TRANSITION AGREEMENT BY AND BETWEEN FIRSTMERIT CORPORATION AND GEORGE P. PAIDAS
Exhibit 99.1
Effective as of the Effective Date (as defined in Section 10.03[4]), FirstMerit Corporation
(“Corporation”), an Ohio corporation, and Xxxxxx X. Xxxxxx (“Xx. Xxxxxx”), collectively, the
“Parties,” enter into this Transition Agreement (“Agreement”) to describe the terms and conditions
of Xx. Xxxxxx’ continuing employment with the Corporation and subsequent retirement at the end of
the Term (as defined below) of this Agreement.
ARTICLE 1 TERM OF AGREEMENT
Unless it terminates at an earlier date as provided in Article 5, this Agreement will remain in
effect from the Effective Date until December 31, 2007 (“Term”), at which time Xx. Xxxxxx agrees
that he will voluntarily terminate employment with the Corporation because of retirement.
ARTICLE
2 POSITIONS; DUTIES
2.01 Position, Transition Duties and Retirement. Xx. Xxxxxx agrees:
[1] To continue to serve as [a] Senior Executive Vice President of Business Segments and to
perform the services customarily performed by persons in a similar executive capacity until
the Corporation’s reorganization is effectuated on October 25, 2006 (“Transition Date”) and
[b] an officer of the Corporation until December 31, 2007.
[2] Effective as of the Transition Date, [a] to resign as Senior Executive Vice President of
Business Segments of the Corporation and as a member of the FirstMerit Bank, N.A. Board of
Directors, but [b][i] to continue in active employment with the Corporation until December
31, 2007 and [ii] until December 31, 2007, to perform services necessary to identify and
develop merger and acquisition opportunities for the Corporation, assist with leadership
training as required and other duties and responsibilities assigned by the President of the
Corporation which are consistent with duties and responsibilities of persons in similar
executive capacities and which will be primarily performed out of the Xxxxxx and Akron
offices. However, Xx. Xxxxxx may be required to work in other locations from time to time
as needed.
[3] Effective as of December 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”).
2.02 Reporting. Xx. Xxxxxx will report directly and solely to the President and CEO of the
Corporation.
ARTICLE 3 COMPENSATION
During the Term and subject to this section and to Article 5:
3.01 Base Salary. The Corporation will pay to Xx. Xxxxxx a “Base Salary” at an annualized rate of
Three Hundred Twenty-Seven Thousand Dollars ($327,000.00), prorated to reflect partial calendar
months and years of employment and paid in installments that correspond with the Corporation’s
normal payroll practices. During the Term, the Base Salary will not be reduced without Xx. Xxxxxx’
consent. Xx. Xxxxxx will be eligible for a merit increase to his base salary equal to the
designated merit pool percentage, if any, for the compensation year commencing on April 1, 2007.
3.02 Incentive Compensation. Xx. Xxxxxx will be eligible to participate in the 2006 incentive
compensation program for executives as previously approved by the Board of Directors and will be
eligible to participate in the 2007 incentive compensation program with goals and targets as
established and approved by the Corporation’s Board of Directors.
3.03 Benefits. Xx. Xxxxxx will be entitled to participate in the hospitalization, life insurance
and other employee benefit plans and programs, if any, that the Corporation maintains during the
Term in accordance with the provisions of those plans and programs and on the same basis as other
full-time salaried employees of the Corporation who participate in those employee benefit plans,
provided however that during the Term of this Agreement Xx. Xxxxxx will not earn or accrue any
additional Paid Time Off benefits (“PTO”). Xx. Xxxxxx also may exercise his vested stock options
during the Term and to continue to vest in his stock options during the Term, subject to the terms
of the plans and award agreements through which those stock options were issued.
