AMENDED AND RESTATED EMPLOYMENT AGREEMENT BY AND BETWEEN FIRSTMERIT CORPORATION AND PAUL GREIG
Exhibit 10.27
Effective May 15, 2006, (“Employment Date”) FirstMerit Corporation (“Corporation”), an Ohio
corporation, and Xxxx Xxxxx (“Executive”), collectively, the “Parties,” entered into an employment
agreement to describe the terms and conditions of the Executive’s employment with the Corporation.
Effective January 8th, 2009 (“Effective Date”), the Parties adopt this amended and restated version
of the employment agreement (as previously amended and restated from time to time) (“Agreement”).
By signing this Agreement, the Executive specifically represents that he is fully able to assume
the duties described in this Agreement and is under no obligation or condition that would prevent
him from doing so.
ARTICLE 1 TERM OF AGREEMENT
This Agreement will remain in effect from the Effective Date until May 31, 2009 (“Initial Term”),
unless it terminates at an earlier date as provided in this Agreement or unless, before June 1,
2008, either Party delivers to the other a written “Notice of Intent Not To Renew” specifying the
date this Agreement will terminate. If a Notice of Intent Not To Renew is delivered before June 1,
2008, this Agreement will expire at the end of the Initial Term. However, if a Notice of Intent
Not To Renew is not delivered before June 1, 2008, this Agreement will continue for additional one
year periods (“Additional One-Year Terms”) unless either party delivers to the other a written
Notice of Intent Not To Renew at least twelve (12) months before the beginning of the then
Additional One-Year Term. For purposes of this Agreement, the Initial Term and any Additional
One-Year Terms will be referred to collectively as the “Term.” Section 5.07 will apply to any
termination of this Agreement through a Notice of Intent Not To Renew.
ARTICLE 2 EXECUTIVE’S DUTIES
2.01 During the Term, the Executive agrees:
[1] To serve as President and Chief Executive Officer of the Corporation and to perform the
services customarily performed by persons in a similar executive capacity.
[2] Subject to Section 5.05, to discharge any other duties and responsibilities that the
Corporation’s Board of Directors (“Board”) assigns to him from time to time.
[3] To serve as an officer and, if elected, as a director of the Corporation, and of any
other entity that is related through common ownership to the Corporation. For purposes of
this Agreement, the Corporation and all entities related through common ownership to the
Corporation are individually called “Group Members” and collectively are called the “Group.”
[4] Except for periods of absence because of illness, vacations of reasonable duration and
any leaves of absence approved by the Board or during the pendency of any disputes arising
under Sections 5.04 and 5.05, to:
[a] Devote his full attention and energies to promoting the Group’s business;
[b] Fulfill the obligations described in this Agreement; and
[c] Exercise the highest degree of loyalty and the highest standards of conduct in
the performance of his duties.
[5] In addition to the obligations described in Article 6, not to engage in any other
business activity, whether or not for gain, profit or other pecuniary advantage, that does
not involve promoting the Corporation’s, the Group’s or any Group Member’s business.
However, the Executive may serve as a director of companies that are not Group Members if
that service:
[a] Does not violate any term or condition of this Agreement;
[b] Does not injure the Group or any Group Member;
[c] Is not prohibited by law or by rules adopted by any Group Member; and
[d] Is approved in advance by the Board.
2.02 The restrictions described in Section 2.01[5] will not be construed to prevent the Executive
from:
[1] Investing his personal assets in [a] businesses that do not compete or do business with
any Group Member and do not require the Executive to perform any services connected with the
operation or affairs of the businesses in which the investment is made or [b] stocks or
corporate securities described in Section 6.02 but subject to the limits described in that
section; or
[2] Participating in, or serving as a trustee or director of, civic and charitable
organizations or activities, but only if this activity does not materially interfere with
the performance of his duties under this Agreement.
2.03 The Executive will report directly and solely to the Board.
ARTICLE 3 EXECUTIVE’S COMPENSATION
3.01 During the Term and subject to this section and to Article 5:
[1] The Corporation will pay to the Executive a “Base Salary” at an annualized rate of Six
Hundred Eighty-nine Thousand Thirty-seven Dollars and Thirty-six Cents ($689,037.36),
prorated to reflect partial calendar months and years of employment and
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paid in installments that correspond with the Corporation’s normal payroll practices, but in
any event not less frequently than monthly. During the Term, Base Salary will not be
reduced below Six Hundred Eighty-nine Thousand Thirty-seven Dollars and Thirty-six Cents
($689,037.36) without the Executive’s written consent but may be increased during the Term
at the discretion of the Board. In the event Base Salary is increased, the increased Base
Salary will not be reduced below that amount without the Executive’s written consent.
[2] The Executive may participate in any long-term or short-term cash bonus program that the
Corporation adopts or maintains for its senior executives and will be assigned a target
bonus of no less than one hundred percent (100%) of his Base Salary. Except for the
commitment just made, the amount of and conditions placed on the Executive’s participation
in these programs and on the bonus amount will be established by the Board’s Compensation
Committee subject to the terms of the plan or program through which it may be earned and
other related documents and procedures governing that grant. In the event that the
conditions of the programs are met and a bonus payment is earned, any payment under this
Section 3.01[2] will be paid to the Executive in accordance with the terms of the program
through which it was earned.
[3] The Executive may participate in the health, welfare and retirement benefit programs
(whether or not tax-qualified) provided to the Corporation’s senior executives (subject to
the terms and conditions of the programs, a description of each of which has been given to
the Executive), as these programs may from time to time be amended or modified by the Board
or the Board’s Compensation Committee. The Corporation will provide long-term disability
insurance which will provide benefits payable in the event that the Executive is disabled,
as that term is defined by the insurance policy, during employment. The amount of the long
term disability benefit will equal two thirds of the Executive’s most recently paid annual
Base Salary and bonus, but will not exceed Six Hundred Eighty-four Thousand Dollars
($684,000.00) annually.
