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EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") entered into this 23rd day of
October, 1998, between and among FirstMerit Corporation, an Ohio corporation
("FirstMerit"), FirstMerit Bank, N.A., a national banking association
("FirstMerit Bank") (collectively sometimes "FirstMerit"), and Xxxxxxx X.
Xxxxxxxxx ("Executive").
R E C I T A L S :
FirstMerit and FirstMerit Bank desire to employ Executive for a period
certain, subject, however, to the terms and conditions of this Agreement.
IN CONSIDERATION OF THE FOREGOING, the mutual covenants contained
herein, and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT
FirstMerit hereby employs Executive, and Executive hereby accepts
employment, according to the terms and conditions set forth in this Agreement
and for the period specified in Section 3 of this Agreement.
2. DUTIES
During the Term (as defined in Section 3), Executive shall serve
FirstMerit and FirstMerit Bank as its Executive Vice President of FirstMerit and
President of the Construction Financing Division of FirstMerit Bank in
accordance with directions from the Chief Executive Officer. During the
Employment Period, Executive shall devote Executive's exclusive business time,
energies, attention and ability to the business of FirstMerit, and shall
faithfully and diligently perform the duties of Executive's employment with
FirstMerit and of any office or offices held by Executive in FirstMerit,
provided that there shall be no set time or minimum time during which Executive
shall perform such services.
It is understood and agreed that, without prior written approval from
the Board of Directors of FirstMerit (the "Board") (which approval shall not be
unreasonably withheld to the extent such activities do not materially interfere
with Executive's duties), Executive may not engage in any other business
activities during the period of Executive's employment by FirstMerit, whether or
not for profit or other pecuniary advantage. Notwithstanding the foregoing, (a)
nothing contained in this Section 2 shall preclude Executive from any investment
or activity that existed at the time of this Agreement, which were disclosed by
Executive to FirstMerit and do not materially interfere with
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Executive's duties; (b) Executive may make personal financial investments after
the date of this Agreement which do not involve any active participation on
Executive's part, (c) Executive may engage in charitable, educational,
religious, civic, trade associations and similar types of activities, and (d)
Executive may serve on the board of directors of such other entities as may be
approved by the Board; provided, however, that any such activities described in
item (c) above must be approved in advance by the Board, and any such activities
described in items (c) and (d) above (i) must not interfere with the business or
the performance of the Executive's duties under this Agreement, and (ii) must
not conflict with policies concerning conflicts of interest. Any director's or
other fees received by the Executive related to activities described in (a) and
(d) above may be retained by Executive.
3. TERM OF EMPLOYMENT
The term of this Agreement (the "Term") shall commence as of October
23, 1998 (the "Commencement Date"), and shall continue for a period of three (3)
years ending at 11:59 pm Cleveland time on October 22, 2001 (the "Expiration
Date"), unless this Agreement has been earlier terminated in accordance with the
provisions of Section 6 hereof. Following the Expiration Date, Executive's
employment status will be "at will."
4. COMPENSATION
4.1 BASE SALARY. While employed under this Agreement, Executive will
receive as his compensation for the performance of his duties and obligations to
FirstMerit under this Agreement a base salary of Two Hundred Nineteen Thousand
Dollars ($219,000.00) per year, which will be payable in semi-monthly
installments, and which will be subject to annual increase by the Compensation
Committee as approved by the Board (the base salary, as it may be increased from
time to time, is referred to herein as the "Base Salary").
4.2 BONUS. In addition to the Base Salary, Executive will be eligible
to receive with respect to each calendar year a bonus of 40%-70% of Base Salary
in accordance with FirstMerit's Incentive Compensation Plan ("ICP"), a copy of
which has been delivered to Executive, as it may be amended from time to time.
Bonuses will be determined by FirstMerit's Compensation Committee in accordance
with the terms of the ICP, subject to approval by the Board, will be calculated
based upon the formula for determining bonuses under the ICP that is in effect
on the Commencement Date unless the formula for determining bonuses under the
ICP that is in effect on the date of determination of the amount of the bonus
would produce a bonus of greater amount, and ordinarily will be paid during the
first quarter of the year following the year to which the bonus relates.
