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EXHIBIT 10.25.1
FIRST AMENDMENT TO
CHANGE OF CONTROL TERMINATION AGREEMENT
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FIRST AMENDMENT TO CHANGE OF CONTROL TERMINATION AGREEMENT (the "First
Amendment"), effective as of the 18th day of March, 1999, between FirstMerit
Corporation, an Ohio Corporation (the "Company"), and Xxx X. Xxxxxx (the
"Employee").
R E C I T A L S:
A. The Company and the Employee entered into a Change of Control
Termination Agreement, dated as of February 1, 1998, (the "Termination
Agreement") concerning the payment of certain benefits to the Employee upon the
occurrence of a Change of Control with respect to the Company. Capitalized terms
used herein shall have the meanings ascribed to them in the Termination
Agreement unless otherwise specifically indicated in this First Amendment.
B. Paragraph 12 of the Termination Agreement provides that the Company
and the Employee may modify the provisions of the Termination Agreement provided
such modifications are contained in a writing signed by the Employee and a duly
authorized representative of the Company.
C. The Company and the Employee desire to amend the Termination
Agreement to the change the limitation on benefits that may become payable to
the Employee under the Termination 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 both the Company and the
Employee, the Company and Employee mutually agree that the Termination Agreement
is hereby amended, effective as of March 18, 1999, as follows:
1. Paragraph 7 of the Termination Agreement is hereby amended in its
entirety to read as follows:
7. LIMITATION ON BENEFITS. Notwithstanding any
provision of this Agreement to the contrary, if the compensation and
benefits provided to the Employee pursuant to this Agreement, either
alone or with other compensation and benefits received by the Employee
from the Company, constitute Parachute Payments, then the compensation
and benefits payable pursuant to this Agreement, and under any other
employment agreement to which the Employee is party or employee benefit
plan or program in which the Employee is participating, shall be
reduced if, and only to the extent that, a reduction will allow the
Employee to receive a greater Net After Tax Amount than the Employee
would receive absent a reduction. The following steps shall be followed
in implementing the provisions of this paragraph 7:
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(a) The Accountant shall first determine the total amount of
the Parachute Payments and the Net After Tax Amount of such Parachute
Payments.
(b) Next, the Accountant shall determine the amount of the
Employee's Reduced Parachute Payments and the Net After Tax Amount of
such Reduced Parachute Payments.
(c) 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 Employee 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 Employee shall receive the total Parachute Payments. If the
Accountant determines that the Employee's Parachute Payments should be
reduced to an amount equal to the Reduced Parachute Payments, the
Company shall give prompt notice to that effect to the Employee with a
copy of the Accountant's calculations. The Employee 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
Agreement, shall be eliminated or reduced to arrive at the amount of
the Reduced Parachute Payments. If the Employee does not make an
election within such ten-day period, the Company 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 Employee promptly thereof. All determinations made by the
Accountant pursuant to this paragraph 7 shall be binding upon the
Company and the Employee and shall be made within sixty (60)days after
the occurrence of an event which triggers the payment of benefits under
paragraph 6 of this Agreement.
(d) The following definitions shall apply for purposes of this
paragraph 7:
(1) "Accountant" means the accounting firm approved
by the Company's shareholders as the Company's independent
auditor immediately prior to the occurrence of an event which
triggers the payment of compensation or benefits under
paragraph 6 of this Agreement.
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(2) "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.
(3) "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 Employee as in effect on the date of the
payment under paragraph 6 of this Agreement. 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.
(4) "Reduced Parachute Payments" means the largest
amount of Parachute Payments that may be paid to the Employee
without liability for any excise tax under Code Section 4999.
(e) As a result of uncertainty in the application of Code
Sections 280G and 4999 at the time that the Accountant makes its
determination under this paragraph 7, it is possible that amounts will
have been paid or distributed to the Employee under this paragraph 7
that should not have been paid or distributed ("Overpayments") or that
additional amounts should be paid or distributed to Employee under this
paragraph 7 ("Underpayments"). If the Accountant determines, based on
controlling precedent, substantial authority or the assertion of a
deficiency by the Internal Revenue Service against the Employee or the
Company, which assertion the Accountant believes has a high probability
of success, that Overpayments have been made, the Employee shall have
an obligation to pay to the Company, upon demand, an amount equal to
the sum of the
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Overpayments plus interest on such Overpayments, at the prime rate of
FirstMerit Bank, N.A. (or its successor) as such prime rate shall
change from time to time (or, if higher, the rate provided in Code
Section 7872(f)(2)), from the date of the Employee's receipt of such
Overpayments until the date of repayment; provided, however, that
Employee shall be obligated to repay such Overpayments if, and only to
extent that, the repayment would either reduce the amount on which
Employee is subject to tax under Code Section 4999 or generate a refund
of tax imposed under Section 4999. If the Accountant determines, based
upon controlling precedent or substantial authority, that Underpayments
have occurred, the Company will pay to the Employee the amount of such
Underpayments, with interest calculated on such Underpayments, at the
prime rate of FirstMerit Bank, N.A. (or its successor) as such prime
rate shall change from time to time (or, if higher, the rate provided
in Code Section 7872(f)(2)), from the date such Underpayments should
have been paid until actual payment.
2. Except as expressly modified by the provisions of this First
Amendment, the other provisions of the Termination Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the Company and the Employee 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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/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
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