Document:

Exhibit 10.1

 

Exhibit 10.1

FIRSTMERIT CORPORATION

CHANGE IN CONTROL TERMINATION AGREEMENT

     THIS
AGREEMENT (“Agreement”) is effective the 1st day of November, 2004
(“Effective Date”), by and between FirstMerit Corporation, an Ohio corporation
(the “Company”) and Terrence E. Bichsel 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 (“Board”) has determined that the
interests of the Company’s shareholders will be best served by ensuring that
its key corporate officers will adhere to the policies of the Board and senior
management with respect to any event by which another entity would acquire
effective control of the Company.

     C. The Board has also determined that it is in the best interests of the
shareholders to promote stability among key officers and employees,
particularly during the period leading up to and after another entity acquires
effective control of the Company.

     D. Employee and the Company may have previously entered into a Change in
Control Termination Agreement, which agreement is being replaced in its
entirety by this Agreement, and may also enter into a Displacement Agreement
which protects Employee in the circumstance of a displacement of the Employee
which occurred due to a merger or acquisition described in the Displacement
Agreement. If an event (or series of events) creates an entitlement under both
the Displacement Agreement and this Agreement, the Employee will not be
entitled to be paid benefits under both this Agreement and the Displacement
Agreement but will be entitled to a benefit under this Agreement or under the
Displacement Agreement, whichever produces the largest after-tax benefit to the
Employee.

     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. In exchange for the compensation and benefits
described in this Agreement, the Employee agrees to discharge the obligations
described in paragraph 9 and, consistent with his or her duties to shareholders
and other legal obligations, Employee shall support the position of the Board
and the Company’s senior management and shall take any action reasonably
requested by the Board and the Company’s senior management with respect to any
event that may or will constitute a Change in Control. The Employee agrees (on
his/her own behalf and in behalf of his/her heirs, assigns and beneficiaries)
that the compensation and benefits described in this Agreement are adequate
consideration for the obligations assumed in this Agreement.

 

 

     2. Change in Control. The term “Change in Control” shall mean the
occurrence of the earliest to occur of any one of the following events on or
after the Effective Date and while in the employ of the Company or any
Subsidiary before a Change in Control or, after a Change in Control, the Change
Entity or any Related Entity:

          (a) Individuals who, on April 19, 2000, constituted 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 then Incumbent Directors (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 individual elected or
nominated as a 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 ever be deemed to be an Incumbent Director;

          (b) 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) becomes through any means (including
those described in paragraph (c)(i) through (v)) a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% 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”);

          (c) Any “person” (as such term is defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of Company Voting Securities representing 25% or more
(but less than 50%) of the Company Voting Securities; provided, however, that
the event described in this paragraph (c) shall not be deemed to be a Change in
Control for purposes of this paragraph (c) by virtue of any of the following
acquisitions:

          (i) by the Company or any Subsidiary (i.e., any entity related to
the Company through common ownership as determined under Sections 414 or
1563 of the Internal Revenue Code of 1986, as amended (“Code”));

          (ii) by or through any employee benefit plan sponsored or maintained
by the Company or any Subsidiary and described (or intended to be
described) in Section 401(a) of the Code;

          (iii) directly through an equity compensation plan maintained by the
Company or any Subsidiary, including a program described in Section 423
of the Code;

          (iv) by any underwriter temporarily holding securities pursuant to
an offering of such securities;

          (v) by any entity or “person” (including a “group” as contemplated
by Sections 13(d)(3) and 14(d)(2) of the Exchange Act) with respect to
which that acquirer

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has filed SEC Schedule 13G indicating that the securities were not
acquired and are not held for the purpose of or with the effect of
changing or influencing, directly or indirectly, the Company’s management
or policies (regardless of whether such acquisition of securities is
considered to constitute the acquisition of control under the Bank
Holding Company Act of 1956 pursuant to Regulation Y promulgated
thereunder), unless and until that entity or person files SEC Schedule
13D, at which point this exception will not apply to such Company Voting
Securities, including those previously subject to an SEC Schedule 13G
filing; or

          (vi) pursuant to a Non-Control Transaction (as defined in paragraph
(d)).

          (d) 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
with respect to such transaction or the issuance of securities in connection
with the transaction (a “Business Combination”), unless immediately following
such Business Combination:

          (i) more than 50% of the total voting power of (y) the corporation
resulting from such Business Combination (the “Surviving Entity”), or (z)
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; and

          (ii) 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 (d)(i) and (d)(ii) shall be deemed to be a “Non-Control
Transaction”); or

          (e) 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

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Voting Securities beneficially owned by such person by more than one
percent, a Change in Control of the Company shall then occur.

          For purposes of this Agreement, the entity resulting from a Change in
Control (including, if appropriate, the Company) or succeeding to the Company’s
interest in connection with a Change in Control is referred to as the “Change
Entity.”

          If more than one event that constitutes a Change in Control occurs during
a Protection Period, the Employee shall be entitled to the amount that equals
the largest after-tax amount generated by any of the Changes in Control.

          If one or more events generate a payment under both this Agreement and the
Displacement Agreement, the Employee will be entitled only to the benefit
described in this Agreement or in the Displacement Agreement, whichever
provides the highest after-tax value to the Employee, but will not be entitled
to amounts under both agreements.

          Notwithstanding any other provision of this Agreement, the Employee will
not be entitled to any amount under this Agreement if he/she acted in concert
with any person or group (as defined above) to effect a Change in Control,
other than at the specific direction of the Board and in his/her capacity as an
employee of the Company or any Subsidiary.

     3. Company’s Right to Terminate. The entity with which the Employee has a
direct employment relationship (“Employer”) may terminate the Employee’s
employment at any time during the term of this Agreement, subject to the terms
of this Agreement and the obligation to provide the amounts stated herein if
due.

     4. Termination in Connection With a Change in Control. In the event of
termination of employment from the Company or any Subsidiary before a Change in
Control or, after a Change in Control, the Change Entity or any Related Entity
(including an involuntary termination while the employee is absent from active
employment pending determination of Disability under the procedures described
in paragraph 4(a)) within the Protection Period (i.e., the period beginning on
the date the Board first learns of an act or event that results in a Change in
Control, even if that period begins before the Effective Date, and ending on
the last day of the number of calendar months specified in Item 10 on Exhibit A
beginning coincident with or immediately after a Change in Control), the
Employee shall be entitled to the benefits provided in paragraph 6 unless such
termination is because of the Employee’s death or determination of Disability
(as described in paragraph 4(a)), for Cause, or by the Employee other than for
Good Reason.

          (a) Disability. The term “Disability” shall mean termination because of
Total and Permanent Disability as defined in the Long-Term Disability Plan in
effect at any time during the Protection Period in which the Employee is or was
participating when the condition began (or, if the Employee is or was not
participating in a Long-Term Disability Plan when the condition begins, as
defined under any long-term disability program in effect at any time during the
Protection Period). If the Employee is deemed Disabled, his date of
termination will be the end of any period prescribed under the long-term
disability plan for determining eligibility for long term disability benefits
and any termination occurring before that date will not be a

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termination for Disability. Also, any adjustment to the Employee’s
compensation, job duties or other circumstances of employment during the period
his Disability is being established will not constitute a basis for “Good
Reason” under paragraph 4(c).

          (b) Cause. The term “Cause” shall mean one or more of the following acts
of the Employee:

          (i) any act of fraud, intentional misrepresentation, embezzlement,
misappropriation or conversion by the Employee of the assets or business
opportunities of the Company or any Subsidiary before a Change in Control
or, after a Change in Control, the Change Entity or any entity related
through common ownership (as determined under Sections 414 and 1563 of
the Code) to the Change Entity (“Related Entity”);

          (ii) conviction of the Employee of (or plea by the Employee of
guilty to) a felony (or a misdemeanor that originally was charged as a
felony but was reduced to a misdemeanor as part of a plea bargain) or
intentional and repeated violations by the Employee of the Employer’s
written policies or procedures;

          (iii) disclosure, other than through mere inadvertance, to
unauthorized persons of any Confidential Information (as defined below);

          (iv) intentional breach of any contract with or violation of any
legal obligation owed to the Company or any Subsidiary before a Change in
Control or, after a Change in Control, the Change Entity or any Related
Entity;

          (v) dishonesty relating to the duties owed by the Employee to the
Company or any Subsidiary before a Change in Control or, after a Change
in Control, the Change Entity or any Related Entity;

          (vi) the Employee’s (x) willful and continued refusal to
substantially perform assigned duties (other than any refusal resulting
from sickness or illness or while suffering from an incapacity due to
physical or mental illness, including a condition that does or may result
in a Disability, or attributable to an event that constitutes Good
Reason, as defined in paragraph (c)), (y) willful engagement in gross
misconduct materially and demonstrably injurious to the Company or any
Subsidiary before a Change in Control or, after a Change in Control, the
Change Entity or any Related Entity or (z) breach of any term of this
Agreement; or

          (vii) any intentional cooperation with any party attempting to
effect a Change in Control unless (y) the Board has approved or ratified
that action before the Change in Control or (z) that cooperation is
required by law.

          However, Cause will not arise solely because the Employee is absent from
active employment during periods of vacation, consistent with the Employer’s
applicable vacation policy, sickness or illness or while suffering from an
incapacity due to physical or mental illness, including a condition that does
or may result in a Disability or other period of absence initiated by the
Employee and approved by the Employer.

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          The term “Confidential Information” shall mean any and all information
(other than information in the public domain) related to the Company’s, any
Subsidiary’s, the Change Entity’s or any Related Entity’s business, including
all processes, inventions, trade secrets, computer programs, technical data,
drawings or designs, information concerning pricing and pricing policies,
marketing techniques, plans and forecasts, new product information, information
concerning methods and manner of operations and information relating to the
identity and location of all past, present and prospective customers and
suppliers.

