 $341,344 $326,195
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
As a percent of total loans 1.40% 1.40% 1.47%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
38 Comerica Incorporated
<PAGE>
NOTE 6
- --------------------------------------------------------------------------------
SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Concentrations of both on-balance sheet and off-balance sheet credit risk are
controlled and monitored as part of credit policies. The Corporation is a
regional bank holding company with a geographic concentration of its on-balance
sheet and off-balance sheet activities centered in Michigan. In addition, the
Corporation has an industry concentration with the automotive industry, which
includes manufacturers and their finance subsidiaries, suppliers, dealers and
company executives.
At December 31, 1996 and 1995, exposure from loan commitments and guarantees to
companies related to the automotive industry totaled $8.2 billion and $8.0
billion, respectively. Additionally, commercial real estate loans, including
commercial mortgages and construction loans, totaled $4.2 billion in 1996 and
$3.9 billion in 1995. Approximately $1.9 billion of commercial real estate loans
at December 31, 1996 involved mortgages on owner-occupied properties. Those
borrowers are involved in business activities other than real estate, and the
sources of repayment are not dependent on the performance of the real estate
market.
NOTE 7
- --------------------------------------------------------------------------------
PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31 by major category follows:
(in thousands) 1996 1995
- --------------------------------------------------------------------------
Land $ 54,635 $ 61,144
Buildings and improvements 366,618 402,569
Furniture and equipment 436,133 479,099
- --------------------------------------------------------------------------
Total cost 857,386 942,812
Less accumulated depreciation and amortization (449,723) (487,810)
- --------------------------------------------------------------------------
Net book value $ 407,663 $ 455,002
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Rental expense for leased properties and equipment amounted to $44 million in
1996, 1995 and 1994. Future minimum lease rentals under noncancelable operating
lease obligations are as follows:
(in thousands)
- -------------------------------------------------------------
1997 $ 40,211
1998 38,575
1999 35,518
2000 32,256
2001 28,735
2002 and later 138,414
- -------------------------------------------------------------
- -------------------------------------------------------------
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," was adopted in 1995. The statement establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held and
used. The adoption of this standard had no significant effect on the financial
position or results of operations of the Corporation.
NOTE 8
- --------------------------------------------------------------------------------
SHORT-TERM BORROWINGS
Federal funds purchased and securities sold under agreements to repurchase
generally mature within one to four days from the transaction date. Other
borrowed funds, consisting of commercial paper, borrowed securities, term
federal funds purchased, short-term notes and treasury tax and loan deposits,
generally mature within one to 120 days from the transaction date. The following
is a summary of short-term borrowings for the two years ended December 31, 1996:
Federal Funds Purchased
and Securities Sold Other
Under Agreements Borrowed
(in thousands) to Repurchase Funds
- -------------------------------------------------------------------------------
December 31, 1996
Amount outstanding at year-end $1,395,540 $3,093,651
Weighted average interest rate at year-end 5.80% 5.14%
December 31, 1995
Amount outstanding at year-end $3,206,612 $1,467,550
Weighted average interest rate at year-end 5.39% 5.18%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The Corporation entered into interest rate swap contracts that convert $700
million of short-term notes based on the bank prime rate minus 2.96% and the
one-month London Interbank Offered Rate (LIBOR) (5.29% and 5.53% at December 31,
1996, respectively) to a three-month LIBOR (5.56% at December 31, 1996) based
rate.
At December 31, 1996, the parent company had available additional credit
totaling $100 million under a line of credit agreement, all of which was unused.
Under the current agreement, the line will expire in April of 2000.
Comerica Incorporated 39
<PAGE>
NOTE 9
- --------------------------------------------------------------------------------
MEDIUM- AND LONG-TERM DEBT
Medium- and long-term debt consisted of the following at December 31:
(in thousands) 1996 1995
- -------------------------------------------------------------------------------
Parent Company
7.25% subordinated notes due 2007 $ 148,548 $ 148,584
9.75% subordinated notes due 1999 74,782 74,692
10.125% subordinated debentures due 1998 74,880 74,800
- -------------------------------------------------------------------------------
Total parent company 298,210 298,076
Subsidiaries
Subordinated notes:
8.375% subordinated notes due 2024 147,860 147,782
7.25% subordinated notes due 2002 149,089 148,931
6.875% subordinated notes due 2008 99,143 99,066
7.125% subordinated notes due 2013 148,112 148,000
7.875% subordinated notes due 2026 146,814 --
- -------------------------------------------------------------------------------
Total subordinated notes 691,018 543,779
Medium-term notes:
Floating rate based on Treasury bill indices 399,955 1,099,701
Floating rate based on Prime indices -- 550,000
Floating rate based on LIBOR indices 1,448,947 624,937
Fixed rate notes with interest rates ranging
from 5.75% to 6.875% 1,399,040 1,523,433
- -------------------------------------------------------------------------------
Total medium-term notes 3,247,942 3,798,071
Notes payable maturing on dates ranging
from 1997 through 2015 4,599 4,490
- -------------------------------------------------------------------------------
Total subsidiaries 3,943,559 4,346,340
- -------------------------------------------------------------------------------
Total medium- and long-term debt $4,241,769 $4,644,416
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Concurrent with the issuance of certain of the medium- and long-term debt
presented above, the Corporation entered into interest rate swap agreements to
convert the stated rate of the debt to a rate based on the indices identified in
the following table:
Principal
Amount Base
of Debt Rate at
(in thousands) Converted Base Rate 12/31/96
- ----------------------------------------------------------------------------
Parent Company
7.25% subordinated notes $150,000 6-month LIBOR 5.63%
9.75% subordinated notes 50,000 3-month LIBOR 5.56
- ----------------------------------------------------------------------------
Subsidiaries
Subordinated notes:
8.375% subordinated notes 150,000 6-month LIBOR 5.63
7.25% subordinated notes 150,000 6-month LIBOR 5.63
6.875% subordinated notes 100,000 6-month LIBOR 5.63
7.125% subordinated notes 150,000 6-month LIBOR 5.63
7.875% subordinated notes 150,000 6-month LIBOR 5.63
Medium-term notes:
Floating based on LIBOR
indices 200,000 3-month LIBOR 5.56
Fixed rate notes with interest
rates ranging from 5.75%
to 6.65% 850,000 3-month LIBOR 5.56
5.95% fixed rate note 150,000 5.63% 5.63
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
All subordinated notes and debentures with maturities greater than one year
qualify as Tier 2 capital.
The Corporation currently has two medium-term note programs: a senior note
program and a European note program. Under these programs, certain of the bank
subsidiaries may offer an aggregate principal amount of up to $9.5 billion. The
notes can be issued as fixed or floating rate notes and with terms from one
month to 15 years. The interest rate on the floating rate medium-term notes
based on LIBOR ranged from three-month LIBOR minus 0.13% to three-month LIBOR
plus 0.10%. The notes are due from 1997 to 2001. The interest rates on the
floating medium-term notes based on the three-month U.S. Treasury bill bond
equivalent rate (5.22% at December 31, 1996) were the rate plus 0.30% for notes
maturing in 1997. The maturities of the fixed rate notes range from 1997 to
2000. The medium-term notes do not qualify as Tier 2 capital and are not insured
by the FDIC. The principal maturities of medium- and long-term debt are as
follows:
(in thousands)
- -------------------------------------------------------------
1997 $2,549,030
1998 274,095
1999 74,290
2000 199,431
2001 299,315
2002 and later 845,608
- -------------------------------------------------------------
- -------------------------------------------------------------
40 Comerica Incorporated
<PAGE>
NOTE 10
- --------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
During 1996, the board of directors authorized the repurchase of up to 15
million shares of Comerica Incorporated common stock for general corporate
purposes, acquisitions and employee benefit plans. At December 31, 1996, 8.6
million shares had been repurchased under this program.
At December 31, 1996, the Corporation had reserved 4.8 million shares of common
stock for issuance to employees under the long-term incentive plans.
During 1996, the Corporation issued 5 million shares of Fixed/ Adjustable Rate
Noncumulative Preferred Stock, Series E, with a stated value of $50 per share.
Dividends are payable quarterly, at a rate of 6.84% per annum through July 1,
2001. Thereafter, the rate will be equal to 0.625% plus an effective rate, but
not less than 7.34% nor greater than 13.34%. The effective rate will be equal to
the highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate (as defined in the prospectus). The
Corporation, at its option, may redeem all or part of the outstanding shares on
or after July 1, 2001.
NOTE 11
- --------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE
Primary net income per common share is computed by dividing adjusted net income
by the weighted average number of shares of common stock and dilutive common
stock equivalents outstanding during the period. Common stock equivalents
consist of common stock issuable under the assumed exercise of stock options
granted under the Corporation's stock plans, using the treasury stock method.
