1
EXHIBIT (10)(r)
FIRSTMERIT CORPORATION TERMINATION AGREEMENT
Agreement made this ____ day of _______________, 19__, by and between
FirstMerit Corporation, an Ohio corporation, (the "Company") and ("Employee").
R E C I T A L S:
A. The Employee serves as a ______________________ of the Company and
is a key corporate officer of the Company.
B. The Board of Directors of the Company has determined that the
interests of FirstMerit Corporation stockholders will be best served by assuring
that its key corporate officers will adhere to the policy of the Board of
Directors with respect to any event by which another entity would acquire
effective control of the Company, including but not limited to a tender offer.
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.
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 event by which another entity would acquire
effective control of the Company, including but not limited to a tender offer.
2. CHANGE IN CONTROL. The term "Change in Control" shall mean 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 (a) 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 the Company's then
outstanding securities or (b) 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 the Company, cease for any reason to constitute at least
the majority of such Board unless the election, or the nomination for election,
by the Company'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 the
Company at the beginning of such two-year period.
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
providing the benefits hereinafter specified.
4. TERMINATION FOLLOWING CHANGE IN CONTROL. In the event of termination
of employment subsequent to a Change in Control 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 (c) by the
Employee other than for Good Reason.
2
(1) DISABILITY OR RETIREMENT. Termination of employment by the
Company based on "Dis ability" 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.
(2) CAUSE. The term "Cause" shall mean termination upon one or
more of the following acts of the Employee:
(a) Felonious criminal activity whether or not
affecting the Company;
(b) Disclosure to unauthorized persons of Company
information which is believed by the Board of
Directors of the Company to be confidential;
(c) Breach of any contract with, or violation of any
legal obligation to, the Company or dishonesty; or
(d) Gross negligence or insubordination in the
performance of duties of the position held by the
Employee.
(3) GOOD REASON. The term "Good Reason" shall mean voluntary
termination of employment by the Employee based on any of the following:
(a) Involuntary reduction in the Employee's base
salary, as in effect immediately prior to a Change
in Control unless such reduction occurs
simultaneously with a Company-wide reduction in
officers' salaries;
(b) 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 Change
in Control, unless a Company-wide reduction of all
officers' incentive award opportunities occurs
simultaneously with such discontinuance or
reduction;
(c) Involuntary relocation to another office located
more than 50 miles from the Employee's office
location at the time the Change in Control occurs;
(d) 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;
(e) 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;
(f) Involuntary reduction of the Employee's paid
vacation to less than twenty (20) working days per
calendar year;
2
3
(g) 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
(h) Termination of employment which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph 5 herein.
5. NOTICE OF TERMINATION. Any purported termination of the Employee's
employment by the Company or by the Employee shall be communicated by written
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice 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 a "Date of Termination."
6. COMPENSATION AND BENEFITS UPON TERMINATION.
(a) If, after a Change in Control has occurred and prior to the
expiration of the term of this Agreement, the Employee's employment by the
Company shall be 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 fifth day following the Date of Termination.
For purposes of this Agreement, the term "Month" shall mean a period of thirty
(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 TERMINATION. The Company shall pay to
the Employee his/her full base salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given or
immediately preceding a Change in Control, 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 Termination is given or immediately preceding a
Change in Control, whichever is higher) multiplied by (ii) the lesser of
the number _____ (__) or a fraction the numerator of which is the number
of months from and including the month in which the Date of Termination
occurs to and including the month in which the Employee would attain the
age of sixty-five (65) and the denominator of which is ______ (__).
(3) INCENTIVE COMPENSATION. The Company shall pay to the Employee
an incentive award in an amount equal to (i) the average of the
incentive compensation paid to the Employee in the (2) years immediately
preceding the Date of Termination multiplied by (ii) the lesser of the
number _____ (__) or a fraction the numerator of which is the number of
months from and including the month in which the Date of Termination
occurs to and including the month in which the Employee would attain the
age of sixty-five (65) and denominator of which is _____ (__).
3
4
(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 ninety (90) days after the Date of Termination 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 second anniversary of the Date of Termination or the
calendar month in which the Employee reaches the age of sixty-five (65)
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
Change in Control. If the Employee is a participant in the Company's
Executive Committee Life Insurance Program, the Company shall pay the
premium for the Employee on such insurance for a period ending the
earlier of two (2) years after the Date of Termination or the calendar
month in which the Employee reaches the age of sixty-five (65), 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.
(6) OUTPLACEMENT FEES. For a period not to exceed one (1) year
after the Date of Termination, 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
____________________ ($_________).
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
earliest to occur of the following:
(1) the last day of the _____________ (____) Month, as defined in
paragraph 6, after a Change in Control occurs; or
4
5
(2) the date as of which the Employee is removed or resigns from
his/her position as a ______________ of the Company unless such
removal or resignation occurs after a Change of Control and is for
other than Cause, Disability, Retirement or death, in the case of
removal, or for Good Reason, in the case of resignation.
In the event that the Employee becomes entitled to the compensation or benefits
provided in paragraph 6 of this Agreement before an event of termination occurs
as provided in this paragraph 9, such compensation and benefits shall continue
for the period provided in paragraph 6 notwithstanding the occurrence of such
event of termination.
10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, provided that all
notices to the Company shall be directed to the attention of the President of
the Company with a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
11. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived, or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Employee and such officer as may be specifically
designated by the Board of Directors of the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar provisions or conditions at the same
or at any prior or subsequent time. This Agreement is intended to replace and
supersede the existing Termination Agreement between the parties which prior
agreement shall become invalid as of the date of signing of this Agreement. 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; provided, however, that this
Agreement shall not supersede or in any way limit the rights, duties of
obligations you may have under any other written agreement with the Company. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio.
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.
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
Attest: By:
------------------------- -------------------------
Title:
---------------------
Witness:
------------------------ ----------------------------
EMPLOYEE:
5