Exhibit 10.35
Amended and Restated Displacement Agreement
THIS AGREEMENT ("Agreement") is effective the st day of , 2002,
by and between FirstMerit Corporation, an Ohio corporation (the "Company") and
NAME the executive employee who has executed this Agreement ("Employee").
R E C I T A L S:
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 has determined that the interests
of the Company's shareholders will be best served by assuring that its key
corporate officers will adhere to the policies of the Board of Directors and
senior management with respect to any merger, acquisition or like transaction,
which transaction does not result or involve a change in control of the Company.
C. The Board of Directors has also determined that it is in the best
interest of the shareholders to promote stability among key officers and
employees.
D. Employee and the Company may also enter into an Amended and Restated
Change in Control Termination Agreement which protects Employee in the event of
a termination of employment following a change in control of the Company. It is
the intent of the Company and the Employee that if the Employee has also entered
into a form of termination agreement providing benefits to the employee in the
event of a change in control, that Employee will not be entitled to be paid
benefits under both this Agreement and any change of control or termination
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 Employee agree as follows:
1. Duties of Employee. Employee shall support the position of the Board of
Directors and shall take any action reasonably requested by the Board of
Directors with respect to any merger, acquisition or like transaction, not
involving a change in control of the Company.
2. Displacement and Change in Control.
(a) The term "Displacement" shall mean the termination of the
Employee's employment with the Company as a consequence of a merger, acquisition
or like transaction, either before or after the closing of the merger,
acquisition or like transaction, and where no Change in Control of the Company
has occurred.
(b) The term "Change in Control" shall mean the occurrence of any
one of the following events:
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(1) individuals who, on April 19, 2000, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to April 19,
2000 whose election or nomination for election was approved by a vote of at
least 2/3rds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual elected or nominated as a director of the Company initially as a
result of an actual or threatened election contest with respect to directors or
any other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an Incumbent
Director;
(2) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities eligible to vote for the election
of the Board (the "Company Voting Securities"); provided, however, that the
event described in this paragraph (2) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions:
(i) by the Company or any Subsidiary,
(ii) by any employee benefit plan sponsored or maintained by
the Company or any Subsidiary,
(iii) by any underwriter temporarily holding securities
pursuant to an offering of such securities,
(iv) pursuant to a Non-Control Transaction (as defined in
paragraph (3)), or
(v) a transaction (other than one described in (3) below) in
which Company Voting Securities are acquired from the Company, if a
majority of the Incumbent Directors then on the Board approve a
resolution providing expressly that the acquisition pursuant to this
clause (v) does not constitute a Change in Control under this
paragraph (2);
(3) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or any
of its Subsidiaries that requires the approval of the Company's shareholders,
whether for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(i) more than 50% of the total voting power of (x) the
corporation resulting from such Business Combination (the "Surviving
Entity"), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors ("Total Voting Power")
of the Surviving Entity (the "Parent Entity"), is represented by
Company Voting Securities that were outstanding immediately prior to
such Business Combination (or, if applicable, shares into which such
Company Voting
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Securities were converted pursuant to such Business Combination),
and such voting power among the holders thereof is in substantially
the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the
Business Combination,
(ii) no person (other than any employee benefit plan (or
related trusts) sponsored or maintained by the Surviving Entity or
the Parent Entity), is or becomes the beneficial owner, directly or
indirectly, of 25% or more of the Total Voting Power of the
outstanding voting securities eligible to elect directors of the
Parent Entity (or, if there is no Parent Entity, the Surviving
Entity), and
(iii) at least a majority of the members of the board of
directors of the Parent Entity (or, if there is no Parent Entity,
the Surviving Entity) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for
such Business Combination (any Business Combination which satisfies
all of the criteria specified in (i), (ii) and (iii) above shall be
deemed to be a "Non-Control Transaction"); or
(4) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 25% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person by more than one percent, a Change
in Control of the Company shall then occur.
3. Company's Right to Terminate. The Company may terminate the Employee's
employment at any time during the term of this Agreement, subject to the terms
of this Agreement and providing the benefits stated herein if vested.
4. Displacement. In the event of termination of employment due to a
Displacement and prior to the expiration of the term of this Agreement, the
Employee shall be entitled to the benefits provided in paragraph 6 unless such
termination is (a) because of the Employee's death, Retirement or Disability,
(b) by the Company for Cause, or (c) by the Employee other than for Good Reason.
(a) Disability or Retirement. Termination of employment by the
Company based on "Disability" shall mean termination because of Total and
Permanent Disability as defined in the Long-Term Disability Plan of the Company,
in effect from time to time, in which the Employee is participating. Termination
of employment based on "Retirement" shall mean termination of employment by the
Employee in accordance with the retirement policy (including early retirement
policy) which is in effect from time to time and is generally applicable to the
Company's salaried employees.