Fully diluted net income per share of common stock differs from primary to the
extent the treasury stock method affects the assumed conversion of common stock
equivalents. A computation of earnings per share follows:
Year Ended December 31
(in thousands, except per share data) 1996 1995 1994
- -------------------------------------------------------------------------------
Primary
Average shares outstanding 112,847 115,797 117,264
Common stock equivalent
Net effect of the assumed
exercise of stock options 2,007 1,097 896
- -------------------------------------------------------------------------------
Primary average shares 114,854 116,894 118,160
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net income $417,161 $413,366 $387,242
Less preferred stock dividends 9,025 -- --
- -------------------------------------------------------------------------------
Net income applicable to
common stock $408,136 $413,366 $387,242
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Primary net income per share $ 3.55 $ 3.54 $ 3.28
Fully diluted
Average shares outstanding 112,847 115,797 117,264
Common stock equivalents
Net effect of the assumed
exercise of stock options 2,411 1,783 899
- -------------------------------------------------------------------------------
Fully diluted average shares 115,258 117,580 118,163
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net income $417,161 $413,366 $387,242
Less preferred stock dividends 9,025 -- --
- -------------------------------------------------------------------------------
Net income applicable to
common stock $408,136 $413,366 $387,242
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fully diluted net income per share $ 3.54 $ 3.52 $3.28
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Comerica Incorporated 41
<PAGE>
NOTE 12
- --------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLANS
The Corporation has long-term incentive plans under which it has awarded both
shares of restricted stock to key executive officers and stock options to
executive officers and key personnel of the Corporation and its subsidiaries.
The exercise price of the stock options is equal to the fair market value at the
time the options are granted and the options may have restrictions regarding
exercisability. The maturity of each option is determined at the date of grant;
however, no options may be exercised later than ten years from the date of
grant. The Corporation adopted the disclosure-only option under SFAS No. 123,
"Accounting for Stock-Based Compensation," as of December 31, 1996. If the
recognition provisions of the new statement had been adopted as of the beginning
of 1996, the effect on 1996 net income would have been immaterial.
Average per Share
- -------------------------------------------------------------------------------
Exercise Market
Number Price Price
- -------------------------------------------------------------------------------
Outstanding--December 31, 1993 3,441,273 $21.68 $26.63
Granted 887,350 27.03 27.03
Cancelled (92,877) 29.30 27.78
Exercised (247,726) 14.67 28.94
Expired --
- -------------------------------------------------------------------------------
Outstanding--December 31, 1994 3,988,020 23.13 24.38
Granted 1,106,180 27.96 27.96
Cancelled (220,741) 29.15 31.88
Exercised (514,247) 16.11 31.56
Expired --
Acquisition of
University Bank & Trust 153,119 16.05 27.50
- -------------------------------------------------------------------------------
Outstanding--December 31, 1995 4,512,331 24.58 40.00
Granted 1,262,762 38.42 38.42
Cancelled (214,079) 28.43 43.42
Exercised (1,183,742) 19.17 44.01
Expired --
Acquisition of Metrobank 397,145 12.74 39.63
- -------------------------------------------------------------------------------
Outstanding--December 31, 1996 4,774,417 $28.43 $52.38
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Exercisable--December 31, 1996 2,389,945
Available for grant--
December 31, 1996 58,238
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The following table summarizes information about stock options outstanding at
December 31,1996:
Outstanding Exercisable
- -------------------------------------------------------------------------
Average Average
Exercise Average Exercise Exercise
Price Range Shares Life (a) Price Shares Price
- -------------------------------------------------------------------------
$ 9.48 - $15.44 793,185 3.2 $14.17 793,185 $14.17
15.55 - 27.00 817,617 6.2 24.56 504,918 23.05
27.88 - 29.25 927,230 8.2 27.90 236,058 27.91
29.75 - 37.75 1,024,398 5.9 31.20 855,784 30.96
38.13 - 52.38 1,211,987 9.2 38.43 -- --
- -------------------------------------------------------------------------
Total 4,774,417 6.8 $28.43 2,389,945 $23.41
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
(a) Average contractual life remaining in years.
42 Comerica Incorporated
<PAGE>
NOTE 13
- --------------------------------------------------------------------------------
EMPLOYEE BENEFIT PLANS
The Corporation has a defined benefit pension plan in effect for substantially
all full-time employees. Staff expense includes income of $1.4 million in 1996,
$1.0 million in 1995 and $2.3 million in 1994 for the plan. Benefits under the
plan are based primarily on years of service and the levels of compensation
during the five highest paid consecutive calendar years occurring during the
last ten years before retirement. The plan's assets primarily consist of U.S.
government and agency securities, corporate bonds and notes, equity securities
and units of certain collective investment funds administered by Comerica Bank.
Net periodic pension cost/(income) consisted of the following:
(in thousands) 1996 1995 1994
- -----------------------------------------------------------------------
Service cost--benefits earned
during the period $11,675 $ 8,857 $ 9,273
Interest cost on projected
benefit obligation 31,572 29,231 27,043
Actual return on plan assets (62,710) (93,650) 15,323
Net amortization and (deferral) 18,072 54,585 (53,926)
- -----------------------------------------------------------------------
Net pension income $(1,391) $ (977) $(2,287)
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
The following table sets forth the funded status of the defined benefit pension
plans and amounts recognized on the Corporation's balance sheet:
December 31
(in thousands) 1996 1995
- -------------------------------------------------------------------------------
Accumulated benefit obligation
Vested $367,376 $336,411
Nonvested 16,483 16,970
- -------------------------------------------------------------------------------
Accumulated benefit obligation 383,859 353,381
Effect of projected future compensation levels 78,917 71,597
- -------------------------------------------------------------------------------
Projected benefit obligation 462,776 424,978
Plan assets at fair value 515,164 466,845
- -------------------------------------------------------------------------------
Plan assets in excess of projected benefit obligation 52,388 41,867
Unrecognized net gain due to past experience
different from that assumed and effects of
changes in assumptions (17,672) (13,397)
Unrecognized net assets being amortized
over 15 years (20,191) (25,026)
- -------------------------------------------------------------------------------
Prepaid pension $ 14,525 $ 3,444
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Actuarial assumptions were as follows:
1996 1995 1994
- --------------------------------------------------------------------------
Discount rate used in determining
projected benefit obligation 7.5% 7.5% 8.5%
Rate of increase in compensation levels 5% 5% 5%
Long-term rate of return on assets 9% 8% 8%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
The Corporation has a savings ("401(k)") plan which is a defined contribution
plan. All of the Corporation's salaried and regular part-time employees are
eligible to participate in the plan. The Corporation makes matching
contributions based on a declining percentage of employee contributions
(currently, maximum per employee is $800) as well as a performance-based
matching contribution based on the Corporation's financial performance. Staff
expense includes expense of $10.4 million in 1996, $7.1 million in 1995 and $7.6
million in 1994 for the plan.
The Corporation's postretirement benefits plan continues postretirement health
care and life insurance benefits for retirees as of December 31, 1992, provides
a phase-out for employees over 50 as of that date, and substantially
reduces all benefits for remaining employees. The Corporation has funded the
plan with a company-owned life insurance contract purchased in 1995.
Net periodic postretirement benefit cost included the following components:
(in thousands) 1996 1995 1994
- ----------------------------------------------------------------------------
Service cost $ 402 $ 383 $ 467
Interest cost on accumulated
postretirement benefit obligation 5,597 6,652 6,698
Return on plan assets (3,094) (2,453) --
Amortization of transition obligation 4,628 4,628 4,628
Net amortization and (deferral) (2,488) (1,511) --
- ----------------------------------------------------------------------------
Net periodic postretirement
benefit cost $ 5,045 $ 7,699 $11,793
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
The following table sets forth the status of the postretirement plan at
December 31:
(in thousands) 1996 1995
- ----------------------------------------------------------------------------
Retirees $65,711 $68,477
Other fully eligible plan participants 4,910 4,568
Other active plan participants 5,799 4,993
- ----------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 76,420 78,038
Plan assets at fair value 80,547 77,453
- ----------------------------------------------------------------------------
Funded status 4,127 (585)
Unrecognized net gain (11,800) (13,039)
Unrecognized transition obligation 73,733 78,360
- ----------------------------------------------------------------------------
Prepaid postretirement benefit $66,060 $64,736
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Actuarial assumptions were as follows:
1996 1995 1994
- ----------------------------------------------------------------------------
Discount rate used in determining
accumulated postretirement
benefit obligation 7.5% 7.5% 8.5%
Long-term rate of return on assets 6.7% 6.7% --
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
An 11 percent health care cost trend rate was projected for 1996 and is assumed
to decrease gradually to 6 percent by 2002, remaining constant thereafter.
