FIRSTMERIT CORPORATION AMENDED AND RESTATED DISPLACEMENT AGREEMENT (GREIG)
Exhibit 10.29
THIS AGREEMENT (“Agreement”) originally was effective May 18, 2006 (“Effective Date”), by and
between FirstMerit Corporation, an Ohio corporation (the “Company”), and Xxxx X. Xxxxx, the
executive employee who has executed this Agreement (“Employee”). Effective as of this
8th day of January, 2009, the parties hereby amend and restate the Agreement (as
previously amended and restated from time to time) as set forth herein.
RECITALS:
A. The Employee serves as an executive and is considered a key corporate officer of the
Company or one of its affiliates.
B. The Board of Directors of the Company (“Board”) has determined that the interests of the
Company’s shareholders will be best served by ensuring that its key corporate officers will adhere
to the policies of the Board and senior management with respect to any merger, acquisition or like
transaction that does not result or involve a Change in Control of the Company.
C. The Board has also determined that it is in the best interests of the shareholders to
promote stability among key officers and employees, particularly during the period leading up to
and after a merger, acquisition or like transaction.
D. Employee and the Company may have previously entered into a Displacement Agreement, which
agreement is being replaced in its entirety by this Agreement and have also entered into a Change
in Control Termination Agreement which protects Employee in the circumstances of a termination of
employment following a Change in Control of the Company. If an event (or a series of events)
creates an entitlement under both the Change in Control Termination Agreement and this Agreement,
the Employee will not be entitled to be paid benefits under both this Agreement and the Change in
Control Termination Agreement but will be entitled to a benefit under this Agreement.
IN CONSIDERATION OF THE FOREGOING, the mutual covenants hereinafter contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the Company and the Employee
agree as follows:
1. Duties of Employee. In exchange for the compensation and benefits described in
this Agreement, the Employee agrees to discharge the obligations described in paragraph 9 and,
consistent with his duties to shareholders and other legal obligations, the Employee shall support
the position of the Board and the Company’s senior management and shall take any action reasonably
requested by the Board and the Company’s senior management with respect to any merger, acquisition
or like transaction not involving a Change in Control of the Company. The Employee agrees (on his
own behalf and in behalf of his heirs, assigns and beneficiaries) that the
compensation and benefits described in this Agreement are adequate consideration for the
obligations assumed in this Agreement.
2. Displacement and Change in Control.
(a) The term “Displacement” shall mean a merger, acquisition or like transaction where no
Change in Control of the Company has occurred.
For purposes of this Agreement, the entity resulting from a Displacement (including, if
appropriate, the Company) or succeeding to the Company’s interest in connection with a Displacement
is referred to as the “Displacement Entity.”
If more than one event that constitutes a Displacement occurs during a Protection Period (as
defined below), the Employee shall be entitled to the amount that equals the largest after-tax
amount generated by any of the Displacements.
If one or more events generate a payment under both this Agreement and the Change in Control
Termination Agreement, the Employee will be entitled only to the benefit described in this
Agreement, but will not be entitled to amounts under both agreements.
Notwithstanding any other provision of this Agreement, the Employee will not be entitled to
any amount under this Agreement if he acted in concert with any person or group (as defined above)
to effect a Displacement, other than at the specific direction of the Board and in his capacity as
an employee of the Company or any Subsidiary.
(b) The term “Change in Control” shall mean a “change in control” as defined in the Amended
and Restated Change in Control Termination Agreement effective as of the date hereof by and between
the Employee and the Company.
3. Company’s Right to Terminate. The entity with which the Employee has a direct
employment relationship (“Employer”) may terminate the Employee’s employment at any time during the
term of this Agreement, subject to the terms of this Agreement and the obligation to provide the
amounts stated herein if due. For purposes of this Agreement, any reference to the Employee’s
“termination” or “termination of employment” (or any form thereof) shall mean the Employee’s
“separation from service”, within the meaning of Section 409A of the Internal Revenue Code of 1986,
as amended (“Code”), from the Employer and all entities that, along with the Employer would be
treated as a single employer under Sections 414(b) and (c) of the Code.
4. Termination in Connection With a Displacement. In the event of termination of
employment from the Company or any Subsidiary after a Displacement, the Displacement Entity or any
Related Entity (i.e., any entity related to the Displacement Entity through common ownership as
determined under Sections 414 or 1563 of the Code): (including an involuntary termination while the
employee is absent from active employment pending determination of Disability under the procedures
described in paragraph 4(a)) within the Protection Period (i.e., the period beginning on the date
of the Displacement, even if that period begins before the Effective Date, and ending on the last
day of the number of calendar months specified in Item 10 on Exhibit A beginning coincident with or
immediately after a Displacement), the Employee shall be entitled to the benefits provided in
paragraph 6 unless such termination is because of the
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Employee’s death or determination of Disability (as described in paragraph 4(a)), for Cause,
or by the Employee other than for Good Reason.
(a) Disability. The term “Disability” shall mean termination because of Total and
Permanent Disability as defined in the Long-Term Disability Plan in effect at any time during the
Protection Period in which the Employee is or was participating when the condition began (or, if
the Employee is or was not participating in a Long-Term Disability Plan when the condition begins,
as defined under any long-term disability program in effect at any time during the Protection
Period). If the Employee is deemed Disabled, his date of termination will be the end of any period
prescribed under the long-term disability plan for determining eligibility for long term disability
benefits and any termination occurring before that date will not be a termination for Disability.