3.04 Life Insurance. The Corporation will pay the 2007 premium payments on behalf of Xx. Xxxxxx
for the permanent whole life insurance policy, which is owned by Xx. Xxxxxx and provides Xx. Xxxxxx
with $500,000 in life insurance (“Executive Life Insurance Policy”). 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 for income tax preparation fees
in accordance with the policies of the Corporation applicable to all of its executives for the 2006
and 2007 tax year.
3.06 Club Memberships. The Corporation will pay, or reimburse Xx. Xxxxxx for, all membership dues
and special assessments, and any sales tax assessed or payable with respect to those dues or
assessments, incurred in connection with Xx. Xxxxxx’ membership at Xxxxxx Country Club (where he
currently is a member).
3.07 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.
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ARTICLE 4 BUSINESS-RELATED EXPENSES
The Corporation will pay (or reimburse) Xx. Xxxxxx for all reasonable, ordinary and necessary
expenses that he incurs prior to and during the Term to perform his duties under this Agreement.
Reimbursement will be made within 30 days after the date Xx. Xxxxxx submits appropriate evidence of
the expenditure (and all other information required under the Corporation’s business expense
reimbursement policy) to the Corporation and otherwise complies with reimbursement procedures the
Corporation applies to its senior executives.
ARTICLE 5 TERMINATION OF EMPLOYMENT
5.01 Expiration of Term. Xx. Xxxxxx agrees that he will comply with the terms of this Agreement
and will voluntarily terminate his employment because of retirement at the expiration of the Term.
In exchange, but subject to Xx. Xxxxxx’ execution and non-revocation of a general release,
substantially in the form attached hereto as Exhibit B (“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.
Xx. Xxxxxx (or, if applicable, his beneficiary) will be entitled to receive:
[1] Accrued Base Salary. Any unpaid installments of his Base Salary, calculated through the
Termination Date (as defined in Section 5.07[4]), will be paid on the next payroll date
after the Termination Date.
[2] Life Insurance. The Corporation will continue to pay the premium payments 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’ life
expectancy, based upon the current dividend scale or, if earlier, the date of Xx. Xxxxxx’
death; provided that reimbursement for any premium due during the first six months following
the Termination Date will be paid to him in a lump sum on the first day of the seventh month
after the Termination Date. 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] Equity Awards. The vesting, ability to exercise and lapsing of any restrictions of Xx.
Xxxxxx’ 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.
[4] 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 of the
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Effective Date of this Agreement. Xx. Xxxxxx will pay the full cost under the Retiree
Medical Program.
[5] 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.
[6] Unused and Accrued Paid Days Off. The Corporation will pay to Xx. Xxxxxx an amount
equal to Sixty-One and One Hundred Twenty-five Thousandths (61.125) days of compensation at
Base Salary rate of pay.
The amounts distributable under Section 5.01[5] 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 5.01[5][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.
5.02 Termination of Employment Before Expiration of Term for Death, Disability, or any Other Reason
Other Than by the Corporation for Cause or by Xx. Xxxxxx Without Good Reason. If, before the
expiration of the Term on December 31, 2007, Xx. Xxxxxx’ employment terminates for death,
Disability, or for any other reason other than a termination by the Corporation for Cause (as
defined in Section 5.07[1]) or a termination by Xx. Xxxxxx without Good Reason (as defined in
Section 5.07[3]), then, subject to the execution and non-revocation of the General Release by Xx.
Xxxxxx or, if applicable, his representative, he (or, if applicable, his beneficiary) will be
entitled to the payments and benefits described in (and subject to the terms of) Section 5.01 as if
the Term had expired on Xx. Xxxxxx’ termination of employment under this section.
5.03 Termination of Employment Before Expiration of Term by the Corporation for Cause or by Xx.
Xxxxxx Without Good Reason. If, before the expiration of the Term on December 31, 2007, Xx.
Xxxxxx’ employment is terminated by the Corporation for Cause or by Xx. Xxxxxx without Good Reason,
then Xx. Xxxxxx (or, if applicable, his beneficiary) will be entitled to:
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[1] The amount described in Section 5.01[1] and any benefits he has earned under the
employee benefit plans and programs described in Section 3.03.