[4] The Executive will receive the perquisites that are made available to the Corporation’s
other senior executives (and will receive twenty-nine (29) paid time-off days under the
Corporation’s paid-time-off program). Also, the Corporation will pay the initiation fees
and monthly dues associated with the Executive’s membership fees in one country club located
within fifteen (15) miles of the Corporation’s headquarters. Except as provided in Article
4, the Executive will be personally responsible for any costs associated with his use of
these country club facilities.
[5] The Executive will be eligible to participate in any equity compensation plan subject to
the terms of that plan and to the extent deemed appropriate by the Board’s Compensation
Committee.
3.02 Subject to its availability at standard rates, the Corporation will reimburse the Executive
each year for the annual premiums he incurs upon his acquisition of a variable, whole life
insurance policy with a face value of one million five hundred thousand dollars ($1,500,000) and
also will distribute to the Executive forty percent (40%) of the amount of any premiums taxable
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to him on account of this policy. Such reimbursements and payments shall be made to the Executive
on or before December 31 of the year in which the premiums are incurred. The Executive will be the
owner of the policy and the Corporation will have no interest in the policy or its proceeds.
Except as specifically provided in Article 5, no further payments will be due from the Corporation
under this Section 3.02 following the Executive’s termination of employment with the Corporation.
ARTICLE 4 BUSINESS-RELATED EXPENSES
The Corporation will pay (or reimburse) the Executive for all reasonable, ordinary and necessary
expenses that he incurs to perform his duties under this Agreement. Reimbursement will be made
within thirty (30) days after the date such expenses are incurred, provided the Executive submits
appropriate evidence of the expenditure (and all other information required under the Corporation’s
business expense reimbursement policy) to the Corporation and otherwise complies with reimbursement
procedures the Corporation applies to its other senior executives.
ARTICLE 5 TERMINATION OF EMPLOYMENT DURING TERM OF AGREEMENT
Wherever used in this article, except in connection with death, the word “terminate” or
“termination” in connection with the Executive’s employment shall mean a “separation from service”
of the Executive from the Corporation within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (“Code”), and Treasury Regulation Section 1.409A-1(h).
5.01 Termination of Employment Due to Death or Disability. The Executive’s employment will
terminate upon his death. In addition, the Corporation or the Executive may terminate the
Executive’s employment due to the Executive’s Disability (as defined in Section 5.01[3]) at any
time during the Term by giving the other party written notice of its intention to do so. The terms
of this section will apply if the Executive dies or his employment is terminated due to Disability
during the Term and before a written notice of termination is given under any other section of this
Agreement. However, if the Executive dies or becomes disabled after a written notice of
termination has been given under any other section of this article (and while that notice is still
in effect), he or his beneficiary will receive the amounts calculated under such section, but only
if the payments described in that section would have been due if the Executive had not died or
become disabled, determined as if any “cure period” had expired on the day before the date the
Executive dies or becomes disabled.
[1] This Agreement and the Executive’s employment will terminate as of the date the
Executive dies or the Corporation or Executive terminates the Executive’s employment due to
the Executive’s Disability and the Corporation will pay or cause to be paid to the Executive
(or to his beneficiary if the Executive is dead):
[a] Any unpaid installments of his Base Salary, calculated through the date his
employment is terminated due to his death or Disability; and
[b] Any bonus earned with respect to the previous year but not yet paid; and
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[c] The pro rata portion of a bonus for the current year, determined by multiplying
the “target” cash bonus amount most recently established by a fraction, the
numerator of which is the number of days in the calendar year preceding the date his
employment is terminated due to his death or Disability and the denominator of which
is three hundred sixty-five (365); and
[d] Any amounts the Executive is entitled to receive under the terms of any employee
benefit plan described in Section 3.01[3].
[2] If the Executive’s employment is terminated due to his death or Disability, all the
Executive’s outstanding stock options and other cash and equity incentive grants will be
exercisable (or applicable restrictions will lapse) to the extent provided under the terms
relating to terminations of employment for similar reasons contained in the plan and the
award agreement through which they were granted or as otherwise provided in Section 5.06.
[3] “Disability” or “Disabled” has the same meaning given to the term “disability” under the
Corporation’s long-term disability plan as in effect on May 15, 2006, whether or not the
Executive participated in that plan on June 5, 2006 (“Employment Date”), or subsequently and
whether or not that plan is amended or terminated before the Executive’s Disability arises.
[4] Except as otherwise provided in the program through which they are paid or in the
Agreement, all amounts payable under this section will be:
[a] Paid within thirty (30) days of the Executive’s death or the date the
Executive’s employment is terminated due to Disability; and
[b] If the Executive’s employment is terminated due to Disability but he dies before
all payments due under this section have been paid, the unpaid amount will be paid
to the Executive’s beneficiary under the procedures described in Section 10.07.
5.02 Voluntary Termination of Employment Without Good Reason. The Executive may voluntarily
terminate his employment at any time during the Term without Good Reason (as defined in Section
5.05[6]) by giving the Corporation written notice of his intention to do so. This notice will be
effective one hundred eighty (180) days after it is given unless the Parties mutually agree to
accelerate this termination date (“Voluntary Termination Date”). If the Executive voluntarily
terminates his employment without Good Reason (including initiating a termination on account of
retirement), the terms of this section will apply regardless of any other event (other than as
provided in Section 5.06) that occurs after the delivery of the notice of intent to terminate
without Good Reason.
