TRANSITION AGREEMENT AND RELEASE
THIS TRANSITION AGREEMENT AND RELEASE (the "Agreement") made
and entered into by and between RICHARD A. MANLEY (the
"Executive") and FIRST CHARTER CORPORATION , a North
Carolina corporation ("First Charter") (collectively defined and
referred to as the "Parties");
WITNESSETH:
WHEREAS , Executive has been and is currently employed by
First Charter Bank as Executive Vice President, Chief Banking
Officer, and by First Charter as Executive Vice President, Chief
Banking Officer, and is highly knowledgeable about the business and
operations of First Charter, First Charter Bank, the banking
industry and First Charter's and First Charter Bank's
customers;
WHEREAS, First Charter and Executive desire to enter into
this Agreement to conclude his employment relationship with First
Charter, First Charter Bank and their related subsidiaries, provide
for an orderly transition of Executive's responsibilities, and
resolve all matters by and among them, including but not limited
to, any matters relating to Executive's employment relationship
with and separation from First Charter and First Charter Bank;
WHEREAS , the Parties acknowledge and agree that this
Agreement is supported by valuable consideration and is entered
into voluntarily by the Parties;
NOW , THEREFORE , in exchange for the promises and
mutual covenants contained in this Agreement, the Parties,
intending legally to be bound, agree as follows:
1. Transition
and Separation from Employment . The Parties agree
that Executive's initial transition from his role as Executive Vice
President, Chief Banking Officer of First Charter Bank and
Executive Vice President, Chief Banking Officer of First Charter
shall start on September 22, 2006 (the "Transition Date").
Despite Executive's transition from his positions, the Parties
agree that following Executive's signing of this Agreement, and
provided all conditions of this Agreement are met by Executive,
after the Transition Date, Executive shall continue to be employed
by First Charter and First Charter Bank for a period through, and
his official employment with First Charter, First Charter Bank
and/or their related subsidiaries in all capacities shall end
effective October 6, 2006 (the "Separation Date") (collectively
defined and referred to as the "Transition Period").
The Parties agree that during the Transition Period, Executive will
consult and reasonably cooperate with First Charter and its
officers and employees as needed and requested in providing limited
advice and consulting assistance regarding the transition of his
position responsibilities and with respect to any other issues
regarding the subject matters that are within the current scope of
his job duties and responsibilities, including but not limited to
work on specific transition issues that may arise. The
Parties further acknowledge and agree that during the Transition
Period, Executive's primary responsibility shall be to look for and
obtain other employment.
The Parties agree that this Agreement is and will be enforceable
and First Charter will be in compliance with this provision 1
provided Executive is paid his applicable regular compensation and
benefits through the Separation Date, whether or not he is actually
required to perform
complete, full-time services for First Charter during the
Transition Period. In addition, except for Executive's
opportunity to obtain continuation medical coverage as allowed by
and pursuant to COBRA or as otherwise set forth in provisions 3 and
4 below, Executive's rights to his regular salary and benefits
shall cease effective on the Separation Date, except that Executive
shall not forfeit any vested deferred compensation benefits as set
forth below, or vested 401(k), pension or stock benefits earned by
him during his employment with First Charter, if any.
2. Nature of
Separation . The Parties agree that for purposes of
Executive's participation in First Charter's Omnibus Stock Option
Award Plan and First Charter's Comprehensive Stock Plan, including
Executive's Performance Shares Award Agreement under First
Charter's Omnibus Stock Option Award Plan, Executive's transition
and the end of the employment relationship between the Parties
shall be treated as an involuntary separation without "Cause", as
defined in such plans. However, the Parties further agree
that, at Executive's election, Executive's transition and the end
of the employment relationship between the Parties shall be treated
as a voluntary resignation in the personnel records of First
Charter for purposes of employment references and any subsequent
job search by Executive.
3. Transition
Period Compensation . The Parties agree that
following the Effective Date of this Agreement (as defined in
provision 15 below), and provided all conditions of this Agreement
are met by Executive, First Charter shall provide Executive with
the following general compensation and other benefits and services
during the Transition Period (the "Transition Period
Compensation):
a. Base
Salary . During the Transition Period through
Executive's final Separation Date, First Charter shall continue to
pay Executive a base salary as compensation for services rendered
at Executive's current bi-weekly base rate of $7,884.61 (the "Base
Salary"), payable to Executive by First Charter at the same time
and in the same manner as Executive's current salary payout with
First Charter, less applicable deductions required by
law.
b. Bonus
. During the Transition Period through Executive's final
Separation Date, Executive shall be eligible to continue
participation and shall participate in the First Charter Annual
Incentive Plan for fiscal year 2006 (ending December 31, 2006) in
accordance with the terms and conditions of such plan.