          (c) Good Reason. The term “Good Reason” shall mean any of the following
to which the Employee has not specifically consented in writing:

     (i) at any time during the Protection Period, any breach of
this Agreement (including breach of the commitments undertaken
under paragraph 9(d) of any nature whatsoever) by or on behalf of
the Company or any Subsidiary before a Change in Control or, after
a Change in Control, the Change Entity or any Related Entity;

     (ii) at any time during the Protection Period, a reduction in
the Employee’s title, duties, responsibilities or status, as
compared to either (y) the Employee’s title, duties,
responsibilities or status immediately before the beginning of the
Protection Period or (z) any enhanced or increased title, duties,
responsibilities or status assigned to the Employee during the
Protection Period;

     (iii) at any time during the Protection Period, the permanent
assignment to the Employee of duties that are inconsistent with (y)
the Employee’s office immediately before the beginning of the
Protection Period or (z) any more senior office to which the
Employee is promoted during the Protection Period;

     (iv) during any calendar year ending during the Protection
Period (or any fractional calendar year ending within the
Protection Period), a 15 percent (or larger) reduction (other than
a reduction that is attributable to any termination for death,
after reaching age 65 (but only if the Employee is then entitled to
an immediate, unreduced benefit under a deferred compensation plan
described in Section 401(a) of the Code), Disability or Cause,
voluntary termination by the Employee other than for Good Reason or
for any period of temporary absence protected by law or initiated
by the Employee and approved by the Employer) in the aggregate
value of the highest of the Employee’s total compensation for the
calendar year ending before the Date of Termination (including base
salary, cash bonus potential, the value of employee benefits, other
than value associated solely with the performance of investments
the Employee controls, and fringe benefits but excluding
compensation attributable to the exercise or liquidation of stock
options) or, if higher, the Employee’s total compensation for the
last calendar year ending before the beginning of the Protection
Period (including base salary, cash bonus potential, the value of
employee benefits, other than value associated solely with the
performance of investments the Employee controls, and fringe
benefits) but, in both cases, determined without regard to any
amounts, paid or payable, under paragraphs 6, 7, 8 and 11;

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     (v) at any time during the Protection Period, a requirement
that the Employee relocate to a principal office or worksite (or
accept indefinite assignment) to a location more than 50 miles
distant from (y) the principal office or worksite to which the
Employee was assigned immediately before the beginning of the
Protection Period or (z) any location to which the Employee agreed,
in writing, to be assigned after a Change in Control;

     (vi) at any time during the Protection Period, the imposition
on the Employee of business travel obligations substantially
greater than the Employee’s business travel obligations during the
12-consecutive-calendar-month period ending immediately before the
beginning of the Protection Period but determined without regard to
any special business travel obligations associated with activities
relating to the Change in Control;

     (vii) at any time during the Protection Period, the Employer’s
(u) failure to continue in effect any material fringe benefit or
compensation plan, retirement or deferred compensation plan, life
insurance plan, health and accident plan, sick pay plan or
disability plan in which the Employee is participating (or was
eligible to participate) immediately before the beginning of the
Protection Period, (v) modification of any of the plans or programs
just described that adversely affects the potential value of the
Employee’s benefits under those plans (other than value associated
solely with the performance of investments the Employee controls)
or (w) failure to provide the Employee, after a Change in Control,
with the same number of paid vacation days to which the Employee is
or becomes entitled at or anytime during the Protection Period
under the terms of the Employer’s vacation policy or program.
However, Good Reason will not arise under this subsection solely
because (x) the Company or any Subsidiary before a Change in
Control or, after a Change in Control, the Change Entity or any
Related Entity terminates or modifies any such program during the
Protection Period solely to comply with applicable law but only to
the extent required to meet applicable legal standards, (y) a plan
or benefit program expires under self-executing terms contained in
that plan or benefit program before the Change in Control or (z)
the Company or any Subsidiary before a Change in Control or, after
a Change in Control, the Change Entity or any Related Entity
replaces a plan or program with a successor plan or program of
equal or equivalent value to the Employee;

     (viii) for the duration of any period of any absence from
active employment that begins or continues at any time during the
Protection Period, failure to provide or continue for the Employee
any benefits (including disability benefits) available to employees
who are absent from active employment (including because of
disability) under programs maintained by the Company, the Change
Entity or any Related Entity on the date the absence (including
disability) begins;

     (ix) during the Protection Period, the Employee is unable to
perform normally assigned duties because of a physical or mental
condition and before his/her Disability is established under
paragraph 4(a), the Company or any

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Subsidiary before a Change in Control or, after a Change in
Control, the Change Entity or any Related Entity terminates the
Employee before the end of the Disability determination period
described in paragraph 4(a);

     (x) during the Protection Period, the Company or any
Subsidiary before a Change in Control or, after a Change in
Control, the Change Entity or any Related Entity unsuccessfully
attempts to terminate the Employee for Cause, in which case the
Effective Period will not end earlier than 60 days after the
conclusion of the Employer’s unsuccessful attempt to terminate the
Employee for Cause;

     (xi) during the Protection Period, the Employer attempts to
amend or terminate this Agreement without regard to the procedures
described in paragraphs 10 or 13;

     (xii) failure at any time to obtain an assumption of the
Company’s or any Subsidiary’s, before a Change in Control, or,
after a Change in Control, the Change Entity’s or any Related
Entity’s obligations under this Agreement by any successor to any
of them, regardless of whether such entity becomes a successor to
the Company or any Subsidiary, before a Change in Control, or,
after a Change in Control, the Change Entity or any Related Entity
as a result of a merger, consolidation, sale of assets or any other
form of reorganization; or

     (xiii) 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 shall be communicated by written Notice of Termination to the other
party delivered no later than 60 days after the Employee, in the case of Good
Reason, or, in other cases, the Company or any Subsidiary, before a Change in
Control, or, after a Change in Control, the Change Entity and any Related
Entity, know or with reasonable diligence should have known of the event
constituting Good Reason, Cause or Disability. For purposes of this Agreement,
a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provisions 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.” However, the Date of Termination
specified in the notice:

          (a) In the case of a termination because of Disability, will be no earlier
than the end of the disability determination period described in paragraph
4(a);

          (b) In the case of a termination for Cause, on the Date of Termination
specified in the Notice of Termination (which may not be earlier than the date
on which the condition constituting Cause occurred, unless, within 30 days
after the date the Notice of Termination for Cause is delivered to the
Employee, the Employee corrects to the reasonable satisfaction of the Employer
the condition specified in the Notice of Termination for Cause as

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the basis for the termination, in which case the Notice of Termination
will be deemed to have been withdrawn and will be of no effect;

          (c) In the case of a termination for Good Reason, on the Date of
Termination specified in the Notice of Termination (which may not be earlier
than the day before the event constituting Good Reason occurred), unless,
within 30 days after the date the Notice of Termination for Good Reason is
delivered (even if this 30 day period extends beyond the term as defined in
paragraph 10), the Employer corrects to the reasonable satisfaction of the
Employee the condition specified in the Notice of Termination for Good Reason
as the basis for the termination, in which case the Notice of Termination will
be deemed to have been withdrawn and will be of no effect; and

          (d) in all other cases, the date the Notice of Termination is
delivered.

     6. Compensation and Benefits Upon Termination.

          (a) If a Change in Control has occurred and during the Protection Period
the Employee’s employment is terminated (i) by the Employer other than for
Cause, Disability or death or (ii) by the Employee for Good Reason, the
Employee shall be entitled to (and each of the Change Entity and all Related
Entities shall be jointly liable for) the compensation and benefits provided in
subparagraph (c) below.

          (b) The compensation described in subparagraphs (c)(i), (c)(ii) and
(c)(iii) shall be paid by the Change Entity or the Employer (or jointly by
them) to the Employee in a single lump sum cash payment on or before the fifth
business day following the effective Date of Termination. The compensation and
benefits described in subparagraphs (c)(iv), (c)(v), (c)(vi) and (c)(vii) will
be paid as provided in those subparagraphs.

          (c) The compensation and benefits payable to an Employee pursuant to this
paragraph 6 shall be as follows:

          (i) Base Salary to Date of Termination. The Employee’s full base
salary through the Date of Termination.

          (ii) Base Salary. An amount equal to the Employee’s annual base
salary (at the highest annualized rate in effect at any time during the
Protection Period) multiplied by the number indicated in Item 6(c)(ii) on
Exhibit A, which Exhibit is attached hereto and incorporated by reference
herein.

          (iii) Incentive Compensation. An amount equal to (y) the value of
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 (and/or any analogous plan adopted after the
date of this Agreement) for the year of the Employee’s Date of
Termination (or any higher percentage based on objective criteria
specified in the Executive Incentive Compensation Plan for the year in
which the Date of Termination occurs and/or any analogous plan adopted
after the date of this Agreement that the Employee has achieved before
the Date of Termination) or, if higher, the value of the incentive
compensation payment the Employee received under the Company’s

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Executive Incentive Plan (and/or any analogous plan adopted after
the date of this Agreement) at any time during the Protection Period
multiplied by (z) the number indicated in Item 6(c)(iii) on Exhibit A.

          (iv) Stock Plans. The Employee’s outstanding stock options and
other stock, phantom stock, stock appreciation rights or similar
arrangements in which he/she participates, whether issued before, in
connection with or after the Change in Control will be fully vested and
exercisable. Notwithstanding any provisions to the effect that rights
terminate upon termination of employment, the Employee (or his/her
beneficiary) shall be given the longer of 90 days after the Date of
Termination, or the remaining period provided in the grant (determined
without regard to the Employee’s termination), to realize or exercise all
rights or options provided under such plans with respect to any stock
option, and other stock, phantom stock, stock appreciation rights or
similar grants.

          (v) Medical Benefits and Life Insurance. The Employer or the Change
Entity shall maintain in full force and effect for the Employee’s (and
for his/her family if family coverage is then in effect) continued
benefit until the earlier of the number of months listed in Item 6(c)(v)
on Exhibit A after the Date of Termination, or the end of the calendar
month in which the Employee reaches the age of 67, all medical insurance
(including health care, dental and prescription drug insurance), life
insurance, and accidental death and dismemberment insurance including
conversion rights (collectively, “Welfare Benefits”), with coverage and
limits, separately for each Welfare Benefit and in the aggregate,
identical to those in effect with respect to the Employee (including
family coverage if family coverage is then in effect), immediately before
the Date of Termination or, if higher (both separately and in the
aggregate) at any time during the Protection Period. If the Employer or
the Change Entity is unable to provide some or all of the Welfare
Benefits through its insured program for the duration of the period
described in the first sentence of this paragraph, the Employer or the
Change Entity will distribute to the Employee a lump sum cash amount
equal to the highest aggregate premium amount paid during the Protection
Period with respect to the Welfare Benefit it is unable to provide
through its insured programs multiplied by the number of whole and
fractional premium periods for which it is unable to provide this
coverage through its insured program, plus an additional amount equal to
the Premium Tax Obligation (as defined below). If the Employee is a
participant in the Company’s Executive Committee Life Insurance Program
(and/or any analogous plan adopted after the date of this Agreement) on
the Date of Termination, the Change Entity and/or the Employer shall pay
the premium for the Employee on such insurance for a period ending the
earlier of the number of months listed in Item 6(c)(v) on Exhibit A after
the Date of Termination, or the calendar month in which the Employee
reaches the age of 67, plus an additional amount to the Employee equal to
the Premium Tax Obligation. For the sole purpose of determining the
Employee’s eligibility to participate in the Company’s Welfare Benefit
programs, the Employee shall be considered to be on a paid leave of
absence as long as he/she is receiving benefits under this Agreement.