Increasing each health care rate by one percentage point would increase the
accumulated postretirement benefit obligation by $5 million at December 31, 1996
and the aggregate of the service and interest cost components by $420 thousand
for the year ended December 31, 1996.
Comerica Incorporated 43
<PAGE>
NOTE 14
- -------------------------------------------------------------------------------
INCOME TAXES
The current and deferred components of income taxes were as follows:
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------
Currently payable
Federal $225,863 $192,899 $176,322
State, local and foreign 16,951 8,610 6,676
- --------------------------------------------------------------------------
242,814 201,509 182,998
Deferred federal, state and local (13,769) 10,819 11,855
- --------------------------------------------------------------------------
Total $229,045 $212,328 $194,853
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
There were $4.8 million, $4.1 million and $1.2 million of income taxes provided
on securities transactions in 1996, 1995 and 1994, respectively.
The principal components of deferred tax (assets) liabilities at December 31
were as follows:
(in thousands) 1996 1995
- ---------------------------------------------------------------------------
Allowance for loan losses $(116,816) $(99,660)
Lease financing transactions 105,805 96,735
Allowance for depreciation 18,972 11,017
Deferred loan origination fees and costs (11,408) (13,604)
Investment securities available for sale (11,562) (2,242)
Employee benefits (3,132) (8,514)
Restructuring charge (15,178) --
Other temporary differences, net (35,825) (23,728)
- ---------------------------------------------------------------------------
Total $ (69,144) $(39,996)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
The provision for income taxes differs from that computed by applying the
federal statutory rate of 35 percent for the reasons in the following analysis:
(in thousands) 1996 1995 1994
- -------------------------------------------------------------------------------
Tax based on federal statutory rate $226,172 $218,993 $203,733
Effect of tax-exempt interest income (8,842) (12,538) (16,153)
Other 11,715 5,873 7,273
- -------------------------------------------------------------------------------
Provision for income taxes $229,045 $212,328 $194,853
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NOTE 15
- --------------------------------------------------------------------------------
RESTRUCTURING
The Corporation recorded a restructuring charge of $90 million in 1996 in
connection with a program to improve efficiency, revenue and customer service.
The charge includes only identified direct and incremental costs associated with
the program. The components of the restructuring charge are as follows:
(in thousands)
- -----------------------------------------------------
Termination benefits $48,000
Occupancy and equipment 21,000
Other 21,000
- -----------------------------------------------------
Total restructuring charge $90,000
- -----------------------------------------------------
- -----------------------------------------------------
Termination benefits primarily include severance payments. The occupancy and
equipment portion consists of lease termination costs, space consolidation and
estimated losses on the disposal of vacated properties. Other charges consist
primarily of the project costs incurred during the assessment phase of the
program.
NOTE 16
- --------------------------------------------------------------------------------
TRANSACTIONS WITH RELATED PARTIES
The bank subsidiaries have had, and expect to have in the future, transactions
with the Corporation's directors and their affiliates. Such transactions were
made in the ordinary course of business and included extensions of credit, all
of which were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the same time for comparable transactions
with other customers and did not, in management's opinion, involve more than
normal risk of collectibility or present other unfavorable features. The
aggregate amount of loans attributable to persons who were related parties at
December 31, 1996, approximated $145 million at the beginning and $193 million
at the end of 1996. During 1996, new loans to related parties aggregated $92
million and repayments totaled $44 million.
44 Comerica Incorporated
<PAGE>
NOTE 17
- --------------------------------------------------------------------------------
REGULATORY CAPITAL AND BANKING SUBSIDIARIES
Banking regulations limit the transfer of assets in the form of dividends, loans
or advances from the bank subsidiaries to the Corporation. Under the most
restrictive of these regulations, the aggregate amount of dividends which can be
paid to the Corporation without obtaining prior approval from bank regulatory
agencies approximated $371 million at January 1, 1997, plus current year's
earnings. Substantially all the assets of the Corporation's subsidiaries are
restricted from transfer to the Corporation in the form of loans or advances.
Dividends paid to the Corporation by its banking subsidiaries amounted to $322
million in 1996, $184 million in 1995, and $293 million in 1994.
The Corporation and its banking subsidiaries are subject to various regulatory
capital requirements administered by the federal banking agencies. Quantitative
measures established by regulation to ensure capital adequacy require the
maintenance of minimum amounts and ratios of Tier 1 and total capital (as
defined in the regulations) to average and risk-weighted assets. At December 31,
1996, the Corporation and all of its banking subsidiaries exceeded the ratios
required for an institution to be considered "well capitalized" (total capital
ratio greater than 10 percent). The following is a summary of the capital
position of the Corporation and its significant banking subsidiaries:
<TABLE>
<CAPTION>
Comerica, Inc. Comerica Comerica Bank- Comerica Bank-
(in thousands) (Consolidated) Bank Texas California
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31,1996
Tier 1 capital $2,366,342 $1,930,830 $275,895 $282,108
Total capital 3,617,961 2,914,832 309,627 319,109
Tier 1 capital to average assets
(minimum-3.0%) 7.07% 7.23% 8.42% 7.40%
Tier 1 capital to risk-weighted assets
(minimum-4.0%) 7.18 7.12 9.49 8.95
Total capital to risk-weighted assets
(minimum-8.0%) 10.99 10.75 10.65 10.12
December 31,1995
Tier 1 capital $2,361,785 $1,799,266 $267,306 $170,038
Total capital 3,470,229 2,601,900 301,753 192,326
Tier 1 capital to average assets
(minimum-3.0%) 6.87% 6.52% 7.73% 7.86%
Tier 1 capital to risk-weighted assets
(minimum-4.0%) 7.63 7.25 9.23 9.56
Total capital to risk-weighted assets
(minimum-8.0%) 11.21 10.48 10.42 10.81
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 18
- --------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Corporation enters into various off-
balance sheet transactions involving derivative financial instruments, foreign
exchange contracts, and credit-related financial instruments to manage exposure
to fluctuations in interest rate, foreign currency and other market risks and to
meet the financing needs of customers. These financial instruments involve, to
varying degrees, elements of credit and market risk in excess of the amount
reflected in the consolidated balance sheets.
Credit risk is the possible loss that may occur in the event of nonperformance
by the counterparty to a financial instrument. The Corporation attempts to
minimize credit risk arising from off-balance sheet financial instruments by
evaluating the creditworthiness of each counterparty adhering to the same credit
approval process used for traditional lending activities. Counterparty risk
limits and monitoring procedures have also been established to facilitate the
management of credit risk. Collateral is obtained, if deemed necessary, based on
the results of management's credit evaluation. Collateral varies but may include
cash, investment securities, accounts receivable, inventory, property, plant and
equipment, or real estate.
Derivative financial instruments and foreign exchange contracts are traded over
an organized exchange or negotiated over-the-counter. Credit risk associated
with exchange-traded contracts is typically assumed by the organized exchange.
Over-the-counter contracts are tailored to meet the needs of the counterparties
involved and, therefore, contain a greater degree of credit risk and liquidity
risk than exchange-traded contracts which have standardized terms
Comerica Incorporated 45
<PAGE>
NOTE 18 (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
and readily available price information. The Corporation reduces exposure to
credit and liquidity risks from over-the-counter derivative and foreign exchange
contracts by conducting such transactions with investment-grade domestic and
foreign investment banks or commercial banks.
Market risk is the potential loss that may result from movements in interest or
foreign currency rates which cause an unfavorable change in the value of a
financial instrument. The Corporation manages this risk by establishing
counterparty and monetary exposure limits and monitoring compliance with those
limits. Market risk arising from derivative and foreign exchange positions
entered into on behalf of customers is relected in the consolidated financial
statements and may be mitigated by entering into offsetting transactions. Market
risk inherent in off-balance sheet derivative and foreign exchange contracts
held or issued for risk management purposes is generally offset by changes in
the value of rate sensitive on-balance sheet assets or liabilities. Termination
of derivative contracts, other than by a counterparty, is unlikely as a
particular instrument can be offset by entering into an opposite-effect
derivative product to facilitate risk management strategies.
DERIVATIVE FINANCIAL INSTRUMENTS AND FOREIGN EXCHANGE CONTRACTS
The Corporation, as an end-user, employs a variety of off-balance sheet
financial instruments for risk management purposes. Activity related to these
instruments is centered predominantly in the interest rate markets and mainly
involves interest rate swaps. Various other types of instruments are also used
to manage exposures to market risks, including interest rate caps and floors,
foreign exchange forward contracts, and foreign exchange swap agreements. Refer
to the section entitled "Risk Management Derivative Financial Instruments and
Foreign Exchange Contracts" in Management's Discussion and Analysis on page 27
for further information about the Corporation's objectives for using such
instruments.
