exv10w1







 Exhibit 10.1

FIRSTMERIT BANK CASH-SETTLED VALUE APPRECIATION INSTRUMENT




Issue Date: May 14, 2010



1. Defined Terms. When used in this Value Appreciation Instrument (“VAI”),
the following terms have the meanings indicated.




     “Bank” means First MeritBank, N.A.



     “Company” means FirstMerit Corporation.



     “Determination Price” means the Company’s “average volume weighted price” (displayed under the
heading “Bloomberg VWAP” on the issuer’s Bloomberg page) over the two NASDAQ trading days
immediately prior to the date on which this VAI is exercised.



     “Exercise Date” means (i) the date of exercise designated by the Holder in the Notice or (ii)
if the date is not so designated in the Notice, the date the Bank receives the Notice, which, in
either event, shall not be later than the expiration of the Term.



     “Exercise Price” means $22.81, subject to adjustment pursuant to Section 13.



     “FDIC” means Federal Deposit Insurance Corporation.



     “Holder” means the FDIC or its assignee.



     “Initial Exercise Date” means May 21, 2010.



     “Notice” means written notice, in the form attached as Appendix A, executed by
the Holder.



     “Right” means the cash-settled value appreciation right granted pursuant to this VAI with
respect to 2,500,000 Units (such number of Units subject to adjustment pursuant to Section 13), at
the Exercise Price.



     “Term” means the period commencing on May 21, 2010 and expiring at 5 p.m. EST on June 14,
2010.



     “Unit” means an accounting device used to calculate the settlement amount of the Right
granted by this VAI, which mirrors one share of Company common stock.



     “VWAP” means the Volume Weighted Average Price for a trading day displayed under the heading
“Bloomberg VWAP” on the Bloomberg Page for the Company (or its equivalent successor page if such
page is not available) for such trading day. If the Bloomberg Page or the
Bloomberg VWAP is not available for a trading day, “VWAP” shall mean the volume weighted
average price of Company common stock for such trading day, as determined by a nationally



 









 




recognized investment banking firm retained by the Bank based on available trading
information for the Company’s common stock.



2. Grant of Value Appreciation Right. The Bank hereby grants to the FDIC, during the
Term, the Right.



3. Exercise. To the extent permitted by applicable laws and regulation, the Right is
exercisable in accordance with the following conditions:





	 	(a)	 	The Right may be exercised in whole or in part beginning on the Initial
Exercise Date and continuing, at any time, until expiration of the Term.
	 
	 	(b)	 	Notice designating the date of exercise must be delivered to the Bank prior to
expiration of the Term and the Right shall be deemed to be exercised on the Exercise
Date.




4. Settlement of Right; Payment by Bank. After receipt of the Notice in the manner set
forth above, on the first business day following the Exercise Date, the Bank shall deliver to the
Holder an amount, in cash, equal to the product of (i) the number of Units with respect to which
the Right was exercised and (ii) the difference between (A) the Determination Price and (B) the
Exercise Price. Payment shall be made by wire transfer of immediately available funds by the Bank
to the account designated in the Notice.



5. No Rights as Shareholder. This VAI does not entitle the Holder to any voting rights or
other rights as a shareholder of the Bank or the Company.



6. Compliance with Law. Holder will not exercise the Right and the Bank will not be
obligated to deliver payment, if such exercise or payment would violate any applicable law or any
rule or regulation of any governmental authority or any rule or regulation of any securities
exchange or association.



7. Transfer/Assignment. This VAI is transferable, in whole or in part as set forth above
without the consent of the Bank. This VAI shall be binding upon any successors or assigns of the
Bank and the Holder.



8. Governing Law; Jurisdiction. This VAI shall be governed by and construed in accordance
with the federal law of the United States. Each of the Bank and the Holder agrees to submit to the
exclusive jurisdiction and venue of the federal courts located in the Southern District of New York
for any action, suit or proceeding arising out of or relating to this VAI or the transactions
contemplated hereby. To the extent permitted by applicable law, each of the Bank and the Holder
hereby unconditionally waives trial by jury in any legal action or proceeding relating to the VAI.



