RETIREMENT AGREEMENT BY AND BETWEEN FIRSTMERIT CORPORATION AND ROBERT P. BRECHT
Exhibit 10.39
This Retirement Agreement (“Agreement”) is entered into by FirstMerit Corporation (“Corporation”),
an Ohio corporation, and Xxxxxx X. Xxxxxx (“Xx. Xxxxxx”), collectively, the “Parties,” to describe
the terms and conditions of Xx. Xxxxxx’x retirement and separation of employment with the
Corporation.
ARTICLE 1 EFFECTIVE DATE OF AGREEMENT
This Agreement will become effective as defined in Section 8.03[4].
ARTICLE 2 RESIGNATION AND RETIREMENT
2.01 Resignation and Retirement. Xx. Xxxxxx agrees:
[1] Effective as of the January 31, 2007, [a] to resign as Senior Executive Vice President
of Retail of the Corporation and [b] to resign as a member of the FirstMerit Bank, N.A.
Board of Directors,
[2] Effective as of January 31, 2007, to resign as an employee of the Corporation and any
other entity that is related through common ownership to the Corporation (all entities
related through common ownership to the Corporation are called “Group Members” and the
Corporation and all Group Members collectively are called the “Group”).
ARTICLE 3 CONSIDERATION
Xx. Xxxxxx agrees that he will comply with the terms of this Agreement and will voluntarily
terminate his employment because of retirement on January 31, 2007 (“Termination Date”), and his
retirement will commence effective February 1, 2007. In exchange, but subject to Xx. Xxxxxx’x
execution and non-revocation of a general release, and any restrictions imposed under Section 409A
of the Internal Revenue Code of 1986, as amended (“Code”), and to the terms of this section, Xx.
Xxxxxx will receive the payments and benefits described in this section.
Beginning on February 1, 2007:
3.01 Separation Pay. The Corporation will pay to Xx. Xxxxxx a “Separation Pay” in the amount of
Three Hundred One Thousand Two Hundred Seventeen Dollars ($301,217.00), and
paid in semi-monthly installments that correspond with the Corporation’s normal payroll practices.
The first payment will be paid on February 15, 2007. The final payment will be made on December
31, 2007.
3.02 Incentive Compensation. The Corporation will pay Xx. Xxxxxx the amount of Fifty Thousand
Dollars ($50,000.00) as incentive compensation for the year 2006. Xx. Xxxxxx will not be eligible
to receive any other incentive compensation payments. This payment will be be paid no later than
30 days after the Termination Date.
3.30 Equity Awards. The vesting, ability to exercise and lapsing of any restrictions of Xx.
Xxxxxx’x outstanding equity awards will be determined in accordance with and to the extent provided
under the terms relating to terminations of employment for similar reasons contained in the plan
and the award agreements through which they were granted.
3.04 Life Insurance. The Corporation will continue to pay the premiums on behalf of Xx. Xxxxxx
for the Executive Life Insurance Policy until such time as the policy cash value and dividends are
estimated to be sufficient to pay future premiums for Xx. Xxxxxx’x life expectancy, based upon the
current dividend scale or, if earlier, the date of Xx. Xxxxxx’x death. In addition, the
Corporation will pay Xx. Xxxxxx an amount equal to 40 percent of the premium on or about the date
the premium is paid. Xx. Xxxxxx will be responsible for the payment of all taxes associated with
the payment of the premiums.
3.05 Tax Preparation. The Corporation will reimburse Xx. Xxxxxx an amount not to exceed $750.00
for income tax preparation fees in accordance with the policies of the Corporation applicable to
all of its executives for the 2006 tax year. This amount shall be paid prior to December 31, 2007.
3.06 Medical Coverage. Until Xx. Xxxxxx attains the age of 65, he will be eligible to participate
in the FirstMerit group health coverage for retirees after the Termination Date in accordance the
FirstMerit Retiree Medical Plan. After Xx. Xxxxxx reaches age 65 and until his death, Xx. Xxxxxx
will be eligible to apply for coverage under the Hartford Group Retirement Insurance Plan (“Retiree
Medical Program”), or a health care plan consistent with the coverage available under the Retiree
Medical Program as provided to FirstMerit Retirees generally. Xx. Xxxxxx will pay the full cost
under the Retiree Medical Program.
3.07 Retirement Plan Benefits. Xx. Xxxxxx (or, if applicable, his beneficiary) will be entitled to
all benefits he has accrued through the Termination Date under:
[a] The FirstMerit Corporation and Affiliates Employees’ Salary Savings Retirement
Plan.