4.3 EMPLOYMENT PAYMENT. At the time that Executive accepts employment
by executing this Agreement, FirstMerit will pay to Executive in cash the sum of
One Hundred Fifty Thousand Dollars ($150,000.00).
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4.4 WITHHOLDING. All compensation payable to Executive pursuant to this
Section 4 shall be paid net of amounts withheld for federal, state, municipal or
local income taxes, Executive's share, if any, of any payroll taxes, and such
other federal, state, municipal or local taxes as may be applicable to amounts
paid by an employer to its employee or to the employer/employee relationship.
5. OTHER BENEFITS OF EMPLOYMENT
5.1 RETIREMENT BENEFITS
(A) PENSION PLAN. Executive will participate in the Pension
Plan for Employees of FirstMerit Corporation and Subsidiaries (the
"Pension Plan"), a copy of the summary plan description of which has
been provided to Executive, in accordance with the provisions of the
Plan, as amended from time to time.
(B) EMPLOYEES' SALARY SAVINGS RETIREMENT PLAN. Executive will
be entitled to participate in the FirstMerit Corporation and
Subsidiaries Employees' Salary Savings Retirement Plan (the "401(k)
Plan"), a copy of the summary plan description of which has been
provided to Executive, in accordance with the provisions of the Plan,
as amended from time to time.
(C) SERP. Executive will participate in the FirstMerit
Corporation Executive Supplemental Retirement Plan ("Plan") in
accordance with the provisions of the Plan (as may be amended from time
to time) and the provisions of the Membership Agreement entered into by
FirstMerit and Executive in connection with the Plan (the Plan and
Membership Agreement collectively known as the "SERP"). A copy of the
SERP has been provided to Executive. The Membership Agreement provides
that Executive may receive a lump sum cash payment as his benefit under
the SERP in the amount of the greater of (i) the Actuarial Equivalent
(as defined in the SERP) of the Monthly Retirement Income (also as
defined in the SERP) to which Executive is entitled under the terms of
the SERP, or (ii) One Million Four Hundred Twenty Six Thousand Seven
Hundred Sixty Nine Dollars ($1,426,769.00), provided in either case
that Executive is employed under this Agreement on the Expiration Date.
Such amounts payable under the SERP to the Executive, pursuant to the
terms of the SERP, shall be reduced by amounts paid to Executive as
provided in the SERP.
(D) TOP HAT PLAN. Executive will be entitled to participate in
the FirstMerit Corporation Unfunded Supplemental Benefits Plan (the
"Top Hat Plan"), a copy of which has been provided to Executive, in
accordance with the provisions of the Plan, as amended from time to
time. Executive's benefits under the Top Hat Plan shall be calculated
for all purposes based upon Executive's continuous employment at least
through the Expiration Date, unless Executive's employment is
terminated prior thereto under circumstances described in Section 6.2.
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5.2 COMPENSATORY SEVERANCE BENEFIT. In the event that Executive's
employment shall terminate for any reason prior to the Expiration Date,
FirstMerit shall pay to Executive or his estate in a lump sum in cash, within 25
days after the Termination Date, an amount equal to Nine Hundred Eighty-Five
Thousand Dollars ($985,000.00).
5.3 CHANGE OF CONTROL SEVERANCE BENEFIT. In the event that Executive's
employment shall terminate following a Change of Control, which termination
occurs after the first anniversary of this Agreement but before the Expiration
Date, and under any circumstance other than as described in Section 6.2 or
Executive's Death, FirstMerit shall cause the acquiror to pay to Executive in a
lump sum in cash, within 25 days after the later of the date of such Change of
Control or the Termination Date, an amount equal to 200% of Executive's "base
amount" as determined under Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), less the aggregate present value of the payments or
benefits, if any, in the nature of compensation for the benefit of Executive,
arising under any plan or arrangement between FirstMerit and Executive, which
constitute "parachute payments" under Section 280G of the Code.
5.4 DISABILITY. Executive will be entitled to participate in
FirstMerit's Long-Term Disability Plan applicable to executive level employees
of FirstMerit, and in FirstMerit's Short-Term Illness Program, all in accordance
with the provisions of such programs as may be amended from time to time.