Also, any adjustment to the Employee’s compensation, job duties or other circumstances of
employment during the period his Disability is being established will not constitute a basis for
“Good Reason” under paragraph 4(c).
(b) Cause. The term “Cause” shall mean one or more of the following acts of the
Employee:
(i) any act of fraud, intentional misrepresentation, embezzlement, misappropriation or
conversion by the Employee of the assets or business opportunities of the Company or any
Subsidiary before a Displacement or, after a Displacement, the Displacement Entity or any
Related Entity;
(ii) conviction of the Employee of (or plea by the Employee 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 Employee of the
Employer’s written policies or procedures;
(iii) disclosure, other than through mere inadvertance, to unauthorized persons of any
Confidential Information (as defined below);
(iv) intentional breach of any contract with or violation of any legal obligation owed
to the Company or any Subsidiary before a Displacement or, after a Displacement, the
Displacement Entity or any Related Entity;
(v) dishonesty relating to the duties owed by the Employee to the Company or any
Subsidiary before a Displacement or, after a Displacement, the Displacement Entity or any
Related Entity;
(vi) the Employee’s (x) willful and continued refusal to substantially perform assigned
duties (other than any refusal attributable to an event that constitutes Good Reason, as
defined in paragraph (c)), (y) willful engagement in gross misconduct materially and
demonstrably injurious to the Company or any Subsidiary before a Displacement or, after a
Displacement, the Displacement Entity or any Related Entity or (z) breach of any term of
this Agreement; or
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(vii) any intentional cooperation with any party attempting to effect a Displacement
unless (y) the Board has approved or ratified that action before the Displacement or (z)
that cooperation is required by law.
However, Cause will not arise solely because the Employee is absent from active employment
during periods of vacation, consistent with the Employer’s applicable vacation 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
Employee and approved by the Employer.
The term “Confidential Information” shall mean any and all information (other than information
in the public domain) related to the Company’s, any Subsidiary’s, the Displacement Entity’s or any
Related Entity’s business, including all processes, inventions, trade secrets, computer programs,
technical data, drawings or designs, information concerning pricing and pricing policies, marketing
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.
(c) Good Reason. The term “Good Reason” shall mean any of the following to which the
Employee has not specifically consented in writing:
(i) at any time during the Protection Period, any breach of this Agreement (including
breach of the commitments undertaken under paragraph 9(d) of any nature whatsoever) by or on
behalf of the Company or any Subsidiary before a Displacement or, after a Displacement, the
Displacement Entity or any Related Entity;
(ii) at any time during the Protection Period, a reduction in the Employee’s title,
duties, responsibilities or status, as compared to either (y) the Employee’s title, duties,
responsibilities or status immediately before the beginning of the Protection Period or (z)
any enhanced or increased title, duties, responsibilities or status assigned to the Employee
during the Protection Period;
(iii) at any time during the Protection Period, the permanent assignment to the
Employee of duties that are inconsistent with (y) the Employee’s office immediately before
the beginning of the Protection Period or (z) any more senior office to which the Employee
is promoted during the Protection Period;
(iv) during any calendar year ending during the Protection Period (or any fractional
calendar year ending within the Protection Period), a 15 percent (or larger) reduction
(other than a reduction that is attributable to any termination for death, after reaching
age 65 (but only if the Employee is then entitled to an immediate, unreduced benefit under a
deferred compensation plan described in Section 401(a) of the Code), Disability or Cause,
voluntary termination by the Employee other than for Good Reason or for any period of
temporary absence protected by law or initiated by the Employee and approved by the
Employer) in the aggregate value of the highest of the Employee’s total compensation for the
calendar year ending before the Date of Termination, as determined under paragraph 5
(including base salary, cash bonus potential (as distinguished from the
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cash bonus earned), the value of employee benefits, other than value associated solely
with the performance of investments the Employee controls, and fringe benefits but excluding
compensation attributable to the exercise or liquidation of stock options) or, if higher,
the Employee’s total compensation for the last calendar year ending before the beginning of
the Protection Period (including base salary, cash bonus potential, the value of employee
benefits, other than value associated solely with the performance of investments the
Employee controls, and fringe benefits) but, in both cases, determined without regard to any
amounts, paid or payable, under paragraphs 6, 7, 8 and 11;
(v) at any time during the Protection Period, a requirement that the Employee relocate
to a principal office or worksite (or accept indefinite assignment) to a location more than
50 miles distant from (y) the principal office or worksite to which the Employee was
assigned immediately before the beginning of the Protection Period or (z) any location to
which the Employee agreed, in writing, to be assigned after a Displacement;
(vi) at any time during the Protection Period, the imposition on the Employee of
business travel obligations substantially greater than the Employee’s business travel
obligations during the 12-consecutive-calendar-month period ending immediately before the
beginning of the Protection Period but determined without regard to any special business
travel obligations associated with activities relating to the Displacement;
(vii) at any time during the Protection Period, the Employer’s (u) 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 Employee is participating (or was eligible to participate)
immediately before the beginning of the Protection Period, (v) modification of any of the
plans or programs just described that adversely affects the potential value of the
Employee’s benefits under those plans (other than value associated solely with the