[2] Retain the Executive Life Insurance Policy (although Xx. Xxxxxx will be solely
responsible for all premiums due after the Termination Date).
[3] The vesting, ability to exercise and lapsing of any restrictions of Xx. Xxxxxx’
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.
5.04 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 5 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.
5.05 Effect of Multiple Termination Events. Except as provided otherwise in this Agreement, Xx.
Xxxxxx will receive the benefits and payments attributable to the first termination event to occur,
the effects of which are described in this Article 5.
5.06 Notice of Termination. Any purported termination of employment by the Corporation or by Xx.
Xxxxxx (other than due to Xx. Xxxxxx’ death) must be communicated by written Notice of Termination
to the other Party. For purposes of this Agreement, a “Notice of Termination” means a notice that
indicates the specific termination provision in this Agreement relied upon and will set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of
employment under the provision so indicated. The Corporation may terminate Xx. Xxxxxx’ employment
[1] for Cause as defined in Section 5.07[1] or [2] without Cause to be effective 90 days after the
written notice is delivered to Xx. Xxxxxx but not later than December 31, 2007. Xx. Xxxxxx may
terminate his employment, with or without Good Reason as defined in Section 5.07[3], to be
effective 90 days after the written notice is delivered to the Corporation but not later than
December 31, 2007. However, any Notice of Termination that cites a reason that may be cured will
be deemed to not have been given if the condition cited is corrected within the 90 day (or shorter)
period described in the preceding sentence.
5.07 Definitions.
[1] “Cause” means the termination of Xx. Xxxxxx’ employment by the Corporation for any of
the following reasons:
[a] Conviction of, or plea of guilty or nolo contendere to, a felony, whether or not
affecting the Corporation or any Group Member.
[b] Disclosure to unauthorized persons of material information of the Corporation or
any Group Member which is believed by the Board, acting in good faith, to be
confidential; provided, that a disclosure will not be considered “Cause” to the
extent that [i] it is required pursuant to a court order or subpoena
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from an appropriate regulatory agency or otherwise required by law or regulation,
[ii] it is made by Xx. Xxxxxx in the ordinary course of business within the scope of
his authority or [iii] it is in the context of a dispute between Xx. Xxxxxx and the
Corporation or any Group Member and limited to the court or arbitrator considering
the dispute, legal counsel and the other parties to the dispute. In addition, it
will not be “Cause” for Xx. Xxxxxx to provide truthful testimony regarding the
Corporation or any Group Member to governmental or regulatory authorities and any
disclosure that does not constitute “Cause” will be deemed not to violate Section
6.01.
[c] Engagement (in connection with the business of the Corporation or any Group
Member) in illegal conduct or in gross misconduct, in either case, that causes
material financial or material reputational harm to the Corporation or any Group
Member.
[d] Failure to perform substantially Xx. Xxxxxx’ responsibilities as described in
this Agreement, after demand for substantial performance has been given by the Board
that specifically identifies how Xx. Xxxxxx has not substantially performed his
responsibilities in accordance with Article 2 of this Agreement. “Cause” does not,
however, include any failure after the Corporation gives a notice of a termination
without Cause or Xx. Xxxxxx gives notice of a termination for Good Reason.
[e] Material breach of the Corporation’s written code of conduct and business
ethics. However, to the extent the breach is curable, the Corporation must give Xx.
Xxxxxx notice and a reasonable opportunity to cure as described in Section 5.06.
[f] Attempt to obstruct or willful failure to cooperate with any investigation
authorized by the Board or any governmental or regulatory agency.
[g] Being subject to the prohibitions of Section 19(a)(1) of the Federal Deposit
Insurance Act.