The following table presents the composition of off-balance sheet derivative
financial instruments and foreign exchange contracts, excluding commitments,
held or issued for risk management purposes at December 31, 1996 and 1995.
Notional amounts, which represent the extent of involvement in the derivatives
market, are generally used to determine the contractual cash flows required in
accordance with the terms of the agreement. These amounts are typically not
exchanged, significantly exceed amounts subject to credit or market risk, and
are not reflected in the consolidated balance sheets.
Notional/
Contract Unrealized Unrealized Fair
(in millions) Amount Gains Losses Value
- -------------------------------------------------------------------------------
December 31, 1996
Risk management
Interest rate contracts:
Swaps $8,015 $ 42 $(97) $(55)
Options, caps and
floors purchased 53 -- -- --
Caps written 152 -- -- --
- -------------------------------------------------------------------------------
Total interest rate
contracts 8,220 42 (97) (55)
Foreign exchange
contracts:
Spot and forwards 444 26 (4) 22
Swaps 38 -- (1) (1)
- -------------------------------------------------------------------------------
Total foreign
exchange contracts 482 26 (5) 21
- -------------------------------------------------------------------------------
Total risk management $8,702 $ 68 $(102) $(34)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
December 31, 1995
Risk management
Interest rate contracts:
Swaps $5,925 $ 88 $(20) $ 68
Options, caps and
floors purchased 40 19 (21) (2)
Caps written 154 -- -- --
- -------------------------------------------------------------------------------
Total interest rate
contracts 6,119 107 (41) 66
Foreign exchange
contracts:
Spot and forwards 229 2 (1) 1
Swaps 50 8 -- 8
- -------------------------------------------------------------------------------
Total foreign
exchange contracts 279 10 (1) 9
- -------------------------------------------------------------------------------
Total risk management $6,398 $117 $(42) $ 75
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Credit risk, which excludes the effects of any collateral or netting
arrangements, is measured as the cost to replace, at current market rates,
contracts in a profitable position. The amount of this exposure is represented
by the gross unrealized gains on derivative and foreign exchange contracts. At
December 31, 1996 and 1995, bilateral collateral agreements with counterparties
covered 93 percent and 82 percent, respectively, of the notional amount of
interest rate derivative contracts. These agreements reduce credit risk by
providing for the exchange of marketable investment securities to secure amounts
due on contracts in an unrealized gain position. In addition, at December 31,
1996 master netting arrangements had been established with all interest rate
swap counterparties and certain foreign exchange counterparties. These
arrangements effectively reduce credit risk by permitting settlement, on a net
basis, of contracts entered into with the same counterparty. The Corporation has
not experienced any credit losses associated with derivative or foreign exchange
contracts.
46 Comerica Incorporated
<PAGE>
NOTE 18 (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
On a limited scale, fee income is earned from entering into various
transactions, principally foreign exchange contracts and interest rate caps, at
the request of customers. The Corporation does not speculate in derivative
financial instruments for the purpose of profiting in the short-term from
favorable movements in market rates.
Fair values for customer initiated and other derivative and foreign exchange
contracts represent the net unrealized gains or losses on such contracts and are
recorded in the consolidated balance sheets. Changes in fair value are
recognized in the consolidated income statements. For the year ended
December 31, 1996, unrealized gains and unrealized losses on customer initiated
and other foreign exchange contracts averaged $10 million and $9 million,
respectively. For the year ended December 31, 1995, unrealized gains and
unrealized losses averaged $6 million and $5 million, respectively. These
contracts also generated $7 million of noninterest income for both years ended
December 31, 1996 and 1995. Average positive and negative fair values and income
related to customer initiated and other interest rate contracts were not
material for 1996 and 1995.
The following table presents the composition of off-balance sheet derivative
financial instruments and foreign exchange contracts held or issued in
connection with customer initiated and other activities at December 31, 1996 and
1995.
Notional/
Contract Unrealized Unrealized Fair
(in millions) Amount Gains Losses Value
- -------------------------------------------------------------------------------
December 31, 1996
Customer initiated and other
interest rate contracts:
Caps written $ 358 $ -- $ -- $ --
Floors purchased 2 -- -- --
Swaps 30 5 (5) --
- -------------------------------------------------------------------------------
Total interest rate
contracts 390 5 (5) --
Foreign exchange
contracts:
Spot, forwards, futures
and options 644 19 (18) 1
- -------------------------------------------------------------------------------
Total customer
initiated and other $1,034 $ 24 $(23) $ 1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
December 31, 1995
Customer initiated and other
interest rate contracts:
Caps written $ 360 $ -- $ -- $ --
Swaps 3 -- -- --
- -------------------------------------------------------------------------------
Total interest rate
contracts 363 -- -- --
Foreign exchange
contracts:
Spot, forwards, futures
and options 320 5 (5) --
- -------------------------------------------------------------------------------
Total customer
initiated and other $ 683 $ 5 $ (5) $ --
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Detailed discussions of each class of derivative financial instrument and
foreign exchange contract held or issued by the Corporation for both risk
management and customer initiated and other activities are provided below.
INTEREST RATE SWAPS
Interest rate swaps are agreements in which two parties periodically exchange
fixed cash payments for variable payments based on a designated market rate or
index (or variable payments based on two different rates or indices for basis
swaps), applied to a specified notional amount until a stated maturity. In some
cases, the payments may be based on the change in the value of an underlying
security. The Corporation's swap agreements are structured such that variable
payments are primarily based on one-month and three-month LIBOR. These
instruments are principally negotiated over-the-counter and are subject to
credit risk, market risk and liquidity risk.
INTEREST RATE OPTIONS, INCLUDING CAPS AND FLOORS
Option contracts grant the option holder the right to buy or sell an underlying
financial instrument for a predetermined price before the contract expires.
Interest rate caps and floors are option-based contracts which entitle the buyer
to receive cash payments based on the difference between a designated reference
rate and the strike price, applied to a notional amount. Written options,
primarily caps, expose the Corporation to market risk but not credit risk. A fee
is received at inception for assuming the risk of unfavorable changes in
interest rates. Purchased options contain both credit and market risk; however,
market risk is limited to the fee paid. Options are either exchange-traded or
negotiated over-the-counter. All interest rate caps and floors are over-the-
counter agreements.
FOREIGN EXCHANGE CONTRACTS
The Corporation uses foreign exchange rate swaps, including generic receive
variable swaps and cross-currency swaps, for risk management purposes. Generic
receive variable swaps involve payment, in a foreign currency, of the difference
between a contractually fixed exchange rate and an average exchange rate
determined at settlement, applied to a notional amount. Cross-currency swaps
involve the exchange of both interest and principal amounts in two different
currencies. Other foreign exchange contracts such as futures, forwards and
options are primarily entered into as a service to customers and to offset
market risk arising from such positions. Futures and forward contracts require
the delivery or receipt of foreign currency at a specified date and exchange
rate. Foreign currency options allow the holder to purchase or sell a foreign
currency at a specified date and price. Foreign exchange futures are exchange-
traded, while forwards, swaps and most options are negotiated over-the-counter.
Foreign exchange contracts expose the Corporation to both market risk and credit
risk.
Comerica Incorporated 47
<PAGE>
NOTE 18 (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
COMMITMENTS
The Corporation also enters into commitments to purchase or sell earning assets
for risk management purposes. These transactions, which are similar in nature to
forward contracts, did not have a material impact on the consolidated financial
statements for the years ended December 31, 1996 and 1995. Commitments to
purchase investment securities are executed to secure certain rates on primarily
U.S. government and agency securities, and totaled $50 million at year-end 1996.
No such commitments were outstanding at year-end 1995. Commitments to purchase
and sell municipal bond securities totaled $18 million and $30 million at
December 31, 1996 and 1995, respectively. At December 31, 1996 and 1995, $23
million and $147 million, respectively, of commitments with settlement terms of
up to 120 days had been initiated to reduce interest rate risk on fixed rate
residential mortgage loans originated or held for sale. Outstanding commitments
expose the Corporation to both credit risk and market risk.
Available credit lines on fixed rate credit card and check product accounts,
which have characteristics similar to option contracts, totaled $2.0 billion at
December 31, 1996, the same as 1995. These commitments expose the Corporation to
the risk of a reduction in net interest income as interest rates increase.
Market risk exposure arising from fixed rate revolving credit commitments is
very limited, however, since it is unlikely that a significant number of
customers with these accounts will simultaneously borrow up to their maximum
available credit lines. Additional information concerning unused commitments to
extend credit is provided in the "Credit-Related Financial Instruments" section
below.
