EXHIBIT 10.37
SUPPLEMENTAL AGREEMENT
FOR XXXXXXX X. XXXXX
THIS SUPPLEMENTAL AGREEMENT, effective as of December, 19, 2001, by and between
FIRST CHARTER CORPORATION, a corporation organized under the State of North
Carolina ("First Charter"), and XXXXXXX X. XXXXX, a resident of the City of
Davidson, County of of Mecklenburg, and State of North Carolina ("the
"Executive").
Preamble
First Charter employs the Executive as a Group Executive Vice President, and the
Executive devotes his time, attention, skill and efforts to the performance of
duties on behalf of First Charter as described in his Amended and Restated
Employment Agreement with First Charter dated December 19, 2001 (the "Employment
Agreement"). In consideration of services rendered on behalf of First Charter
and as an inducement for ongoing valuable services until retirement, First
Charter agreed to provide a deferred compensation benefit to the Executive.
In consideration of the Supplemental Agreement and mutual promises hereinafter
contained, the parties hereto agree to the following Supplemental Agreement:
Article I Definitions
The following definitions shall govern this Supplemental Agreement:
1.1 "Beneficiary" means the person designated in writing by the Executive
to receive any benefits due the Executive upon his death. If no such
designation is made or if the designated person is not living at the
death of the Executive, the Beneficiary shall be the Executive's
spouse, if living; otherwise, the Beneficiary shall be his estate.
1.2 "Benefit" means the benefit that will be available to the Executive as
described in Article III.
1.3 "Benefit Distribution Date" means the first day of the first month
beginning on or after the date the Executive has attained age 65 and
terminated employment with First Charter, or any earlier date mutually
agreed to by the Executive and the Board of Directors
1.4 "Board of Directors' means the board of directors of First Charter.
1.5 "Disabled" means the inability of the Executive to engage in his
profession by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which is to last
or can be expected to last for a continuous period of not less than
twelve months. The Board of Directors, in its sole discretion, shall
determine if the Executive is Disabled upon certification thereof by a
qualified physician selected by the Board of Directors after such
physician examines the Executive.
1.6 "Distribution Event" means an event upon which the Executive may become
entitled to receive his Benefit as described in Article IV.
1.7 "First Charter" means First Charter Corporation.
Article II Vesting
Under the terms of this Supplemental Agreement, the Executive shall become 50%
vested in his Benefit as of January 1, 2006. On each January 1 thereafter on
which the Executive continues to be an employee of First Charter, Executive
shall become vested in an additional 10% of his Benefit. The Executive shall
vest in 100% of his Benefit on January 1, 2011 if he remains an employee of
First Charter through such date, subject all times to the forfeiture provisions
of Article VI.
Furthermore, the Executive shall become 100% vested in his Benefit before
January 1, 2011 if (i) he dies, (ii) he becomes Disabled or (iii) First Charter
has a Change in Control (as such is defined in the Employment Agreement).
Article III Amount of the Benefit
3.1 Following a Distribution Event, the Executive, if fully vested, shall
receive a monthly benefit payment in the form of 120 monthly
installments of $10,041.67 each, with a total of payments of $1,205,000
(the "Benefit").
3.2 Following a Distribution Event, the Executive, if not fully vested,
shall receive a reduced monthly benefit payment in the form of 120
monthly installments. The amount of the monthly benefit payment is
determined by the percent vested as indicated on the following table:
Vesting Adjustment Monthly Benefit Payment to
Date Percent Vested Executive Total of Payments
---- -------------- --------- -----------------
01/01/06 50% $5,020.83 $602,500
01/01/07 60% $6,025.00 $723,000
01/01/08 70% $7,029.17 $843,500
01/01/09 80% $8,033.33 $964,000
01/01/10 90% $9,037.50 $1,084,500
01/01/11 100% $10,041.67 $1,205,000
Article IV Distribution Events
The Benefit shall be paid to the Executive or the Executive's Beneficiary upon
the following events:
o If the Executive's employment is terminated on or after the Benefit
Distribution Date, the Executive shall be entitled to payment of Ten
Thousand Forty One Dollars and 67 Cents ($10,041.67) per month for 120
monthly installments, unless another equivalent form of distribution is
selected by the Board of Directors in its sole discretion. Payment will
begin as soon as practicable following the Executive's termination of
employment.