[1] This Agreement and the Executive’s employment will terminate on the Voluntary
Termination Date and the Corporation will pay or cause to be paid to the Executive the sum
of:
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[a] Any unpaid installments of his Base Salary, calculated through the Voluntary
Termination Date; and
[b] Any amounts the Executive is entitled to receive under the terms of any employee
benefit plan described in Section 3.01[3].
For purposes of this Agreement, a termination initiated by the Executive after qualifying
for retirement under any deferred compensation plan (whether or not tax-qualified)
maintained by the Corporation will be treated as a voluntary termination under this section.
[2] If the Executive’s employment terminates under this Section 5.02, all the Executive’s
outstanding stock options and other cash and equity incentive grants will be exercisable (or
applicable restrictions will lapse) to the extent provided under the terms relating to
terminations of employment for similar reasons contained in the plan and the award agreement
through which they were granted or as otherwise provided in Section 5.06.
[3] Except as otherwise provided in the program through which they are paid or in the
Agreement, all amounts payable under this section will be:
[a] Paid within thirty (30) days of the Voluntary Termination Date; and
[b] If the Executive dies before all payments due under this section have been paid,
the unpaid amount will be paid to the Executive’s beneficiary under the procedures
described in Section 10.07.
5.03 Termination of Employment by Corporation Without Cause. The Corporation may terminate the
Executive’s employment without Cause (as defined in Section 5.04[4]) at any time during the Term by
giving the Executive written notice of its intention to do so. This notice will be effective
ninety (90) days after it is given unless the Parties mutually agree to accelerate this termination
date (“Involuntary Termination Date”) and the terms of this section will apply regardless of any
other event (other than as provided in Section 5.06) that occurs after the delivery of the notice
of intent to terminate the Executive without Cause.
[1] This Agreement and the Executive’s employment will terminate as of the Involuntary
Termination Date.
[2] The Corporation will pay or cause to be paid or made available to the Executive:
[a] Any unpaid installments of his Base Salary, calculated through the Involuntary
Termination Date;
[b] The value of any accrued but unused paid-time-off, calculated under the terms of
the Corporation’s paid-time-off policy for similar events;
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[c] Continuation of Base Salary at the rate then in effect for twelve (12) months,
paid in accordance with the Corporation’s normal payroll procedures beginning on the
Involuntary Termination Date;
[d] A lump sum payment (less lawful payroll deductions and taxes) equal to the
“target” cash bonus amount most recently established before the Involuntary
Termination Date;
[e] In addition to the payments described in Section 5.03[2][c], continuation of
Base Salary for twenty-four (24) months, paid in accordance with the Corporation’s
normal payroll procedures beginning on the Involuntary Termination Date in
consideration of the obligations assumed under Article 6. In the event the
Executive breaches the obligations contained under Article 6, the obligation to pay
continuation of Base Salary under this Section 5.03[2][e] will terminate;
[f] In addition to the payment described in Section 5.03[2][d], lump sum payments
(less lawful payroll deductions and taxes) within five (5) days after the first and
second anniversaries of the Involuntary Termination Date each equal to the “target”
cash bonus amount most recently established before the Involuntary Termination Date
and also in consideration of the obligations assumed under Article 6. In the event
the Executive breaches the obligations contained under Article 6, the obligation to
pay the lump sum payments under this Section 5.03[2][f] will terminate;
[g] At the Corporation’s expense, continuation of medical and dental coverage for
thirty-six (36) months beginning on the Involuntary Termination Date at a level
equivalent to that provided before the Involuntary Termination Date; provided that,
with respect to the last eighteen (18) months of such coverage, [i] the benefits
provided during the Executive’s taxable year may not affect the benefits to be
provided to the Executive in any other taxable year, [ii] reimbursement of any
eligible expense must be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense was incurred and [iii] the
right to such continued coverage is not subject to liquidation or exchange for
another benefit. The applicable Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) health insurance benefit continuation period shall begin coincident with
the beginning of this benefit continuation period; and
[h] At the Corporation’s expense, continuation of the premium reimbursement (and the
additional forty percent (40%) payment) described in Section 3.02 for the remainder
of the Executive’s taxable year during which the Involuntary Termination Date occurs
and for three (3) additional taxable years thereafter. Any reimbursement pursuant
to this Section 5.03[2][h] shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the applicable premium
cost is incurred. The premium costs eligible for reimbursement under this Section
5.03[2][h] during any taxable year may not
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affect any expenses eligible for reimbursement in any other taxable year and the
right to such continued coverage is not subject to liquidation or exchange for
another benefit.
[3] If the Executive’s employment terminates under this Section 5.03, all the Executive’s
outstanding stock options and other cash and equity incentive grants will be exercisable (or
applicable restrictions will lapse) to the extent provided under the terms relating to
terminations for similar reasons contained in the plan and the award agreements through
which they were granted or as otherwise provided in Section 5.06.
[4] If the Executive’s employment terminates under this Section 5.03, the Executive will
receive any other benefits he is entitled to receive under the terms of any benefit program
described in Section 3.01[3].
[5] Except as otherwise provided in the program through which they are paid or in the
Agreement, all amounts payable under this section will be:
[a] Paid within thirty (30) days of the Involuntary Termination Date; and
[b] If the Executive dies before all payments due under this section have been paid,
the unpaid amounts will be paid to the Executive’s beneficiary under the procedures
described in Section 10.07.
It is specifically understood that delivery of a Notice of Intent Not To Renew by the Corporation
under Article 1 is not itself a notice of involuntary termination without Cause under this section.
