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Exhibit 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into this 1st day of February, 1998,
between and among FirstMerit Corporation, an Ohio corporation ("FirstMerit"),
FirstMerit Bank, N.A., a national banking association ("FirstMerit Bank")
(collectively sometimes "FirstMerit"), and Xxx X. Xxxxxx ("Executive").
R E C I T A L S :
FirstMerit and FirstMerit Bank desire to employ Executive for a period
certain, subject, however, to the terms and conditions of this Agreement.
IN CONSIDERATION OF THE FOREGOING, the mutual covenants contained
herein, and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. EMPLOYMENT
FirstMerit hereby employs Executive, and Executive hereby accepts
employment, according to the terms and conditions set forth in this Agreement
and for the period specified in Section 3 of this Agreement.
2. DUTIES
During the Term (as defined in Section 3), Executive shall serve
FirstMerit and FirstMerit Bank as its President and Chief Operating Officer in
accordance with directions from the Chief Executive Officer and FirstMerit's
Board of Directors, and in accordance with FirstMerit's Amended and Restated
Articles of Incorporation and Amended and Restated Code of Regulations (as both
may be amended from time to time). Executive will report directly to the
Chairman and Chief Executive Officer. While Executive is employed by FirstMerit
as a full-time employee, Executive shall serve FirstMerit faithfully,
diligently, competently and to the best of his ability, and will exclusively
devote his full time, energy and attention to the business of FirstMerit and to
the promotion of its interests. Executive shall not, without the written consent
of the Chairman and Chief Executive Officer and the Board of Directors of
FirstMerit, render services to or for any person, firm, corporation or other
entity or organization in exchange for compensation, regardless of the form in
which such compensation is paid and whether or not it is paid directly or
indirectly to Executive. Nothing in this Section 2 shall preclude Executive from
managing his personal investments and affairs, provided that such activities in
no way interfere with the proper performance of his duties and responsibilities
as President and Chief Operating Officer.
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3. TERM OF EMPLOYMENT
The term of this Agreement (the "Term") shall commence as of February
1, 1998, and shall continue for a period of three (3) years ending on January
31, 2001, unless this Agreement has been earlier terminated in accordance with
the provisions of Section 7 hereof. Following expiration of the Term,
Executive's employment status will be "at will."
4. COMPENSATION
4.1 BASE SALARY. While employed under this Agreement, Executive will
receive as his compensation for the performance of his duties and obligations to
FirstMerit under this Agreement a basic salary of Three Hundred Fifty Thousand
Dollars ($350,000) per year, which will be payable in semi-monthly installments,
and which will be subject to annual review by the Compensation Committee as
approved by the Board of Directors (the base salary, as may be adjusted from
time to time, is referred to herein as the "Base Salary").
4.2 BONUS. In addition to the Base Salary, Executive will receive with
respect to each calendar year a bonus in accordance with FirstMerit's Incentive
Compensation Plan ("ICP"), a copy of which has been delivered to Executive, as
may be amended from time to time. Bonuses will be determined by FirstMerit's
Compensation Committee in accordance with the terms of the ICP, subject to
approval by the Board of Directors, and ordinarily will be paid during the first
quarter of the year following the year to which the bonus relates.
4.3 REIMBURSEMENT FOR LOST INCENTIVE PAYMENT. In the event that by
reason of accepting employment with FirstMerit, Executive forfeits all or any
portion of any incentive payment which he may be entitled or may become entitled
to receive from his prior employer, Norwest Bank Indiana, FirstMerit will
reimburse Executive for the amount of such lost incentive payment; provided,
however, that such reimbursement shall not exceed the sum of Seventy-Five
Thousand Dollars ($75,000).
4.4 WITHHOLDING. All compensation payable to Executive pursuant to this
Section 4 shall be paid net of amounts withheld for federal, state, municipal or
local income taxes, the Executive's share, if any, of any payroll taxes, and
such other federal, state, municipal or local taxes as may be applicable to
amounts paid by an employer to its employee or to the employer/employee
relationship.
5. OTHER BENEFITS OF EMPLOYMENT
5.1 RETIREMENT BENEFITS
(A) PENSION PLAN. Executive will participate in the Pension
Plan for Employees of FirstMerit Corporation and Subsidiaries (the
"Pension Plan"), a copy of the summary plan
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description of which has been provided to Executive, in accordance with
the provisions of the Plan, as amended from time to time.
(B) EMPLOYEES' SALARY SAVINGS RETIREMENT PLAN. Executive will
be entitled to participate in the FirstMerit Corporation and
Subsidiaries Employees' Salary Savings Retirement Plan (the "401(k)
Plan"), a copy of the summary plan description of which has been
provided to Executive, in accordance with the provisions of the Plan,
as amended from time to time.