CREDIT-RELATED FINANCIAL INSTRUMENTS
The Corporation issues off-balance sheet financial instruments in connection
with commercial and consumer lending activities. Credit risk associated with
these instruments is represented by the contractual amounts indicated in the
following table:
(in millions) 1996 1995
- -------------------------------------------------------------------------------
Unused commitments to extend credit $22,118 $18,622
Standby letters of credit and financial guarantees 2,684 1,925
Commercial letters of credit 335 167
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNUSED COMMITMENTS TO EXTEND CREDIT
Commitments to extend credit are legally binding agreements to lend to a
customer, provided there is no violation of any condition established in the
contract. These commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many commitments
expire without being drawn upon, the total contractual amount of commitments
does not necessarily represent future cash requirements of the Corporation.
Total unused commitments to extend credit at December 31, 1996 and 1995,
included $4 billion of variable and fixed rate revolving credit commitments.
Other unused loan commitments, primarily variable rate, totaled $18 billion at
December 31, 1996 and $15 billion at December 31, 1995.
STANDBY AND COMMERCIAL LETTERS OF CREDIT AND FINANCIAL GUARANTEES
Standby and commercial letters of credit and financial guarantees represent
conditional obligations of the Corporation which guarantee the performance of a
customer to a third party. Standby letters of credit and financial guarantees
are primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing and similar transactions. Long-term
standby letters of credit and financial guarantees, which generally extend for
five or more years and expire in decreasing amounts through the year 2010, were
$1,192 million and $758 million at December 31, 1996 and 1995, respectively.
The remaining standby letters of credit and financial guarantees, which mature
within one year, totaled $1,492 million and $1,167 million at December 31, 1996
and 1995, respectively. Commercial letters of credit are issued to finance
foreign or domestic trade transactions.
NOTE 19
- --------------------------------------------------------------------------------
CONTINGENT LIABILITIES
The State of Michigan filed a lawsuit in District Court on July 24, 1990,
against a subsidiary bank and certain former officers, directors and
shareholders of a lending customer seeking recovery of amounts expended by the
State (past and future) to clean up hazardous waste at two former plant sites,
compensation for damages to natural resources, civil penalties for claimed
violation of State Acts and attorney's fees. Plaintiff seeks cleanup costs and
damages and has expressed the opinion that the claim will be well in excess of
$30 million. In January 1993, the court granted the bank's motion for summary
judgment and the Circuit Court of Appeals upheld the judgment on December 19,
1996.
The Corporation and its subsidiaries are parties to other litigation and claims
arising in the normal course of their activities. Although the amount of
ultimate liability, if any, with respect to such matters cannot be determined,
management, after consultation with legal counsel, believes that the litigation
and claims, some of which are substantial, including the matter described above,
will not have a materially adverse effect on the Corporation's consolidated
financial position.
48 Comerica Incorporated
<PAGE>
NOTE 20
- --------------------------------------------------------------------------------
USAGE RESTRICTIONS
Included in cash and due from banks are amounts required to be deposited with
the Federal Reserve Bank. These reserve balances vary, depending on the level of
customer deposits in the Corporation's subsidiary banks. At December 31, 1996
and 1995, the Federal Reserve balances were $534 million and $575 million,
respectively.
NOTE 21
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS
Disclosure of the estimated fair values of financial instruments, which differ
from carrying values, often requires the use of estimates. In cases where quoted
market values are not available, the Corporation uses present value techniques
and other valuation methods to estimate the fair values of its financial
instruments. These valuation methods require considerable judgment, and the
resulting estimates of fair value can be significantly affected by the
assumptions made and methods used. Accordingly, the estimates provided herein do
not necessarily indicate amounts which could be realized in a current exchange.
Furthermore, as the Corporation normally intends to hold the majority of its
financial instruments until maturity, it does not expect to realize many of the
estimated amounts disclosed. The disclosures also do not include estimated fair
value amounts for items which are not defined as financial instruments, but
which have significant value. These include such items as core deposit
intangibles, the future earnings potential of significant customer
relationships, and the value of trust operations and other fee generating
businesses. The Corporation does not believe that it would be practicable to
estimate a representational fair value for these types of items.
The Corporation used the following methods and assumptions:
Cash and short-term investments: The carrying amount approximates the estimated
fair value of these instruments, which consist of cash and due from banks,
interest-bearing deposits with banks, and federal funds sold.
Trading account securities: These securities are carried at quoted market value
or the market value for comparable securities, which represents estimated fair
value.
Loans held for sale: The market value of these loans represents estimated fair
value. The market value is determined on the basis of existing forward
commitments or the market values of similar loans.
Investment securities: The market value of investment securities, which is based
on quoted market values or the market values for comparable securities,
represents estimated fair value.
Domestic commercial loans: These consist of commercial, real estate
construction, commercial mortgage and equipment lease financing loans. The
estimated fair value of the Corporation's variable rate commercial loans is
represented by their carrying value, adjusted by an amount which estimates the
change in fair value caused by changes in the credit quality of borrowers since
the loans were originated. The estimated fair value of fixed rate commercial
loans is calculated by discounting the contractual cash flows of the loans using
year-end origination rates derived from the Treasury yield curve or other
representative bases. The resulting amounts are adjusted to estimate the effect
of changes in the credit quality of borrowers since the loans were originated.
International loans: The estimated fair value of the Corporation's short-term
international loans which consist of trade-related loans, or loans which have no
cross-border risk due to the existence of domestic guarantors or liquid
collateral, is represented by their carrying value, adjusted by an amount which
estimates the effect on fair value of changes in the credit quality of borrowers
or guarantors. The estimated fair value of long-term international loans is
based on the quoted market values of these loans or on the market values of
international loans with similar characteristics.
Retail loans: This category consists of residential mortgage, consumer and
auto lease financing loans. The estimated fair value of residential mortgage
loans is based on discounted contractual cash flows or market values of
similar loans sold in conjunction with securitized transactions. For consumer
loans, the estimated fair values are calculated by discounting the
contractual cash flows of the loans using rates representative of year-end
origination rates. The resulting amounts are adjusted to estimate the effect
of changes in the credit quality of borrowers since the loans were originated.
Comerica Incorporated 49
<PAGE>
NOTE 21 (CONTINUED)
- --------------------------------------------------------------------------------
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS
Customers' liability on acceptances outstanding: The carrying amount
approximates the estimated fair value.
Loan servicing rights: The estimated fair value is computed using discounted
cash flow analyses, using interest rates and prepayment speed assumptions
currently quoted for comparable instruments.
Deposit liabilities: The estimated fair value of demand deposits, consisting of
checking, savings and certain money market deposit accounts, is represented by
the amounts payable on demand. The carrying amount of deposits in foreign
offices approximates their estimated fair value, while the estimated fair value
of term deposits is calculated by discounting the scheduled cash flows using the
year-end rates offered on these instruments.
Short-term borrowings: The carrying amount of federal funds purchased,
securities sold under agreements to repurchase, and other borrowings
approximates estimated fair value.
Acceptances outstanding: The carrying amount approximates the estimated fair
value.
Medium- and long-term debt: The estimated fair value of the Corporation's
variable rate medium- and long-term debt is represented by their carrying value.
The estimated fair value of the fixed rate medium- and long-term debt is based
on quoted market values. If quoted market values are not available, the
estimated fair value is based on the market values of debt with similar
characteristics.
Derivative financial instruments and foreign exchange contracts: The estimated
fair value of interest rate swaps represents the amount the Corporation would
receive or pay to terminate or otherwise settle the contracts at the balance
sheet date, taking into consideration current unrealized gains and losses on
open contracts. The estimated fair value of foreign exchange futures and forward
contracts and commitments to purchase or sell financial instruments are based on
quoted market prices. The estimated fair value of interest rate and foreign
currency options (including interest rate caps and floors) are determined using
option pricing models.
Credit-related financial instruments: The estimated fair value of unused
commitments to extend credit and standby and commercial letters of credit is
represented by the estimated cost to terminate or otherwise settle the
obligations with the counterparties. This amount is approximated by the fees
currently charged to enter into similar arrangements, considering the remaining
terms of the agreements and any changes in the credit quality of counterparties
since the agreements were entered into. This estimate of fair value does not
take into account the significant value of the customer relationships and the
future earnings potential involved in such arrangements as the Corporation does
not believe that it would be practicable to estimate a representational fair
value for these items.