performance of investments the Employee controls) or (w) failure to provide the Employee,
after a Displacement, with the same number of paid vacation days to which the Employee is or
becomes entitled at or anytime during the Protection Period under the terms of the
Employer’s vacation policy or program. However, Good Reason will not arise under this
subsection solely because (x) the Company or any Subsidiary before a Displacement or, after
a Displacement, the Displacement Entity or any Related Entity terminates or modifies any
such program during the Protection Period solely to comply with applicable law but only to
the extent required to meet applicable legal standards, (y) a plan or benefit program
expires under self-executing terms contained in that plan or benefit program before the
Displacement or (z) the Company or any Subsidiary before a Displacement or, after a
Displacement, the Displacement Entity or any Related Entity replaces a plan or program with
a successor plan or program of equal or equivalent value to the Employee;
(viii) for the duration of any period of any absence from active employment that begins
or continues at any time during the Protection Period, failure to provide or continue for
the Employee any benefits (including disability benefits)
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available to employees who are absent from active employment (including because of
disability) under programs maintained by the Company, a Subsidiary, the Displacement Entity
or any Related Entity on the date the absence (including disability) begins;
(ix) during the Protection Period, the Employee is unable to perform normally assigned
duties because of a physical or mental condition and before his Disability is established
under paragraph 4(a), the Company or any Subsidiary before a Displacement or, after a
Displacement, the Displacement Entity or any Related Entity terminates the Employee before
the end of the Disability determination period described in paragraph 4(a);
(x) during the Protection Period, the Company or any Subsidiary before a Displacement
or, after a Displacement, the Displacement Entity or any Related Entity unsuccessfully
attempts to terminate the Employee for Cause, in which case the Effective Period will not
end earlier than 60 days after the conclusion of the Employer’s unsuccessful attempt to
terminate the Employee for Cause;
(xi) during the Protection Period, the Employer attempts to amend or terminate this
Agreement without regard to the procedures described in paragraphs 10 or 13;
(xii) failure at any time to obtain an assumption of the Company’s or any Subsidiary’s,
before a Displacement, or, after a Displacement, the Displacement Entity’s or any Related
Entity’s obligations under this Agreement by any successor to any of them, regardless of
whether such entity becomes a successor to the Company or any Subsidiary, before a
Displacement, or, after a Displacement, the Displacement Entity or any Related Entity as a
result of a merger, consolidation, sale of assets or any other form of reorganization; or
(xiii) termination of employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph 5 herein.
5. Notice of Termination. Any purported termination of the Employee’s employment
shall be communicated by a written Notice of Termination to the other party delivered no later than
60 days after the Employee, in the case of Good Reason, or, in other cases, the Displacement Entity
and any Related Entity, knows or with reasonable diligence should have known of the event
constituting Good Reason, Cause or Disability. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the specific termination provisions in this
Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee’s employment under the provisions so indicated and
shall specify a “Date of Termination”, However, the Date of Termination specified in the notice:
(a) In the case of a termination because of Disability, will be no earlier than the end of the
disability determination period described in Paragraph 4(a);
(b) In the case of a termination for Cause, on the Date of Termination specified in the Notice
of Termination (which may not be earlier than the date on which the condition
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constituting Cause occurred), unless, within 30 days after the date the Notice of Termination
for Cause is delivered to the Employee, the Employee corrects to the reasonable satisfaction of the
Employer the condition specified in the Notice of Termination for Cause as the basis for the
termination, in which case the Notice of Termination will be deemed to have been withdrawn and will
be of no effect;
(c) In the case of a termination for Good Reason, on the Date of Termination specified in the
Notice of Termination (which may not be earlier than the day before the event constituting Good
Reason occurred), unless, within 30 days after the date the Notice of Termination for Good Reason
is delivered (even if this 30 day period extends beyond the term as defined in Paragraph 10), the
Employer corrects to the reasonable satisfaction of the Employee the condition specified in the
Notice of Termination for Good Reason as the basis for the termination, in which case the Notice of
Termination will be deemed to have been withdrawn and will be of no effect; and
(d) in all other cases, the date the Notice of Termination is delivered.
Notwithstanding the foregoing, the Date of Termination shall be date of the Employee’s
termination of employment, if earlier than the Date of Termination specified above.
6. Compensation and Benefits Upon Termination.
(a) If a Displacement has occurred and during the Protection Period the Employee’s employment
is terminated (i) by the Employer other than for Cause, Disability or death, or (ii) by the
Employee for Good Reason, the Employee shall be entitled to (and each of the Displacement Entity
and all Related Entities shall be jointly liable for) the compensation and benefits provided in
subparagraph (c) below.
(b) The compensation described in subparagraphs (c)(i), (c)(ii) and (c)(iii) shall be paid by
the Displacement Entity or the Employer (or jointly by them) to the Employee as follows: (A) if the
termination is described in paragraph 6(a)(i), as described in Sections 5.03[2][a], [c] and [d] of
the Amended and Restated Employment Agreement by and between FirstMerit Corporation and Xxxx Xxxxx
effective January 17, 2008 (“Employment Agreement”), as applicable; and (B) if the termination is
described in paragraph 6(a)(ii), as described in Sections 5.05[2][a], [c] and [d] of the Employment
Agreement, as applicable. The compensation and benefits described in subparagraphs (c)(iv),
(c)(v), (c)(vi) and (c)(vii) will be paid as provided in those subparagraphs.