(C) SERP. Executive will participate in the FirstMerit
Corporation Executive Supplemental Retirement Plan (the "SERP"), a copy
of which has been provided to Executive, in accordance with the
provisions of the SERP, as may be amended from time to time and as may
be modified by the provisions of the Membership Agreement entered into
by FirstMerit and Executive in connection with the SERP.
(D) TOP HAT PLAN. Executive will be entitled to participate in
the FirstMerit Corporation Unfunded Supplemental Benefits Plan (the
"Top Hat Plan"), a copy of which has been provided to Executive, in
accordance with the provisions of the Plan, as amended from time to
time.
5.2 CHANGE OF CONTROL TERMINATION AGREEMENT. Following commencement of
the Term, FirstMerit and Executive will enter into a Change of Control
Termination Agreement in the form previously delivered to Executive, the terms
of which will provide for the continuation of compensation and certain benefits
in the event of certain terminations of employment of Executive following a
Change of Control. The terms of such Agreement will provide, subject to certain
limitations, for continuation for a period of thirty (30) months of the Base
Salary, incentive compensation, medical, life, and accidental death and
dismemberment insurance under FirstMerit plans and payment of premiums as
provided in Section 5.3. The Change of Control Termination Agreement will also
provide that if any compensation or benefits payable under such Agreement, alone
or in conjunction with other compensation or benefits received by Executive,
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 under the Agreement will
be reduced to the extent necessary so that no portion shall be subject to the
excise tax imposed by Section 4999 of the Code.
5.3 EXECUTIVE LIFE INSURANCE. During such time as Executive is employed
by FirstMerit, FirstMerit shall pay the premiums, plus forty percent (40%) of
such premiums as a gross-up amount, on a permanent whole life insurance policy
which shall be owned by Executive and which shall provide Executive with Seven
Hundred Fifty Thousand Dollars ($750,000) in life insurance. Executive will be
responsible for the payment of all taxes associated with the payment of the
premiums and the gross-up amount. FirstMerit's obligations under this Section
5.3 will cease upon the termination of Executive's employment for any reason
(other than retirement), except to the
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extent provided otherwise in the Change of Control Termination Agreement or
pursuant to Section 7.5(A). Executive acknowledges that a physical examination
will be required by the insurer.
5.4 DISABILITY. Executive will be entitled to participate in
FirstMerit's Long-Term Disability Plan applicable to executive level employees
of FirstMerit, and in FirstMerit's Short-Term Illness Program, all in accordance
with the provisions of such programs as may be amended from time to time.
5.5 MISCELLANEOUS BENEFITS. Executive will be entitled to participate
in such hospitalization, life insurance, and other employee benefit plans and
programs, if any, as may be adopted by FirstMerit from time to time, in
accordance with the provisions of such plans and programs and on the same basis
as other full-time salaried employees of FirstMerit who participate in such
employee benefit plans (except to the extent that the benefits provided under
any of such plans or programs are expressly offset by any of the benefits
provided under or pursuant to this Agreement).
5.6 STOCK OPTIONS AND GRANTS
(A) NON-QUALIFIED STOCK OPTIONS. Immediately following the
commencement of the Term, FirstMerit will make an award to Executive
under and pursuant to the terms of the FirstMerit 1997 Stock Plan, a
copy of which has been provided to Executive, of non-qualified stock
options ("NQSOs") for Fifty Thousand (50,000) shares of FirstMerit
Corporation common stock, plus an additional Twenty-Five Thousand
(25,000) "performance" shares. The award will be made pursuant to a
Stock Option Agreement in the form and subject to the terms customarily
used by FirstMerit, but the terms of which will include the following:
The NQSOs will be issued at fair market value on the date of grant. The
NQSOs for the 50,000 shares will become exercisable with respect to
one-half of the shares on August 15, 1998, and with respect to the
remaining one-half of the shares on February 15, 1999. The NQSOs for
the 25,000 performance shares will become exercisable on February 16,
1999, if FirstMerit has achieved its three (3)-year earnings per share
growth target as of that date. Notwithstanding the foregoing, all NQSOs
under this grant will become exercisable if Executive's employment is
terminated by reason of Death, Disability or, following a Change of
Control, Termination Without Cause or Termination for Good Reason. Once
vested, the NQSOs will remain exercisable until the date which is ten
(10) years from the date of grant.
(B) RESTRICTED STOCK. Immediately following the commencement
of the Term, FirstMerit will make a restricted stock award to Executive
of Nine Thousand (9,000) shares of FirstMerit Corporation common stock.
