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EXHIBIT 10.23.1
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "First Amendment"),
effective as of the 18th day of March, 1999, among FirstMerit Corporation, an
Ohio Corporation ("FirstMerit"), FirstMerit Bank, N.A., a national banking
association ("FirstMerit Bank"), and Xxx X. Xxxxxx (the "Executive").
R E C I T A L S:
A. FirstMerit, FirstMerit Bank and the Executive entered into an
Employment Agreement, dated as of February 1, 1998, (the "Employment Agreement")
concerning the Executive's employment with FirstMerit and FirstMerit Bank.
Capitalized terms used herein shall have the meanings ascribed to them in the
Employment Agreement unless otherwise specifically indicated in this First
Amendment.
B. FirstMerit, FirstMerit Bank and the Executive desire to amend the
Employment Agreement to change the limitation on the compensation and benefits
that may become payable to the Executive under the Employment Agreement as the
result of the occurrence of a Change of Control and the application of Section
280G of the Internal Revenue Code of 1986 (the "Code").
IN CONSIDERATION OF THE FOREGOING and good and valuable consideration,
the receipt of which is hereby acknowledged by all of FirstMerit, FirstMerit
Bank and the Employee, FirstMerit, FirstMerit Bank and the Executive mutually
agree that the Employment Agreement is hereby amended, effective as of March 18,
1999, as follows:
1. The third sentence of Section 5.2 is amended and replaced by the
following:
"The Change of Control Termination Agreement will also provide that if
any compensation or benefits payable under such Agreement, alone or in
conjunction with other compensation or benefits received by Executive,
constitute "parachute payments," within the meaning of Section 280G of
the Internal Revenue Code (the "Code") or the regulations adopted or
proposed thereunder, then the compensation and benefits payable under
the Agreement will be reduced if, and only to the extent that, a
reduction will allow the Executive to receive a greater benefit, net
after taxes, than the Executive would receive absent a reduction."
2. The second sentence of Section 7.5(A) is amended and replaced by the
following:
"Notwithstanding the preceding sentence, if a termination of employment
under this Section 7.5(A) occurs following a Change of Control and if
the compensation and benefits provided under this Section 7.5(A),
either alone or with other compensation and benefits received by the
Executive from FirstMerit, constitute Parachute Payments, then the
compensation and benefits payable pursuant to this Section
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7.5(A), and under any other employment agreement to which the Executive
is party or employee benefit plan or program in which the Executive is
participating, shall be reduced if, and only to the extent that, a
reduction will allow the Executive to receive a greater Net After Tax
Amount than the Executive would receive absent a reduction. The
following steps shall be followed in implementing the provisions of
this paragraph 7.5(A):
(i) The Accountant shall first determine the total amount
of the Parachute Payments and the Net After Tax Amount of such
Parachute Payments.
(ii) Next, the Accountant shall determine the amount of
the Executive's Reduced Parachute Payments and the Net After
Tax Amount of such Reduced Parachute Payments.
(iii) If the Accountant determines that the Net After Tax
Amount of the Reduced Parachute Payments is greater than the
Net After Tax Amount of the total Parachute Payments, the
Executive shall receive the Reduced Parachute Payments. If the
Accountant determines that the Net After Tax Amount of the
total Parachute Payments is greater than or equal to the Net
After Tax Amount of the Reduced Parachute Payments, the
Executive shall receive the total Parachute Payments. If the
Accountant determines that the Executive's Parachute Payments
should be reduced to an amount equal to the Reduced Parachute
Payments, FirstMerit shall give prompt notice to that effect to
the Executive with a copy of the Accountant's calculations. The
Executive may then elect, in his sole discretion, within ten
(10) days after his receipt of such notice, which and how much
of the Parachute Payments, including without limitation the
compensation and benefits payable pursuant to this Section
7.5(A), shall be eliminated or reduced to arrive at the amount
of the Reduced Parachute Payments. If the Executive does not
make an election within such ten-day period, FirstMerit shall,
in its sole discretion, make the election to reduce the
Parachute Payments to arrive at the amount of the Reduced
Parachute Payments and shall notify the Executive promptly
thereof. All determinations made by the Accountant pursuant to
this Section 7.5(A) shall be binding upon FirstMerit and the
Executive and shall be made within sixty (60)days after the
occurrence of an event which triggers the payment of benefits
under this Section 7.5(A).
(iv) The following definitions shall apply for purposes of
this Section 7.5(A):
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(a) "Accountant" means the accounting firm
approved by FirstMerit's shareholders as FirstMerit's
independent auditor immediately prior to the
occurrence of an event which triggers the payment of
compensation or benefits under this Section 7.5(A).
(b) "Parachute Payment" means a payment that is
described in Code Section 280G(b)(2) (without regard
to whether the aggregate present value of such payment
exceeds the limit prescribed in Code Section
280G(b)(2)(A)(ii)). The amount of any Parachute
Payment shall be determined in accordance with Code
Section 280G and the regulations promulgated
thereunder, or, in the absence of final regulations,
the proposed regulations promulgated under Code
Section 280G.
(c) "Net After Tax Amount" means the amount of any
Parachute Payments or Reduced Parachute Payments, as
applicable, net of the taxes imposed under Code
Sections 1, 3101(b) and 4999 and any state or local
income taxes applicable to the Executive as in effect
on the date of the payment under this Section 7.5(A).
The determination of the Net After Tax Amount shall be
made using the highest combined effective rates of the
taxes described in the preceding sentence imposed on
income of the same character as the Parachute Payments
or Reduced Parachute Payments, as applicable, in
effect for the year for which the determination is
made.
(d) "Reduced Parachute Payments" means the largest
amount of Parachute Payments that may be paid to the
Executive without liability for any excise tax under
Code Section 4999.
3. Except as expressly modified by the provisions of this First
Amendment, the other provisions of the Employment Agreement shall remain in full
force and effect.
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IN WITNESS WHEREOF, FirstMerit, FirstMerit Bank and the Executive have
duly executed this First Amendment this 20th day of April, 1999.
FIRSTMERIT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Its: Chairman
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FIRSTMERIT BANK, N.A.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Its: Senior Vice President
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/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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