          The term “Premium Tax Obligation” shall mean an additional cash
amount equal to all applicable federal, state and local, income, wage,
employment and excise taxes (including those imposable under Code §4999)
so that, after payment of all

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taxes due on the cash payments described in this subparagraph (c)(v)
(i.e., the cash equivalent of the premiums needed to provide the Welfare
Benefits the Change Entity and/or the Company are unable to provide
through their insured programs), the Employee will retain cash equal to
the highest aggregate premium amount paid during the Protection Period
with respect to the Welfare Benefit it is unable to provide through its
insured programs multiplied by the number of whole and fractional premium
periods for which it is unable to provide this coverage through its
insured program.

          (vi) Executive Supplemental Retirement Plan. The following shall
apply for purposes of calculating the Employee’s benefits, if applicable,
under the FirstMerit Corporation Executive Supplemental Retirement Plan
and/or any other nonqualified plan of deferred compensation in effect
during the Protection Period (the “SERP”):

          (x) for purposes of calculating the Employee’s Monthly
Retirement Income (as defined in the SERP) under Sections 4.01 and
4.02 (or successor section) of the SERP and for purposes of
determining the Employee’s vested Monthly Retirement Income under
Section 4.05 (or successor section) of the SERP, the Employee’s
Years of Service (as defined in the SERP) shall be increased by 24
months;

          (y) 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 24
months; and

          (z) the Employee’s Average Monthly Earnings for purposes of
the SERP shall be deemed to be equal to the total of the highest
monthly base salary earned by the Employee during the 24 months
immediately preceding the Change in Control and the value of 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 (and/or any analogous plan
adopted after the date of this Agreement) in the year of Employee’s
Date of Termination (or any higher percentage based on objective
criteria specified in the Incentive Compensation Plan for the year
in which the Date of Termination occurs and/or any analogous plan
adopted after the date of this Agreement) that the Employee has
achieved before the Effective Date of Termination in the year of
Employee’s Date of Termination divided by 12.

          The terms of this subparagraph (vi) shall apply only if Employee is
a participant in the SERP, and 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
(vi)(x), (y) and (z) above, is assumed to commence on the earliest date
upon which the Employee is eligible to retire under the SERP for purposes
of determining the Actuarial Equivalent (as defined in the SERP) of such
benefit.

-11-

 

          If the SERP is terminated and the Employee cites that termination as
a basis for Good Reason termination, the benefits due under this
subparagraph will be calculated as if the SERP had not been terminated.

          (vii) Outplacement Fees. For a period not to exceed one year after
the Date of Termination, the Change Entity, the Employer or any Related
Entity will pay directly to the provider 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)(vii) on Exhibit A.

     7. Overall Limitation on Benefits. Notwithstanding any provision in this
Agreement to the contrary (other than paragraphs 6(c)(v), 8 and 11 which will
apply under the circumstances described in those paragraphs and below), if, as
of the date of the Change in Control, the Change Entity (after consulting with
an independent accounting or compensation consulting company) ascertains that
the compensation and benefits provided to the Employee pursuant to or under
this Agreement (other than the Welfare Benefit Replacement Cost defined below
and the amounts described in paragraphs 8 and 11), either alone or when
combined with other compensation and benefits received by the Employee, would
constitute “parachute payments” within the meaning of Section 280G of the Code,
or the regulations adopted thereunder, then the compensation and benefits
payable pursuant to or under this Agreement (other than the Welfare Benefit
Replacement Cost and the amounts described in paragraphs 8 and 11) 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 (“Excise Taxes”). 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 an independent accounting or compensation consulting company
(other than the entity described in the first sentence of this subparagraph)
selected by the Change Entity and approved by the party requesting such
determination, the fees of which will be borne solely by the Change Entity. In
the event that any reduction is required under this paragraph 7, the Employee
may select which compensation and benefits shall be reduced and the Employee’s
decision will be binding.

     If the Internal Revenue Service subsequently and finally decides that the
amount of the reduction applied under this paragraph 7 is not sufficient to
avoid the Excise Taxes on compensation and benefits (other than the Welfare
Benefit Replacement Cost and those amounts described in paragraphs 8 and 11),
the Employee will immediately remit an additional amount to the Change Entity
equal to the difference between the amount paid (other than the Welfare Benefit
Replacement Cost and those amounts described in paragraphs 8 and 11) and the
amount paid (other than the Welfare Benefit Replacement Cost and those amounts
described in paragraphs 8 and 11). Also, the Employee agrees to promptly
notify the Change Entity of an assessment or inquiry from the Internal Revenue
Service relating to payments under this Agreement that would, if made final,
result in imposition of an Excise Tax and also agrees to cooperate with the
Change Entity in resisting any Excise Tax assessment. However, the Change
Entity will have complete control over resolution of any claim by the Internal
Revenue Service that might generate an Excise Tax (although it will have no
dispositive power over any other tax matter that may be subject to the same
audit) and the Company will bear all costs associated with that effort.

-12-

 

     For purposes of this paragraph 7, Welfare Benefit Replacement Cost equals
the sum of the amount required to enable the Employee to purchase the Welfare
Benefits the Change Entity and the Company are unable to provide through their
insured programs throughout the period described in paragraph 6(c)(v) plus the
Premium Tax Obligation. When applying the rules described in this paragraph 7,
the Welfare Benefit Replacement Cost and those amounts described in paragraphs
8 and 11 will be disregarded entirely and the calculation of any Excise Tax
liability (and, if appropriate, reduction of compensation and benefits to avoid
any Excise Tax liability) will be performed without reference to the Welfare
Benefit Replacement Cost and the amounts described in paragraphs 8 and 11.

     8. Legal, Etc., Fees. The Change Entity shall pay all reasonable legal,
accounting and actuarial fees and expenses incurred by the Employee in
enforcing any right or benefit provided by this Agreement. If it is
subsequently determined that payment of these fees are parachute payments, the
Change Entity or the Employer will fully gross-up the Employee for the income,
wage, employment and excise taxes associated with that payment so that, after
all applicable federal, state and local, income, wage, employment and excise
taxes (plus any assessed interest and penalties), the Employee will have
incurred no liability (either for these fees or the taxes just listed) with
respect to the matters encompassed in this paragraph.

     9. Obligations. By signing this Agreement, the Employee agrees to be
bound by and to comply with the following restrictions, whether or not the
Employee also receives the compensation and benefits described in paragraph 6.

          (a) If any “person” (as used in paragraphs 2(b) and 2(c)) initiates a
tender or exchange offer, distributes proxy materials to the Company’s
shareholders or takes other steps to effect, or that may result in, a Change in
Control, the Employee agrees not to terminate employment voluntarily during the
pendency of that activity (other than by reason of termination after reaching
retirement age or Disability or for Good Reason) and to continue to serve as a
full-time employee until those efforts are abandoned, that activity is
terminated or until a Change in Control has occurred.

          (b) Except as otherwise required by applicable law, Employee expressly
agrees to keep and maintain Confidential Information (as defined in paragraph
4(b)) confidential and not, at any time during or subsequent to the Employee’s
employment, to use any Confidential Information for Employee’s own benefit or
to divulge, disclose or communicate any Confidential Information to any person
or entity in any manner except (i) to employees or agents of the Company, any
Subsidiary, the Change Entity and any Related Entity that need the Confidential
Information to perform their duties on behalf of the Company, any Subsidiary,
the Change Entity and any Related Entity, (ii) in the performance of Employee’s
duties, (iii) as a necessary (and only to the extent necessary) part of any
undertaking by the Employee to enforce the Employee’s rights under this
Agreement or (iv) pursuant to a subpoena. Employee also agrees to notify the
Company, before a Change in Control and, after a Change in Control, the Change
Entity promptly of any circumstance Employee believes may legally compel the
disclosure of Confidential Information and to give this notice before
disclosing any Confidential Information.

-13-

 

          (c) The Employee agrees that during and after employment and without
additional compensation (other than reimbursement for reasonable associated
expenses) to cooperate with the Company, any Subsidiary, the Change Entity and
any Related Entity in the following areas:

          (i) the Employee agrees (w) to be reasonably available to answer
questions for the Company’s, any Subsidiary’s, the Change Entity’s and
any Related Entity’s officers regarding any matter, project, initiative
or effort for which the Employee was responsible while employed by the
Employer and (x) to cooperate with the Company, any Subsidiary, the
Change Entity and any Related Entity during the course of all third-party
proceedings arising out of the Company’s, any Subsidiary’s, the Change
Entity’s or any Related Entity’s business about which the Employee has
knowledge or information. For purposes of this Agreement, (y)
“proceedings” includes internal investigations, administrative
investigations or proceedings and lawsuits (including pre-trial discovery
and trial testimony) and (z) “cooperation” includes the Employee’s being
reasonably available for interviews, meetings, depositions, hearings
and/or trials without the need for subpoena or assurances by the Company,
any Subsidiary, the Change Entity or any Related Entity providing any and
all documents in the Employee’s possession that relate to the proceeding
and providing assistance in locating any and all relevant notes and/or
documents.

          (ii) unless compelled to do so by lawfully-served subpoena or court
order, the Employee agrees not to communicate with, or give statements or
testimony to, any attorney representing an interest opposed to the
Company’s, any Subsidiary’s, the Change Entity’s or any Related Entity’s
interest (“Opposing Attorney”), Opposing Attorney’s representative
(including private investigators) or current or former employee relating
to any matter (including pending or threatened lawsuits or administrative
investigations) about which the Employee has knowledge or information
(other than knowledge or information that is not Confidential Information
as defined in paragraph 4(b)) as a result of employment with the Company,
any Subsidiary, the Change Entity or any Related Entity. The Employee
also agrees to notify the Employer after being contacted by a third party
or receiving a subpoena or court order to appear and testify with respect
to any matter that may include a claim opposed to the Company’s, any
Subsidiary’s, the Change Entity’s or any Related Entity’s interest.
However, this subsection will not apply to any effort undertaken by the
Employee to enforce the Employee’s rights under this Agreement but only
to the extent necessary for that purpose.

          (iii) the Employee agrees not to communicate with, or give
statements to, any member of the media (including print, television or
radio media) relating to any matter (including pending or threatened
lawsuits or administrative investigations) about which the Employee has
knowledge or information (other than knowledge or information that is not
Confidential Information as defined in paragraph 4(b)) as a result of
employment with the Company, before a Change in Control, or, after a
Change in Control, the Change Entity immediately after being contacted by
any member of the media with respect to any matter affected by this
section.

-14-

 

          (d) The Employee, the Company, any Subsidiary, the Change Entity and any
Related Entity agree that none will make any disparaging remarks about the
others. However, this restriction will not preclude (i) remarks by any
employee made in the normal course of business, (ii) remarks by the Employee
that are required to discharge the Employee’s regular duties or other duties
described in this Agreement, (iii) the Company, any Subsidiary, the Change
Entity or any Related Entity from making (or eliciting from any person)
disparaging remarks about the Employee concerning any conduct that may lead to
a termination for Cause (including initiating an inquiry or investigation that
may result in a termination for Cause), but only to the extent reasonably
necessary to investigate the Employee’s conduct and to protect the Company’s,
any Subsidiary’s, the Change Entity’s and any Related Entity’s interests or
(iv) any remarks made by any party that are necessary (but only to the extent
necessary) to resolve any dispute arising under this Agreement and that are
made solely in the context of proceeding undertaken pursuant to paragraph 11.