The estimated fair values of the Corporation's financial instruments at
December 31, 1996 and 1995 are as follows:
1996 1995
- -------------------------------------------------------------------------------
Carrying Estimated Carrying Estimated
(in millions) Amount Fair Value Amount Fair Value
- -------------------------------------------------------------------------------
ASSETS
Cash and short-term
investments $ 1,961 $1,961 $2,255 $2,255
Trading account securities 6 6 11 11
Loans held for sale 38 38 512 513
Investment securities
available for sale 4,800 4,800 6,859 6,859
Commercial loans 13,520 13,445 12,041 11,957
International loans 1,706 1,704 1,385 1,383
Real estate construction
loans 751 744 641 637
Commercial mortgage
loans 3,446 3,413 3,254 3,233
Residential mortgage
loans 1,744 1,771 2,221 2,261
Consumer loans 4,634 4,498 4,570 4,468
Lease financing 406 406 330 333
- -------------------------------------------------------------------------------
Total loans 26,207 25,981 24,442 24,272
Less allowance for
loan losses (367) -- (341) --
- -------------------------------------------------------------------------------
Net loans 25,840 25,981 24,101 24,272
Customers' liability on
acceptances outstanding 33 33 21 21
Loan servicing rights 23 25 16 17
Liabilities
Demand deposits
(noninterest-bearing) 6,713 6,713 5,580 5,580
Interest-bearing deposits 15,358 15,368 15,461 15,487
Deposits in foreign offices 296 296 2,126 2,126
- -------------------------------------------------------------------------------
Total deposits 22,367 22,377 23,167 23,193
Short-term borrowings 4,489 4,489 4,674 4,674
Acceptances outstanding 33 33 21 21
Medium- and
long-term debt 4,242 4,268 4,644 4,724
Off-balance Sheet
Financial Instruments
Derivative financial
instruments and foreign
exchange contracts
Risk management:
Unrealized gains -- 68 -- 117
Unrealized losses -- (102) -- (42)
Customer initiated
and other:
Unrealized gains 24 24 5 5
Unrealized losses (23) (23) (5) (5)
Credit-related financial
instruments -- (10) -- (9)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
50 Comerica Incorporated
<PAGE>
NOTE 22
- -------------------------------------------------------------------------------
PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
BALANCE SHEETS--Comerica Incorporated
December 31 (in thousands, except share data) 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 263 $ 292
Time deposits with subsidiary bank 105,700 130,800
Investment securities available for sale 17,074 13,231
Investment in subsidiaries, principally banks 2,829,906 2,754,395
Premises and equipment 53,347 54,566
Other assets 31,345 49,873
- ---------------------------------------------------------------------------------------------------------
Total assets $3,037,635 $3,003,157
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Long-term debt $ 298,210 $ 298,076
Other borrowed funds 842 1,101
Advances from nonbanking subsidiaries 236 3,759
Other liabilities 122,778 92,494
- ---------------------------------------------------------------------------------------------------------
Total liabilities 422,066 395,430
Nonredeemable preferred stock--$50 stated value
Authorized--5,000,000 shares
Issued--5,000,000 shares in 1996 250,000 --
Common stock--$5 par value
Authorized--250,000,000 shares
Issued--107,297,345 shares in 1996 and 115,094,531 shares in 1995 536,487 575,473
Capital surplus -- 410,618
Unrealized gains and losses on investment securities available for sale (22,789) (4,141)
Retained earnings 1,854,116 1,640,980
Deferred compensation (2,245) (1,974)
Less cost of common stock in treasury--490,704 shares in 1995 -- (13,229)
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 2,615,569 2,607,727
- ---------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $3,037,635 $3,003,157
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENTS OF INCOME--Comerica Incorporated
Year Ended December 31 (in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Income from subsidiaries
Dividends from subsidiaries $322,000 $183,700 $293,390
Other interest income 3,372 7,113 8,127
Intercompany management fees 264,368 293,292 267,123
Other interest income 1,773 -- 171
Other noninterest income 5,278 2,680 779
- ---------------------------------------------------------------------------------------------------------
Total income 596,791 486,785 569,590
EXPENSES
Interest on long-term debt and other borrowed funds 26,328 19,948 15,076
Net interest rate swap income (2,794) (785) --
Interest on advances from subsidiaries 86 243 198
Salaries and employee benefits 123,271 127,261 123,924
Occupancy expense 22,483 22,778 18,570
Equipment expense 24,806 25,600 25,649
Restructuring charge 27,000 -- 2,363
Other noninterest expenses 63,224 76,319 68,185
- ---------------------------------------------------------------------------------------------------------
Total expenses 284,404 271,364 253,965
- ---------------------------------------------------------------------------------------------------------
Income before income taxes and equity
in undistributed net income of subsidiaries 312,387 215,421 315,625
Income tax expense (credit) (1,931) 10,705 7,058
- ---------------------------------------------------------------------------------------------------------
314,318 204,716 308,567
Equity in undistributed net income of
subsidiaries, principally banks 102,843 208,650 78,675
- ---------------------------------------------------------------------------------------------------------
Net Income $417,161 $413,366 $387,242
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Comerica Incorporated 51
<PAGE>
NOTE 22 (CONTINUED)
- --------------------------------------------------------------------------------
PARENT COMPANY FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS--Comerica Incorporated
Year Ended December 31 (in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 417,161 $ 413,366 $ 387,242
Adjustments to reconcile net income to
net cash provided by operating activities
Undistributed earnings of
subsidiaries, principally banks (102,843) (208,650) (78,675)
Depreciation 20,595 20,447 19,784
Restructuring charge 27,000 (6,078) (12,380)
Other, net 23,091 16,694 10,759
- -----------------------------------------------------------------------------------------------------------------------------
Total adjustments (32,157) (177,587) (60,512)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 385,004 235,779 326,730
Investing Activities
Proceeds from maturities of investment securities available for sale -- -- 15,157
Purchase of investment securities available for sale (4,820) (6,097) (22,818)
Proceeds from maturity of investment securities
held to maturity -- -- 7,507
Proceeds from sales of fixed assets and other real estate 603 3,439 1,638
Purchases of fixed assets (20,345) (16,413) (30,226)
Net (increase) decrease in bank time deposits 25,100 (41,200) 7,600
Capital transactions with subsidiaries 131,871 (1,400) (97,647)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 132,409 (61,671) (118,789)
Financing Activities
Net increase (decrease) in advances from subsidiaries (3,523) (4,064) 3,546
Proceeds from issuance of long-term debt -- 210,000 --
Repayments and purchases of long-term debt (259) (59,147) --
Proceeds from issuance of preferred stock 246,744 -- --
Proceeds from issuance of common stock 35,206 11,736 5,711
Purchase of common stock for treasury and retirement (622,196) (178,656) (76,280)
Dividends paid (173,414) (155,726) (139,988)
- -----------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (517,442) (175,857) (207,011)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash on deposit at bank subsidiary (29) (1,749) 930
Cash on deposit at bank subsidiary at beginning of year 292 2,041 1,111
- -----------------------------------------------------------------------------------------------------------------------------
Cash on deposit at bank subsidiary at end of year $ 263 $ 292 $ 2,041
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Interest paid $ 25,942 $ 15,623 $ 15,104
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Income taxes recovered $ 11,150 $ 3,275 $ 4,743
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Noncash investing and financing activities
Stock issued for acquisitions $ 128,938 $ 77,100 $ 121,363
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
52 Comerica Incorporated
<PAGE>
NOTE 23
- --------------------------------------------------------------------------------
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
The following quarterly information is unaudited. However, in the opinion of
management, the information furnished reflects all adjustments which are
necessary for the fair presentation of the results of operations for the periods
presented.
1996
- --------------------------------------------------------------------------------
(in thousands, Fourth Third Second First
except per share data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
Interest income $632,737 $633,421 $642,192 $654,430
Interest expense 279,476 280,154 285,703 305,169
Net interest income 353,261 353,267 356,489 349,261
Provision for loan losses 32,000 28,500 25,000 28,500
Securities gains/(losses) 10,194 (276) 3,310 360
Noninterest income
(excluding securities gains) 122,214 116,604 117,480 137,068
Restructuring charge 90,000 -- -- --
Noninterest expenses
(excluding restructuring charge) 266,220 253,635 270,196 278,975
Net income 60,816 121,518 118,221 116,606
Net income per share $0.52 $1.04 $1.00 $0.98
1995
- --------------------------------------------------------------------------------
(in thousands, Fourth Third Second First
except per share data) Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
Interest income $670,632 $661,678 $659,992 $621,622
Interest expense 329,610 338,354 336,941 309,136
Net interest income 341,022 323,324 323,051 312,486
Provision for loan losses 33,000 26,000 15,500 12,000
Securities gains 10,960 516 71 201
Noninterest income
(excluding securities gains) 129,605 123,873 118,361 115,138
Noninterest expenses 288,445 261,171 272,582 264,216
Net income 106,510 105,302 101,532 100,022
Net income per share $0.92 $0.91 $0.86 $0.85
- --------------------------------------------------------------------------------
Comerica Incorporated 53
<PAGE>
REPORT OF MANAGEMENT
Management is responsible for the accompanying financial statements and all
other financial information in this Annual Report. The financial statements have
been prepared in conformity with generally accepted accounting principles and
include amounts which of necessity are based on management's best estimates and
judgments and give due consideration to materiality. The other financial
information herein is consistent with that in the financial statements.