o If the Executive's employment is terminated by reason of his death or
if the Executive's death occurs after a Distribution Event but before
full payment of the Benefit has been made to the Executive, the
Beneficiary shall be entitled to the continuation of monthly
installments of Ten Thousand Forty One Dollars and 67 Cents
($10,041.67) per month, so that a total of 120 such installments are
paid to the Executive and the Executive's Beneficiary, unless another
equivalent form of distribution is selected by the Board of Directors
in its sole discretion. Payment to the Beneficiary will begin (or
continue to the Beneficiary) as soon as practicable following the
Executive's death.
o If the Executive becomes Disabled before reaching his Benefit
Distribution Date and while in the employ of First Charter, the
Executive shall be entitled to payment of Ten Thousand Forty One
Dollars and 67 Cents ($10,041.67) per month for 120 monthly
installments, unless another equivalent form of distribution is
selected by the Board of Directors in its sole discretion. Payment will
begin as soon as practicable following the date the Executive becomes
Disabled.
o If the Executive's employment is terminated before the Executive
attains his Benefit Distribution Date for any reason other than the
Executive's death or if the Executive becomes Disabled, the Executive
shall be entitled to payment of the vested portion of the Benefit in
120 equal monthly installments in the amount indicated in Section 3.2,
unless another equivalent form of distribution is selected by the Board
of Directors in its sole discretion. Payment will begin as soon as
practicable following the date the Executive's termination of
employment.
Article V Payment of Benefit
Alternatives
5.1 Form of Payment. All monthly benefit installments will be paid in cash.
When the Executive becomes fully vested, First Charter may purchase an
annuity from an insurance company rated A+ or better by A.M. Best
Company, Inc. Notwithstanding the foregoing, however, if the Benefit
becomes fully vested as a result of a Change in Control, or if a Change
in Control occurs after benefits become payable, First Charter shall
purchase an annuity as described above. If purchased by First Charter,
such annuity shall provide the Executive or his Beneficiary with 120
monthly payments in an amount equal to his Benefit as described in
Articles III and IV.
5.2 Alternate Recipients. If, in the sole opinion of First Charter, the
Executive or Beneficiary is physically or mentally incapacitated to
properly receive such payments, First Charter may make (or cause to be
made) payments to any member of the family of the Executive or
Beneficiary, or for the use and benefit of the Executive or
Beneficiary, or to any person or institution providing care for the
Executive or Beneficiary. All payments so made shall fully discharge
and acquit First Charter obligation to provide the Benefit to the
amounts thereof.
5.3 Withholding for Taxes. First Charter (or, if payments are made by an
insurance company under an annuity) may withhold from any benefits
payable under this Supplemental Agreement all federal, state, city, or
other taxes, or qualified domestic relations order or divorce decree as
shall be required pursuant to any law, government regulation or ruling,
or court order.
Article VI Forfeiture of Benefit
Rights to any unvested payments of the Executive's Benefit pursuant to this
Supplemental Agreement shall be immediately forfeited if the Executive engages
in any act that results in the Executive's Termination for Cause (as defined in
the Employment Agreement) or the breach of any covenant in the Employment
Agreement.
Article VII Status Of Benefit
7.1 Accrual of Benefit. First Charter may use any reasonable accounting
policy in accruing the Benefit, and shall accrue the Benefit on its
books on a monthly basis. The amount accrued shall be segregated from
other accounts on the books and records of First Charter as a
contingent liability of First Charter to the Executive.