          (e) If the Employee breaches any obligation described in this Agreement:

          (i) If that breach occurs before a Change in Control, this Agreement
will terminate as of the date of the breach, even if the fact of the
breach becomes apparent at a later date and no amounts will be due under
this Agreement;

          (ii) If that breach occurs after a Change in Control but before the
Employee has terminated, this Agreement will terminate as of the date of
the breach, even if the fact of the breach becomes apparent at a later
date, and no amounts will be due under this Agreement; or

          (iii) If that breach occurs after a Change in Control and after the
Employee terminates employment, (y) the Change Entity will be entitled to
treat the Employee as having terminated for Cause and (z) Employee will
repay the amounts already received in paragraph 6 plus interest
calculated with reference to the mid-term applicable federal rate [as
defined in Section 1274(d) of the Code] for January 1 of each calendar
year, compounded annually until paid and will be entitled to no further
amounts under this Agreement.

     10. Term of Agreement. The Term of this Agreement shall be from the
Effective Date through the last day of the calendar month which is the number
of months listed in Item 10 on Exhibit A beginning after a Change in Control
(“Termination Date”). Nevertheless, this Agreement will terminate on the
earliest of the following to occur:

          (a) Except as provided in paragraph 6, the Employee’s employment with the
Company or any Subsidiary, before a Change in Control, or, after a Change in
Control, the Change Entity or any Related Entity terminates before the
beginning of the Protection Period;

          (b) Before the beginning of a Protection Period, the Employee is
reassigned to a more junior position than that held on the date of this
Agreement; however, if the more junior position is in an employee
classification, the majority of whose members have change in control
termination agreements (or analogous agreements, other than a Displacement
Agreement), this

-15-

 

Agreement will remain in effect, although benefit levels will
automatically be adjusted to the level established under those agreements;

          (c) The Employee mutually agrees, in writing, to terminate this Agreement,
whether or not it is replaced with a similar agreement;

          (d) The Company notifies the Employee, in writing, that the Agreement is
to terminate at the end of its then current term. To be effective, however,
this written notice (i) must be given no later than 60 consecutive calendar
days before the end of the then current term but (ii) may never be effective
during a Protection Period, although a notice of termination of this Agreement
given during the portion of the Protection Period before a Change in Control
may be effective if a Change in Control does not occur; or

          (e) All payments due under this Agreement have been fully paid.

     However this Agreement will not terminate if, before the beginning of or
during a Protection Period, the Employee is reassigned to a more senior
position than that held on the date of this Agreement. In this case, the
Agreement will remain in effect, although the benefit levels will automatically
be adjusted to the level established for other employees assigned to that
classification or, if there is no other employee in that classification, to the
highest level in effect under this Agreement.

     11. Dispute Resolution. Any disagreement concerning the calculation of
any payment due under this Agreement that is not resolved by agreement between
the parties (or by the independent accounting or compensation consulting
company described in paragraph 7 with reference to matters described in that
paragraph) or other dispute or controversy arising out of or relating to this
Agreement that is not resolved by agreement between the parties, including the
basis on which the Employee’s employment is terminated, will be resolved by
arbitration in accordance with the rules of the American Arbitration
Association. The award of the arbitrator will be final, conclusive and
nonappealable and judgment upon the award rendered by the arbitrator may be
entered in any court having competent jurisdiction. The arbitrator must be an
arbitrator qualified to serve in accordance with the rules of the American
Arbitration Association and one who is approved by the Company, before a Change
in Control, or, after a Change in Control, the Change Entity and the Employee.
If the Employee and the Company, before a Change in Control, or, after a Change
in Control, the Change Entity fail to agree on an arbitrator, each must
designate a person qualified to serve as an arbitrator in accordance with the
rules of the American Arbitration Association and these persons will select the
arbitrator from among those persons qualified to serve in accordance with the
rules of the American Arbitration Association. Any arbitration relating to
this Agreement will be held in Summit County, Ohio (or other geographical area
acceptable to the parties).

     The Company, before a Change in Control, or, after a Change in Control,
the Change Entity or any Related Entity will bear all reasonable costs
associated with any dispute arising under this Agreement, including reasonable
accounting and legal fees incurred by the Employee in connection with the
arbitration proceedings just described. If it is subsequently determined that
payment of these costs are parachute payments, the Company, before a Change in
Control, or, after a Change in Control, the Change Entity will fully gross-up
the Employee for the income,

-16-

 

wage, employment and excise taxes associated with that payment so that,
after all applicable federal, state and local, income, wage, employment and
excise taxes (plus any assessed interest and penalties), the Employee will have
incurred no liability (either for these fees or the taxes just listed) with
respect to the matters encompassed in this paragraph 11.

     If otherwise due, payments not being contested under the procedures
described in this paragraph will not be deferred during the pendency of
procedures described in this paragraph.

     If the arbitrator decides, at the conclusion of the arbitration
proceedings described in this paragraph, that the Company, before a Change in
Control, or, after a Change in Control, the Change Entity has understated the
amount due under this Agreement, the Company, before a Change in Control, or,
after a Change in Control, the Change Entity will, subject to application of
paragraph 7 to the aggregate of the amount initially paid under paragraph 6 and
the additional award, pay the additional amount, if any, to the Employee within
30 days after the date of the award along with interest calculated at the
interest rate prescribed by the arbitrator. However, if, after application of
paragraph 7 to the arbitrator’s award, the net amount due to the Employee would
not increase, no amounts will be paid under this subsection, regardless of the
arbitrator’s award.

     12. 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 or any Subsidiary, before a Change in Control, or, after
a Change in Control, the Change Entity, the Employer or any Related Entity
shall be directed to the attention of the President of the Company with a copy
to the Secretary of the Company, before a Change in Control or, after a Change
in Control, to the President of the Change Entity with a copy to the Secretary
of the Change Entity (or, in the case of the President, directed to the notice
of the Chairman of the Board of the Company, before a Change in Control, or,
after a Change in Control, to the Chairman of the board of directors of the
Change Entity with a copy to the Secretary of the Change Entity), 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. If the last address given by the Employee is not current,
the Employer will use reasonable means to locate the Employee.

     13. Miscellaneous.

          (a) 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 or the board of directors of the Change Entity. 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.

          (b) This Agreement is intended to replace and supersede the existing
Change in Control Termination Agreement between the Company and the Employee,
which prior agreement shall become invalid as of the date of signing of this
Agreement. No agreements or

-17-

 

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 or obligations the
Employee may have under any other written agreement with the Company or any
Subsidiary, the Change Entity, the Employer or any Related Entity that are not
inconsistent with the terms of this Agreement.

          (c) Except as expressly provided in this Agreement, the Employee’s right
to receive the payments described in this Agreement will not decrease the
amount of, or otherwise adversely affect, any other benefits payable to the
Employee under any other plan, agreement or arrangement.

          (d) The Employee is not required to mitigate the amount of any payment
described in this Agreement by seeking other employment or otherwise, nor will
the amount of any payment or benefit provided for in this Agreement be reduced
by any compensation or benefits the Employee earns, or is entitled to receive,
in any capacity after termination or by reason of the Employee’s receipt of or
right to receive any retirement or other benefits attributable to employment.

          (e) Except as expressly provided elsewhere in this Agreement, the amount
of any payment made under this Agreement will be reduced by amounts the
Employer is required to withhold in payment (or in anticipation of payment) of
any income, wage or employment taxes imposed on the payment.

          (f) The right of an Employee or any other person to receive any amount
under this Agreement may not be assigned, transferred, pledged or encumbered
except by will or by applicable laws of descent and distribution. Any attempt
to assign, transfer, pledge or encumber any amount that is or may be receivable
under this Agreement will be null and void and of no legal effect. However,
this paragraph will not preclude payment under paragraph 13(g) of any benefit
to which a deceased Employee is entitled.

          (g) Subject to the preceding subparagraph (f), this Agreement inures to
the benefit of and may be enforced by the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

          (h) If:

          (i) the Employee’s employment relationship shifts between the
Company and any Subsidiary before a Change in Control or after a Change
in Control, between the Change Entity and any Related Entity and there
has been no intervening termination, this Agreement will remain in full
force and effect and for all purposes of this Agreement, the Employee’s
new employer will be substituted for the Employee’s prior employer.

          (ii) if the Employee’s employer is no longer a Subsidiary, whether
or not as part of a transaction that constitutes a Change in Control,
this Agreement will remain in full force and effect. However, the
Employee will not be entitled to any amount under this Agreement on
account of a Change in Control that solely affects the

-18-

 

Company after that transfer and is not part of the same transaction
through which the employer stopped being a Subsidiary.

     14. 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 (other than the laws of conflict of laws) of the State
of Ohio.

     15. 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:
	 	 	 	/s/ Christopher J. Maurer
	 	 	 	 	
 
	

	 	 	 	 	 	Christopher J. Maurer,
	

	 	 	 	 	 	Executive Vice President
	 
	 	 	 	 	 	 
	 	 	Employee:
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	/s/ Terrence E. Bichsel
	 	 	
 
	 	 	(Signature)
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Terrence E. Bichsel
	 	 	
 
	 	 	(Print Name)

-19-

 

Change in Control Termination Agreement

Exhibit A

Name of Executive: Terrence E. Bichsel (print)

	 	 	 	 	 	 	 
	Item 6(c)(ii): Multiplied By:

	 	 	2.5	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(iii) Multiplied By:

	 	 	2.5	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(v):

	 	 	30	 	 	(insert number of months)
	 
	 	 	 	 	 	 
	Item 6(c)(vii): Outplacement Fee:

	 	$	25,000	 	 	 
	 
	 	 	 	 	 	 
	Item 10:

	 	 	30	 	 	(insert number of months)

-20-

 

Change in Control Termination Agreement

Form of Exhibit A

for all Executive Officers other than

John R. Cochran, Terrence E. Bichsel, Robert P. Brecht and George P. Paidas

	 	 	 	 	 
	Name of Executive:

	 	 	 	(print)
	

	 	
 	 	 

	 	 	 	 	 	 	 
	Item 6(c)(ii): Multiplied By:

	 	 	2	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(iii) Multiplied By:

	 	 	2	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(v):

	 	 	24	 	 	(insert number of months)
	 
	 	 	 	 	 	 
	Item 6(c)(vii): Outplacement Fee:

	 	$	25,000	 	 	 
	 
	 	 	 	 	 	 
	Item 10:

	 	 	24	 	 	(insert number of months)

-21-Exhibit 10.2

 

Exhibit 10.2

FIRSTMERIT CORPORATION

DISPLACEMENT AGREEMENT

     THIS
AGREEMENT (“Agreement”) is effective the 1st day of November, 2004
(“Effective Date”) by and between FirstMerit Corporation, an Ohio corporation
(the “Company”) and Terrence E. Bichsel 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 (“Board”) has determined that the
interests of the Company’s shareholders will be best served by ensuring that
its key corporate officers will adhere to the policies of the Board and senior
management with respect to any merger, acquisition or like transaction that
does not result or involve a Change in Control of the Company.

