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Exhibit 10(a)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into this 16th day of February, 1995, by
and between JOHN R. COCHRAN ("Executive") and FIRSTMERIT CORPORATION, an Ohio
corporation ("FirstMerit").
R E C I T A L S :
A. FirstMerit desires 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
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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
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During the Term (as defined in Section 3), Executive shall serve
FirstMerit as its President and Chief Executive Officer in accordance with
directions from 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 Board of Directors. 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 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 Executive Officer.
3. Term of Employment
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The term of this Agreement (the "Term") shall commence as of March 1,
1995, and shall continue for a period of four years ending on February 28,
1999, 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."
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4. Compensation
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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 Four Hundred
Thousand Dollars 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. Notwithstanding the preceding
sentence, Executive's bonus with respect to the calendar year 1995 will be One
Hundred Forty Thousand Dollars, and shall be paid on or before December 31,
1995. Thereafter, 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 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
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5.1 Retirement Benefits.
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(A) PENSION PLAN. Executive will participate in the
FirstMerit Corporation Pension Plan (the "Pension Plan"), a copy 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
Employees Salary Savings Retirement Plan (the "Retirement Plan"), a
copy 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 FirstMerit
Corporation's 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
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into by FirstMerit and Executive in connection with the SERP. The
Membership Agreement will include the following provisions:
(i) If Executive's employment terminates prior to
his attaining age 55 (a) due to death or Disability, (b) upon
Termination Without Cause during the Term or Termination for
Good Reason during the Term, or (c) following a Change of
Control, then Executive shall be deemed to have attained age
55; in which case Executive may elect to begin receiving
accrued benefits prior to age 55, and, if such election is
made, the amount of his monthly benefit will be calculated as
if Executive had attained age 55 on the date his SERP benefit
commences. No benefits will commence under the SERP, however,
until all payments to be made under Section 7.5(A) of this
Agreement have been made.
(ii) Executive will have no right to receive
payments in the form of a lump sum, and Executive hereby
waives any such right to receive payments under the SERP in
the form of a lump sum.
(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 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 for a period of thirty-six months, and will provide for
reimbursement of outplacement fees for a period of one year. 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 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 One Million
Dollars 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
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of Executive's employment for any reason, except to the 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 program 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.
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(A) Stock Options.
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(i) NQSOs. Immediately following the
commencement of the Term, FirstMerit will make an award to
Executive under and pursuant to the terms of the FirstMerit
1992 Stock Option Program (the "1992 Program"), a copy of
which has been provided to Executive, of non-qualified stock
options ("NQSOs") for 60,000 shares of FirstMerit Corporation
common stock. 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 will become
exercisable with respect to one third of the shares on each of
the anniversaries of the date of grant in 1996, 1997 and 1998,
respectively, except that 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 years from the date of grant.
(ii) ISOs. During the calendar year 1995,
FirstMerit will make an award to Executive, under and pursuant
to the terms of the 1992 Program, of a combination of
incentive stock options ("ISOs") and/or NQSOs for an aggregate
15,000 shares of FirstMerit Corporation common stock. The
terms of such awards shall be determined by the Compensation
Committee and subject to approval by the Board of Directors.
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(B) RESTRICTED STOCK. Immediately following the
commencement of the Term, FirstMerit will make a restricted stock
award to Executive of 12,500 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 one third of the shares will lapse on each of the
anniversaries of the date of grant in 2001, 2002 and 2003, except 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. FirstMerit will reimburse Executive
for fees incurred in connection with personal income tax preparation and
financial planning during the calendar year 1995 in an amount not to exceed Two
Thousand Five Hundred Dollars. For calendar years beginning with 1996,
Executive will be reimbursed for income tax preparation and financial planning
fees in accordance with the policies of FirstMerit then in effect with respect
thereto.
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.
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(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 Summit County, to the extent such expenses are
(i) incurred prior to September 30, 1995, and (ii) approved for
reasonableness by the Chairman of the Board of FirstMerit.
(B) RELOCATION EXPENSES. FirstMerit will pay or
reimburse Executive for relocation expenses incurred by Executive
according to existing policies of FirstMerit.
(C) CONSULTANT FEES. FirstMerit will reimburse Executive
for attorney and other professional fees incurred by him in connection
with the negotiation and consummation of this Agreement and the
employment relationship contemplated hereby; provided, however, that
such reimbursement shall not exceed the sum of Ten Thousand Dollars.
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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.
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6.1 EXECUTIVE PHYSICAL EXAMINATION. Approximately every two
years, Executive will have an executive physical examination performed on him
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.
6.2 VACATION. Executive will be entitled to five weeks paid
vacation and ten bank holidays.
6.3 BOARD OF DIRECTORS. FirstMerit has proposed to its
shareholders that, at the annual meeting to be held in April, 1995, an
additional seat be added to the Board of Directors. If the proposal is adopted
by the shareholders, the Board of Directors agrees to appoint Executive to the
Board of Directors. If the proposal is not adopted by shareholders, the Board
of Directors will appoint Executive, or nominate Executive for election, to the
Board of Directors to fill the first vacancy that shall occur after the date
hereof. 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
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7.1 Definitions.
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(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 the Company representing 30% or
more of the combined voting power of FirstMerit's then outstanding
securities or (ii) at any time during any period of two 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
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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-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
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
Executive 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
termination of Executive's employment by Executive for any of the
following reasons:
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(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 reduction of all
officers' incentive compensation awards 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
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.
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.
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7.5 Termination Without Cause or Termination For Good Reason.
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(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 three years from the Termination Date;
provided, however, that if Executive obtains employment (other than
self-employment) following such termination, then Executive's Base
Salary and benefits (including service credit under the SERP, and
including the payment of premiums under Section 5.3) shall continue
for a period of two years from the Termination Date or until
Executive's obtaining employment, whichever is later. 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 Internal Revenue Code (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 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
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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; and
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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 written information 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 Executives 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 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 in
any geographic area in which FirstMerit or any of its subsidiaries 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 in
the State of Ohio, the west coast of the State of Florida (including, without
limitation, the cities of Clearwater, Ft. Myers, Naples, and such places in
between), and such other geographic area in the State of Florida as FirstMerit
or any of its subsidiaries 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 paragraph 8. Accordingly, if FirstMerit shall institute an action to
enforce the provisions hereof, Executive hereby waives the claim or defense
that an adequate 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.
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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.
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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/ Howard L. Flood
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Its: President & CEO
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/s/ John R. Cochran
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JOHN R. COCHRAN
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