(c) The compensation and benefits payable to an Employee pursuant to this paragraph 6 shall be
as follows:
(i) Base Salary to Date of Termination. The Employee’s full base salary through the
Date of Termination.
(ii) Base Salary. An amount equal to the Employee’s annual base salary (at the highest
annualized rate in effect at any time during the Protection Period) multiplied by the number
indicated in Item 6(c)(ii) on Exhibit A, which Exhibit is attached hereto and incorporated
by reference herein.
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(iii) Incentive Compensation. An amount equal to (y) the value of the incentive
compensation payment the Employee would receive if payout was made at the “target”
percentage for the Employee under the Company’s Executive Incentive Plan (and/or any
analogous plan adopted after the date of this Agreement) for the year of the Employee’s Date
of Termination (or any higher percentage based on objective criteria specified in the
Executive Incentive Compensation Plan for the year in which the Date of Termination occurs
and/or any analogous plan adopted after the date of this Agreement that the Employee has
achieved before the Date of Termination) or, if higher, the value of any incentive
compensation payment received by the Employee under the Company’s Executive Incentive Plan
(and/or any analogous plan adopted after the date of this Agreement) at any time during the
Protection Period multiplied by (z) the number indicated in Item 6(c)(iii) on Exhibit A.
(iv) Stock Plans. The Employee’s outstanding stock options, restricted stock, and
other stock, phantom stock, stock appreciation rights or similar arrangements in which he
participates, whether issued before, in connection with or after the Displacement will be
fully vested and exercisable and settled in accordance with the terms of the applicable plan
or plans. Notwithstanding any provisions to the effect that rights terminate upon
termination of employment, the Employee (or his beneficiary) shall be given the longer of 90
days after the Date of Termination, or the remaining period provided in the grant
(determined without regard to the Employee’s termination), to realize or exercise all rights
or options provided under such plans with respect to any stock option, and other stock,
phantom stock, stock appreciation rights or similar grants.
(v) Medical Benefits and Life Insurance. The Employer or the Displacement Entity shall
maintain in full force and effect for the Employee’s (and for his family if family coverage
is then in effect) continued benefit until the earlier of the number of months listed in
Item 6(c)(v) on Exhibit A after the Date of Termination, or the end of the calendar month in
which the Employee reaches the age of 67, all medical insurance (including health care,
dental and prescription drug insurance), life insurance, and accidental death and
dismemberment insurance including conversion rights (collectively “Welfare Benefits”), with
coverage and limits, separately for each Welfare Benefit and in the aggregate, identical to
those in effect with respect to the Employee (including family coverage if family coverage
is then in effect), immediately before the Date of Termination or, if higher (both
separately and in the aggregate) at any time during the Protection Period. If the Employer
or the Displacement Entity is unable to provide some or all of the Welfare Benefits through
its insured program for the duration of the period described in the first sentence of this
paragraph, the Employer or the Displacement Entity will distribute to the Employee a lump
sum cash amount equal to the highest aggregate premium amount paid during the Protection
Period with respect to the Welfare Benefit it is unable to provide through its insured
programs multiplied by the number of whole and fractional premium periods for which it is
unable to provide this coverage through its insured program, plus an additional amount equal
to the Premium Tax Obligation (as defined below)(“Benefit Cashout”). If the Employee is a
participant in the Company’s Executive Life Insurance Program (and/or any analogous plan
adopted after the date of this Agreement) on the Date of Termination, the Displacement
Entity and/or the Employer shall pay the premium for the Employee on such insurance for a
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period ending the earlier of the number of months listed in Item 6(c)(v) on Exhibit A
after the Date of Termination, or the calendar month in which the Employee reaches the age
of 67, plus an additional amount to the Employee equal to the Premium Tax Obligation. For
the sole purpose of determining the Employee’s eligibility to participate in the Company’s
Welfare Benefit programs, the Employee shall be considered to be on a paid leave of absence
as long as he is receiving benefits under this Agreement.
The term “Premium Tax Obligation” shall mean an additional cash amount equal to all
applicable federal, state and local, income, wage, employment and excise taxes (including
those imposable under Code § 4999) so that, after payment of all taxes due on the cash
payments described in this subparagraph (c)(v) (i.e., the cash equivalent of the premiums
needed to provide the Welfare Benefits the Displacement Entity and/or the Company are unable
to provide through their insured programs), the Employee will retain cash equal to the
highest aggregate premium amount paid during the Protection Period with respect to the
Welfare Benefit it is unable to provide through its insured programs multiplied by the
number of whole and fractional premium periods for which it is unable to provide this
coverage through its insured program.
Notwithstanding the foregoing, (A) any amounts or benefits that will be paid or
provided under this subparagraph with respect to health or dental coverage after completion
of the time period described in Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any other
amounts or benefits that will be paid or provided under this subparagraph shall be subject
to the following requirements: (1) the amount of expenses eligible for reimbursement or
benefits provided during any taxable year of the Employee may not affect the expenses
eligible for reimbursement or benefits to be provided in any other taxable year of the
Employee; (2) any reimbursement of an eligible expense shall be made on or before the last
day of the taxable year of the Employee following the taxable year of the Employee in which
the expense was incurred; and (3) the right to such reimbursement or benefit may not be
subject to liquidation or exchange for another benefit; provided, however, that the Benefit
Cashout shall be made within five days following the date of the Employee’s termination.