However, Cause will not arise solely because Xx. Xxxxxx is absent from active employment
during periods of paid time-off, consistent with the Corporation’s applicable paid-time-off
policy, sickness or illness or while suffering from an incapacity due to physical or mental
illness, including a condition that does or may result in a disability or other period of
absence initiated by Xx. Xxxxxx and approved by the Corporation.
[2] “Disability” means Xx. Xxxxxx’ inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous
period beyond expiration of the Term on December 31, 2007, as determined by a physician
engaged by the Corporation.
[3] “Good Reason” means the termination of Xx. Xxxxxx’ employment by Xx. Xxxxxx for any of
the following reasons:
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[a] Reduction in Xx. Xxxxxx’ Base Salary without his consent; or
[b] Involuntary discontinuance of Xx. Xxxxxx’ participation in any employee benefit
plans maintained by the Corporation, other than [i] by reason of legal restrictions
or limitations, [ii] as required by applicable law or [iii] a discontinuance of a
benefit plan as to all similarly situated executives of the Corporation; or
[c] Failure by the Corporation to obtain an assumption of the Corporation’s
obligations under this Agreement by any successor to the Corporation, regardless of
whether that entity becomes a successor to the Corporation as a result of a merger,
consolidation, sale of assets of the Corporation or other form of reorganization; or
[d] Termination of employment by the Corporation which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 5.06; or
[e] A material breach of this Agreement by the Corporation, which breach is not
corrected within the time prescribed pursuant to Section 5.06 after Xx. Xxxxxx
notifies the Corporation in writing of his intent to terminate employment due to
that material breach.
However, it is specifically understood that none of the events contemplated by the Agreement
(including those described in Section 2.01) constitutes “Good Reason” either under this
Agreement or under the Prior Employment Agreement.
[4] “Termination Date” means the earlier of [a] December 31, 2007, [b] the date specified in
the Notice of Termination provided pursuant to Section 5.06, [c] Xx. Xxxxxx’ death, or [d]
Xx. Xxxxxx’ Disability.
5.08 Effect of Code §§280G and 4999.
[1] If any amount due under this Agreement, when combined with amounts due to Xx. Xxxxxx
under any and all other agreements between him and any Group Member (“Payment”), might
generate an excise tax under Code §4999 or a loss of deduction under Code §280G (“Parachute
Penalty”), the Parties agree [a] to apply reasonable means to recharacterize a sufficient
portion of the Payment to avoid or minimize the Parachute Penalty and [b] if the procedure
described in Section 5.08[1][a] does not eliminate the Parachute Payment, to reduce the
Payment to the maximum amount that may be paid without generating a Parachute Penalty.
[2] If the procedure described in Section 5.08[1][b] is to be applied, [a] before the
transaction that might generate a Parachute Penalty becomes effective (or if the transaction
is not predictable, before any additional Payment is made), the Corporation will notify Xx.
Xxxxxx of the amount required to be reduced to avoid a Parachute Penalty and [b] Xx. Xxxxxx
may specify the payment or payments against which that reduction
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will be applied by sending a written election to the Corporation within 30 days of receiving
the written notice described in Section 5.08[2][a] specifying the payment or payments to be
affected and the amount by which each is to be reduced. If this election is not received
within the 30-day period just specified or if the reductions Xx. Xxxxxx specifies in that
election are not sufficient to eliminate the Parachute Penalty, the Corporation will reduce
all payments proportionately in an aggregate amount sufficient to avoid the Parachute
Penalty while providing Xx. Xxxxxx the maximum Payment that may be made without generating a
Parachute Payment.
[3] If the Corporation fails to comply with any of its obligations under this section and
Xx. Xxxxxx incurs an excise tax under Code §4999, the Corporation agrees that it will [a]
make the full amount of the Payment and [b] distribute an additional amount to Xx. Xxxxxx
sufficient to ensure that, after he pays all taxes due on that additional payment, including
any excise taxes due under Code §4999, he retains an the same after-tax amount he would have
retained if no Parachute Penalty had been applied.