The award will be made pursuant to a Restricted Stock Agreement, the
terms of which will include the following: The restrictions on 7,000
shares will lapse on February 1, 2001; the restrictions on 1,000 shares
will lapse on February 1, 2002, but only if Executive is an employee on
such date; and the restrictions on the remaining 1,000 shares will
lapse on February 1, 2003, but only if Executive is an employee
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on such date; provided, however, that all restrictions will lapse if
Executive's employment is terminated by reason of Death, Disability,
following a Change of Control, Termination Without Cause or Termination
for Good Reason. The shares subject to such restricted stock award
shall be registered on the books of FirstMerit in Executive's name, and
Executive shall have all rights of a shareholder with respect thereto
(including, without limitation, voting and dividend rights), other than
the right to transfer such shares during the restricted period, and
such other limitations as may be provided by law or customary for
restricted stock awards.
5.7 INCOME TAX PREPARATION. For calendar years beginning with 1998,
FirstMerit will reimburse Executive for fees incurred in connection with
personal income tax preparation in an amount not to exceed Seven Hundred Fifty
Dollars ($750) per year.
5.8 CLUB DUES. FirstMerit will pay, or reimburse Executive for, all
membership dues and special assessments, and any sales tax assessed or payable
with respect to such dues or assessments, incurred in connection with the
Executive's membership in a country club chosen by the Executive in his sole
discretion.
5.9 MISCELLANEOUS EXPENSE REIMBURSEMENT
(A) TRAVEL AND LIVING EXPENSES. FirstMerit will pay or
reimburse Executive for travel and living expenses (including meals and
lodging) incurred by Executive until such time as Executive's family is
relocated to Northeastern Ohio, to the extent such expenses are (i)
incurred prior to September 30, 1998, and (ii) approved for
reasonableness by the Chairman of the Board of FirstMerit.
(B) RELOCATION EXPENSES. FirstMerit will assist Executive with
the sale of his home in Ft. Xxxxx, Indiana, and with the purchase of
his home in Northeastern Ohio. FirstMerit will pay or reimburse
Executive for relocation expenses incurred by Executive according to
existing policies of FirstMerit.
5.10 TAXES AND WITHHOLDING. Executive shall be responsible for paying
all federal, state, municipal or local taxes payable by him with respect to any
benefits provided under this Section 5, and FirstMerit will, when required by
law or when otherwise appropriate or customary, withhold from the benefits or
other compensation amounts sufficient to satisfy such taxes.
6. OTHER PROVISIONS RELATING TO EMPLOYMENT
6.1 EXECUTIVE PHYSICAL EXAMINATION. Approximately every two (2) years,
Executive will undergo an executive physical examination by physicians (not
including any physicians who have performed or are then performing medical
services for Executive) of the Cleveland Clinic or comparable facility. The
expenses of the physical examinations required under this Section 6.1 (but not
any treatment in connection therewith), which are not otherwise covered by
FirstMerit-sponsored medical plans, will be borne by FirstMerit.
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6.2 VACATION. Executive will be entitled to five (5) weeks paid
vacation and ten (10) bank holidays per year.
6.3 BOARD OF DIRECTORS. The Board of Directors will appoint Executive
to the Board of Directors of FirstMerit and FirstMerit Bank, effective as of
February 1, 1998. Once Executive has become a Director, FirstMerit will agree to
nominate the Executive at such times as necessary so that Executive remains a
director of FirstMerit during his employment by FirstMerit. Nothing in this
Section 6.3 shall require FirstMerit or its Board to decline to nominate an
existing Director at the expiration of such Director's term.
7. TERMINATION
7.1 DEFINITIONS
(A) "CHANGE OF CONTROL" means a change in control of a nature
that would be required to be reported by persons or entities subject to
the reporting requirements of Section 14(a) of the Securities Exchange
Act of 1934 in response to item 5(f) of Schedule 14A of Regulation
14(A) as in effect on the date hereof, or successor provisions thereto,
provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any unaffiliated "person," "entity," or
"group" (as defined in Rule 13(d)-3 issued under the Securities
Exchange Act of 1934) directly or indirectly becomes the owner of
securities of FirstMerit representing thirty percent (30%) or more of
the combined voting power of FirstMerit's then outstanding securities
or (ii) at any time during any period of two (2) consecutive calendar
years individuals, who at the beginning of such period constitute the
Board of Directors of FirstMerit, cease for any reason to constitute at
least the majority of such Board unless the election, or the nomination
for election, by FirstMerit's shareholders of each new director was
approved by a vote of at least two-thirds of the directors still in
office who were directors of FirstMerit at the beginning of such two
(2)-year period.