[b] The Pension Plan for Employees of FirstMerit Corporation and Subsidiaries.
[c] The FirstMerit Corporation Unfunded Supplemental Benefit Plan.
[d] The FirstMerit Corporation Executive Supplemental Retirement Plan.
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3.08 Unused and Accrued Paid Days Off. Xx. Xxxxxx will not be paid for any accrued and unused paid
time off.
3.09 Outplacement. The Corporation will provide Xx. Xxxxxx with outplacement services with Dise &
Company for a period not to exceed three months.
3.10 No Duplicate Payments. Nothing in this Article 3 is intended to result in the duplication of
any payments or benefits provided to Xx. Xxxxxx prior to the execution of this Agreement or under
the terms of any other agreement by and between Xx. Xxxxxx and the Corporation (“Prior Agreements”)
or under any other employee benefit plan or program maintained or sponsored by the Corporation on
or before the Effective Date.
3.11 Effect of Other Severance Benefits. Regardless of any other provision of this Agreement and
except as specifically provided in this Agreement, all amounts paid under this Article 3 will be in
lieu of any amounts payable to Xx. Xxxxxx from any broad-based severance program in which Xx.
Xxxxxx participates and, by signing this Agreement, Xx. Xxxxxx specifically waives any rights to
receive any amounts from any broad-based severance program in which he participates.
The amounts distributable under Section 3.07 will be distributed subject to the terms and
conditions of each plan in effect on the Termination Date and to any distribution elections Xx.
Xxxxxx has made as of the Effective Date, including, with respect to the plans described in
Sections 3.07[c] and [d], any election made under (and subject to the restrictions and limits of)
any applicable transition rule described in Section XI, C of the Preamble to Proposed Treasury
Regulations 1.409A-1, et. seq.; provided that any amount subject to Code §409A, which would
otherwise be payable on account of a termination of employment or separation from service will not
be paid before the first day of the seventh month after the Termination Date.
ARTICLE 4 POST-TERMINATION OBLIGATIONS
4.01 Non-Disclosure of Confidential Information. Xx. Xxxxxx expressly covenants and agrees that,
during and after the Term, he will not reveal, divulge or make known to any person, firm, company
or corporation any Confidential Information without the prior express written consent of the
Corporation. “Confidential Information” shall mean financial information about the Corporation or
any of its affiliates, strategies and techniques, trade secrets, contract terms with vendors and
suppliers, supplier lists and data, and such other confidential, proprietary, or sensitive
information concerning or relating to the Corporation, any Group Member or any of their respective
affiliates or any third party that has disclosed or provided any of the same to the Corporation on
a confidential basis. Confidential Information shall not include [1] any information which was or
becomes generally available to the public other than as a result of a wrongful disclosure by Xx.
Xxxxxx, or [2] any information disclosed by Xx. Xxxxxx which he reasonably and in good faith
believes is required for the performance of his duties under this
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Agreement, or [3] any information compelled to be disclosed by applicable law; provided that Xx.
Xxxxxx, to the extent not prohibited from so doing by applicable law, will give the Corporation
prior written notice of the information to be so disclosed pursuant to clause [3] of this sentence
as far in advance of its disclosure as may be practical, will disclose no more information than is
required and will cooperate with any attempts by the Corporation or any Group Member to obtain a
protection order or similar treatment.
4.02 Return of Materials. Xx. Xxxxxx agrees [1] to deliver or return to the Corporation upon
termination or expiration of this Agreement all written Confidential Information furnished by the
Corporation or any Group Member or prepared by Xx. Xxxxxx in connection with his services hereunder
and [2] that he will not retain any copies of any of the materials described in Section 4.02[1].
In addition, upon Xx. Xxxxxx’x termination, he agrees to immediately return to the Corporation all
property of the Corporation or any Group Member which is in his possession, including, but not
limited to, memoranda, books, papers, computer files, laptops, credit cards and keys.