5.04 Termination of Employment by Corporation for Cause. The Corporation may terminate the
Executive’s employment for Cause at any time during the Term by giving the Executive written notice
of its intention to do so. This notice will be effective on the date it is given (“For Cause
Termination Date”). If this notice is given, the terms of this section will apply regardless of
any other event that may occur after the delivery of the written notice of termination for Cause.
[1] This Agreement and the Executive’s employment will terminate as of the For Cause
Termination Date.
[2] The Corporation will pay or cause to be paid or made available to the Executive:
[a] Any unpaid installments of his Base Salary, calculated through the For Cause
Termination Date; and
[b] Any amounts the Executive is entitled to receive under the terms of any employee
benefit plan described in Section 3.01[3].
[3] If the Executive’s employment is terminated for Cause, all the Executive’s outstanding
stock options and other cash and equity incentive grants will be exercisable (or applicable
restrictions will lapse) to the extent provided under the terms relating to
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terminations of employment for similar reasons contained in the plan and the award
agreements through which they were granted or as otherwise provided in Section 5.06.
[4] “Cause” means one or more of the following acts of the Executive:
[a] Any act of fraud, intentional misrepresentation, embezzlement, misappropriation
or conversion by the Executive of the assets or business opportunities of the Group,
the Corporation or any Group Member;
[b] Conviction of the Executive of (or plea by the Executive of guilty to) a felony
(or a misdemeanor that originally was charged as a felony but was reduced to a
misdemeanor as part of a plea bargain) or intentional and repeated violations by the
Executive of the Corporation’s written policies or procedures;
[c] Disclosure, other than through mere inadvertence or other than acting in the
course and scope of duties or pursuant to a subpoena, to unauthorized persons of any
Confidential Information (as defined below);
[d] Intentional and material breach of any contract with or violation of any legal
obligation owed to the Group, the Corporation or any Group Member provided that a
breach shall be considered intentional and material only if the Executive fails to
cure to the best of the Executive’s ability such breach within thirty (30) days
after delivery to the Executive of a notice from the Board specifying such breach;
[e] The Executive’s [i] willful and intentional failure to materially comply (to the
best of his ability) with a specific, written direction of the Board that is
consistent with normal business practice and not inconsistent with this Agreement
and the Executive’s responsibilities hereunder, provided that a failure shall be
considered willful only if the Executive fails to cure to the best of the
Executive’s ability any such failure to materially comply with such written
direction of the Board within thirty (30) days after delivery to the Executive of a
notice from the Board specifying any such failure; and further provided that any
such failure shall not be deemed willful or intentional if based on the Executive’s
good faith belief, as expressed by written notice to the Board given within thirty
(30) days after such failure, that the implementation of such direction of the Board
would be unlawful or unethical and such notice is accompanied by the opinion of
nationally recognized corporate counsel that such implementation would be unlawful
or unethical, [ii] willful engagement in gross misconduct materially and
demonstrably injurious to the Group, the Corporation or any Group Member or [iii]
material breach of this Agreement, provided that such breach is not cured within
thirty (30) days after delivery to the Executive of a notice from the Board
requesting cure; or
[f] Any intentional cooperation with any party attempting to effect a Change in
Control (as defined in the Executive’s Change in Control and Displacement
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Agreements) unless [i] the Board has approved or ratified that action before the
Change in Control or [ii] that cooperation is required by law.
However, Cause will not arise solely because the Executive is absent from active employment during
periods of paid-time-off, consistent with the Corporation’s applicable paid-time-off policy,
sickness or illness or while suffering from an incapacity due to physical or mental illness,
including a condition that does or may result in a Disability or other period of absence initiated
by the Executive and approved by the Corporation.
It also is specifically understood that delivery by the Corporation of a Notice of Intent Not To
Renew under Article 1 is not itself a notice of termination for Cause under this section.
The Corporation may not terminate the Executive’s employment for Cause unless:
[i] No fewer than thirty (30) days prior to the For Cause Termination Date, the
Corporation provides the Executive with written notice (the “Notice of
Consideration”) of its intent to consider termination of the Executive’s employment
for Cause, including a detailed description of the specific reasons which form the
basis for such consideration, provided, however, that after providing Notice of
Consideration, the Board may, by the affirmative vote of seventy-five percent (75%)
of its members (excluding for this purpose the Executive if he is a member of the
Board), suspend the Executive with pay until a final determination pursuant to this
Section 5.04 has been made;
[ii] On a date designated in the Notice of Consideration, which date shall be at
least thirty (30) days following the date the Notice of Consideration is provided,
the Executive shall have the opportunity to appear before the Board, with or without
legal representation, at the Executive’s election, to present arguments and evidence
on his own behalf; and
[iii] Following the presentation to the Board as provided in subparagraph [ii] above
or the Executive’s failure to appear before the Board at the date and time specified
in the Notice of Consideration, the Executive may be terminated for Cause only if
the Board, by a seventy-five percent (75%) vote of its members (excluding the
Executive if he is a member of the Board), determines that the actions or inactions
of the Executive specified in the Notice of Consideration occurred, that such
actions or inactions constitute Cause and that the Executive’s employment should
accordingly be terminated for Cause. If the requisite seventy-five percent (75%)
vote under this subparagraph [iii] is not obtained, the Executive will be deemed to
have met the definition of Good Reason as described in Section 5.05[6][j].
[5] “Confidential Information” means any and all information (other than information in the
public domain) related to the Group’s, the Corporation’s or any Group Member’s business,
including all processes, inventions, trade secrets, computer programs, technical data,
drawings or designs, information concerning pricing and pricing policies, marketing
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techniques, plans and forecasts, new product information, information concerning methods and
manner of operations and information relating to the identity and location of all past,
present and prospective customers and suppliers.