     C. The Board has also determined that it is in the best interests of the
shareholders to promote stability among key officers and employees,
particularly during the period leading up to and after a merger, acquisition or
like transaction.

     D. Employee and the Company may have previously entered into a
Displacement Agreement, which agreement is being replaced in its entirety by
this Agreement and may also enter into a Change in Control Termination
Agreement which protects Employee in the circumstances of a termination of
employment following a Change in Control of the Company. If an event (or a
series of events) creates an entitlement under both the Change in Control
Termination Agreement and this Agreement, the Employee will not be entitled to
be paid benefits under both this Agreement and the Change in Control
Termination Agreement but will be entitled to a benefit under this Agreement or
under the Change in Control Termination Agreement, whichever produces the
largest after-tax benefit to the Employee.

     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. In exchange for the compensation and benefits described
in this Agreement, the Employee agrees to discharge the obligations described
in paragraph 9 and, consistent with his or her duties to shareholders and other
legal obligations, Employee shall support the position of the Board and the
Company’s senior management and shall take any action reasonably requested by
the Board and the Company’s senior management with respect to any merger,
acquisition or like transaction not involving a Change in Control of the
Company. The Employee agrees (on his/her own behalf and in behalf of his/her
heirs, assigns and

- 1 -

 

beneficiaries) that the compensation and benefits described in this Agreement
are adequate consideration for the obligations assumed in this Agreement.

     2. Displacement and Change in Control.

          (a) The term “Displacement” shall mean a merger, acquisition or like
transaction where no Change in Control of the Company has occurred.

          (b) The term “Change in Control” shall mean the occurrence of any one of
the following events on or after the Effective Date:

                (i) Individuals who, on April 19, 2000, constituted 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 then Incumbent Directors (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 individual elected or
nominated as a 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 ever be deemed to be an Incumbent Director;

                (ii) 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) becomes through any means (including
those described in paragraph (iii)(u) through (z)) a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% 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”);

                (iii) 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) becomes a “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
Company Voting Securities representing 25% or more (but less than 50%) of the
Company Voting Securities; provided, however, that the event described in this
paragraph (iii) shall not be deemed to be a Change in Control for purposes of
this paragraph (iii) by virtue of any of the following acquisitions:

            (u) by the Company or any Subsidiary (i.e., any entity related to
the Company through common ownership as determined under Sections 414 or
1563 of the Internal Revenue Code of 1986, as amended (“Code”));

            (v) by or through any employee benefit plan sponsored or maintained
by the Company or any Subsidiary and described (or intended to be
described) in Section 401(a) of the Code;

            (w) directly through an equity compensation plan maintained by the
Company or any Subsidiary, including a program described in Section 423
of the Code;

- 2 -

 

            (x) by any underwriter temporarily holding securities pursuant to an
offering of such securities;

            (y) by any entity or “person” (including a “group” as contemplated
by Sections 13(d)(3) and 14(d)(2) of the Exchange Act) with respect to
which that acquirer has filed SEC Schedule 13G indicating that the
securities were not acquired and are not held for the purpose of or with
the effect of changing or influencing, directly or indirectly, the
Company’s management or policies (regardless of whether such acquisition
of securities is considered to constitute the acquisition of control
under the Bank Holding Company Act of 1956 pursuant to Regulation Y
promulgated thereunder), unless and until that entity or person files SEC
Schedule 13D, at which point this exception will not apply to such
Company Voting Securities, including those previously subject to an SEC
Schedule 13G filing; or

            (z) pursuant to a Non-Control Transaction (as defined in paragraph
(iv)).

          (iv) 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
with respect to such transaction or the issuance of securities in connection
with the transaction (a “Business Combination”), unless immediately following
such Business Combination:

            (y) more than 50% of the total voting power of (A) the corporation
resulting from such Business Combination (the “Surviving Entity”), or (B)
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; and

            (z) 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 (iv)(y) and (iv)(z) shall be deemed to be a “Non-Control
Transaction”); or

          (v) 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

- 3 -

 

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.

          For purposes of this Agreement, the entity resulting from a Displacement
(including, if appropriate, the Company) or succeeding to the Company’s
interest in connection with a Displacement is referred to as the “Displacement
Entity.”

          If more than one event that constitutes a Displacement occurs during a
Protection Period, the Employee shall be entitled to the amount that equals the
largest after-tax amount generated by any of the Displacements.

          If one or more events generate a payment under both this Agreement and the
Change in Control Termination Agreement, the Employee will be entitled only to
the benefit described in this Agreement or in the Change in Control Termination
Agreement, whichever provides the highest after-tax value to the Employee, but
will not be entitled to amounts under both agreements.

          Notwithstanding any other provision of this Agreement, the Employee will
not be entitled to any amount under this Agreement if he/she acted in concert
with any person or group (as defined above) to effect a Displacement, other
than at the specific direction of the Board and in his/her capacity as an
employee of the Company or any Subsidiary.

     3. Company’s Right to Terminate. The entity with which the Employee has a
direct employment relationship (“Employer”) may terminate the Employee’s
employment at any time during the term of this Agreement, subject to the terms
of this Agreement and the obligation to provide the amounts stated herein if
due.

     4. Termination in Connection With a Displacement. In the event of
termination of employment from the Company or any Subsidiary before a
Displacement or, after a Displacement, the Displacement Entity or any Related
Entity (including an involuntary termination while the employee is absent from
active employment pending determination of Disability under the procedures
described in paragraph 4(a)) within the Protection Period (i.e., the period
beginning on the date the Board first learns of an act or event that results in
a Displacement, even if that period begins before the Effective Date, and
ending on the last day of the number of calendar months specified in Item 10 on
Exhibit A beginning coincident with or immediately after a Displacement), the
Employee shall be entitled to the benefits provided in paragraph 6 unless such
termination is because of the Employee’s death or determination of Disability
(as described in paragraph 4(a)), for Cause, or by the Employee other than for
Good Reason.

          (a) Disability. The term “Disability” shall mean termination because of
Total and Permanent Disability as defined in the Long-Term Disability Plan in
effect at any time during the Protection Period in which the Employee is or was
participating when the condition

- 4 -

 

began (or, if the Employee is or was not participating in a Long-Term
Disability Plan when the condition begins, as defined under any long-term
disability program in effect at any time during the Protection Period). If the
Employee is deemed Disabled, his date of termination will be the end of any
period prescribed under the long-term disability plan for determining
eligibility for long term disability benefits and any termination occurring
before that date will not be a termination for Disability. Also, any
adjustment to the Employee’s compensation, job duties or other circumstances of
employment during the period his Disability is being established will not
constitute a basis for “Good Reason” under paragraph 4(c).

          (b) Cause. The term “Cause” shall mean one or more of the following acts
of the Employee:

          (i) any act of fraud, intentional misrepresentation, embezzlement,
misappropriation or conversion by the Employee of the assets or business
opportunities of the Company or any Subsidiary before a Displacement or,
after a Displacement, the Displacement Entity or any entity related
through common ownership (as determined under Sections 414 and 1563 of
the Code) to the Displacement Entity (“Related Entity”);

          (ii) conviction of the Employee of (or plea by the Employee of
guilty to) a felony (or a misdemeanor that originally was charged as a
felony but was reduced to a misdemeanor as part of a plea bargain) or
intentional and repeated violations by the Employee of the Employer’s
written policies or procedures;

          (iii) disclosure, other than through mere inadvertance, to
unauthorized persons of any Confidential Information (as defined below);

          (iv) intentional breach of any contract with or violation of any
legal obligation owed to the Company or any Subsidiary before a
Displacement or, after a Displacement, the Displacement Entity or any
Related Entity;

          (v) dishonesty relating to the duties owed by the Employee to the
Company or any Subsidiary before a Displacement or, after a Displacement,
the Displacement Entity or any Related Entity;

          (vi) the Employee’s (x) willful and continued refusal to
substantially perform assigned duties (other than any refusal resulting
from sickness or illness or while suffering from an incapacity due to
physical or mental illness, including a condition that does or may result
in a Disability, or attributable to an event that constitutes Good
Reason, as defined in paragraph (c)), (y) willful engagement in gross
misconduct materially and demonstrably injurious to the Company or any
Subsidiary before a Displacement or, after a Displacement, the
Displacement Entity or any Related Entity or (z) breach of any term of
this Agreement; or

          (vii) any intentional cooperation with any party attempting to
effect a Displacement unless (y) the Board has approved or ratified that
action before the Displacement or (z) that cooperation is required by
law.

- 5 -

 

          However, Cause will not arise solely because the Employee is absent from
active employment during periods of vacation, consistent with the Employer’s
applicable vacation policy, sickness or illness or while suffering from an
incapacity due to physical or mental illness, including a condition that does
or may result in a Disability or other period of absence initiated by the
Employee and approved by the Employer.

          The term “Confidential Information” shall mean any and all information
(other than information in the public domain) related to the Company’s, any
Subsidiary’s, the Displacement Entity’s or any Related Entity’s business,
including all processes, inventions, trade secrets, computer programs,
technical data, drawings or designs, information concerning pricing and pricing
policies, marketing techniques, plans and forecasts, new product information,
information concerning methods and manner of operations and information
relating to the identity and location of all past, present and prospective
customers and suppliers.