However, Executive and First Charter acknowledge and agree that
Executive's final award payout under such plan, if and as awarded
by the Board, shall be prorated for Executive's active service as
Executive Vice President, Chief Banking Officer, as set forth in
provision 4.f. below.
c.
Expenses . During the Transition Period through
Executive's final Separation Date, upon submission of proper
vouchers to First Charter by Executive, First Charter shall
continue to pay or reimburse Executive for all normal and
reasonable business expenses, including authorized travel expenses,
incurred by Executive in connection with Executive's performance of
his responsibilities with First Charter in accordance with the
terms of applicable First Charter policies and procedures then in
effect concerning the same as they may be established or amended
from time to time in the absolute discretion of First
Charter. However, Executive and First Charter agree that
during the Transition Period, Executive must receive advance
authorization from First Charter's then Chief Executive Officer or
his designee for business and First Charter-related travel expenses
incurred by Executive.
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d.
Company Car . Executive shall continue to have
the use of the automobile owned or leased by First Charter and
currently used by Executive (the "Company Car") during the
Transition Period through his final Separation Date (the "Car
Return Date"). Executive agrees that he shall return the
Company Car to First Charter on or before the Car Return
Date. Executive also acknowledges and agrees that, unless
otherwise authorized by First Charter's then Chief Executive
Officer for specified First Charter business, his authorization for
travel and other expenses associated with the use of the Company
Car shall be discontinued as of the Car Return Date.
e.
Leave Accrual . Executive shall be eligible to
continue to accrue PTO days and all other paid leave time during
the Transition Period through the Final Separation Date, after
which the Parties agree that any such further accrual shall
cease. Executive, in turn, agrees to review and confirm with
Human Resources his PTO balance and past activity during the last
12-month period for general accuracy.
f.
Benefits . During the Transition Period through
Executive's final Separation Date, First Charter shall continue to
provide to Executive (at the same level of shared expense) those
general benefits that Executive received and/or in which Executive
participated with First Charter immediately prior to Executive's
execution of this Agreement, including all group medical,
hospitalization, disability, dental, life and other insurance and
employee welfare benefit plans, as they may be established,
amended, replaced or terminated from time to time in the absolute
and sole discretion of First Charter and provided Executive
otherwise remain eligible to participate in such plans and policies
by their terms.
g. Other
Perquisites . Except as otherwise set forth or
modified above, during the Transition Period through Executive's
final Separation Date, First Charter shall also continue to provide
to Executive (at the same level of shared expense) those other
perquisites that Executive received and/or in which Executive
participated with First Charter immediately prior to Executive's
execution of this Agreement, including Option Plan Trust Deferred
Compensation Plan, Retirement Savings Plan and Employee Stock
Purchase Plan participation, as such plans may be established,
amended, replaced or terminated from time to time in the absolute
and sole discretion of First Charter and provided Executive
otherwise remain eligible to participate in such plans and policies
by their terms.
4. Separation
Benefits . In addition to the above, following
the end of Executive's employment with First Charter on the
Separation Date, First Charter will provide Executive with the
following separation benefits:
a.
Paid Time Off . Regardless of whether
Executive signs this Agreement, Executive shall receive payment for
all unused PTO days as of his final Separation Date, payable by
First Charter to Executive in a lump sum amount on or before the
next available payday following the Separation Date, less
appropriate deductions required by law for the payment of wages,
including for state and federal taxes and FICA. In addition,
the Parties agree that Executive will not accrue and will not be
entitled to receive any additional PTO days during any period that
he is receiving severance payments under this Agreement.
b. Expense
Reimbursement . Regardless of whether Executive signs this
Agreement, the Parties agree that the total expense reimbursements
due Executive for
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reasonable and authorized expenses incurred by him during his
employment with First Charter through the final Separation Date but
not yet reimbursed to him shall be payable by First Charter to
Executive on the next available payday following the Separation
Date and the submission of appropriate receipts and other
reimbursement information from Executive to First Charter
concerning the same, whichever is later.
c. Deferred
Compensation . The Parties agree that following
Executive's Separation Date, Executive shall cease to be an active
participant in the awards and other benefits under First Charter's
Option Plan Trust Deferred Compensation Plan (the "OPT"), if and as
applicable. The Parties further agree that Executive will not
accrue any additional awards, credits, contributions or benefits
under the OPT following Executive's final Separation Date. In
addition, regardless of whether Executive signs this Agreement,
Executive's rights to, and First Charter's obligations concerning,
vested benefits that Executive has accrued under the OPT through
his Separation Date and distributions to Executive arising under
the same shall be governed by and made in accordance with the terms
and conditions of such plan and applicable law.