[6] Except as otherwise provided in the program through which they are paid or in the
Agreement, all amounts payable under this section will be:
[a] Paid within thirty (30) days of the For Cause Termination Date; and
[b] If the Executive dies before all payments due under this section have been paid,
the unpaid amount will be paid to the Executive’s beneficiary under the procedures
described in Section 10.07.
5.05 Termination of Employment by the Executive for Good Reason. The Executive may terminate his
employment at any time during the Term for Good Reason by giving the Corporation written notice of
his intention to do so. This notice must describe, in reasonable detail, the reasons for which the
Executive believes he has Good Reason to terminate his employment. If, during the ensuing thirty
(30) days or, if shorter, the remainder of the Term (“Cure Period”), the Corporation cures the
condition cited by the Executive, no termination will occur under this section. However, if the
Corporation does not cure the condition cited by the Executive during the Cure Period, this
Agreement will terminate at the end of the Cure Period (“Good Reason Termination Date”) and the
terms of this section will apply regardless of any other event (other than as provided in Section
5.06) that occurs after the delivery of the written notice of intent to terminate for Good Reason.
[1] This Agreement and the Executive’s employment will terminate as of the Good Reason
Termination Date.
[2] The Corporation will pay or cause to be paid or made available to the Executive:
[a] Any unpaid installments of his Base Salary, calculated through the Good Reason
Termination Date;
[b] The value of any accrued but unused paid-time-off, calculated under the terms of
the Corporation’s paid-time-off policy for similar events;
[c] Continuation of Base Salary at the rate then in effect for twelve (12) months,
paid in accordance with the Corporation’s normal payroll procedures beginning on the
Good Reason Termination Date;
[d] A lump sum payment (less lawful payroll deductions and taxes) equal to the
“target” cash bonus amount most recently established before the Good Reason
Termination Date;
[e] In addition to the payments described in Section 5.05[2][c], continuation of
Base Salary for twenty-four (24) months, paid in accordance with the Corporation’s
normal payroll procedures beginning on the Good Reason
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Termination Date and in consideration of the obligations assumed under Article 6.
In the event the Executive breaches the obligations contained under Article 6, the
obligation to pay continuation of Base Salary under this Section 5.05[2][e] will
terminate;
[f] In addition to the payments described in Section 5.05[2][d], lump sum payments
(less lawful payroll deductions and taxes) within five (5) days after the first and
second anniversaries of the Good Reason Termination Date each equal to the “target”
cash bonus amount most recently established before the Good Reason Termination Date
and also in consideration of the obligations assumed under Article 6. In the event
the Executive breaches the obligations contained under Article 6, the obligation to
pay the lump sum payments under this Section 5.05[2][f] will terminate;
[g] At the Corporation’s expense, continuation of medical and dental coverage for
thirty-six (36) months beginning on the Good Reason Termination Date at a level
equivalent to that provided immediately before the Good Reason Termination Date;
provided that, with respect to the last eighteen (18) months of such coverage, [i]
the benefits provided during the Executive’s taxable year may not affect the
benefits to be provided to the Executive in any other taxable year, [ii]
reimbursement of any eligible expense must be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense was
incurred and [iii] the right to such continued coverage is not subject to
liquidation or exchange for another benefit. The applicable COBRA health insurance
benefit continuation period shall begin coincident with the beginning of this
benefit continuation period; and
[h] At the Corporation’s expense, continuation of the premium reimbursement (and the
additional forty percent (40%) payment) described in Section 3.02 for the remainder
of the Executive’s taxable year during which the Good Reason Termination Date occurs
and for three (3) additional taxable years thereafter. Any reimbursement pursuant
to this Section 5.05[2][h] shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the applicable premium
cost is incurred. The premium costs eligible for reimbursement under this Section
5.05[2][h] during any taxable year may not affect any expenses eligible for
reimbursement in any other taxable year and the right to such continued coverage is
not subject to liquidation or exchange for another benefit.
[3] If the Executive’s employment terminates under this Section 5.05, all the Executive’s
outstanding stock options and other cash and equity incentive grants will be exercisable (or
applicable restrictions will lapse) to the extent provided under the terms relating to
terminations of employment for similar reasons contained in the plan and the award agreement
through which they were granted or as otherwise provided in Section 5.06.
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[4] If the Executive’s employment terminates under this Section 5.05, the Executive will
receive any other benefits he is entitled to receive under the terms of any benefit program
described in Section 3.01[3].
[5] Except as otherwise provided in the program through which they are paid or in the
Agreement, all amounts payable under this section will be:
[a] Paid within thirty (30) days of the Good Reason Termination Date; and
[b] If the Executive dies before all payments due under this section have been paid,
the unpaid amounts will be paid to the Executive’s beneficiary under the procedures
described in Section 10.07.