(vi) Supplemental Executive Retirement Plan. The following shall apply for purposes of
calculating the Employee’s benefits, if applicable, under the FirstMerit Corporation Amended
and Restated Supplemental Executive Retirement Plan, originally effective on February 13,
1987 and amended and restated effective of as November 20, 2008, and as maybe amended from
time to time, and/or any other nonqualified plan of deferred compensation in effect during
the Protection Period (the “SERP”): the Employee’s Average Monthly Earnings for purposes of
the SERP shall be deemed to be equal to the total of the highest monthly base salary earned
by the Employee during the 24 months immediately preceding the Displacement and the value of
the incentive compensation payment the Employee would receive if payout was made at the
“target” percentage for the Employee under the Company’s Executive Incentive Plan (and/or
any analogous plan adopted after the date of this Agreement) in the year of the Employee’s
Date of Termination (or any higher percentage based on objective criteria specified in the
Incentive Compensation Plan for the year in which the Date of Termination occurs and/or any
analogous plan adopted after the date of this Agreement)
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that the Employee has achieved before the Date of Termination in the year of Employee’s
Date of Termination divided by 12.
The terms of this subparagraph (vi) shall apply only if the Employee is a participant
in the SERP, and shall supersede any contrary provisions of the SERP and any membership
agreement executed between the Company and the Employee in connection with the Employee’s
participation in the SERP, unless expressly provided otherwise in such membership agreement.
The Employee’s SERP benefit, calculated using the provisions of subparagraph (vi) above, is
assumed to commence on the earliest date upon which the Employee is eligible to retire under
the SERP for purposes of determining the Actuarial Equivalent (as defined in the SERP) of
such benefit.
If the SERP is terminated and the Employee cites that termination as a basis for Good
Reason termination, the benefits due under this subparagraph will be calculated as if the
SERP had not been terminated.
(vii) Outplacement Fees. For a period not to exceed one year after the Date of
Termination, the Displacement Entity, the Employer or any Related Entity will pay directly
to the provider the reasonable expenses associated with outplacement training of the
Employee by a professional placement firm and in an amount not to exceed that listed as Item
6(c)(vii) on Exhibit A.
(viii) The additional consideration described in Section 5.03[2][e] and [f] or Section
5.05[2][e] and [f] of the Employment Agreement (or any successor agreement) in exchange for
a continuation of the obligations described in Article 6 (or any successor section of
similar effect) therein.
(d) Notwithstanding anything in this Agreement to the contrary, if the Employee is a
“specified employee” (within the meaning of Section 409A of the Code and as determined under
the relevant entity’s policy for determining specified employees), on the Employee’s date of
termination and the Employee is entitled to a payment and/or a benefit under this Agreement
that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code, then such
payment or benefit, as the case may be, shall not be paid or provided (or begin to be paid
or provided) until the first business day of the seventh month following the date of the
Employee’s termination of employment (or, if earlier, the date of the Employee’s death).
The first payment that can be made to the Employee following such postponement period shall
include the cumulative amount of any payments or benefits that could not be paid or provided
during such postponement period due to the application of Section 409A(a)(2)(B)(i) of the
Code.
7. Overall Limitation on Benefits. Notwithstanding any provision in this Agreement to
the contrary (other than paragraphs 6(c)(v), 8 and 11 which will apply under the circumstances
described in those paragraphs and below), if, as of the date of the Displacement, the Displacement
Entity (after consulting with an independent accounting or compensation consulting company)
ascertains that the compensation and benefits provided to the Employee pursuant to or under this
Agreement, either alone or when combined with other compensation and benefits received by the
Employee, would constitute “parachute payments” within the
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meaning of Section 280G of the Code, or the regulations adopted thereunder, then the Employee
will be entitled to a “full gross up” in an amount sufficient to ensure that, after payment of the
taxes (including those attributable to the gross up) the Employee will retain an after tax amount
equal to the amount he would have retained had no tax arisen under Section 4999 of the Code. Any
gross up pursuant to this paragraph 7 shall be paid no later than the end of the taxable year
following the year in which the Employee remits the taxes being grossed-up.
8. Legal, Etc. Fees. The Displacement Entity shall pay all reasonable legal,
accounting and actuarial fees and expenses incurred by the Employee or the Employee’s estate in
enforcing any right or benefit provided by this Agreement. If it is subsequently determined that
payment of these fees are parachute payments, the Displacement Entity or the Employer will fully
gross-up the Employee or the Employee’s estate for the income, wage, employment and excise taxes
associated with that payment so that, after all applicable federal, state and local, income, wage,
employment and excise taxes (plus any assessed interest and penalties), the Employee or the
Employee’s estate will have incurred no liability (either for these fees or the taxes just listed)
with respect to the matters encompassed in this paragraph. Any legal, accounting and actuarial fees
and expenses being reimbursed must relate to a claim brought during the lifetime of the Employee or
the duration of the Employee’s estate arising from the alleged breach of any obligation of Employer
under this Agreement and the reimbursement or payment is subject to the following: (a) the amount
eligible for reimbursement during any taxable year of the Employee or the Employee’s estate may not
affect the amount eligible for reimbursement in any other taxable year of the Employee or the
Employee’s estate; (b) any reimbursement must be made on or before the last day of the Employee’s
of the Employee’s estate’s taxable year following the taxable year in which the cost was incurred;
and (c) the right to reimbursement for such costs may not be subject to liquidation or exchange for
another benefit. Any gross-up payment of taxes shall be made by the end of the taxable year
following the year in which the Employee or the Employee’s estate remits the taxes being
grossed-up.