4.03 Non-Competition. For a period of 24 months after Xx. Xxxxxx’x termination of employment, Xx.
Xxxxxx will not directly or indirectly, own, manage, operate, join, or have a financial interest
in, control or participate in the ownership, management, operation or control of, or be employed as
an employee, agent or consultant or in any other individual or representative capacity whatsoever,
or use or permit his name to be used in connection with, or be otherwise connected in any manner
with any competitive business or venture. Competitive business or venture will be defined as any
business or venture that is actively engaged in any business which is in competition with the
Corporation or any Group Member in any geographic area in which the Corporation or any Group Member
does business through the Termination Date. However, this section will not prohibit the ownership
by Xx. Xxxxxx of not more than one percent of any class of securities of any corporation whose
securities are registered pursuant to the Securities Exchange Act of 1934, which securities are
publicly owned and regularly traded on any national exchange or in the over-the-counter market and
that ownership represents a passive investment and that neither Xx. Xxxxxx nor any group of persons
including Xx. Xxxxxx in any way, either directly or indirectly, manages or exercises control of the
corporation, guarantees any of its financial obligations, otherwise takes part in its business
other than exercising his rights as a shareholder, or seeks to do any of the foregoing.
4.04 Non-solicitation. Xx. Xxxxxx hereby further agrees and covenants that for a period of
twenty-four (24) months following January 31, 2007, he shall not, directly or indirectly, on his
own behalf or with others [1] induce or attempt to induce any employee of the Group to leave the
employ of the Group, or in any way interfere with the relationship between the Group and any
employee, [2] hire any employee of the Group, or [3] induce or attempt to induce any referral
source, customer, or other business relation of the Group, not to do business with the Group, or to
cease doing business with the Group, or in any way interfere with the relationship between any such
referral source, customer, or business relation and the Group.
4.05 Injunctive Relief. Xx. Xxxxxx acknowledges that it is impossible to measure in money the
damages that will accrue to the Corporation by reason of Xx. Xxxxxx’x failure to observe any of the
obligations imposed on him by this Article 4. Accordingly, if the Corporation institutes an action
to enforce the provisions hereof, Xx. Xxxxxx hereby waives the claim or defense that an
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adequate remedy at law is available to the Corporation, and Xx. Xxxxxx agrees not to urge the claim
or defense that a remedy at law exists. Also, if a final determination is made by a court having
competent jurisdiction that the time or territory or any other restriction contained in Section
4.03 is an unenforceable restriction on Xx. Xxxxxx’x activities, the provisions of Section 4.03
will not be rendered void but will be deemed amended to apply the maximum time and territory and
other restrictions the court judicially determines or otherwise indicates to be reasonable.
ARTICLE 5 INDEMNIFICATION
To the extent permitted by law, the Corporation will indemnify Xx. Xxxxxx pursuant to the terms of
the Indemnification Agreement, dated April 28, 1995, by and between the Corporation and Xx. Xxxxxx
and the Corporation’s Articles of Incorporation and Code of Regulations, each as amended.
ARTICLE 6 ASSIGNMENT OF AGREEMENT
6.01 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.
6.02 Because the services to be provided by Xx. Xxxxxx to the Corporation under this Agreement are
personal to him, Xx. Xxxxxx 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
Xx. Xxxxxx’x personal or legal representatives, executors and administrators, successors, heirs,
distributees, devisees, and legatees to the extent of any amounts payable to Xx. Xxxxxx that are
due to Xx. Xxxxxx upon his death.
ARTICLE 7 DISPUTE RESOLUTION
7.01 Except as provided in Section 4.05, any disagreement arising under this Agreement that is not
resolved by agreement between the Parties, including the basis on which Xx. Xxxxxx’x 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 Xx. Xxxxxx.
If the Corporation and Xx. Xxxxxx 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
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Association. Any arbitration relating to this Agreement will be held in Summit County, Ohio.
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 paragraph will not be deferred during the pendency of
procedures described in this section.
7.02 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 8 RELEASES, WAIVERS AND REVOCATION RIGHTS
8.01 Release. In consideration of receipt of the payments and benefits set forth herein, Xx.
Xxxxxx does hereby fully and forever surrender, release, acquit and discharge the Corporation, and
its principals, stockholders, directors, officers, agents, administrators, insurers, subsidiaries,
affiliates, employees, successors, assigns, related entities, and legal representatives, personally
and in their representative capacities, and each of them (collectively, “Released Parties”), of and
from any and all claims for costs of attorneys’ fees, expenses, compensation, and all losses,
demands and damage of whatsoever nature or kind in law or in equity, whether known or unknown,
including without limitation those claims arising out of, under, or by reason of Xx. Xxxxxx’x
employment with the Corporation or any Group Member, Xx. Xxxxxx’x relationship with the Corporation
or any Group Member and/or the termination of Xx. Xxxxxx’x employment relationship and any and all
claims which were or could have been asserted in any charge, complaint, or related lawsuit.