[6] “Good Reason” means any of the following to which the Executive has not consented in
writing:
[a] Any breach of this Agreement by or on behalf of the Group, the Corporation or
any Group Member;
[b] A reduction in the Executive’s title, duties, responsibilities or status, as
compared to either [i] the Executive’s title, duties, responsibilities or status on
the Employment Date, or [ii] any enhanced or increased title, duties,
responsibilities or status assigned to the Executive after the Employment Date;
[c] The assignment to the Executive of duties that are inconsistent with [i] the
Executive’s office as of the Employment Date or [ii] any more senior office to which
the Executive is promoted after the Employment Date;
[d] Modification of the Executive’s reporting responsibilities described in Section
2.03;
[e] During any calendar year ending during the Term (or any fractional calendar year
ending within the Term), any reduction (other than a reduction that is attributable
to any termination for death, Disability or Cause, voluntary termination by the
Executive other than for Good Reason or for any period of temporary absence
protected by law or initiated by the Executive and approved by the Corporation) in
Base Salary for the calendar year ending before the Good Reason Termination Date;
[f] A requirement that the Executive relocate to a principal office or worksite (or
accept indefinite assignment) to a location more than fifty (50) miles distant from
Akron, Ohio;
[g] The Corporation’s [i] failure to continue in effect any material fringe benefit
or compensation plan, retirement or deferred compensation plan, life insurance plan,
health and accident plan, sick pay plan or disability plan in which the Executive is
participating or [ii] modification of any of the plans or programs
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just described that adversely affects the potential value of the Executive’s
benefits under those plans (other than value associated solely with the performance
of investments the Executive controls). However, [iii] this section will not apply
to any of the acts just enumerated that are applied to or which affect all other
participants in any program or plan and [iv] Good Reason will not arise under this
subsection solely because [A] the Corporation terminates or modifies any of the
programs just described solely to comply with applicable law but only to the extent
required to meet applicable legal standards, [B] a plan or benefit program expires
under self-executing terms contained in that plan or [C] the Corporation replaces a
plan or program with a successor plan or program of equal or equivalent value to the
Executive;
[h] For the duration of any period of any absence from active employment, failure to
provide or continue for the Executive any benefits (including disability benefits)
available to employees who are absent from active employment (including because of
Disability) under programs maintained by the Corporation on the date the absence
(including Disability) begins;
[i] While the Executive is unable to perform normally assigned duties because of a
physical or mental condition and before his Disability is established under Section
5.01[3], the Corporation terminates the Executive before the period required to
establish the Executive’s Disability;
[j] The Corporation unsuccessfully attempts to terminate the Executive for Cause;
[k] The Corporation fails to obtain an assumption of its obligations under this
Agreement by any successor, regardless of whether that other entity becomes a
successor to the Corporation as a result of a merger, consolidation, sale of assets
or any other form of reorganization; or
[l] Any attempted termination of the Executive’s employment which is not effected
pursuant to a Notice of Consideration satisfying the requirements of this article.
It is specifically understood that delivery by the Corporation of a Notice of Intent Not To
Renew under Article 1 is not itself “Good Reason” under this Agreement.
5.06 Termination of Employment Following a Change in Control.
[1] Amounts payable to the Executive upon a “Change in Control” will be governed by a
separate “Change in Control Agreement” and “Displacement Agreement” (collectively, “Change
Agreements”), a copy of each of which has been given to the Executive. The definition of
“Cause” under Section 5.04[4] and the definition of “Good Reason” under Section 5.05[6]
contained herein shall supersede, be incorporated into and constitute the definitions of
Cause and Good Reason under the Change Agreements
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(provided that if anything constitutes Good Reason under the Change Agreements and is not
Good Reason under this Agreement, the Change Agreements provisions shall be applicable for
purposes of the Change Agreements). These benefits will be due under the terms and subject
to the conditions that are incorporated from time to time in the Change Agreements,
provided, however, that the applicable obligations described in Article 6 will continue to
apply, subject to payment of the amounts described in Sections 5.03[2][e] and [f] or
5.05[2][e] and [f], whichever is applicable. However, if the Executive is or becomes
entitled to receive payments and benefits under this Agreement and under either of the
Change Agreements, he will be entitled only to receive the larger of the payments and
benefits due under this Agreement or under the Change in Control or Displacement Agreements;
this comparison will be made separately with respect to each type of benefit.
[2] If any payment or benefit under this Agreement generates an excise tax under Section
4999 of the Code, the Corporation will apply the same procedures for these purposes that are
applicable under the Executive’s Change Agreements, whether or not the event generating
these excise taxes is a “change in control” under those agreements.
5.07 Termination Due to Failure to Renew Agreement. Except as provided in Section 5.06, if this
Agreement and the Executive’s employment terminate through a Notice of Intent Not to Renew (as
described in Article 1), the Executive will be entitled to the benefits described in Section 5.02
as if the Executive had terminated employment voluntarily and without Good Reason on the date this
Agreement terminates and the following:
[1] Continuation of Base Salary for twelve (12) months, paid in accordance with the
Corporation’s normal payroll procedures beginning on the date this Agreement terminates, in
consideration of the obligations assumed under Article 6. In the event the Executive
breaches the obligations contained under Article 6, the obligation to pay continuation of
Base Salary under this Section 5.07[1] will terminate; and
[2] A lump sum payment (less lawful payroll deductions and taxes) within thirty (30) days
after the termination of this Agreement, equal to the “target” cash bonus amount most
recently established before the termination date in consideration of the obligations assumed
under Article 6. In the event the Executive breaches the obligations contained under
Article 6, the obligation to pay the lump sum payment under this Section 5.07[2] will
terminate.
5.08 Required Postponement for Specified Employee. If the Executive is a “specified employee,”
within the meaning of Treasury Regulation Section 1.409A-1(i) and as determined under the
Corporation’s policy for determining specified employees, on the date on which his employment
terminates (for any reason other than death), no payments or benefits under Sections 5.01[1][c],
5.03[2][c], [d], and [e], 5.05[2][c], [d], and [e] or 5.07[1] and [2] shall be paid or provided (or
commence to be paid or provided) until the first business day of the seventh month following the
termination date (or, if earlier, the Executive’s death). The first payment that can be made shall
include the cumulative amount of any amounts and benefits that could not be paid or provided during
such postponement period.