(B) "DISABILITY" or "DISABLED" means eligibility for
disability benefits under the terms of FirstMerit's Long-Term
Disability Plan for executive level employees in effect at the time of
termination of Executive's employment.
(C) "TERMINATION DATE" means the date on which Executive's
employment with FirstMerit terminates.
(D) "TERMINATION OF EMPLOYMENT FOR CAUSE" means the
termination of Executive's employment by FirstMerit for any of the
following reasons:
(i) Felonious criminal activity whether or not
affecting FirstMerit;
(ii) Disclosure to unauthorized persons of FirstMerit
information which is believed by the Board of Directors of
FirstMerit, acting in good faith, to be
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confidential; provided, however, that any such disclosure
shall not be considered to be "cause" for termination to the
extent that:
(a) it is required of Executive pursuant to
an order of a court having competent jurisdiction or
a subpoena from an appropriate government agency; or
(b) it is made by Executive in the ordinary
course of business within the scope of his authority;
(iii) Dishonesty or the breach of any contract with
or violation of any legal obligation to FirstMerit;
(iv) Gross negligence or insubordination in the
performance of duties held by the President and Chief
Operating Officer of FirstMerit.
(E) "TERMINATION OF EMPLOYMENT WITHOUT CAUSE" means the
termination of Executive's employment by FirstMerit for any reason
other than Death, Disability or For Cause.
(F) "TERMINATION OF EMPLOYMENT FOR GOOD REASON" means the
voluntary termination of Executive's employment by Executive for any of
the following reasons:
(i) Involuntary reduction in Executive's Base Salary
unless such reduction occurs simultaneously with a
company-wide reduction in officers' salaries;
(ii) Involuntary discontinuance or reduction in
Executive's incentive compensation award opportunities under
FirstMerit's plan unless a company-wide discontinuance or
reduction of all officers' incentive compensation award
opportunities occurs simultaneously with such discontinuance
or reduction;
(iii) Significant reduction in Executive's
responsibilities and status within the FirstMerit
organization, or a change in his title or office without prior
written consent of Executive;
(iv) Involuntary discontinuance of Executive's
participation in any employee benefit plans maintained by
FirstMerit unless such plans are discontinued by reason of law
or loss of tax deductibility to FirstMerit with respect to
contributions to such plans, or are discontinued as a matter
of FirstMerit policy applied equally to all participants in
such plans;
(v) A material breach of this Agreement, which breach
is not corrected within a reasonable time after notice.
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7.2 TERMINATION OF EMPLOYMENT UPON DEATH. If Executive's employment is
terminated by reason of Death, his estate shall be entitled to receive only
Executive's Base Salary to which he was entitled through the Termination Date,
any unpaid bonus due with respect to a year prior to the year in which the
termination occurred, and such other benefits as may be available to him or his
estate through FirstMerit's benefit plans and policies (including the Membership
Agreement entered into in connection with the SERP as described in Section
5.1(C)).
7.3 TERMINATION OF EMPLOYMENT UPON DISABILITY. If Executive's
employment is terminated due to his inability to perform his duties because of
Disability, Executive shall be entitled to receive only his Base Salary to which
he was entitled through the Termination Date, any unpaid bonus due with respect
to a year prior to the year in which the termination occurred, and such other
benefits as may be available to him through FirstMerit's benefit plans and
policies (including the Membership Agreement entered into in connection with the
SERP as described in Section 5.1(C)).
7.4 TERMINATION OF EMPLOYMENT BY FIRSTMERIT FOR CAUSE. If Executive's
employment is terminated For Cause, Executive shall be entitled to receive only
Executive's Base Salary to which he was entitled through the Termination Date
and such other benefits as may be available to him through FirstMerit's benefit
plans and policies in effect at the time of termination.
7.5 TERMINATION WITHOUT CAUSE OR TERMINATION FOR GOOD REASON
(A) If there is a Termination of Employment Without Cause or a
Termination of Employment For Good Reason, and the Termination Date is
prior to the expiration of the Term, Executive's Base Salary and
benefits (including credit for Years of Service under the SERP) shall
continue for a period of thirty (30) months following the month in
which the Termination Date occurs. Notwithstanding the preceding
sentence, if a termination of employment under this Section 7.5(A)
occurs following a Change of Control, and if the compensation and
benefits provided under this Section 7.5(A), alone or in conjunction
with other compensation or benefits received by Executive, constitute
"parachute payments" within the meaning of Section 280G of the Code or
the regulations adopted or proposed thereunder, then the compensation
and benefits payable under this Section 7.5(A) shall be reduced to the
extent necessary so that no portion shall be subject to the excise tax
imposed by Section 4999 of the Code.