9. Obligations. By signing this Agreement, the Employee agrees to be bound by and to
comply with the following restrictions, whether or not the Employee also receives the compensation
and benefits described in paragraph 6.
(a) If any “person” (as used in paragraph 2(b)) initiates a tender or exchange offer,
distributes proxy materials to the Company’s shareholders or takes other steps to effect, or that
may result in, a Displacement, the Employee agrees not to terminate employment voluntarily during
the pendency of that activity (other than by reason of termination after reaching retirement age or
Disability or for Good Reason) and to continue to serve as a full-time employee until those efforts
are abandoned, that activity is terminated or until a Displacement has occurred.
(b) Except as otherwise required by applicable law, the Employee expressly agrees to keep and
maintain Confidential Information (as defined in paragraph 4(b)) confidential and not, at any time
during or subsequent to the Employee’s employment, to use any Confidential Information for the
Employee’s own benefit or to divulge, disclose or communicate any Confidential Information to any
person or entity in any manner except (i) to employees or agents of the Company, any Subsidiary,
the Displacement Entity and any Related Entity that need the Confidential Information to perform
their duties on behalf of the Company, any Subsidiary, the Displacement Entity and any Related
Entity, (ii) in the performance of Employee’s duties, (iii) as
11
a necessary (and only to the extent necessary) part of any undertaking by the Employee to
enforce the Employee’s rights under this Agreement or (iv) pursuant to a subpoena. The Employee
also agrees to notify the Company, before a Displacement and, after a Displacement, the
Displacement Entity promptly of any circumstance the Employee believes may legally compel the
disclosure of Confidential Information and to give this notice before disclosing any Confidential
Information.
(c) The Employee agrees that during and after employment and without additional compensation
(other than reimbursement for reasonable associated expenses, which shall be made consistent with
the Employer’s normal policy relating to the reimbursement of expenses) to cooperate with the
Company, any Subsidiary, the Displacement Entity and any Related Entity in the following areas:
(i) the Employee agrees (w) to be reasonably available to answer questions for the Company’s,
any Subsidiary’s, the Displacement Entity’s and any Related Entity’s officers regarding any matter,
project, initiative or effort for which the Employee was responsible while employed by the Employer
and (x) to cooperate with the Company, any Subsidiary, the Displacement Entity and any Related
Entity during the course of all third-party proceedings arising out of the Company’s, any
Subsidiary’s, the Displacement Entity’s or any Related Entity’s business about which the Employee
has knowledge or information. For purposes of this Agreement, (y) “proceedings” includes internal
investigations, administrative investigations or proceedings and lawsuits (including pre-trial
discovery and trial testimony) and (z) “cooperation” includes the Employee’s being reasonably
available for interviews, meetings, depositions, hearings and/or trials without the need for
subpoena or assurances by the Company, any Subsidiary, the Displacement Entity or any Related
Entity providing any and all documents in the Employee’s possession that relate to the proceeding
and providing assistance in locating any and all relevant notes and/or documents.
(ii) unless compelled to do so by lawfully-served subpoena or court order, the Employee agrees
not to communicate with, or give statements or testimony to, any attorney representing an interest
opposed to the Company’s, any Subsidiary’s, the Displacement Entity’s or any Related Entity’s
interest (“Opposing Attorney”), Opposing Attorney’s representative (including private
investigators) or current or former employee relating to any matter (including pending or
threatened lawsuits or administrative investigations) about which the Employee has knowledge or
information (other than knowledge or information that is not Confidential Information as defined in
paragraph 4(b)) as a result of employment with the Company, any Subsidiary, the Displacement Entity
or any Related Entity. The Employee also agrees to notify the Employer after being contacted by a
third party or receiving a subpoena or court order to appear and testify with respect to any matter
that may include a claim opposed to the Company’s, any Subsidiary’s, the Displacement Entity’s or
any Related Entity’s interest. However, this subsection will not apply to any effort undertaken by
the Employee to enforce the Employee’s rights under this Agreement but only to the extent necessary
for that purpose.
(iii) the Employee agrees not to communicate with, or give statements to, any member of the
media (including print, television or radio media) relating to any matter (including pending or
threatened lawsuits or administrative investigations) about which the Employee has knowledge or
information (other than knowledge or information that is not Confidential
12
Information as defined in paragraph 4(b)) as a result of employment with the Company or a
Subsidiary, before a Displacement, or, after a Displacement, the Displacement Entity or a Related
Entity immediately after being contacted by any member of the media with respect to any matter
affected by this section.