In meeting its responsibility for the reliability of the financial statements,
management develops and maintains systems of internal accounting controls. These
controls are designed to provide reasonable assurance that assets are
safeguarded and transactions are executed and recorded in accordance with
management's authorization. The concept of reasonable assurance is based on the
recognition that the cost of internal accounting control systems should not
exceed the related benefits. The systems of control are continually monitored by
the internal auditors whose work is closely coordinated with and supplements in
many instances the work of independent auditors.
The financial statements have been audited by independent auditors Ernst & Young
LLP. Their role is to render an independent professional opinion on management's
financial statements based upon performance of procedures they deem appropriate
under generally accepted auditing standards.
The Corporation's Board of Directors oversees management's internal control and
financial reporting responsibilities through its Audit Committee as well as
various other committees. The Audit Committee, which consists of directors who
are not officers or employees of the Corporation, meets periodically with
management and internal and independent auditors to assure that they and the
Committee are carrying out their responsibilities and to review auditing,
internal control and financial reporting matters.
Eugene A. Miller
Chairman and Chief Executive Officer
Ralph W. Babb Jr.
Executive Vice President and Chief Financial Officer
Arthur W. Hermann
Senior Vice President and Controller
REPORT OF INDEPENDENT AUDITORS
Board of Directors,
Comerica Incorporated
We have audited the accompanying consolidated balance sheets of Comerica
Incorporated and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Comerica
Incorporated and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
Detroit, Michigan
January 22, 1997
54 Comerica Incorporated
<PAGE>
HISTORICAL REVIEW-AVERAGE BALANCE SHEETS
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Financial Information
(in millions) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,576 $ 1,500 $ 1,532 $ 1,490 $ 1,322
Interest-bearing deposits with banks 32 126 552 814 1,017
Federal funds sold and securities
purchased under agreements to resell 95 124 116 135 399
Trading account securities 4 5 5 12 78
Loans held for sale 64 96 150 232 196
Investment securities 5,823 7,625 8,004 5,512 5,373
Commercial loans 12,686 11,302 9,598 8,473 7,753
International loans 1,541 1,257 1,107 897 710
Real estate construction loans 707 541 403 441 503
Commercial mortgage loans 3,483 3,157 2,916 2,629 2,368
Residential mortgage loans 1,960 2,450 2,175 1,979 2,297
Consumer loans 4,624 4,569 3,795 3,697 3,625
Lease financing 351 285 217 191 191
- ------------------------------------------------------------------------------------------------------
Total loans 25,352 23,561 20,211 18,307 17,447
Less allowance for loan losses (361) (340) (322) (311) (291)
- ------------------------------------------------------------------------------------------------------
Net loans 24,991 23,221 19,889 17,996 17,156
Accrued income and other assets 1,610 1,432 1,203 1,045 969
- ------------------------------------------------------------------------------------------------------
Total assets $34,195 $34,129 $31,451 $27,236 $26,510
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Demand deposits (noninterest-bearing) $ 5,589 $ 4,767 $ 4,700 $ 4,380 $ 3,796
Interest-bearing deposits 15,826 15,046 14,809 15,035 15,449
Deposits in foreign offices 843 1,842 1,816 1,306 1,668
- ------------------------------------------------------------------------------------------------------
Total deposits 22,258 21,655 21,325 20,721 20,913
Federal funds purchased and securities sold
under agreements to repurchase 2,106 2,816 2,817 1,586 1,553
Other borrowed funds 1,999 2,313 2,002 1,432 1,308
Accrued expenses and other liabilities 400 324 286 274 327
Medium- and long-term debt 4,745 4,510 2,708 1,087 414
- ------------------------------------------------------------------------------------------------------
Total liabilities 31,508 31,618 29,138 25,100 24,515
Shareholders' equity 2,687 2,511 2,313 2,136 1,995
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $34,195 $34,129 $31,451 $27,236 $26,510
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
Comerica Incorporated 55
<PAGE>
HISTORICAL REVIEW-STATEMENTS OF INCOME
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Financial Information
(in millions, except per share data) 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 2,161 $ 2,091 $ 1,577 $ 1,388 $ 1,445
Interest on investment securities
Taxable 372 474 446 307 356
Exempt from federal income tax 18 26 31 40 55
- -----------------------------------------------------------------------------------------------------------------
Total interest on investment securities 390 500 477 347 411
Trading account interest -- -- -- 1 3
Interest on federal funds sold and securities
purchased under agreements to resell 5 7 5 4 15
Interest on time deposits with banks 2 8 22 28 45
Interest on loans held for sale 5 8 11 15 14
- -----------------------------------------------------------------------------------------------------------------
Total interest income 2,563 2,614 2,092 1,783 1,933
INTEREST EXPENSE
Interest on deposits 686 721 543 530 707
Interest on short-term borrowings
Federal funds purchased and securities
sold under agreements to repurchase 112 166 121 47 53
Other borrowed funds 107 136 79 41 46
Interest on medium- and long-term debt 295 289 148 63 30
Net interest rate swap (income)/expense (49) 2 (29) (32) (24)
- -----------------------------------------------------------------------------------------------------------------
Total interest expense 1,151 1,314 862 649 812
- -----------------------------------------------------------------------------------------------------------------
Net interest income 1,412 1,300 1,230 1,134 1,121
Provision for loan losses 114 87 56 69 111
- -----------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 1,298 1,213 1,174 1,065 1,010
NONINTEREST INCOME
Income from fiduciary activities 133 125 122 122 114
Service charges on deposit accounts 140 130 124 120 113
Customhouse broker fees 11 36 41 40 38
Revolving credit fees 23 36 24 23 22
Securities gains 14 12 3 2 6
Other noninterest income 186 160 136 142 106
- -----------------------------------------------------------------------------------------------------------------
Total noninterest income 507 499 450 449 399
NONINTEREST EXPENSES
Salaries and employee benefits 561 562 549 529 516
Net occupancy expense 99 99 99 96 86
Equipment expense 69 68 68 62 57
FDIC insurance expense 8 24 44 44 45
Telecommunications expense 29 29 27 21 17
Restructuring charge 90 -- 7 22 128
Other noninterest expenses 303 304 248 251 231
- -----------------------------------------------------------------------------------------------------------------
Total noninterest expenses 1,159 1,086 1,042 1,025 1,080
- -----------------------------------------------------------------------------------------------------------------
Income before income taxes 646 626 582 489 329
Provision for income taxes 229 213 195 148 89
- -----------------------------------------------------------------------------------------------------------------
Net Income $ 417 $ 413 $ 387 $ 341 $ 240
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Net income applicable to common stock $ 408 $ 413 $ 387 $ 341 $ 237
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Net income per common share $ 3.55 $ 3.54 $ 3.28 $ 2.85 $ 1.99
Average common and common equivalent
shares (in thousands) 114,854 116,894 118,160 119,569 119,113
Cash dividends declared on common stock $ 170 $ 158 $ 145 $ 125 $ 108
Dividends per common share $ 1.52 $ 1.37 $ 1.24 $ 1.07 $ 0.96
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
56 Comerica Incorporated
<PAGE>
HISTORICAL REVIEW-STATISTICAL DATA
COMERICA INCORPORATED AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Financial Information 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE RATES (FULLY TAXABLE EQUIVALENT BASIS)
Interest-bearing deposits with banks 5.71% 6.39% 3.96% 3.41% 4.43%
Federal funds sold and securities purchased
under agreements to resell 5.35 5.97 4.06 2.99 3.67
Trading account securities 7.94 6.51 1.67 6.76 3.99
Loans held for sale 7.68 7.75 7.31 6.38 7.34
Investment securities 6.79 6.72 6.15 6.70 8.16
Commercial loans 8.21 8.75 7.38 6.56 6.98
International loans 6.64 7.06 5.58 5.04 5.70
Real estate construction loans 9.22 9.52 7.85 6.63 7.00
Commercial mortgage loans 9.29 9.40 8.52 8.10 8.54
Residential mortgage loans 7.83 7.80 7.46 8.57 9.53
Consumer loans 9.88 10.10 9.44 9.98 11.03
Lease financing 6.82 6.65 6.48 7.34 8.89
- ---------------------------------------------------------------------------------------------------------
Total loans 8.54 8.90 7.84 7.62 8.34
- ---------------------------------------------------------------------------------------------------------
Interest income as a percent of earning assets 8.20 8.35 7.28 7.25 8.04
Domestic deposits 4.04 4.05 3.14 3.24 4.13
Deposits in foreign offices 5.46 6.07 4.28 3.29 4.11
- ---------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 4.11 4.27 3.26 3.24 4.13
Federal funds purchased and securities sold
under agreements to repurchase 5.31 5.88 4.31 3.01 3.44
Other borrowed funds 5.36 5.87 3.92 2.88 3.52
Medium- and long-term debt 6.22 6.41 5.46 5.77 7.18
- ---------------------------------------------------------------------------------------------------------
Interest expense as a percent of
interest-bearing sources 4.51 4.95 3.57 3.18 3.98
- ---------------------------------------------------------------------------------------------------------
Interest rate spread 3.69 3.40 3.71 4.07 4.06
Impact of net noninterest-bearing
sources of funds 0.85 0.79 0.61 0.58 0.67
- ---------------------------------------------------------------------------------------------------------
Net interest margin as a percent of
earning assets 4.54 4.19 4.32 4.65 4.73
Return on Average Common
Shareholders' Equity 15.98 16.46 16.74 15.94 12.10
Return on Average Assets 1.22 1.21 1.23 1.25 0.91
Efficiency Ratio 60.36 60.09 61.28 63.68 69.61
PER SHARE DATA
Book value at year-end $22.05 $22.75 $20.46 $18.99 $17.38
Market value at year-end 52.38 40.00 24.38 26.63 32.00
Market value--high and low for year 59-36 43-24 31-24 35-25 33-26
OTHER DATA
Number of banking offices 358 395 398 385 427
Number of employees (full-time equivalent) 11,079 12,876 13,077 12,670 13,322
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Comerica Incorporated 57
<PAGE>
EXHIBIT 21
3/1/97
COMERICA INCORPORATED
AFFILIATE
ORGANIZATION CHART
1. Direct subsidiaries of Comerica Incorporated (a Delaware corporation) are
shown on the left margin.