Without limiting the generality of the foregoing, Xx. Xxxxxx specifically releases and discharges,
but not by way of limitation, any obligation, claim, demand or cause of action based on, or arising
out of, any alleged wrongful termination, breach of employment contract, breach of implied
covenants of good faith and fair dealing, defamation, fraud, promissory estoppel, intentional or
negligent infliction of emotional distress, discrimination based on age, pain and suffering,
personal injury, punitive damages, and any and all claims arising from any alleged violation by the
Released Parties of any federal, state, or local statutes, ordinances or common laws, including but
not limited to the Ohio Civil Rights Act, including all provisions of the Ohio Revised Code
concerning discrimination on the basis of age, the Age Discrimination in Employment Act of 1967
(“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act or the
Employee Retirement Income Security Act of 1974. This release of rights is knowing and voluntary.
The Corporation acknowledges that Xx. Xxxxxx does not release herein any rights or claims which may
arise after the Effective Date of this Agreement nor any rights he has under this Agreement, any
rights he may have regarding the enforcement of this Agreement, his rights under COBRA or his
rights to indemnification.
8.02 Waiver of Right to Xxx. Except for the Corporation’s promises and obligations contained in
this Agreement, Xx. Xxxxxx further agrees, promises and covenants that neither he, nor any person,
organization, or any other entity acting on his behalf will file, charge, claim, xxx or cause or
permit to be filed, charged or claimed, any action for damages or other relief (including
injunctive, declaratory, monetary relief or other) against the Corporation, involving any matter
occurring in the past up to the Effective Date of this Agreement or involving any
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continuing effects of actions or practices which arose prior to the Effective Date of this
Agreement or the termination of Xx. Xxxxxx’x employment.
8.03 Older Workers’ Benefit Protection Act Waiver. Xx. Xxxxxx has certain individual federal
rights, which must be explicitly waived. Specifically, Xx. Xxxxxx is protected by the ADEA from
discrimination in employment because of his age. By executing this Agreement, Xx. Xxxxxx waives
these rights as to any past or current claims. Notwithstanding anything else in this Agreement,
excluded from this Agreement are ADEA age claims that may arise after execution of this Agreement.
In connection with the releases in Section 8.01 and waivers in Section 8.02 of any and all claims
or disputes that Xx. Xxxxxx has or may have on the date hereof, Xx. Xxxxxx makes the following
acknowledgements:
[1] By signing this Agreement, Xx. Xxxxxx waives all claims against the Released Parties for
discrimination based on age, including without limitation, any claim which arises under or
by reason of a violation of the ADEA.
[2] In consideration of the releases, waivers and covenants made by Xx. Xxxxxx under this
Agreement, Xx. Xxxxxx will be receiving the payments and other benefits in the amounts and
manner described in Articles 3 and 5 of this Agreement.
[3] Xx. Xxxxxx represents and acknowledges that he has consulted with an attorney prior to
executing this Agreement and Xx. Xxxxxx has been given a period of at least twenty-one (21)
days within which to consider whether or not to enter into this Agreement.
[4] Xx. Xxxxxx understands that this Agreement shall be effective as of February 1, 2007
(“Effective Date”), provided that the Agreement is not revoked by Xx. Xxxxxx within seven
days after he signs the Agreement. For a period of seven days after he signs the Agreement,
Xx. Xxxxxx has the right to revoke and/or cancel this Agreement by the delivery of notice in
writing of revocation and/or cancellation to the Corporation. In the event that Xx. Xxxxxx
does not revoke and/or cancel this Agreement during this period, this Agreement shall become
effective on the Effective Date. In the event that Xx. Xxxxxx revokes this Agreement, Xx.
Xxxxxx shall not be entitled to any of the consideration set out in this Agreement.
ARTICLE 9 MISCELLANEOUS
9.01 Notices. 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 Xx. Xxxxxx at the last address he has filed in writing with the
Corporation or, in the case of the Corporation, to the Corporation’s CEO at the Corporation’s
principal offices.
9.02 Entire Agreement. This Agreement supersedes any Prior Agreements or understandings, oral or
written, between the Parties, or between Xx. Xxxxxx and the Corporation, with respect to the
subject matter described in this Agreement, including the Change in Control
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and Displacement Agreements dated November 1, 2004, and constitutes the entire agreement of the
Parties with respect to any matter covered in this Agreement.
9.03 Amendment and Modification. This Agreement may not be varied, altered, modified, canceled,
changed or in any way amended except by written agreement of the Parties. However, by signing this
Agreement, Xx. Xxxxxx agrees, without any further consideration, to consent to any amendment
necessary to avoid penalties under Code §409A.