(d) The Employee, the Company, any Subsidiary, the Displacement Entity and any Related Entity
agree that none will make any disparaging remarks about the others. However, this restriction will
not preclude (i) remarks by any employee made in the normal course of business, (ii) remarks by the
Employee that are required to discharge the Employee’s regular duties or other duties described in
this Agreement, (iii) the Company, any Subsidiary, the Displacement Entity or any Related Entity
from making (or eliciting from any person) disparaging remarks about the Employee concerning any
conduct that may lead to a termination for Cause (including initiating an inquiry or investigation
that may result in a termination for Cause), but only to the extent reasonably necessary to
investigate the Employee’s conduct and to protect the Company’s, any Subsidiary’s, the Displacement
Entity’s and any Related Entity’s interests or (iv) any remarks made by any party that are
necessary (but only to the extent necessary) to resolve any dispute arising under this Agreement
and that are made solely in the context of proceeding undertaken pursuant to paragraph 11.
(e) If the Employee breaches any obligation described in this Agreement:
(i) If that breach occurs before a Displacement, this Agreement will terminate as of the date
of the breach, even if the fact of the breach becomes apparent at a later date and no amounts will
be due under this Agreement;
(ii) If that breach occurs after a Displacement but before the Employee has terminated, this
Agreement will terminate as of the date of the breach, even if the fact of the breach becomes
apparent at a later date, and no amounts will be due under this Agreement; or
(iii) If that breach occurs after a Displacement and after the Employee terminates employment,
(y) the Displacement Entity will be entitled to treat the Employee as having terminated for Cause
and (z) the Employee will repay the amounts already received in paragraph 6 plus interest
calculated with reference to the mid-term applicable federal rate [as defined in Section 1274(d) of
the Code] for January 1 of each calendar year, compounded annually until paid and will be entitled
to no further amounts under this Agreement.
10. Term of Agreement. The Term of this Agreement shall be from the Effective Date through
the last day of the calendar month which is the number of months listed in Item 10 on Exhibit A
beginning after a Displacement. Nevertheless, this Agreement will terminate on the earliest of the
following to occur:
(a) Except as provided in paragraph 6, the Employee’s employment with the Company or any
Subsidiary, before a Displacement, or, after a Displacement, the Displacement Entity or any Related
Entity terminates before the beginning of the Protection Period;
(b) Before the beginning of a Protection Period, the Employee is reassigned to a more junior
position than that held on the date of this Agreement; however, if the more junior position is in
an employee classification, the majority of whose members have displacement
13
agreements (or analogous agreements, other than a Change in Control Termination Agreement),
this Agreement will remain in effect, although benefit levels will automatically be adjusted to the
level established under those agreements;
(c) The Employee mutually agrees, in writing, to terminate this Agreement, whether or not it
is replaced with a similar agreement;
(d) The Company notifies the Employee, in writing, that the Agreement is to terminate at the
end of its then current term. To be effective, however, this written notice (i) must be given no
later than 60 consecutive calendar days before the end of the then current term but (ii) may never
be effective during a Protection Period, although a notice of termination of this Agreement given
during the portion of the Protection Period before a Displacement may be effective if a
Displacement does not occur; or
(e) All payments due under this Agreement have been fully paid.
However this Agreement will not terminate if, before the beginning of or during a Protection
Period, the Employee is reassigned to a more senior position than that held on the date of this
Agreement. In this case, the Agreement will remain in effect, although the benefit levels will
automatically be adjusted to the level established for other employees assigned to that
classification or, if there is no other employee in that classification, to the highest level in
effect under this Agreement.
11. Dispute Resolution. Any disagreement concerning the calculation of any payment
due under this Agreement that is not resolved by agreement between the parties (or by the
independent accounting or compensation consulting company described in paragraph 7 with reference
to matters described in that paragraph) or other dispute or controversy arising out of or relating
to this Agreement that is not resolved by agreement between the parties, including the basis on
which the Employee’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 Company, before a Displacement, or, after a Displacement, the Displacement Entity and the
Employee. If the Employee and the Company, before a Displacement, or, after a Displacement, the
Displacement Entity 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 (or other geographical area acceptable to the parties).
The Company, before a Displacement, or, after a Displacement, the Displacement Entity will
bear all reasonable costs associated with any dispute arising under this Agreement, including
reasonable accounting and legal fees incurred by the Employee in connection with the arbitration
proceedings just described. If it is subsequently determined that payment of these costs are
parachute payments, the Company, before a Displacement, or, after a Displacement, the
14
Displacement Entity will fully gross-up the Employee for the income, wage, employment and
excise taxes associated with that payment so that, after all applicable federal, state and local,
income, wage, employment and excise taxes (plus any assessed interest and penalties), the Employee
will have incurred no liability (either for these fees or the taxes just listed) with respect to
the matters encompassed in this paragraph 11. The treatment of payments or reimbursements and
gross-ups pursuant to this paragraph are described in paragraph 8.
If otherwise due, payments not being contested under the procedures described in this
paragraph will not be deferred during the pendency of procedures described in this paragraph.
If the arbitrator decides, at the conclusion of the arbitration proceedings described in this
paragraph, that the Company, before a Displacement, or, after a Displacement, the Displacement
Entity has understated the amount due under this Agreement, the Company, before a Displacement, or,
after a Displacement, the Displacement Entity will, subject to application of paragraph 7 to the
aggregate of the amount initially paid under paragraph 6 and the additional award, pay the
additional amount, if any, to the Employee within 30 days after the date of the award along with
interest calculated at the interest rate prescribed by the arbitrator. However, if, after
application of paragraph 7 to the arbitrator’s award, the net amount due to the Employee would not
increase, no amounts will be paid under this subsection, regardless of the arbitrator’s award.