9. Amendments/Waivers. This VAI may be amended and the observance of any term of this VAI
may be waived only, in the case of an amendment, with the written consent of the Bank and the
Holder, or in the case of a waiver, by the party against whom the waiver is to be effective.






 









 







10. Notices. All notices hereunder shall be in writing and shall be effective (A)
on the day on which delivered if delivered personally or transmitted by facsimile with evidence of
receipt, (B) one Business Day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (C) five Business Days after the
date on which the same is deposited, postage prepaid, in the U.S. mail, sent by certified or
registered mail, return receipt requested, and addressed to the party to be notified at the address
indicated below, or at such other address and/or telecopy or telex number and/or to the attention
of such other person as the Company or the Holder may designate by ten-day advance written notice.





			
	      If to the Bank, to:	 	Terrence E. Bichsel

Executive Vice President and Chief Financial Officer

FirstMerit Bank, N.A.

III Cascade Plaza

Akron, Ohio 44308

Terr.Bichsel@FirstMerit.com

(330) 384-7413 (fax number)





11. Entire Agreement. This VAI and the appendices attached hereto, and the
Purchase and Assumption Agreement between the Bank and the FDIC dated as of May 14, 2010, contain
the entire agreement between the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or undertakings with respect thereto.



12. Acceptance. The recipient of this Right shall signify acceptance of the terms and
conditions of this VAI by signing in the space provided below and returning a signed copy to the
Bank.



13. Adjustments; Anti-Dilution. In the event of any subdivision, reclassification or
consolidation of outstanding shares of common stock of the Company, declaration of a dividend
payable in shares of common stock of the Company or common stock split of the Company, then (i) the
number of Units and (ii) the Exercise Price shall each be proportionately adjusted by the Board of
Directors of the Bank to reflect such transaction; provided, however, that any adjustment shall
only be such as are necessary to maintain the proportionate interest of the Holder and preserve,
without exceeding, the value of this Right. The existence of this Right shall not affect in any
manner the right or power of the Bank or the Company or their respective shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Bank or the Company or its business or any merger or consolidation of the Bank
or the Company, or any issuance of bonds, debentures or preferred stock, or dissolution or
liquidation, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding of any kind.






 









 







IN WITNESS WHEREOF, the Bank has caused this VAI to be executed by a duly authorized officer as of
the Issue Date written above.




FirstMerit Bank, N. A.




	 	 	 	 	 

	By:

	 	/s/ William P. Richgels
 

	 	 
	 
	 	 	 	 
	ACCEPTED:	 	 
	 
	FEDERAL DEPOSIT INSURANCE CORPORATION	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Cathleen L. Powers
 

Cathleen L. Powers
	 	 
	Title:

	 	Attorney in Fact	 	 






 









 





FORM OF NOTICE OF EXERCISE




TO: FirstMerit Bank, N.A.




RE:Election to Exercise Value Appreciation Instrument



The undersigned, pursuant to the provisions set forth in the attached VAI irrevocably exercises its
Right under such VAI with respect to the Units set forth below.




	 	 	 	 	 	 	 

	 

	 	Number of Units:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Exercise Date:
	 	                                        , 2010

(if a date is not designated, the Exercise
Date is date the Bank receives this Notice)	 	 






     Wire Transfer Instructions:



	 	 	 	 	 	 	 

	 

	 	Bank Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	ABA Routing#:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Beneficiary Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Beneficiary Account #:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Bank Contact:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Phone:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Beneficiary Contact:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Beneficiary Phone:	 	 	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 

	HOLDER:
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Date:

	 	 

	, 	2010 






Appendix A -Form of Notice of Exercise of Value Appreciation Instrument