ARTICLE 6 POST-TERMINATION OBLIGATIONS
6.01 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 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.
6.02 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 6.02[1].
In addition, upon Xx. Xxxxxx’ termination of employment for any reason, 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.
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6.03 Non-Competition. During the Term and for a period of 24 months after Xx. Xxxxxx’ termination
of employment, regardless of whether that termination is by the Corporation with or without Cause
or Xx. Xxxxxx with or without Good Reason, Xx. Xxxxxx will not (except as an officer, director,
employee, agent or consultant of the Corporation) 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.
During the Term of this Agreement competitive business or venture will be defined as any business
of 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. Following the Termination Date, a business or venture will be
considered a competitive business or venture with the business of the Corporation or a Group
Member: [a] if the services to be rendered by Xx. Xxxxxx are conducted in whole or in part within a
radius of one hundred (100) miles of the office to which Xx. Xxxxxx is assigned on the date of his
termination of employment and [b] if it involves the conduct of any business or the furnishing of
any financial or banking services that a national banking association, bank holding company, state
bank, savings and loan association or other regulated financial institution is permitted by law to
conduct or furnish on the date his employment is terminated. However, this section will not
prohibit Xx. Xxxxxx from engaging in work, whether or not for remuneration, with: [1] state,
regional, or national trade associations; [2] governmental or regulatory agencies; or [3]
not-for-profit organizations, so long as the work is limited to leadership development, leadership
coaching and skills development. Further, 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. Further, following
the Termination Date, Xx. Xxxxxx will be permitted to engage in or become associated with a
competitive business or venture with the business of the Corporation or a Group Member provided
that: [1] the services being provided by Xx. Xxxxxx are limited to coaching, leadership development
or individual skills development; [2] that the services do not violate Sections 6.01 or 6.04 of
this Agreement; and [3] that Xx. Xxxxxx receives written authorization from the President and CEO
of the Corporation prior to providing services or becoming associated with any competitive business
or venture as defined above.
6.04 Non-solicitation. Xx. Xxxxxx hereby further agrees and covenants that during the term of this
Agreement and for a period of twenty-four (24) months following December 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.
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6.05 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’ failure to observe any of the
obligations imposed on him by this Article 6. Accordingly, if the Corporation institutes an action
to enforce the provisions hereof, Xx. Xxxxxx hereby waives the claim or defense that an 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
6.03 is an unenforceable restriction on Xx. Xxxxxx’ activities, the provisions of Section 6.03 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 7 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. This Article 7 will
survive any termination of this Agreement or of Xx. Xxxxxx’ employment.
ARTICLE 8 ASSIGNMENT OF AGREEMENT
8.01 Except as specifically provided in this section, the Corporation may not assign this Agreement
to any person or entity that is not a Group Member. However, this Agreement may and will be
assigned or transferred to, and will be binding upon and inure to the benefit of, any successor of
the Corporation, in which case this Agreement will be interpreted and applied by substituting that
successor for the “Corporation” under the terms of this Agreement. For these purposes, “successor”
means any person, firm, corporation or business entity which at any time, whether by merger,
purchase or otherwise acquires all or substantially all of the assets or the business of the
Corporation.
8.02 Because the services to be provided by 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’ 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 9 DISPUTE RESOLUTION
9.01 Except as provided in the penultimate sentence of this section and Section 6.05, any
disagreement arising under this Agreement that is not resolved by agreement between the Parties,
including the basis on which Xx. Xxxxxx’ 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
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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 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.
9.02 The Corporation will bear the arbitrator’s fee and other costs associated with any
arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(b), elects to
award these fees to the Corporation.
ARTICLE 10 RELEASES, WAIVERS AND REVOCATION RIGHTS
10.01 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’
employment with the Corporation or any Group Member, Xx. Xxxxxx’ relationship with the Corporation
or any Group Member and/or the termination of Xx. Xxxxxx’ 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.