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5.09 Effect of Other Severance Benefits. Regardless of any other provision of this Agreement, all
amounts paid under this article will be in lieu of any amounts payable to the Executive from any
other broad-based severance program in which the Executive participates.
5.10 Effect of Multiple Termination Events. Except as provided otherwise in this Agreement
(including the Change Agreements), the Executive will never be entitled to benefits or payment
under more than one section of this article and will receive the benefits and payments attributable
to the first termination event to occur the effects of which are described in this article.
ARTICLE 6 POST-TERMINATION OBLIGATIONS
6.01 For a period of twenty-four (24) full calendar months after the Executive’s employment
terminates for any reason (or twelve (12) full calendar months after termination pursuant to
Section 5.07), he will not directly or indirectly engage in, assist or have an active interest in
(whether as proprietor, partner, investor, shareholder, officer, director or any type of principal
whatsoever) or enter the employment of or act as agent for or adviser or consultant to any person
or entity who is (or is about to become) engaged in any business that competes with the Group in
any state where the Group has an office or branch during the Term and any contiguous state thereto.
6.02 Section 6.01 does not prohibit the Executive from purchasing, for investment purposes only,
any stock or other corporate security that is listed on a national securities exchange or quoted in
any national market system (except as otherwise provided in this Agreement), so long as such stock
or other corporate security owned by the Executive does not represent more than one percent (1%) of
the market value or voting power of the total stock or other corporate securities of that class.
6.03 The Executive is not obligated to comply with the prohibitions described in this article if
the Corporation defaults in the payment of any severance compensation or benefits owed under this
Agreement. This Section 6.03 does not however relieve the Corporation of its obligations to pay
severance compensation or other benefits owed under this Agreement. In the event the Executive
breaches the obligations contained under Article 6, the obligation to pay continuation of Base
Salary and lump sum payments under Sections 5.03[2][e] and [f], 5.05[2][e] and [f] or 5.07[1] and
[2] will terminate.
6.04 For a period of twenty-four (24) full calendar months after the Executive’s employment
terminates for any reason (or twelve (12) full calendar months after termination pursuant to
Section 5.07), he will not, on his own behalf or on behalf of any other person, partnership,
association, corporation or other entity, solicit or in any manner attempt to influence or induce
any employee of the Group, the Corporation or any Group Member to leave the Group’s, the
Corporation’s or Group Member’s employment nor will he use or disclose to any person, partnership,
association, corporation or other entity any information obtained while an employee of the
Corporation concerning the names and addresses of the Group’s, the Corporation’s or any Group
Member’s employees.
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6.05 The Executive recognizes that he has access to and knowledge of certain confidential and
proprietary information of the Group, the Corporation and Group Members that is essential to the
performance of his duties under this Agreement. The Executive agrees that he will not, during or
after the term of his employment by the Corporation, in whole or in part, disclose this information
to any person, firm, corporation, association or other entity for any reason or purpose whatsoever,
nor shall he make use of any such information for his own purposes.
6.06 The Parties recognize that the Corporation will have no adequate remedy at law for breach by
the Executive of the restrictions imposed by this article and that the Group, the Corporation and
one or more Group Members could suffer substantial and irreparable damage if the Executive breaches
any of these restrictions. For this reason, the Executive agrees that, if the Executive breaches
any of the restrictions imposed under this article, the Corporation, in addition to the right to
seek monetary damages, may seek a temporary and/or permanent injunction to restrain any breach or
threatened breach of these restrictions or a decree of specific performance, mandamus or other
appropriate remedy to enforce compliance with the restrictions imposed under this article.
ARTICLE 7 INDEMNIFICATION
The Corporation will enter into an agreement to indemnify the Executive against any liability
arising in connection with his employment under this Agreement. This agreement will be consistent
with the Corporation’s generally applicable indemnification policy, a copy of which has been given
to the Executive. The terms of the Corporation’s indemnification policy will survive the
termination of the Executive’s employment for so long as the Executive may be subject to liability.
In addition, the Corporation will provide for the Executive directors and officers insurance
coverage under its directors and officers insurance policy for claims made during the Executive’s
employment and for a period of six (6) years after termination of employment.
ARTICLE 8 ASSIGNMENT OF AGREEMENT
8.01 Except as specifically provided in this section, the Corporation may not assign this Agreement
to any person or entity that is not a Group Member. However, this Agreement may and will be
assigned or transferred to, and will be binding upon and inure to the benefit of, any successor of
the Corporation, in which case this Agreement will be interpreted and applied by substituting that
successor for the “Corporation” under the terms of this Agreement. For these purposes, “successor”
means any person, firm, corporation or business entity which at any time, whether by merger,
purchase or otherwise acquires all or substantially all of the assets or the business of the
Corporation.
8.02 Because the services to be provided by the Executive to the Corporation under this Agreement
are personal to him, the Executive may not assign the duties allocated to him under this Agreement
to any other person or entity. However, this Agreement will inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors and administrators,
successors, heirs, distributees, devisees and legatees to the extent of any amounts payable to the
Executive that are due to the Executive upon his death.