          (c) Good Reason. The term “Good Reason” shall mean any of the following
to which the Employee has not consented in writing:

     (i) at any time during the Protection Period, any breach of
this Agreement (including breach of the commitments undertaken
under paragraph 9(d) of any nature whatsoever) by or on behalf of
the Company or any Subsidiary before a Displacement or, after a
Displacement, the Displacement Entity or any Related Entity;

     (ii) at any time during the Protection Period, a reduction in
the Employee’s title, duties, responsibilities or status, as
compared to either (y) the Employee’s title, duties,
responsibilities or status immediately before the beginning of the
Protection Period or (z) any enhanced or increased title, duties,
responsibilities or status assigned to the Employee during the
Protection Period;

     (iii) at any time during the Protection Period, the permanent
assignment to the Employee of duties that are inconsistent with (y)
the Employee’s office immediately before the beginning of the
Protection Period or (z) any more senior office to which the
Employee is promoted during the Protection Period;

     (iv) during any calendar year ending during the Protection
Period (or any fractional calendar year ending within the
Protection Period), a 15 percent (or larger) reduction (other than
a reduction that is attributable to any termination for death,
after reaching age 65 (but only if the Employee is then entitled to
an immediate, unreduced benefit under a deferred compensation plan
described in Section 401(a) of the Code), Disability or Cause,
voluntary termination by the Employee other than for Good Reason or
for any period of temporary absence protected by law or initiated
by the Employee and approved by the Employer) in the aggregate
value of the highest of the Employee’s total compensation for the
calendar year ending before the Date of Termination (including base
salary, cash bonus potential, the value of employee benefits, other
than value associated solely with the performance of investments
the Employee controls, and fringe benefits but excluding
compensation attributable to the exercise or liquidation of stock
options) or, if higher, the Employee’s total compensation for the
last calendar year ending before the beginning of the Protection
Period (including base salary, cash

- 6 -

 

bonus potential, the value of employee benefits, other than
value associated solely with the performance of investments the
Employee controls, and fringe benefits) but, in both cases,
determined without regard to any amounts, paid or payable, under
paragraphs 6, 7, 8 and 11;

     (v) at any time during the Protection Period, a requirement
that the Employee relocate to a principal office or worksite (or
accept indefinite assignment) to a location more than 50 miles
distant from (y) the principal office or worksite to which the
Employee was assigned immediately before the beginning of the
Protection Period or (z) any location to which the Employee agreed,
in writing, to be assigned after a Displacement;

     (vi) at any time during the Protection Period, the imposition
on the Employee of business travel obligations substantially
greater than the Employee’s business travel obligations during the
12-consecutive-calendar-month period ending immediately before the
beginning of the Protection Period but determined without regard to
any special business travel obligations associated with activities
relating to the Displacement;

     (vii) at any time during the Protection Period, the Employer’s
(u) failure to continue in effect any material fringe benefit or
compensation plan, retirement or deferred compensation plan, life
insurance plan, health and accident plan, sick pay plan or
disability plan in which the Employee is participating (or was
eligible to participate) immediately before the beginning of the
Protection Period, (v) modification of any of the plans or programs
just described that adversely affects the potential value of the
Employee’s benefits under those plans (other than value associated
solely with the performance of investments the Employee controls)
or (w) failure to provide the Employee, after a Displacement, with
the same number of paid vacation days to which the Employee is or
becomes entitled at or anytime during the Protection Period under
the terms of the Employer’s vacation policy or program. However,
Good Reason will not arise under this subsection solely because (x)
the Company or any Subsidiary before a Displacement or, after a
Displacement, the Displacement Entity or any Related Entity
terminates or modifies any such program during the Protection
Period solely to comply with applicable law but only to the extent
required to meet applicable legal standards, (y) a plan or benefit
program expires under self-executing terms contained in that plan
or benefit program before the Displacement or (z) the Company or
any Subsidiary before a Displacement or, after a Displacement, the
Displacement Entity or any Related Entity replaces a plan or
program with a successor plan or program of equal or equivalent
value to the Employee;

     (viii) for the duration of any period of any absence from
active employment that begins or continues at any time during the
Protection Period, failure to provide or continue for the Employee
any benefits (including disability benefits) available to employees
who are absent from active employment (including because of
disability) under programs maintained by the Company, the

- 7 -

 

Displacement Entity or any Related Entity on the date the
absence (including disability) begins;

     (ix) during the Protection Period, the Employee is unable to
perform normally assigned duties because of a physical or mental
condition and before his/her Disability is established under
paragraph 4(a), the Company or any Subsidiary before a Displacement
or, after a Displacement, the Displacement Entity or any Related
Entity terminates the Employee before the end of the Disability
determination period described in paragraph 4(a);

     (x) during the Protection Period, the Company or any
Subsidiary before a Displacement or, after a Displacement, the
Displacement Entity or any Related Entity unsuccessfully attempts
to terminate the Employee for Cause, in which case the Effective
Period will not end earlier than 60 days after the conclusion of
the Employer’s unsuccessful attempt to terminate the Employee for
Cause;

     (xi) during the Protection Period, the Employer attempts to
amend or terminate this Agreement without regard to the procedures
described in paragraphs 10 or 13;

     (xii) failure at any time to obtain an assumption of the
Company’s or any Subsidiary’s, before a Displacement, or, after a
Displacement, the Displacement Entity’s or any Related Entity’s
obligations under this Agreement by any successor to any of them,
regardless of whether such entity becomes a successor to the
Company or any Subsidiary, before a Displacement, or, after a
Displacement, the Displacement Entity or any Related Entity as a
result of a merger, consolidation, sale of assets or any other form
of reorganization; or

     (xiii) 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 shall be communicated by written Notice of Termination to the other
party delivered no later than 60 days after the Employee, in the case of Good
Reason, or, in other cases, the Company or any Subsidiary, before a
Displacement, or, after a Displacement, the Displacement Entity and any Related
Entity, know or with reasonable diligence should have known of the event
constituting Good Reason, Cause or Disability. For purposes of this Agreement,
a “Notice of Termination” shall mean a notice which shall indicate the specific
termination provisions 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”. However, the Date of Termination
specified in the notice:

          (a) In the case of a termination because of Disability, will be no earlier
than the end of the disability determination period described in paragraph
4(a);

- 8 -

 

          (b) In the case of a termination for Cause, on the Date of Termination
specified in the Notice of Termination (which may not be earlier than the date
on which the condition constituting Cause occurred, unless, within 30 days
after the date the Notice of Termination for Cause is delivered to the
Employee, the Employee corrects to the reasonable satisfaction of the Employer
the condition specified in the Notice of Termination for Cause as the basis for
the termination, in which case the Notice of Termination will be deemed to have
been withdrawn and will be of no effect;

          (c) In the case of a termination for Good Reason, on the Date of
Termination specified in the Notice of Termination (which may not be earlier
than the day before the event constituting Good Reason occurred), unless,
within 30 days after the date the Notice of Termination for Good Reason is
delivered (even if this 30 day period extends beyond the term as defined in
paragraph 10), the Employer corrects to the reasonable satisfaction of the
Employee the condition specified in the Notice of Termination for Good Reason
as the basis for the termination, in which case the Notice of Termination will
be deemed to have been withdrawn and will be of no effect; and

          (d) in all other cases, the date the Notice of Termination is
delivered.

     6. Compensation and Benefits Upon Termination.

          (a) If a Displacement has occurred and during the Protection Period the
Employee’s employment is terminated (i) by the Employer other than for Cause,
Disability or death, or (ii) by the Employee for Good Reason, the Employee
shall be entitled to (and each of the Displacement Entity and all Related
Entities shall be jointly liable for) the compensation and benefits provided in
subparagraph (c) below.

          (b) The compensation described in subparagraphs (c)(i), (c)(ii) and
(c)(iii) shall be paid by the Displacement Entity or the Employer (or jointly
by them) to the Employee in a single lump sum cash payment on or before the
fifth business day following the effective Date of Termination. The
compensation and benefits described in subparagraphs (c)(iv), (c)(v), (c)(vi)
and (c)(vii) will be paid as provided in those subparagraphs.

          (c) The compensation and benefits payable to an Employee pursuant to this
paragraph 6 shall be as follows:

          (i) Base Salary to Date of Termination. The Employee’s full base
salary through the Date of Termination.

          (ii) Base Salary. An amount equal to the Employee’s annual base
salary (at the highest annualized rate in effect at any time during the
Protection Period) multiplied by the number indicated in Item 6(c)(ii) on
Exhibit A, which Exhibit is attached hereto and incorporated by reference
herein.

          (iii) Incentive Compensation. An amount equal to (y) the value of
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 (and/or any analogous plan adopted after the
date of this Agreement) for the year of the

- 9 -

 

Employee’s Date of Termination (or any higher percentage based on
objective criteria specified in the Executive Incentive Compensation Plan
for the year in which the Date of Termination occurs and/or any analogous
plan adopted after the date of this Agreement that the Employee has
achieved before the Date of Termination) or, if higher, the value of the
incentive compensation payment the Employee received under the Company’s
Executive Incentive Plan (and/or any analogous plan adopted after the
date of this Agreement) at any time during the Protection Period
multiplied by (z) the number indicated in Item 6(c)(iii) on Exhibit A.

          (iv) Stock Plans. The Employee’s outstanding stock options and
other stock, phantom stock, stock appreciation rights or similar
arrangements in which he/she participates, whether issued before, in
connection with or after the Displacement will be fully vested and
exercisable. Notwithstanding any provisions to the effect that rights
terminate upon termination of employment, the Employee (or his/her
beneficiary) shall be given the longer of 90 days after the Date of
Termination, or the remaining period provided in the grant (determined
without regard to the Employee’s termination), to realize or exercise all
rights or options provided under such plans with respect to any stock
option, and other stock, phantom stock, stock appreciation rights or
similar grants.

          (v) Medical Benefits and Life Insurance. The Employer or the
Displacement Entity shall maintain in full force and effect for the
Employee’s (and for his/her family if family coverage is then in effect)
continued benefit until the earlier of the number of months listed in
Item 6(c)(v) on Exhibit A after the Date of Termination, or the end of
the calendar month in which the Employee reaches the age of 67, all
medical insurance (including health care, dental and prescription drug
insurance), life insurance, and accidental death and dismemberment
insurance including conversion rights (collectively “Welfare Benefits”),
with coverage and limits, separately for each Welfare Benefit and in the
aggregate, identical to those in effect with respect to the Employee
(including family coverage if family coverage is then in effect),
immediately before the Date of Termination or, if higher (both separately
and in the aggregate) at any time during the Protection Period. If the
Employer or the Displacement Entity is unable to provide some or all of
the Welfare Benefits through its insured program for the duration of the
period described in the first sentence of this paragraph, the Employer or
the Displacement Entity will distribute to the Employee a lump sum cash
amount equal to the highest aggregate premium amount paid during the
Protection Period with respect to the Welfare Benefit it is unable to
provide through its insured programs multiplied by the number of whole
and fractional premium periods for which it is unable to provide this
coverage through its insured program, plus an additional amount equal to
the Premium Tax Obligation (as defined below). If the Employee is a
participant in the Company’s Executive Committee Life Insurance Program
(and/or any analogous plan adopted after the date of this Agreement) on
the Date of Termination, the Displacement Entity and/or the Employer
shall pay the premium for the Employee on such insurance for a period
ending the earlier of the number of months listed in Item 6(c)(v) on
Exhibit A after the Date of Termination, or the calendar month in which
the Employee reaches the age of 67, plus an additional amount to the
Employee equal to the Premium Tax Obligation. For the sole purpose of
determining the Employee’s eligibility to participate in the Company’s

- 10 -

 

Welfare Benefit programs, the Employee shall be considered to be on a
paid leave of absence as long as he/she is receiving benefits under this
Agreement.

          The term “Premium Tax Obligation” shall mean an additional cash
amount equal to all applicable federal, state and local, income, wage,
employment and excise taxes (including those imposable under Code § 4999)
so that, after payment of all taxes due on the cash payments described in
this subparagraph (c)(v) (i.e., the cash equivalent of the premiums
needed to provide the Welfare Benefits the Displacement Entity and/or the
Company are unable to provide through their insured programs), the
Employee will retain cash equal to the highest aggregate premium amount
paid during the Protection Period with respect to the Welfare Benefit it
is unable to provide through its insured programs multiplied by the
number of whole and fractional premium periods for which it is unable to
provide this coverage through its insured program.