12. Notice. For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return receipt requested, postage prepaid,
provided that all notices to the Company or any Subsidiary, before a Displacement, or, after a
Displacement, the Displacement Entity, the Employer or any Related Entity shall be directed to the
attention of the President of the Company with a copy to the Secretary of the Company, before a
Displacement or, after a Displacement, to the President of the Displacement Entity with a copy to
the Secretary of the Displacement Entity (or, in the case of the President, directed to the notice
of the Chairman of the Board of the Company, before a Displacement, or, after a Displacement, to
the Chairman of the board of directors of the Displacement Entity with a copy to the Secretary of
the Displacement Entity), 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 receipt. If the last address given by the Employee is not current, the Employer will use
reasonable means to locate the Employee.
13. Miscellaneous.
(a) No provisions of this Agreement may be modified, waived, or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by the Employee and such officer as
may be specifically designated by the Board or the board of directors of the Displacement Entity.
No waiver by either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar provisions or conditions at the same or at any prior or
subsequent time.
15
(b) This Agreement is intended to replace and supersede the existing Displacement Agreement
between the Company and the Employee, which prior agreement shall become invalid as of the date of
signing this Agreement; provided, however, that nothing in the foregoing is intended to replace or
supersede any provision of the Employment Agreement or any other agreement between the Employee and
the Company to the extent not inconsistent herewith. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement; provided, however, that this Agreement
shall not supersede or in any way limit the rights, duties or obligations the Employee may have
under any other written agreement with the Company or any Subsidiary, the Displacement Entity, the
Employer or any Related Entity that are not inconsistent with the terms of this Agreement.
(c) Except as expressly provided in this Agreement, the Employee’s right to receive the
payments described in this Agreement will not decrease the amount of, or otherwise adversely
affect, any other benefits payable to the Employee under any other plan, agreement or arrangement.
(d) The Employee is not required to mitigate the amount of any payment described in this
Agreement by seeking other employment or otherwise, nor will the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation or benefits the Employee earns, or is
entitled to receive, in any capacity after termination or by reason of the Employee’s receipt of or
right to receive any retirement or other benefits attributable to employment.
(e) Except as expressly provided elsewhere in this Agreement, the amount of any payment made
under this Agreement will be reduced by amounts the Employer is required to withhold in payment (or
in anticipation of payment) of any income, wage or employment taxes imposed on the payment.
(f) The right of an Employee or any other person to receive any amount under this Agreement
may not be assigned, transferred, pledged or encumbered except by will or by applicable laws of
descent and distribution. Any attempt to assign, transfer, pledge or encumber any amount that is
or may be receivable under this Agreement will be null and void and of no legal effect. However,
this paragraph will not preclude payment under paragraph 13(g) of any benefit to which a deceased
Employee is entitled.
(g) Subject to the preceding subparagraph (f), this Agreement inures to the benefit of and may
be enforced by the Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
(h) If:
(i) the Employee’s employment relationship shifts between the Company and any
Subsidiary before a Displacement or after a Displacement, between the Displacement Entity
and any Related Entity and there has been no intervening termination, this Agreement will
remain in full force and effect and for all purposes of
16
this Agreement, the Employee’s new employer will be substituted for the Employee’s
prior employer.
(ii) the Employee’s employer is no longer a Subsidiary, whether or not as part of a
transaction that constitutes a Displacement, this Agreement will remain in full force and
effect. However, the Employee will not be entitled to any amount under this Agreement on
account of a Displacement that solely affects the Company after that transfer and is not
part of the same transaction through which the employer stopped being a Subsidiary.
14. Validity. The validity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws (other than the laws of conflict of laws) of the
State of Ohio.
15. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original by all of which together will constitute one and the same
instrument.
16. Section 409A of the Code. This Agreement is intended to comply with the
requirements of Section 409A of the Code, and, to the maximum extent permitted by law, shall be
interpreted, construed and administered consistent with this intent. None of the Company, the
Employer, any Related Entity, the Change Entity, the Board or any other person shall have liability
in the event this Agreement fails to comply with the requirements of Section 409A of the Code.
Nothing in this Agreement shall be construed as the guarantee of any particular tax treatment to
the Employee.
[signature page attached]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date above first
written.
| FirstMerit Corporation |
||||
| By: | /s/ Xxxxxxxxxxx X. Xxxxxx | |||
| Xxxxxxxxxxx X. Xxxxxx, | ||||
| Executive Vice President | ||||
| Employee: |
||||
| /s/ Xxxx X. Xxxxx | ||||
| (Signature) | ||||
| Xxxx X. Xxxxx | ||||
| (Print Name) | ||||
18
Exhibit A
| Name of Executive: | Xxxx X. Xxxxx | |||
Item 6(c)(ii): Multiplied By: |
1.0 | |||
Item 6(c)(iii): Multiplied By: |
1.0 | |||
Item 6(c)(v): |
36 | |||
Item 6(c)(vii): Outplacement Fee: |
$ | 35,000 | ||
Item 10 |
36 | |||
19