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(b) Cause. The term "Cause" shall mean termination upon one or more
of the following acts of the Employee:
(i) Felonious criminal activity whether or not affecting the
Company;
(ii) Disclosure to unauthorized persons of Company
information which is believed by the Board of Directors
of the Company to be confidential;
(iii) Breach of any contract with, or violation of any legal
obligation to, the Company or dishonesty; or
(iv) Negligence or insubordination in the performance of
duties of the position held by the Employee.
(c) Good Reason. The term "Good Reason" shall mean voluntary
termination of employment by the Employee based on any of the following:
(i) Involuntary reduction in the Employee's base salary, as
in effect immediately prior to a Displacement unless
such reduction occurs simultaneously with a Company-wide
reduction in officers' salaries;
(ii) Involuntary discontinuance or reduction in the
Employee's incentive compensation award opportunities
under plans applicable to the Employee and in existence
at the time of a Displacement, unless a Company-wide
reduction of all officers' incentive award opportunities
occurs simultaneously with such discontinuance or
reduction;
(iii) Involuntary relocation to another office located more
than 50 miles from the Employee's office location at the
time the Displacement occurs;
(iv) Significant reduction in the Employee's responsibilities
and status within the Company's organization or change
in the Employee's title or office without prior written
consent of the Employee;
(v) Involuntary discontinuance of the Employee's
participation in any employee benefit plans maintained
by the Company unless such plans are discontinued by
reason of law or loss of tax deductibility to the
Company with respect to contributions to such plans, or
are discontinued as a matter of the Company's policy
applied equally to all participants in such plans;
(vi) Involuntary reduction of the Employee's paid vacation to
less than 20 working days per calendar year;
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(vii) Failure to obtain an assumption of the Company's
obligations under this Agreement by any successor to the
Company, regardless of whether such entity becomes a
successor to the Company as a result of a merger,
consolidation, sale of the assets of the Company, or
other form of reorganization; or
(viii) Termination of employment which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph 5 herein.
5. Notice of Displacement. Any purported termination of the Employee's
employment by the Company or by the Employee shall be communicated by written
Notice of Displacement. For purposes of this Agreement, a "Notice of
Displacement" shall mean a notice from the Company or by the Employee (as
appropriate) which shall indicate the specific termination provision 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 the date upon
which the Displacement occurred ("Date of Displacement").
6. Compensation and Benefits Upon Displacement.
(a) If, after a Displacement has occurred and prior to the
expiration of the term of this Agreement, the Employee's employment by the
Company has been terminated (1) by the Company other than for Cause, Disability,
Retirement, or death, or (2) by the Employee for Good Reason, then the Employee
shall be entitled to the compensation and benefits provided in subparagraph (c)
below.
(b) If either of the conditions in subparagraph (a) above are
satisfied, the Employee shall be eligible to receive the compensation and
benefits described in subparagraph (c) below. The compensation described in
subparagraphs (c)(1), (c)(2) and (c)(3) shall be paid by the Company to the
Employee in a lump sum on or before the 14th day following the Notice of
Displacement.
For purposes of this Agreement, the term "Month" shall mean a period of 30
days.
(c) The compensation and benefits payable to an Employee pursuant to
this paragraph 6 shall be as follows:
(1) Base Salary to Date of Displacement. The Company shall pay
to the Employee his/her full base salary through the Date of
Displacement at the rate in effect at the time Notice of
Displacement is given or immediately preceding a Displacement,
whichever is higher.
(2) Base Salary. The Company shall pay to the Employee an
amount equal to (i) the Employee's annual base salary (at the
rate in effect at the time Notice of Displacement is given or
immediately preceding a Displacement, whichever is higher)
multiplied by (ii) the lesser of the number indicated in Item
6(c)(2)A on Exhibit A (which Exhibit is attached hereto and
incorporated by reference herein), or a fraction the numerator
of which is the number of
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months from and including the month in which the Date of
Displacement occurs to and including the month in which the
Employee would attain the age of 65, and the denominator of
which is Item 6(c)(2)B on Exhibit A.
(3) Incentive Compensation. The Company shall pay to the
Employee incentive award in an amount equal to (i) 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 in the year of
Employee's Date of Displacement multiplied by (ii) the lesser
of the number indicated in Item 6(c)(3)A on Exhibit A, or a
fraction the numerator of which is the number of months from
and including the month in which the Date of Displacement
occurs to and including the month in which the Employee would
attain the age of 65 and denominator of which is the number
indicated in Item 6(c)(3)B on Exhibit A.
(4) Stock Plans. The Employee shall be entitled to immediate
vesting of all stock options and other stock, phantom stock,
stock appreciation rights or similar arrangements in which he
participates. Notwithstanding any plan provisions to the
effect that rights under any such plan terminate upon
termination of employment, the Employee shall be given the
longer of 90 days after the Date of Displacement, or the
remaining period provided in the grant, to realize or exercise
all rights or options provided under such plans.