          (vi) Executive Supplemental Retirement Plan. The following shall
apply for purposes of calculating the Employee’s benefits, if applicable,
under the FirstMerit Corporation Executive Supplemental Retirement Plan
and/or any other nonqualified plan of deferred compensation in effect
during the Protection Period (the “SERP”):

            (x) for purposes of calculating the Employee’s Monthly
Retirement Income (as defined in the SERP) under Sections 4.01 and
4.02 (or successor section) of the SERP and for purposes of
determining the Employee’s vested Monthly Retirement Income under
Section 4.05 (or successor section) of the SERP, the Employee’s
Years of Service (as defined in the SERP) shall be increased by 24
months;

            (y) 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 24
months; and

            (z) the Employee’s Average Monthly Earnings for purposes of
the SERP shall be deemed to be equal to the total of the highest
monthly base salary earned by the Employee during the 24 months
immediately preceding the Displacement and the value of 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 (and/or any analogous plan
adopted after the date of this Agreement) in the year of Employee’s
Date of Termination (or any higher percentage based on objective
criteria specified in the Incentive Compensation Plan for the year
in which the Date of Termination occurs and/or any analogous plan
adopted after the date of this Agreement) that the Employee has
achieved before the Effective Date of Termination in the year of
Employee’s Date of Termination divided by 12.

          The terms of this subparagraph (vi) shall apply only if Employee is
a participant in the SERP, and shall supersede any contrary provisions of
the SERP and any membership agreement executed between the Company and
the Employee in connection

- 11 -

 

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 (vi)(x), (y)
and (z) above, is assumed to commence on the earliest date upon which the
Employee is eligible to retire under the SERP for purposes of determining
the Actuarial Equivalent (as defined in the SERP) of such benefit.

          If the SERP is terminated and the Employee cites that termination as
a basis for Good Reason termination, the benefits due under this
subparagraph will be calculated as if the SERP had not been terminated.

          (vii) Outplacement Fees. For a period not to exceed one year after
the Date of Termination, the Displacement Entity, the Employer or any
Related Entity will pay directly to the provider 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)(vii) on Exhibit A.

     7. Overall Limitation on Benefits. Notwithstanding any provision in this
Agreement to the contrary (other than paragraphs 6(c)(v), 8 and 11 which will
apply under the circumstances described in those paragraphs and below), if, as
of the date of the Displacement, the Displacement Entity (after consulting with
an independent accounting or compensation consulting company) ascertains that
the compensation and benefits provided to the Employee pursuant to or under
this Agreement (other than the Welfare Benefit Replacement Cost defined below
and the amounts described in paragraphs 8 and 11), either alone or when
combined with other compensation and benefits received by the Employee, would
constitute “parachute payments” within the meaning of Section 280G of the Code,
or the regulations adopted thereunder, then the compensation and benefits
payable pursuant to or under this Agreement (other than the Welfare Benefit
Replacement Cost and the amounts described in paragraphs 8 and 11) 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 (“Excise Taxes”). 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 an independent accounting or compensation consulting company
(other than the entity described in the first sentence of this subparagraph)
selected by the Displacement Entity and approved by the party requesting such
determination, the fees of which will be borne solely by the Displacement
Entity. In the event that any reduction is required under this paragraph 7,
the Employee may select which compensation and benefits shall be reduced and
the Employee’s decision will be binding.

     If the Internal Revenue Service subsequently and finally decides that the
amount of the reduction applied under this paragraph 7 is not sufficient to
avoid the Excise Taxes on compensation and benefits (other than the Welfare
Benefit Replacement Cost and those amounts described in paragraphs 8 and 11),
the Employee will immediately remit an additional amount to the Displacement
Entity equal to the difference between the amount paid (other than the Welfare
Benefit Replacement Cost and those amounts described in paragraphs 8 and 11)
and the amount paid (other than the Welfare Benefit Replacement Cost and those
amounts described in paragraphs 8 and 11). Also, the Employee agrees to
promptly notify the Displacement Entity of an assessment or inquiry from the
Internal Revenue Service relating to payments under this

- 12 -

 

Agreement that would, if made final, result in imposition of an Excise Tax
and also agrees to cooperate with the Displacement Entity in resisting any
Excise Tax assessment. However, the Displacement Entity will have complete
control over resolution of any claim by the Internal Revenue Service that might
generate an Excise Tax (although it will have no dispositive power over any
other tax matter that may be subject to the same audit) and the Company will
bear all costs associated with that effort.

     For purposes of this paragraph 7, Welfare Benefit Replacement Cost equals
the sum of the amount required to enable the Employee to purchase the Welfare
Benefits the Displacement Entity and the Company are unable to provide through
their insured programs throughout the period described in paragraph 6(c)(v)
plus the Premium Tax Obligation. When applying the rules described in this
paragraph 7, the Welfare Benefit Replacement Cost and those amounts described
in paragraphs 8 and 11 will be disregarded entirely and the calculation of any
Excise Tax liability (and, if appropriate, reduction of compensation and
benefits to avoid any Excise Tax liability) will be performed without reference
to the Welfare Benefit Replacement Cost and the amounts described in paragraphs
8 and 11.

     8. Legal, Etc. Fees. The Displacement Entity shall pay all reasonable
legal, accounting and actuarial fees and expenses incurred by the Employee in
enforcing any right or benefit provided by this Agreement. If it is
subsequently determined that payment of these fees are parachute payments, the
Displacement Entity or the Employer will fully gross-up the Employee for the
income, wage, employment and excise taxes associated with that payment so that,
after all applicable federal, state and local, income, wage, employment and
excise taxes (plus any assessed interest and penalties), the Employee will have
incurred no liability (either for these fees or the taxes just listed) with
respect to the matters encompassed in this paragraph.

     9. Obligations. By signing this Agreement, the Employee agrees to be
bound by and to comply with the following restrictions, whether or not the
Employee also receives the compensation and benefits described in paragraph 6.

          (a) If any “person” (as used in paragraphs 2(b)) initiates a tender or
exchange offer, distributes proxy materials to the Company’s shareholders or
takes other steps to effect, or that may result in, a Displacement, the
Employee agrees not to terminate employment voluntarily during the pendency of
that activity (other than by reason of termination after reaching retirement
age or Disability or for Good Reason) and to continue to serve as a full-time
employee until those efforts are abandoned, that activity is terminated or
until a Displacement has occurred.

          (b) Except as otherwise required by applicable law, Employee expressly
agrees to keep and maintain Confidential Information (as defined in paragraph
4(b)) confidential and not, at any time during or subsequent to the Employee’s
employment, to use any Confidential Information for Employee’s own benefit or
to divulge, disclose or communicate any Confidential Information to any person
or entity in any manner except (i) to employees or agents of the Company, any
Subsidiary, the Displacement Entity and any Related Entity that need the
Confidential Information to perform their duties on behalf of the Company, any
Subsidiary, the Displacement Entity and any Related Entity, (ii) in the
performance of Employee’s duties, (iii) as a necessary (and only to the extent
necessary) part of any undertaking by the Employee to enforce the Employee’s
rights under this Agreement or (iv) pursuant to a subpoena. Employee

- 13 -

 

also agrees to notify the Company, before a Displacement and, after a
Displacement, the Displacement Entity promptly of any circumstance Employee
believes may legally compel the disclosure of Confidential Information and to
give this notice before disclosing any Confidential Information.

          (c) The Employee agrees that during and after employment and without
additional compensation (other than reimbursement for reasonable associated
expenses) to cooperate with the Company, any Subsidiary, the Displacement
Entity and any Related Entity in the following areas:

          (i) the Employee agrees (w) to be reasonably available to answer
questions for the Company’s, any Subsidiary’s, the Displacement Entity’s
and any Related Entity’s officers regarding any matter, project,
initiative or effort for which the Employee was responsible while
employed by the Employer and (x) to cooperate with the Company, any
Subsidiary, the Displacement Entity and any Related Entity during the
course of all third-party proceedings arising out of the Company’s, any
Subsidiary’s, the Displacement Entity’s or any Related Entity’s business
about which the Employee has knowledge or information. For purposes of
this Agreement, (y) “proceedings” includes internal investigations,
administrative investigations or proceedings and lawsuits (including
pre-trial discovery and trial testimony) and (z) “cooperation” includes
the Employee’s being reasonably available for interviews, meetings,
depositions, hearings and/or trials without the need for subpoena or
assurances by the Company, any Subsidiary, the Displacement Entity or any
Related Entity providing any and all documents in the Employee’s
possession that relate to the proceeding and providing assistance in
locating any and all relevant notes and/or documents.

          (ii) unless compelled to do so by lawfully-served subpoena or court
order, the Employee agrees not to communicate with, or give statements or
testimony to, any attorney representing an interest opposed to the
Company’s, any Subsidiary’s, the Displacement Entity’s or any Related
Entity’s interest (“Opposing Attorney”), Opposing Attorney’s
representative (including private investigators) or current or former
employee relating to any matter (including pending or threatened lawsuits
or administrative investigations) about which the Employee has knowledge
or information (other than knowledge or information that is not
Confidential Information as defined in paragraph 4(b)) as a result of
employment with the Company, any Subsidiary, the Displacement Entity or
any Related Entity. The Employee also agrees to notify the Employer
after being contacted by a third party or receiving a subpoena or court
order to appear and testify with respect to any matter that may include a
claim opposed to the Company’s, any Subsidiary’s, the Displacement
Entity’s or any Related Entity’s interest. However, this subsection will
not apply to any effort undertaken by the Employee to enforce the
Employee’s rights under this Agreement but only to the extent necessary
for that purpose.

          (iii) the Employee agrees not to communicate with, or give
statements to, any member of the media (including print, television or
radio media) relating to any matter (including pending or threatened
lawsuits or administrative investigations) about which the Employee has
knowledge or information (other than knowledge or information

- 14 -

 

that is not Confidential Information as defined in paragraph 4(b))
as a result of employment with the Company, before a Displacement, or,
after a Displacement, the Displacement Entity immediately after being
contacted by any member of the media with respect to any matter affected
by this section.

          (d) The Employee, the Company, any Subsidiary, the Displacement Entity and
any Related Entity agree that none will make any disparaging remarks about the
others. However, this restriction will not preclude (i) remarks by any
employee made in the normal course of business, (ii) remarks by the Employee
that are required to discharge the Employee’s regular duties or other duties
described in this Agreement, (iii) the Company, any Subsidiary, the
Displacement Entity or any Related Entity from making (or eliciting from any
person) disparaging remarks about the Employee concerning any conduct that may
lead to a termination for Cause (including initiating an inquiry or
investigation that may result in a termination for Cause), but only to the
extent reasonably necessary to investigate the Employee’s conduct and to
protect the Company’s, any Subsidiary’s, the Displacement Entity’s and any
Related Entity’s interests or (iv) any remarks made by any party that are
necessary (but only to the extent necessary) to resolve any dispute arising
under this Agreement and that are made solely in the context of proceeding
undertaken pursuant to paragraph 11.

