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EXHIBIT 10.33
Displacement Agreement
THIS AGREEMENT ("Agreement") is effective the 1st day of November,
2000, by and between FirstMerit Corporation, an Ohio corporation (the "Company")
and 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 the 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.
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(b) The term "Change in Control" shall mean the occurrence of
any one of the following events:
(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
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
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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 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.
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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.
(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
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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;
(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.
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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 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 an 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 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 Displacement or the calendar month in which the Employee
reaches the age of 67, all medical, life, 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 Displacement. If the Employee is a participant
in the Company's Executive Committee Life Insurance Program, the
Company
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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 Displacement 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
Displacement, 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 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 Date of Displacement 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 Displacement
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
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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 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 constitute a
parachute payment and, if requested, such determination shall be made by
independent tax counsel 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
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date above first written.
FirstMerit Corporation
By:__________________________________
Xxxxxxxxxxx X. Xxxxxx, Executive
Vice President
Employee:
_____________________________________
(Signature)
_____________________________________
(Print Name)
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Displacement Agreement
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EXHIBIT A
Name of Executive: ____________________________________ (print)
Item 6(c)(2)A: Multiplied By: ______ (insert number)
Item 6(c)(2)B: Denominator: ______ (insert number)
Item 6(c)(3)A: ______ (insert number)
Item 6(c)(3)B: ______ (insert number)
Item 6(c)(5)A: Anniversary: ______ anniversary (insert number)
Item 6(c)(5)B: Years in Effect: ______ years (insert number)
Item 6(c)(7):Outplacement Fee: $______________
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