(5) Medical Benefits and Life Insurance. The Company shall
maintain in full force and effect for the Employee's continued
benefit until the earlier of the anniversary listed in Item
6(c)(5)A on Exhibit A of the Date of Termination or 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), with coverage and limits identical to those in effect
with respect to the Employee immediately prior to the Change
in Control. If the Employee is a participant in the Company's
Executive Committee Life Insurance Program, the Company shall
pay the premium for the Employee on such insurance for a
period ending the earlier of the period listed in Item
6(c)(5)B 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
Employee's projected federal, state, county and municipal
income taxes on the premiums so paid, which projected taxes
shall be calculated at the highest marginal tax rates. For the
sole purpose of determining the Employee's eligibility to
participate in the Company's medical, life, and accidental
death and dismemberment insurance plans, the Employee shall be
considered to be on a paid leave of absence as long as he/she
is receiving benefits under this Agreement.
In lieu of the benefits provided to Employee under this
subparagraph 6(c)(5) for medical insurance, within six months
after the Date of Termination, the Employee may irrevocably
elect in writing to receive a lump sum cash payment. The
payment will equal the Company's current cost to provide the
medical insurance benefits over the remaining period (without
a present value
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reduction). The amount payable under this paragraph shall be
paid by the Company to the Employee on or before the 14th day
following the receipt by the Company of the writing from the
Employee.
(6) Executive Supplemental Retirement Plan. The following
shall apply for purposes of calculating the Employee's
benefits under the FirstMerit Corporation Executive
Supplemental Retirement Plan (the "SERP"):
(i) for purposes of calculating the Employee's Monthly
Retirement Income (as defined in the SERP) under
Sections 4.01 and 4.02 of the SERP and for purposes of
determining the Employee's vested Monthly Retirement
Income under Section 4.05 of the SERP, the Employee's
Years of Service (as defined in the SERP) shall be
increased by the Employee's Protection Period (as
hereinafter defined);
(ii) for purposes of calculating the Employee's Monthly
Retirement Income under Section 4.02 of the SERP, the
Employee's Attained Age (as defined in the SERP) shall
be increased by the Employee's Protection Period (as
hereinafter defined); and
(iii) the Employee's Average Monthly Earnings for
purposes of the SERP shall be deemed to be equal to the
total of (A) the highest, monthly base salary earned by
the Employee during the 24 months immediately preceding
the Change in Control and (B) 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 in the year of
Employee's Date of Termination divided by 12.
The terms of this subparagraph (6) 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 subparagraphs 6(i), (ii) and
(iii) 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. Further, for purposes of
this subparagraph (6), the Employee's Protection Period is 24 months.
(7) Outplacement Fees. For a period not to exceed one year
after the Date of Displacement, the Company will pay 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)(7) on Exhibit A.
7. Overall Limitation on Benefits. Notwithstanding any provision in
this Agreement to the contrary, if the compensation and benefits provided to the
Employee pursuant to or under this Agreement, either alone or with other
compensation and benefits received by the Employee, would constitute "parachute
payments" within the meaning of Section 280G of the Internal Revenue Code (the
"Code"), or the regulations adopted or proposed thereunder, then the
compensation and benefits payable pursuant to or under this Agreement shall be
reduced to the
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extent necessary so that no portion thereof shall be subject to the excise tax
imposed by Section 4999 of the Code. The Employee or any other party entitled to
receive the compensation or benefits hereunder may request a determination as to
whether the compensation or benefit would a parachute payment and, if requested,
such determination shall be made by independent tax ounsel selected by the
Company and approved by the party requesting such determination. In the event
that any reduction is required under this paragraph 7, the Company shall consult
with the Employee in determining the order in which compensation and benefits
shall be reduced.
8. Legal Fees. The Company shall pay all legal fees and expenses
incurred by the Employee in enforcing any right or benefit provided by this
Agreement.
9. Term of Agreement. This Agreement shall continue in effect until
the Employee (i) is removed for Cause, (ii) is no longer an employee due to
Disability, Retirement or death, or (iii) resigns not for Good Reason.
10. 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 shall be directed to the attention of the President of
the Company with a copy to the Secretary of the Company, 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.
11. Miscellaneous. 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 of Directors of the Company. 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.
This Agreement is in addition to any termination agreement providing
benefits to the employee in the event of a change in control. The Employee will
not however be entitled to the be paid benefits under both this Agreement and a
change of control termination agreement if both should be triggered. The
Employee would be entitled to choose between the two agreements by providing
written notice to the Company within a reasonable time period. 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.
12. 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 of the State of Ohio.
13. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
above first written.
FirstMerit Corporation
By:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
Employee:
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(Signature)
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(Print Name)
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EXHIBIT A
Name of Executive: NAME (print)
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Item 6(c)(2)A: Multiplied By: 2 (insert number)
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Item 6(c)(2)B: Denominator: 12 (insert number)
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Item 6(c)(3)A: 2 (insert number)
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Item 6(c)(3)B: 12 (insert number)
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Item 6(c)(5)A: Anniversary: 2nd anniversary (insert number)
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Item 6(c)(5)B: Years in Effect: 2 years (insert number)
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Item 6(c)(7):Outplacement Fee: $25,000
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