5.5 MISCELLANEOUS BENEFITS. Executive will be entitled to participate
in such hospitalization, life insurance, and other employee benefit plans and
programs, if any, as may be adopted by FirstMerit from time to time, in
accordance with the provisions of such plans and programs and on the same basis
as other full-time salaried employees of FirstMerit who participate in such
employee benefit plans (except to the extent that the benefits provided under
any of such plans or programs are expressly offset by any of the benefits
provided under or pursuant to this Agreement).
5.6 STOCK OPTIONS AND GRANTS. On the Commencement Date, FirstMerit will
make an award to Executive under and pursuant to the terms of the FirstMerit
1997 Stock Plan, a copy of which has been provided to Executive, of
non-qualified stock options ("NQSOs") for Twenty-two Thousand Five Hundred
(22,500) shares of FirstMerit Corporation common stock. The award will be made
pursuant to a Stock Option Agreement in the form and subject to the terms
customarily used by FirstMerit, but the terms of which will include the
following: the NQSOs will be issued at fair market value on the date of grant;
will be exercisable with respect to 5,000 shares on and after the first
anniversary of the Commencement Date, an additional 5,000 shares on and after
the second anniversary of the Commencement Date, and an additional 12,500 shares
on and after the Expiration Date. Notwithstanding the foregoing, all NQSOs under
this grant shall vest and become immediately exercisable if Executive's
employment is terminated for any reason other than any circumstance described in
Section 6.2. Once vested, the NQSOs will remain exercisable for a period ten
(10) years from the Commencement Date, notwithstanding that Executive's
employment terminates for any reason prior to the end of such period.
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5.7 INCOME TAX PREPARATION. For calendar years beginning with 1998,
FirstMerit will reimburse Executive for fees incurred in connection with
personal income tax preparation in an amount not to exceed Seven Hundred Fifty
Dollars ($750) per year.
5.8 TAXES AND WITHHOLDING. Executive shall be responsible for paying
all federal, state, municipal or local taxes payable by him with respect to any
benefits provided under this Section 5, and FirstMerit will, when required by
law or when otherwise appropriate or customary, withhold from the benefits or
other compensation amounts sufficient to satisfy such taxes.
5.9 EXECUTIVE PHYSICAL EXAMINATION. Approximately every two (2) years,
Executive will undergo an executive physical examination by physicians (not
including any physicians who have performed or are then performing medical
services for Executive) of the Cleveland Clinic or comparable facility. The
expenses of the physical examinations required under this Section (but not any
treatment in connection therewith), which are not otherwise covered by
FirstMerit-sponsored medical plans, will be borne by FirstMerit.
5.10 VACATION. Executive shall be entitled to four (4) weeks paid
vacation and ten (10) bank holidays per year.
5.11 REIMBURSEMENTS. Executive shall be entitled to reimbursement
privileges with respect to reasonable business expenses in accordance with
FirstMerit's standard reimbursement policy for executive employees of
FirstMerit.
5.12 COUNTRY CLUB DUES; AUTOMOBILE. FirstMerit shall pay on a timely
basis for the dues and reasonable expenses of Executive's membership and
participation in the country clubs that the Executive is a member as of April 5,
1998. The amounts that FirstMerit shall pay pursuant to this Section 5.12 shall
not substantially exceed the amounts that were paid for such benefits during the
twelve month period ending March 31, 1998 by Security First Corp. FirstMerit
agrees to buyout the lease for the automobile which as of April 5, 1998 is being
utilized by Executive for business and transfer the ownership of such automobile
to Executive.
5.13 BOARD OF DIRECTORS. The Board of Directors will appoint Executive
to the Board of Directors of FirstMerit, effective as of the Commencement Date.
Once Executive has become a Director, FirstMerit will agree to nominate
Executive at such times as necessary so that Executive remains a director of
FirstMerit during his employment by FirstMerit. Executive agrees, if asked by
the Board, to tender his resignation in the event he is no longer an employee
for any reason. Nothing in this Section shall require FirstMerit or its Board to
decline to nominate an existing Director at the expiration of such Director's
term.