7.2 General Creditor. The Executive shall be regarded as a general creditor
of First Charter with respect to any rights derived by the Executive
from the existence of this Supplemental Agreement or the existence or
amount of the liability. Title to and beneficial ownership of any
assets, whether cash, investments, life insurance policies, or other
assets that First Charter may intend to use as a source of payment,
shall at all times remain with First Charter. The Executive and his
Beneficiary shall not have any property interest whatsoever in any
specific assets of First Charter.
7.3 Liability of First Charter. Nothing in this Supplemental Agreement
shall constitute the creation of a trust or other fiduciary
relationship between First Charter and the Executive or between First
Charter and the Beneficiary or any other person. First Charter shall
not be considered a trustee by reason of this Supplemental Agreement.
Article VIII Claims and Review Procedure
In the event that any claim for benefits that must initially be submitted in
writing to the Board of Directors, is denied (in whole or in part) hereunder,
the claimant shall receive from First Charter a notice of denial in writing
within 60 days, written in a manner calculated to be understood by the claimant,
setting forth the specific reasons for denial, with specific reference to
pertinent provisions of this Supplemental Agreement.
Any disagreements about such interpretations and construction shall be submitted
to an arbitrator subject to the rules and procedures established by the American
Arbitration Association. The arbitrator shall be acceptable to both First
Charter and the Executive (or Beneficiary); if the parties cannot agree on a
single arbitrator, the disagreement shall be heard by a panel of three
arbitrators, with each party to appoint one arbitrator and the third to be
chosen by the other two.
No member of the Board of Directors shall be liable to any person for any action
taken under Article VIII except those actions undertaken with lack of good
faith.
Article IX The Supplemental Agreement
9.1 Assignment. Except for the designation of the Beneficiary by the
Executive, no rights under this Supplemental Agreement may be assigned,
transferred, pledged or encumbered by the Executive or the Beneficiary
except by will or by North Carolina interstate laws or other laws of
descent and distribution. This Supplemental Agreement may be assigned
by First Charter only (i) if First Charter or substantially all of its
assets are purchased by another entity or are merged into the assets of
another entity, and such entity specifically assumes First Charter's
obligations thereunder, or (ii) with the prior written consent of the
Executive.
9.2 Supplemental Agreement Binding. This Supplemental Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective next of kin, successors, assigns, heirs, personal
representatives, executors, administrators, and legatees. First Charter
shall not merge or consolidate with any other entity or reorganize
unless and until such succeeding and continuing entity agrees to assume
and discharge the obligations of First Charter under this Supplemental
Agreement. Upon such assumption, the term First Charter as used in this
Supplemental Agreement shall be deemed to refer to such successor to
First Charter. The Board of Directors, at its sole discretion, reserves
the right to amend, revise, or terminate this Supplemental Agreement
with respect to future benefits only, but the Executive's consent must
be obtained for all other amendments or revisions.
9.3 Entire Agreement. This document constitutes the entire understanding
between the parties as to the provision of supplemental retirement
benefits hereunder by First Charter to the Executive. This Supplemental
Agreement may only be modified, altered, or amended by prior written
approval and consent of Executive and First Charter with respect to
Executive's right to or the payment of vested Benefits.
Article X Miscellaneous
10.1 No Guarantee of Employment. Nothing in this Supplemental Agreement
shall be construed as guaranteeing future employment to the Executive.
The Executive continues to be an employee of First Charter subject to
the Employment Agreement.
10.2 Not "Compensation" for Other Purposes. Any deferred compensation
payable under this Supplemental Agreement (or the actuarial or the net
present value of any such payments) shall not be deemed salary or other
compensation to the Executive for purposes of any qualified retirement
plans maintained by First Charter, any incentive bonus plans, or for
purposes of any other fringe benefit obligations of First Charter.
10.3 Governing Law. This Supplemental Agreement shall be construed in
accordance with and governed by the laws of the State of North
Carolina, except to the extent such laws are preempted by federal laws
and regulations.
IN WITNESS WHEREOF, the Parties have entered into this Supplemental
Agreement as of the 19th day of December, 2001.
FIRST CHARTER CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: President and Director
(Principal Executive Officer)
Witnesses
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxxxx
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