10.02 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
11
(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
continuing effects of actions or practices which arose prior to the Effective Date of this
Agreement or the termination of Xx. Xxxxxx’ employment.
10.03 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 10.01 and waivers in Section 10.02 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, 4 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 October 25, 2006
(“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 11 MISCELLANEOUS
11.01 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 Corporations President and CEO at the
Corporation’s principal offices.
11.02 Entire Agreement. This Agreement including Exhibit A attached hereto, 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 and Exhibit
12
A, including the Change in Control and Displacement Agreements dated November 1, 2004, and
constitutes the entire agreement of the Parties with respect to any matter covered in this
Agreement and Exhibit A.
11.03 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.
11.04 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.
11.05 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.
11.06 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. Except to the extent provided in Section 5.08, Xx. Xxxxxx will be
responsible for the payment of all taxes associated with any payments or benefits provided under
this Agreement.
11.07 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.
11.08 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.
11.9 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.
11.10 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.
13
11.11 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.
11.12 Survival of Xx. Xxxxxx’ Rights. All of Xx. Xxxxxx’ rights hereunder, including his rights to
compensation and benefits, and his obligations under Article 6 hereof, shall survive the
termination of Xx. Xxxxxx’ employment and/or the termination of this Agreement.
11.13 Joint and Several Liability. The obligations of the Corporation and the Group Members to Xx.
Xxxxxx under this Agreement are joint and several.
11.14 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 , 2006.
| FIRSTMERIT CORPORATION | ||||||||||||
By:
|
/s/ | Date signed: | , 2006 | |||||||||
Name: |
||||||||||||
Title: |
||||||||||||
| Xxxxxx X. Xxxxxx | ||||||||||||
By:
|
Date signed: | , 2006 | ||||||||||
14
EXHIBIT A
GENERAL RELEASE
This General Release (the “Agreement”) is made and entered into as of [ ], by and between
FirstMerit Corporation (“Corporation”), an Ohio Corporation, and Xxxxxx X. Xxxxxx (“Xx. Xxxxxx”)
(collectively, the “Parties”).
ARTICLE I RELEASES, WAIVERS AND REVOCATION RIGHTS
1.01 Release. In consideration of receipt of the payments and benefits set forth in Article 5 of
the Transition Agreement by and between the Corporation and Xx. Xxxxxx, effective as of October 25,
2006 (“Transition Agreement”), 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’ employment with the Corporation or any Group Member (as
defined in the Transition Agreement), Xx. Xxxxxx’ relationship with the Corporation or any Group
Member and/or the termination of Xx. Xxxxxx’ 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 (as defined in Section 1.03 of this Agreement) nor any rights he has under the
Transition Agreement, any rights he may have regarding the enforcement of the Transition Agreement,
his rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or his
rights to indemnification.
1.02 Waiver of Right to Xxx. Except for the Corporation’s promises and obligations contained in
the Transition 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 continuing effects of actions or practices which arose prior to the Effective Date of this
Agreement or the termination of Xx. Xxxxxx’ employment.
1.03 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 1.01 and waivers in Section 1.02 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 Article 5 of the Transition 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 the Termination Date
(as defined in the Transition Agreement) (“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 Article 5 of the Transition Agreement.
ARTICLE 2 MISCELLANEOUS
2.01 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.
2.02 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.
2
2.03 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.
IN WITNESS WHEREOF, the Parties have executed this Agreement, as of October 25, 2006.
| FIRSTMERIT CORPORATION | ||||||||||
By:
|
/s/ Xxxxxxxxxxx X. Xxxxxx | Date signed: | October 25, 2006 | |||||||
Title:
|
Exeuctive Vice President | |||||||||
| Xxxxxx X. Xxxxxx | ||||||||||
By:
|
/s/ Xxxxxx X. Xxxxxx | Date signed: | October 25, 2006 | |||||||
3