The Parties further specifically acknowledge that because Executive
is a "specified employee" as such term is defined in section 409A
of the Internal Revenue Code upon his Separation Date, payment of
awards and other benefits to Executive under the OPT will be
required to be postponed for a period of six (6) months following
Executive's final Separation Date or such other time as may be
legally required to comply with section 409A.
d.
Stock Options . Executive and First Charter
agree that any current unexercised, non-vested options previously
granted to Executive by First Charter in accordance with the terms
of First Charter's Omnibus Stock Option Award Plan and/or First
Charter's Comprehensive Stock Plan, including options granted
pursuant to Executive's Performance Shares Award
Agreement under the Omnibus Stock Option Award Plan (collectively,
the "Share Options") shall remain subject to, and governed by,
those certain rules and restrictions of the First Charter Omnibus
Stock Option Award Plan and First Charter's Comprehensive Stock
Plan, as applicable, as such plans may be amended from time to
time.
In addition, a schedule listing such Share Options granted to
Executive under any First Charter stock option award agreement,
First Charter's Omnibus Stock Option Award Plan, First Charter's
Comprehensive Stock Plan, or otherwise prior to Executive's signing
of this Agreement is attached as Exhibit A.
e.
Severance Pay . First Charter agrees that
following the Effective Date of this Agreement (as defined in
provision 15 below), and provided all conditions of this Agreement
are and continue to be met by Executive, First Charter shall pay
severance to Executive in equal bi-weekly,
pre-withholding/deduction installments of $7,884.61 each for a
period of twelve (12) months, equivalent to a total amount of
$205,000 (collectively, the "Severance Pay"), retroactive to
the Separation Date beginning on the next regular payday after the
Effective Date of this Agreement or the Separation Date, whichever
is later. All payments to Executive pursuant to this
provision 4.e. shall be made by First Charter via direct deposit on
the same dates as First Charter's regular, bi-weekly payroll for
its active,
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salaried employees, less appropriate deductions required by
law for the payment of wages, including for state and federal taxes
and FICA.
f.
Bonus . First Charter agrees that despite
Executive's transition from active employment as Executive Vice
President, Chief Banking Officer effective upon the Transition
Date, following the Effective Date of this Agreement (as defined in
provision 15 below), and provided all conditions of this Agreement
are met by Executive, First Charter shall pay Executive a pro-rated
bonus as a participant in the First Charter Annual Incentive Plan
for fiscal year 2006 (ending December 31, 2006) through September
30, 2006 (the "Pro-Rata Annual Incentive Bonus"). Such
Pro-Rata Annual Incentive Bonus shall be based upon achievement of
established corporate and individual goals and objectives and
subject to funding criteria being met, as determined by the
Board. In addition, Executive's ongoing active participation
in such plan shall end as of the Separation Date.
For example, if upon calculation of the Annual Incentive Bonus
amounts for employees after the end of fiscal year 2006 Executive
would have received a $10,000 bonus had Executive remained actively
employed with First Charter at the time of such bonus payout,
Executive would receive 9/12th of such amount as a Pro-Rata Annual
Incentive Bonus = .75 x $10,000 = $7,500.
The applicable timing for making payments under the First Charter
Annual Incentive Plan will be governed by the terms and conditions
of such plan, such that Executive shall receive payment for
Executive's Pro Rata Annual Incentive Bonus if and as eligible at
the same time and in the same manner as other then ongoing employee
plan participants at First Charter, which payments generally occur
in or about February/March 2007. In addition, Executive and
First Charter agree that any such Pro-Rata Incentive Bonus payment
will be subject to all required withholdings and deductions, as
appropriate. The Parties further agree that despite any terms
and conditions of such plan to the contrary, Executive's separation
from employment with First Charter effective upon the Separation
Date will not result in a forfeiture of the 2006 Annual Incentive
Plan amounts set forth in this provision 4.f.
g.