6. TERMINATION
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6.1 DEFINITIONS
(A) "CHANGE OF CONTROL" means a change in control of a nature
that would be required to be reported by persons or entities subject to
the reporting requirements of Section 14(a) of the Securities Exchange
Act of 1934 in response to item 5(f) of Schedule 14A of Regulation
14(A) as in effect on the date hereof, or successor provisions thereto,
provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any unaffiliated "person," "entity," or
"group" (as defined in Rule 13(d)-3 issued under the Securities
Exchange Act of 1934) directly or indirectly becomes the owner of
securities of FirstMerit representing thirty percent (30%) or more of
the combined voting power of FirstMerit's then outstanding securities
or (ii) at any time during any period of two (2) consecutive calendar
years individuals, who at the beginning of such period constitute the
Board of Directors of FirstMerit, cease for any reason to constitute at
least the majority of such Board unless the election, or the nomination
for election, by FirstMerit's shareholders of each new director was
approved by a vote of at least two-thirds of the directors still in
office who were directors of FirstMerit at the beginning of such two
(2)-year period.
(B) "TERMINATION DATE" means the date on which Executive's
employment with FirstMerit terminates for any reason.
(C) "TERMINATION OF EMPLOYMENT FOR CAUSE" means the
termination of Executive's employment by FirstMerit on account of (i)
intentional misconduct and/or gross negligence by Executive that has a
material adverse effect on FirstMerit, monetarily or otherwise, (ii)
Executive's personal dishonesty, (iii) incompetence, (iv) breach of a
fiduciary duty involving personal profit, (v) intentional failure to
perform stated duties, (vi) willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final
cease-and- desist order, or (ii) material breach of any provision of
this Agreement by Executive. No act by Executive shall be considered
intentional unless Executive acted or failed to act with an absence of
good faith and without a reasonable belief that his action or failure
to act was in the best interest of FirstMerit. Notwithstanding the
foregoing, there shall not be deemed to have been a Termination of
Employment for Cause unless and until there shall have been delivered
to Executive a copy of a resolution, duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board
stating that the Board believes the Executive has engaged in conduct
described in the preceding sentence.
(D) "TERMINATION OF EMPLOYMENT FOR GOOD REASON" means the
voluntary termination of Executive's employment by Executive for any of
the following reasons: (i) Executive is required to move to a new
principal work location that is more than 25 miles
from Executive's work location while with his prior employer; (ii)
Executive's duties under this Agreement are subject to a substantial
reduction; (iii) the material breach of this Agreement by FirstMerit,
but only if such breach is not corrected within 30-days after written
notice to FirstMerit detailing the breach; (iv) there is a substantial
reduction in the cash compensation, perquisites or vacation provided to
Executive by FirstMerit; (v) significant reduction in Executive's
responsibilities and status within the FirstMerit organization, or a
change in his title or office without prior written consent of
Executive; or (vi) involuntary discontinuance of Executive's
participation in any employee benefit plans
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maintained by FirstMerit unless such plans are discontinued by reason
of law or loss of tax deductibility to FirstMerit with respect to
contributions to such plans, or are discontinued as a matter of
FirstMerit policy applied equally to all participants in such plans.
6.2 TERMINATION OF EMPLOYMENT UPON RESIGNATION OR FOR CAUSE. If
Executive's employment is terminated as a result of Executive's voluntary
resignation (other than Termination of Employment for Good Reason) or
Termination of Employment for Cause, Executive shall be entitled to receive only
Executive's Base Salary to which he was entitled through the Termination Date,
any unpaid bonus due with respect to the year prior to the year in which the
termination occurred, and such other payments and benefits to which he is
entitled under the terms of this Agreement and as may be available to him
through FirstMerit's benefit plans and policies.
6.3 TERMINATION UNDER OTHER CIRCUMSTANCES.
(A) If Executive's employment is terminated under
circumstances other than as described in Section 6.2, and the Termination Date
is prior to the Expiration Date, Executive's Base Salary and bonus as calculated
through the Expiration Date shall be payable in a lump sum in cash within 25
days after the Termination Date, and all other benefits and entitlements
described in Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 5.6 (including credit for
Years of Service under the Pension Plan, 401(k) Plan and the Top Hat Plan) shall
continue at FirstMerit's expense through the Expiration Date.