          (e) If the Employee breaches any obligation described in this Agreement:

          (i) If that breach occurs before a Displacement, this Agreement will
terminate as of the date of the breach, even if the fact of the breach
becomes apparent at a later date and no amounts will be due under this
Agreement;

          (ii) If that breach occurs after a Displacement but before the
Employee has terminated, this Agreement will terminate as of the date of
the breach, even if the fact of the breach becomes apparent at a later
date, and no amounts will be due under this Agreement; or

          (iii) If that breach occurs after a Displacement and after the
Employee terminates employment, (y) the Displacement Entity will be
entitled to treat the Employee as having terminated for Cause and (z)
Employee will repay the amounts already received in paragraph 6 plus
interest calculated with reference to the mid-term applicable federal
rate [as defined in Section 1274(d) of the Code] for January 1 of each
calendar year, compounded annually until paid and will be entitled to no
further amounts under this Agreement.

     10. Term of Agreement. The Term of this Agreement shall be from the
Effective Date through the last day of the calendar month which is the number
of months listed in Item 10 on Exhibit A beginning after a Displacement.
Nevertheless, this Agreement will terminate on the earliest of the following to
occur:

          (a) Except as provided in paragraph 6, the Employee’s employment with the
Company or any Subsidiary, before a Displacement, or, after a Displacement, the
Displacement Entity or any Related Entity terminates before the beginning of
the Protection Period;

- 15 -

 

          (b) Before the beginning of a Protection Period, the Employee is
reassigned to a more junior position than that held on the date of this
Agreement; however, if the more junior position is in an employee
classification, the majority of whose members have displacement agreements (or
analogous agreements, other than a Change in Control Termination Agreement),
this Agreement will remain in effect, although benefit levels will
automatically be adjusted to the level established under those agreements;

          (c) The Employee mutually agrees, in writing, to terminate this Agreement,
whether or not it is replaced with a similar agreement;

          (d) The Company notifies the Employee, in writing, that the Agreement is
to terminate at the end of its then current term. To be effective, however,
this written notice (i) must be given no later than 60 consecutive calendar
days before the end of the then current term but (ii) may never be effective
during a Protection Period, although a notice of termination of this Agreement
given during the portion of the Protection Period before a Displacement may be
effective if a Displacement does not occur; or

          (e) All payments due under this Agreement have been fully paid.

     However this Agreement will not terminate if, before the beginning of or
during a Protection Period, the Employee is reassigned to a more senior
position than that held on the date of this Agreement. In this case, the
Agreement will remain in effect, although the benefit levels will automatically
be adjusted to the level established for other employees assigned to that
classification or, if there is no other employee in that classification, to the
highest level in effect under this Agreement.

     11. Dispute Resolution Any disagreement concerning the calculation of any
payment due under this Agreement that is not resolved by agreement between the
parties (or by the independent accounting or compensation consulting company
described in paragraph 7 with reference to matters described in that paragraph)
or other dispute or controversy arising out of or relating to this Agreement
that is not resolved by agreement between the parties, including the basis on
which the Employee’s employment is terminated, will be resolved by arbitration
in accordance with the rules of the American Arbitration Association. The
award of the arbitrator will be final, conclusive and nonappealable and
judgment upon the award rendered by the arbitrator may be entered in any court
having competent jurisdiction. The arbitrator must be an arbitrator qualified
to serve in accordance with the rules of the American Arbitration Association
and one who is approved by the Company, before a Displacement, or, after a
Displacement, the Displacement Entity and the Employee. If the Employee and
the Company, before a Displacement, or, after a Displacement, the Displacement
Entity fail to agree on an arbitrator, each must designate a person qualified
to serve as an arbitrator in accordance with the rules of the American
Arbitration Association and these persons will select the arbitrator from among
those persons qualified to serve in accordance with the rules of the American
Arbitration Association. Any arbitration relating to this Agreement will be
held in Summit County, Ohio (or other geographical area acceptable to the
parties).

     The Company, before a Displacement, or, after a Displacement, the
Displacement Entity or any Related Entity will bear all reasonable costs
associated with any dispute arising under this

- 16 -

 

Agreement, including reasonable accounting and legal fees incurred by the
Employee in connection with the arbitration proceedings just described. If it
is subsequently determined that payment of these costs are parachute payments,
the Company, before a Displacement, or, after a Displacement, the Displacement
Entity will fully gross-up the Employee for the income, wage, employment and
excise taxes associated with that payment so that, after all applicable
federal, state and local, income, wage, employment and excise taxes (plus any
assessed interest and penalties), the Employee will have incurred no liability
(either for these fees or the taxes just listed) with respect to the matters
encompassed in this paragraph 11.

     If otherwise due, payments not being contested under the procedures
described in this paragraph will not be deferred during the pendency of
procedures described in this paragraph.

     If the arbitrator decides, at the conclusion of the arbitration
proceedings described in this paragraph, that the Company, before a
Displacement, or, after a Displacement, the Displacement Entity has understated
the amount due under this Agreement, the Company, before a Displacement, or,
after a Displacement, the Displacement Entity will, subject to application of
paragraph 7 to the aggregate of the amount initially paid under paragraph 6 and
the additional award, pay the additional amount, if any, to the Employee within
30 days after the date of the award along with interest calculated at the
interest rate prescribed by the arbitrator. However, if, after application of
paragraph 7 to the arbitrator’s award, the net amount due to the Employee would
not increase, no amounts will be paid under this subsection, regardless of the
arbitrator’s award.

     12. 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 or any Subsidiary, before a Displacement, or, after a
Displacement, the Displacement Entity, the Employer or any Related Entity shall
be directed to the attention of the President of the Company with a copy to the
Secretary of the Company, before a Displacement or, after a Displacement, to
the President of the Displacement Entity with a copy to the Secretary of the
Displacement Entity (or, in the case of the President, directed to the notice
of the Chairman of the Board of the Company, before a Displacement, or, after a
Displacement, to the Chairman of the board of directors of the Displacement
Entity with a copy to the Secretary of the Displacement Entity), 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. If the last address given by the Employee is not current,
the Employer will use reasonable means to locate the Employee.

     13. Miscellaneous.

          (a) 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 or the board of directors of the Displacement Entity. 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.

- 17 -

 

          (b) This Agreement is intended to replace and supersede the existing
Displacement Agreement between the Company and the Employee, which prior
agreement shall become invalid as of the date of signing 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 or
obligations the Employee may have under any other written agreement with the
Company or any Subsidiary, the Displacement Entity, the Employer or any Related
Entity that are not inconsistent with the terms of this Agreement.

          (c) Except as expressly provided in this Agreement, the Employee’s right
to receive the payments described in this Agreement will not decrease the
amount of, or otherwise adversely affect, any other benefits payable to the
Employee under any other plan, agreement or arrangement.

          (d) The Employee is not required to mitigate the amount of any payment
described in this Agreement by seeking other employment or otherwise, nor will
the amount of any payment or benefit provided for in this Agreement be reduced
by any compensation or benefits the Employee earns, or is entitled to receive,
in any capacity after termination or by reason of the Employee’s receipt of or
right to receive any retirement or other benefits attributable to employment.

          (e) Except as expressly provided elsewhere in this Agreement, the amount
of any payment made under this Agreement will be reduced by amounts the
Employer is required to withhold in payment (or in anticipation of payment) of
any income, wage or employment taxes imposed on the payment.

          (f) The right of an Employee or any other person to receive any amount
under this Agreement may not be assigned, transferred, pledged or encumbered
except by will or by applicable laws of descent and distribution. Any attempt
to assign, transfer, pledge or encumber any amount that is or may be receivable
under this Agreement will be null and void and of no legal effect. However,
this paragraph will not preclude payment under paragraph 13(g) of any benefit
to which a deceased Employee is entitled.

          (g) Subject to the preceding subparagraph (f), this Agreement inures to
the benefit of and may be enforced by the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

          (h) If:

          (i) the Employee’s employment relationship shifts between the
Company and any Subsidiary before a Displacement or after a Displacement,
between the Displacement Entity and any Related Entity and there has been
no intervening termination, this Agreement will remain in full force and
effect and for all purposes of this Agreement, the Employee’s new
employer will be substituted for the Employee’s prior employer.

- 18 -

 

          (ii) if the Employee’s employer is no longer a Subsidiary, whether or not
as part of a transaction that constitutes a Displacement, this Agreement will
remain in full force and effect. However, the Employee will not be entitled to
any amount under this Agreement on account of a Displacement that solely
affects the Company after that transfer and is not part of the same transaction
through which the employer stopped being a Subsidiary.

     14. 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 (other than the laws of conflict of laws) of the State
of Ohio.

     15. 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:  	/s/ Christopher J.  Maurer
 	 
	 	 	Christopher J.  Maurer, 	 
	 	 	Executive Vice President 	 
	 

	 	 	 	 	 
	 	Employee:

 	 
	 	        /s/ Terrence E. Bichsel
 	 
	 	(Signature) 	 
	 	 	 
	 
	 	        Terrence E. Bichsel
 	 
	 	(Print Name) 	 
	 	 	 

- 19 -

 

	 	 	 	 	 

Displacement Agreement

Exhibit A

	 	 	 	 	 	 	 
	Name of Executive:

	 	 	Terrence E. Bichsel
	 	(print)
	 
	 	 	 	 	 	 
	Item 6(c)(ii): Multiplied By:

	 	 	2.5	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(iii): Multiplied By:

	 	 	2.5	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(v):

	 	 	30	 	 	(insert number of months)
	 
	 	 	 	 	 	 
	Item 6(c)(vii):Outplacement Fee:

	 	 	$25,000	 	 	 
	 
	 	 	 	 	 	 
	Item 10

	 	 	30	 	 	(insert number of months)

- 20 -

 

Displacement Agreement

Form of Exhibit A

for all Executive Officers other than

John R. Cochran, Terrence E. Bichsel, Robert P. Brecht and George P. Paidas

	 	 	 	 	 	 	 	 
	Name of Executive: (print)	 	 	 	 
	 
	 	 	 	 	 	 
	Item 6(c)(ii): Multiplied By:

	 	 	2	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(iii): Multiplied By:

	 	 	2	 	 	(insert number)
	 
	 	 	 	 	 	 
	Item 6(c)(v):

	 	 	24	 	 	(insert number of months)
	 
	 	 	 	 	 	 
	Item 6(c)(vii):Outplacement Fee:

	 	 	$25,000	 	 	 
	 
	 	 	 	 	 	 
	Item 10

	 	 	24	 	 	(insert number of months)

- 21 -

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