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ARTICLE 9 DISPUTE RESOLUTION
9.01 Except as provided in the last sentence of this section, any disagreement arising under this
Agreement that is not resolved by agreement between the Parties, including the basis on which the
Executive’s employment is terminated, will be resolved by arbitration in accordance with the rules
of the American Arbitration Association. The award of the arbitrator will be final, conclusive and
nonappealable and judgment upon the award rendered by the arbitrator may be entered in any court
having competent jurisdiction. The arbitrator must be an arbitrator qualified to serve in
accordance with the rules of the American Arbitration Association and one who is approved by the
Corporation and the Executive. If the Executive and the Corporation fail to agree on an
arbitrator, each must designate a person qualified to serve as an arbitrator in accordance with the
rules of the American Arbitration Association and these persons will select the arbitrator from
among those persons qualified to serve in accordance with the rules of the American Arbitration
Association. Any arbitration relating to this Agreement will be held in Summit County, Ohio. In
the event that the Executive pursues arbitration to enforce any term of this Agreement and in the
event that the Executive prevails, the Executive will be entitled to reasonable attorneys’ fees and
interest on any award at prime rate (as published in the Wall Street Journal) from the date
determined by the arbitrator that any payment should have been paid to the date it is actually
paid. Regardless of the scope of this section, the Parties agree that nothing in this section
prevents either Party from seeking injunctive or other equitable relief if there is a breach or
threatened breach of any provision of this Agreement. Also, if otherwise due, payments not being
contested under the procedures described in this section will not be deferred during the pendency
of procedures described in this section.
9.02 The Corporation will bear the arbitrator’s fee and other costs associated with any
arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(b), elects to
award these fees to the Corporation.
ARTICLE 10 MISCELLANEOUS
10.01 Any notices, consents, requests, demands, approvals or other communications to be given under
this Agreement must be given in writing and must be sent by registered or certified mail, return
receipt requested, to the Executive at the last address he has filed in writing with the
Corporation or, in the case of the Corporation, to the lead Director of the Board at the
Corporation’s principal offices.
10.02 This Agreement supersedes any prior agreements or understandings, oral or written, between
the Parties, or between the Executive and the Corporation, with respect to the subject matter
described in this Agreement and constitutes the entire agreement of the Parties with respect to any
matter covered in this Agreement.
10.03 This Agreement may not be varied, altered, modified, canceled, changed or in any way amended
except by written agreement of the Parties.
10.04 If any provision or portion of this Agreement is determined to be invalid or unenforceable
for any reason, the remaining provisions of this Agreement will remain in full force and effect.
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10.05 This Agreement may be executed in one or more counterparts, each of which will be deemed to
be an original, but all of which together will constitute one and the same Agreement.
10.06 The Corporation will withhold from any benefits payable under this Agreement all federal,
state, city or other taxes as required by any applicable law or governmental regulation or ruling.
10.07 The Executive may designate one or more persons or entities as the primary and/or contingent
beneficiaries of any amounts to be received under this Agreement that are unpaid when the Executive
dies. This designation must be written and presented in a form acceptable to the Board or the
Board’s designee, if appropriate, or in the form required by any affected benefit plan or program.
Subject to any rules prescribed by the Board, its designee or the affected benefit plan or program,
the Executive may make or change his designation at any time.
10.08 Failure to insist upon strict compliance with any of the terms, covenants or conditions
described in this Agreement will not constitute a waiver of that or any other term, covenant or
condition nor will any such failure constitute a waiver or relinquishment of the Party’s right to
insist subsequently on strict compliance of the affected (and all other) terms, covenants or
conditions of this Agreement.
10.09 In no event shall the Executive be obligated to seek other employment or take any other
action to mitigate the amounts payable to the Executive under any of the provisions of this
Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned as
result of the Executive’s employment by another employer, except that any continued welfare
benefits provided for by Section 3.01[3] shall not duplicate any benefits that are provided to the
Executive and his family by such other employer and shall be secondary to any coverage provided by
such other employer to the extent permitted by law.
10.10 The Corporation represents and warrants that the execution and performance of this Agreement
by the Corporation is duly authorized, and that the Agreement, upon due execution and delivery by
the Corporation, constitutes the legal, valid and binding obligation of the Corporation.
10.11 In the event of inconsistencies, the terms of this Agreement shall supersede and control
over any conflicting language in the Change in Control Termination Agreement, the Displacement
Agreement or any other agreement, plan, program or practice of the Corporation.
10.12 Facsimile signatures shall have the same legal effect as original signatures.
10.13 The Corporation shall pay the Executive’s reasonable legal fees incurred in connection with
the completion of this Agreement, not to exceed $6,000.
10.14 To the extent not preempted by federal law, the provisions of this Agreement will be
construed and enforced in accordance with the laws of the state of Ohio.
10.15 It is intended that the Agreement comply with Section 409A of the Code and the Treasury
Regulations promulgated thereunder (and any subsequent notices or guidance issued by
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the Internal Revenue Service), and the Agreement shall be interpreted, administered and operated
accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular
tax treatment to the Executive.
10.16 The Executive and the Corporation agree that this Agreement may be amended, by mutual
agreement, without any further consideration to the Executive, to the extent needed to avoid
penalties under Section 409A of the Code.
10.17 Notwithstanding anything to the contrary contained herein, the Corporation may
accelerate the time or schedule of a payment to the Executive at any time the Agreement fails to
meet the requirements of Section 409A of the Code and the Treasury Regulations promulgated
thereunder. Such payment may not exceed the amount required to be included in income as a result
of the failure to comply with the requirements of Section 409A of the Code and the Treasury
Regulations promulgated thereunder.
IN WITNESS WHEREOF, the Parties have executed this Agreement, as of January 8th, 2009.
FIRSTMERIT CORPORATION
By:
|
/s/ Xxxxxxxx X. Xxxxxx
|
Date signed: 01/08/2009 | ||||
Title:
|
Lead Director | |||||
| EXECUTIVE | ||||||
By:
|
/s/ Xxxx Xxxxx
|
Date signed: 01/08/2009 | ||||
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