(B) If Executive's employment is terminated after the
Expiration Date, Executive shall be entitled to receive his Base Salary and
bonus to which he was entitled through the Termination Date and such other
payments and benefits to which he is entitled under the terms of this Agreement
and as may otherwise be available to him through FirstMerit's benefit plans and
policies.
6.4 EFFECT OF TERMINATION. Upon termination of Executive's employment,
the obligations of each of the parties under this Agreement shall expire as of
the Termination Date, including, without limitation, the obligations of
FirstMerit to pay any compensation to Executive, except to the extent otherwise
specifically provided in this Agreement. Notwithstanding the foregoing, the
obligations contained in Section 7 of this Agreement and the provisions hereof
relating to the obligations of FirstMerit described in the preceding sentence,
shall survive the termination or expiration of this Agreement in accordance with
the terms set forth therein.
7. CONFIDENTIALITY AND NON-COMPETE
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7.1 NON-DISCLOSURE. Executive expressly covenants and agrees that he
will not reveal, divulge or make known to any person, firm, company or
corporation any secret or confidential infor mation of any nature concerning
FirstMerit or its business, or anything connected therewith.
7.2 RETURN OF MATERIALS. Executive agrees to deliver or return to
FirstMerit upon termination or expiration of this Agreement or as soon
thereafter as possible, all non-public information, whether written or stored in
media used in computer systems or otherwise, and any other similar items
furnished by FirstMerit or prepared by Executive in connection with his services
hereunder. Executive will retain no copies thereof after termination of this
Agreement or Executive's employment.
7.3 NON-COMPETE. If Executive terminates his employment other than for
Good Reason during the Term, or if FirstMerit terminates Executive's employment
for Cause during the Term, then, until the first anniversary of the Termination
Date, Executive shall not become associated, directly or indirectly, with any
entity, whether as a shareholder (other than as a holder of not more than one
percent (1%) of the outstanding voting shares of any publicly traded company),
principal, partner, employee or consultant (such activities collectively
referred to as an "Associate"), that is actively engaged in any business which
is in competition with FirstMerit or any of its subsidiaries or affiliates in
any geographic area in which FirstMerit or any of its subsidiaries or affiliates
does business at the date of such termination.
7.4 INJUNCTIVE RELIEF. Executive acknowledges that it is impossible to
measure in money the damages that will accrue to FirstMerit by reason of
Executive's failure to observe any of the obligations imposed on him by this
Section 7. Accordingly, if FirstMerit shall institute an action to enforce the
provisions hereof, Executive hereby waives the claim or defense that an adequate
remedy at law is available to FirstMerit, and Executive agrees not to urge in
any such action the claim or defense that such remedy at law exists.
8. MISCELLANEOUS
8.1 ASSIGNMENT. This Agreement shall be binding upon the parties
hereto, their respective heirs, personal representatives, executors,
administrators and successors.
8.2 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the State of Ohio. In the event that any provision of
this Agreement shall be held to be void or unenforceable by a court of competent
jurisdiction, this Agreement shall not be rendered null and void thereby but
shall be construed and enforced as if such void or unenforceable provision were
not originally a part of this Agreement. The parties agree to the sole
jurisdiction and venue of the Common Pleas Court in Summit County, Ohio, for any
disputes arising hereunder.
8.3 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties concerning the employment of Executive by FirstMerit, and any oral
or written statements, representations, agreements or understandings made or
entered into prior to or contemporaneously
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with the execution of this Agreement, are hereby rescinded, revoked and rendered
null and void by the parties.
8.4 ATTORNEYS' FEES. In the event that a dispute should arise between
the parties regarding the performance, interpretation or enforcement of this
Agreement, the prevailing party in such dispute, in addition to the other
remedies to which it is entitled, shall also be entitled to receive court costs
and reasonable attorneys' fees.
8.5 NO MITIGATION. Executive shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
Executive as the result of employment by another employer, by retirement income
after the Termination Date, or otherwise.
8.6 HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year above first written.
FIRSTMERIT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
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