(B) If there is a Termination of Employment Without Cause or a
Termination of Employment For Good Reason, and the Termination Date is
after the expiration of the Term, Executive shall be entitled to
receive only his Base Salary to which he was entitled through the
Termination Date and such other benefits as may be available to him
through FirstMerit's benefit plans and policies.
7.6 TERMINATION OF EMPLOYMENT OTHER THAN FOR GOOD REASON. If Executive
terminates employment with FirstMerit other than for Good Reason, Executive
shall be entitled to receive only
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his Base Salary to which he was entitled through the Termination Date and such
other benefits as may be available to him through FirstMerit's benefit plans and
policies.
7.7 EFFECT OF TERMINATION. Upon termination of Executive's employment,
the obligations of each of the parties under this Agreement shall expire as of
the Termination Date, including, without limitation, the obligations of
FirstMerit to pay any compensation to Executive, except to the extent otherwise
specifically provided in this Agreement. Notwithstanding the foregoing, the
obligations contained in Section 8 of this Agreement and the provisions hereof
relating to the obligations of FirstMerit described in the preceding sentence,
shall survive the termination or expiration of this Agreement in accordance with
the terms set forth therein.
8. CONFIDENTIALITY AND NON-COMPETE
8.1 NON-DISCLOSURE. Executive expressly covenants and agrees that he
will not reveal, divulge or make known to any person, firm, company or
corporation any secret or confidential information of any nature concerning
FirstMerit or its business, or anything connected therewith.
8.2 RETURN OF MATERIALS. Executive agrees to deliver or return to
FirstMerit upon termination or expiration of this Agreement or as soon
thereafter as possible, all information, whether written or stored in media used
in computer systems or otherwise, and any other similar items furnished by
FirstMerit or prepared by Executive in connection with his services hereunder.
Executive will retain no copies thereof after termination of this Agreement or
Executive's employment.
8.3 NON-COMPETE. If Executive terminates his employment other than for
Good Reason during the Term, or if FirstMerit terminates Executive's employment
for Cause during the Term, then, until the first anniversary of the Termination
Date, Executive shall not become associated, directly or indirectly, with any
entity, whether as a shareholder (other than as a holder of not more than one
percent (1%) of the outstanding voting shares of any publicly traded company),
principal, partner, employee or consultant (such activities collectively
referred to as an "Associate"), that is actively engaged in any business which
is in competition with FirstMerit or any of its subsidiaries or affiliates in
any geographic area in which FirstMerit or any of its subsidiaries or affiliates
does business at the date of such termination. If Executive incurs a Termination
of Employment for Good Reason or a Termination of Employment Without Cause
during the Term, then, until the cessation of payments under Section 7.5(A),
Executive shall not become an Associate of any entity that is actively engaged
in any business which is in competition with FirstMerit or any of its
subsidiaries or affiliates in the State of Ohio, and such other geographic area
as FirstMerit or any of its subsidiaries or affiliates may have begun doing
business as of the Termination Date.
8.4 INJUNCTIVE RELIEF. Executive acknowledges that it is impossible to
measure in money the damages that will accrue to FirstMerit by reason of
Executive's failure to observe any of the obligations imposed on him by this
Section 8. Accordingly, if FirstMerit shall institute an action to enforce the
provisions hereof, Executive hereby waives the claim or defense that an adequate
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remedy at law is available to FirstMerit, and Executive agrees not to urge in
any such action the claim or defense that such remedy at law exists.
9. MISCELLANEOUS
9.1 ASSIGNMENT. This Agreement shall be binding upon the parties
hereto, their respective heirs, personal representatives, executors,
administrators and successors; provided, however, that Executive shall not
assign this Agreement.
9.2 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the State of Ohio. In the event that any provision of
this Agreement shall be held to be void or unenforceable by a court of competent
jurisdiction, this Agreement shall not be rendered null and void thereby but
shall be construed and enforced as if such void or unenforceable provision was
not originally a part of this Agreement. The parties agree to the sole
jurisdiction and venue of the Common Pleas Court in Summit County, Ohio, for any
disputes arising hereunder.
9.3 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties concerning the employment of Executive by FirstMerit, and any oral
or written statements, representations, agreements or understandings made or
entered into prior to or contemporaneously with the execution of this Agreement,
are hereby rescinded, revoked and rendered null and void by the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year above first written.
FIRSTMERIT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, Chairman and
Chief Executive Officer
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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