9.04 Severability. 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.
9.05 Counterparts. 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.
Facsimile signatures will have the same legal effect as original signatures.
9.06 Tax Withholding. 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. Xx. Xxxxxx will be responsible for the payment of all taxes associated with
any payments or benefits provided under this Agreement.
9.07 Waiver. Failure to insist upon strict compliance with any of the terms, covenants or
conditions described in this Agreement [1] will not constitute a waiver of that or any other term,
covenant or condition and [2] will not 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.
9.08 Governing Document. The terms of this Agreement will supersede and control over any
conflicting language in any other agreement, plan, program or practice of the Corporation.
9.9 Applicable Law. 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.
9.10 Code §409A Fail Safe. Notwithstanding anything in this Agreement to the contrary, if payment
of any amount or other benefit that is “deferred compensation” subject to Code §409A at the time
otherwise specified in this Agreement would subject such compensation to additional tax pursuant to
Code §409A(a)(1), the payment thereof shall be postponed to the earliest commencement date on which
such amounts could be paid without incurring such additional tax. In the event a deferral of
payment should be required, any payments that would have been made prior to such earliest
commencement date but for Code §409A shall be accumulated and paid in a single lump sum on such
earliest commencement date. If any benefits permitted or required under this Agreement are
otherwise reasonably determined by the Corporation or Xx. Xxxxxx to be subject for any reason to a
material risk of additional tax pursuant to Code §409A(a)(1), the Corporation and Xx. Xxxxxx agree
to negotiate in good faith appropriate provisions to avoid such risk without materially changing
the economic value of this Agreement to Xx. Xxxxxx or the economic value or financial effect of
this Agreement on the Corporation.
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9.11 Headings. The descriptive headings in this Agreement are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
9.12 Survival of Xx. Xxxxxx’x Rights. All of Xx. Xxxxxx’x rights hereunder, including his rights
to compensation and benefits, and his obligations under Article 4 hereof, shall survive the
termination of Xx. Xxxxxx’x employment and/or the termination of this Agreement.
9.13 Joint and Several Liability. The obligations of the Corporation and the Group Members to Xx.
Xxxxxx under this Agreement are joint and several.
9.14 Approvals. The Corporation represents and warrants to Xx. Xxxxxx that it has taken all
corporate action necessary to authorize this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement, as of the dates set forth below.
| FIRSTMERIT CORPORATION | ||||||
By:
|
/s/ Xxxxxxxxxxx X. Xxxxxx | Date signed: January 12 , 2007 | ||||
Name:
|
Xxxxxxxxxxx X. Xxxxxx | |||||
Title:
|
Executive Vice President –H.R. | |||||
| Xxxxxx X. Xxxxxx | ||||||
By:
|
/s/ Xxxxxx X. Xxxxxx
|
Date signed: January 12 , 2007
|
||||
| Xxxxxx X. Xxxxxx | ||||||
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WAIVER OF TWENTY-ONE DAYS TO CONSIDER AGREEMENT
RELATING TO REASSIGNMENT OF EMPLOYMENT
AND RELEASE OF CLAIMS
RELATING TO REASSIGNMENT OF EMPLOYMENT
AND RELEASE OF CLAIMS
On January 12, 2007, I received a Retirement Agreement (the “Agreement”) dated Janary 12,
2007.
I understand and acknowledge, and as listed in Article 8 of the Agreement, that I have the
legal entitlement for twenty-one (21) days to decide whether or not I want to sign the Agreement
and that I have also been advised to seek the advice of an attorney before signing the Agreement
and have obtained the advice of an attorney. Understanding those rights, I have determined to
sign the Agreement and have done so effective this 12th day of January, 2007.
I recognize that only one day has transpired since I received the Agreement, but I have
determined, with the assistance of my legal counsel, that since I have made the decision to sign
the Agreement, it is not necessary to wait the entire twenty-one (21) day period to which I am
entitled, and I hereby freely and knowingly waive that statutory right.
I understand that the parties to the Agreement are relying upon my representations in this
Agreement and I agree that they have a right to so rely. I understand that those parties have
agreed to pay me the amount stated in the Agreement for the period set forth in the Agreement,
based on my representations contained herein.
| Date: January 12, 2007 | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx | ||||
| /s/ Xxxxxxxxxxx X. Xxxxxx | ||||
| Witness | ||||
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