Outplacement . First Charter agrees that following
the Effective Date of this Agreement (as defined in provision 15
below), and provided all conditions of this Agreement are and
continue to be met by Executive, First Charter shall provide
Executive with individual outplacement services by and through Lee
Hecht Harrison ( see www.lhh.com) or DBM, Inc. ( see
www.dbm.com), at Executive's election, as coordinated through First
Charter's Human Resources Department, up to a maximum amount of
$20,000. Executive must initiate participation in this
outplacement program no later than within 60 days of the final
Separation Date. In addition, such outplacement services,
once initiated and begun by Executive as described below, shall be
made available to Executive for a maximum period of up to twelve
(12) months following Executive's initiation of service.
First Charter and Executive agree that the expenses for the
outplacement agency services set forth in this provision 4.g. shall
be paid directly to the agency by First Charter. First
Charter and Executive further agree that all outplacement services
and expenses must be reviewed and approved by First Charter Human
Resources prior to payment.
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h.
Club/Membership Fees . First Charter agrees that
following the Effective Date of this Agreement (as defined in
provision 15 below), and provided all conditions of this Agreement
are and continue to be met by Executive, First Charter shall
continue to pay and/or reimburse Executive for Executive's general
membership dues, fees and assessments related to Executive's
membership in River Run Country Club from Executive's Transition
Date through December 31, 2006, less applicable deductions required
by law.
i.
Medical/Dental Insurance Benefits .
Regardless of whether Executive signs this Agreement, following the
Separation Date, First Charter and/or its applicable carriers will
notify Executive of his rights to elect continuation of medical and
dental benefits for him and his eligible dependents under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). In
addition, following the Effective Date of this Agreement (as
defined in provision 15 below), and provided all conditions of this
Agreement are and continue to be met by Executive, First Charter
agrees to pay Executive's monthly COBRA premium at the same level
of Executive's current shared coverage expense during the twelve
(12) month period following the Separation Date or such
earlier time that Executive becomes eligible for coverage under
another group plan, as applicable. If Executive wishes to
continue his COBRA coverage beyond the end of such period, he will
then be responsible for paying the full premiums for such coverage
during the remainder of his potential COBRA coverage
eligibility.
Executive will be notified by First Charter's insurance carrier
regarding his rights under COBRA and the costs and conditions of
that option. All other insurance coverage provided to
Executive by First Charter, including but not limited to First
Charter's group life insurance and short and long-term disability
benefits, will terminate and cease to be in effect as of the
Separation Date, except as otherwise noted in provisions 4.j and
4.k below. In addition, failure by Executive to timely elect
medical/dental coverage, to timely pay any required premiums or to
make any required payments, or to remain eligible for COBRA
coverage continuation will terminate First Charter's obligations
with respect to such COBRA payments.
j.
Supplemental Disability and Life Insurance Benefits .
Regardless of whether Executive signs this Agreement,
following the Separation Date, Executive shall cease to be an
eligible participant in First Charter's group long-term disability
and group life insurance plans. However, in accordance with
the terms of Executive's current Supplemental Disability Insurance
Plan (the "Supplemental Disability Policy") and current
Supplemental Life Insurance Plan (the "Supplemental Life Policy"),
Executive may have the option to maintain all or a portion of his
coverage under the Supplemental Disability Policy and/or
Supplemental Life Policy as an individual policy or policies
following his final Separation Date. Executive may elect such
coverage continuation and/or conversion, as applicable and
otherwise eligible, through the applicable carrier for the
same. However, Executive and First Charter agree that all
conversion and buy-out fees, premiums and other expenses regarding
Executive's coverage continuation and/or conversion rights for the
Supplemental Disability Policy and Supplemental Life Policy shall
be the absolute and sole obligation of Executive.
k. Effect of
Separation on Other Existing Benefits . Except as
otherwise set forth in provisions 3 and 4 above, Executive shall
cease to be an active participant in First
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Charter's benefit programs effective as of Executive's
Separation Date, and Executive shall no longer be eligible to
receive other perquisite benefits from First Charter following such
Separation Date. In addition, following Executive's
separation from his employment with First Charter, Executive's
rights to continue any benefits that he formerly received under
First Charter's benefit plans, to convert any such benefits to
personal policies, or to receive any vested or accrued benefits
under those plans will be governed by the applicable plan documents
and law. The Parties also acknowledge and agree that
the separation payments, benefits and other compensation outlined
in this provision 4