2. Subsidiaries of these direct subsidiaries are listed immediately following
each direct subsidiary's name and are indented to the right.
3. Subsidiaries of these indirect subsidiaries are listed immediately
following the indirect subsidiary's name and are further indented to the
right.
4. The state or other jurisdiction of incorporation for each corporation or
bank is listed in brackets after its name.
5. The parent company owns 100% of the outstanding capital stock of each
subsidiary unless indicated otherwise.
Comerica Bank [Michigan]
Comerica Insurance Group, Inc. [Michigan]
Comerica Insurance Services, Inc. [Michigan]
Interstate Select Insurance Services, Inc. [California]
Professional Life Underwriters Services, Inc. ("PLUS") [Michigan]
Professional Life Underwriters Services Group Plus, Inc.
[Michigan]
Comerica Leasing Corporation, f/k/a/ CMCA Lease, Inc. [Michigan]
Comerica Management Co., Inc. [Michigan]
Comerica AutoLease, Inc. [Michigan]
Comerica Mortgage Corporation [Michigan]
DLKL Corporation [Delaware]
1
<PAGE>
VRB Corp. [Michigan]
CKN Corp., f/k/a John V. Carr & Son, Inc. [Michigan]
CEF Corp., f/k/a Duty Drawback Service, Inc. [Michigan]
Comerica International Corporation [United States]
Comerica International (Canada), Limited [Ontario]
Comerica International (Canada) Properties, Limited [Ontario]
Comerica Trust Company of Bermuda, Ltd. [Bermuda]
Comerica Trade Services Limited [Hong Kong]
Comerica Merchant Services, Inc. [Delaware]
NDPS Comerica Alliance L.L.C. {less than 50%}[Delaware LLC]
Comerica California Incorporated [Delaware]
Comerica Bank-California [California]
Lytton Corporation [California]
Metrocorp [California]
Comerica Bank and Trust, F.S.B. [United States]
Comerica Bank-Midwest, N.A. {99.5%} [United States]
Comerica Bank-Ann Arbor, N.A. {97.4%} [United States]
Comerica Investment Services, Inc. [Michigan]
Comerica Securities, Inc. [Michigan]
Wilson, Kemp & Associates, Inc. [Michigan]
Woodbridge Capital Management, Inc. [Michigan]
WAM Holdings, Inc. [Delaware]
2
<PAGE>
Munder Capital Management {less than 50%} [Delaware Limited
Partnership]
Munder UK, LLC {99%} [Delaware LLC]
Framlington Holdings Limited {less than 49%}[England]
Comerica Capital Markets Corporation [Michigan]
Comerica Networking, Inc. [Michigan]
Integrion Financial Network, LLC {5.88%} [Delaware LLC]
Comerica Texas Incorporated [Delaware]
Comerica Bank-Texas [Texas]
CMT Holdings, Inc. [Texas]
Comerica Acceptance Corporation [Michigan]
Comerica Assurance Ltd. [Bermuda]
Comerica Community Development Corporation [Michigan]
Comerica Corporate Services Incorporated [Michigan]
Comerica Insurance Company [Arizona]
Comerica Properties Corporation [Michigan]
Waterfront Corporation [Michigan]
M L, Inc. (Magic Line) {24.74%} [Michigan]
FIRG (D/O Insurance) {5%}
3
<PAGE>
Exhibit 23
[LETTERHEAD]
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
listed below, of our reports on the consolidated financial statements of
Comerica Incorporated and subsidiaries dated January 22, 1997, included in the
Annual Report on Form 10-K for the year ended December 31, 1996:
Registration Statement No. 33-42485 on Form S-8 dated August 29, 1991
Registration Statement No. 33-45500 on Form S-8 dated February 11, 1992
Registration Statement No. 33-49964 on Form S-8 dated July 23, 1992
Registration Statement No. 33-49966 on Form S-8 dated July 23, 1992
Registration Statement No. 33-53220 on Form S-8 dated October 13, 1992
Registration Statement No. 33-53222 on Form S-8 dated October 13, 1992
Registration Statement No. 33-58823 on Form S-8 dated April 26, 1995
Registration Statement No. 33-58837 on Form S-8 dated April 26, 1995
Registration Statement No. 33-58841 on Form S-8 dated April 26, 1995
Registration Statement No. 33-65457 on Form S-8 dated December 29, 1995
Registration Statement No. 33-65459 on Form S-8 dated December 29, 1995
Registration Statement No. 333-00839 on Form S-8 dated February 9, 1996
/s/ Ernst & Young LLP
March 24, 1997
Ernst & Young LLP is a member of Ernst & Young International, Ltd.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
1996 FORM 10K FOR COMERICA INCORPORATED AND SUBSIDIARIES AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,901,760
<INT-BEARING-DEPOSITS> 27,329
<FED-FUNDS-SOLD> 32,200
<TRADING-ASSETS> 6,009
<INVESTMENTS-HELD-FOR-SALE> 4,838,103
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 26,206,708
<ALLOWANCE> 367,165
<TOTAL-ASSETS> 34,206,071
<DEPOSITS> 22,367,173
<SHORT-TERM> 4,489,191
<LIABILITIES-OTHER> 492,369
<LONG-TERM> 4,241,769
536,487
0
<COMMON> 250,000
<OTHER-SE> 1,829,082
<TOTAL-LIABILITIES-AND-EQUITY> 34,206,071
<INTEREST-LOAN> 2,160,981
<INTEREST-INVEST> 389,774
<INTEREST-OTHER> 12,025
<INTEREST-TOTAL> 2,562,780
<INTEREST-DEPOSIT> 685,539
<INTEREST-EXPENSE> 1,150,502
<INTEREST-INCOME-NET> 1,412,278
<LOAN-LOSSES> 114,000
<SECURITIES-GAINS> 13,588
<EXPENSE-OTHER> 1,159,026
<INCOME-PRETAX> 646,206
<INCOME-PRE-EXTRAORDINARY> 417,161
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417,161
<EPS-PRIMARY> 3.55
<EPS-DILUTED> 3.54
<YIELD-ACTUAL> 4.54
<LOANS-NON> 103,294
<LOANS-PAST> 51,748
<LOANS-TROUBLED> 8,009
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 341,344
<CHARGE-OFFS> 125,912
<RECOVERIES> 41,363
<ALLOWANCE-CLOSE> 367,165
<ALLOWANCE-DOMESTIC> 255,409
<ALLOWANCE-FOREIGN> 2,062
<ALLOWANCE-UNALLOCATED> 109,694
</TABLE>
