Exhibit 10.4



 





AMENDED AND RESTATED

CHANGE IN CONTROL AGREEMENT




          THIS CHANGE IN CONTROL AGREEMENT is made and entered into as of the 2nd day of November, 2007
by and between FIRST CHARTER CORPORATION (the “Company”), a North Carolina corporation, and 
Cecil O. Smith (“Employee”), an individual residing in  Charlotte, North Carolina.




Background Statement




          First Charter Bank (the “Bank”) is a wholly owned subsidiary of the Company. Employee is a
valued employee of the Bank. In order to induce Employee to continue employment with the Bank and
to enhance Employee’s job security, the Company desires to provide compensation to Employee in the
event Employee’s employment is terminated following a change in control of the Company, as
hereinafter provided.




          The Company and Employee entered a Change in Control Agreement, dated April 13, 2005, (the “Original Agreement”) whereby the Company promised to pay Employee
certain amounts and to provide Employee with certain benefits in the event of the termination of
Employee’s employment under specified conditions following a Change in Control, as such term was
defined in the Original Agreement.




          The Company and Employee desire to amend and restate the Original Agreement in order to bring
the document into compliance with section 409A of the Internal Revenue Code (the “Code”) and the
regulations and other guidance issued thereunder.




          NOW, THEREFORE, in consideration of the mutual covenants contained herein, the compensation
the Company agrees to pay to Employee, Employee’s continued employment with the Bank, and of other
good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the
Company and Employee agree as follows:




          1.      Termination following a Change in Control. If a Change in Control (as defined in Section
1(iii) hereof) occurs and if, within one year following the Change in Control, the employment of
Employee is terminated (x) by the Company or the Bank other than for Cause or (y) by Employee for
Good Reason, Employee’s Compensation shall continue to be paid, subject to applicable withholdings,
by the Company for a period of 24 months following such termination of employment. The
Compensation described in the immediately preceding sentence, if and when such Compensation becomes
payable, shall be payable in single, lump sum payment equal to the present value of the
Compensation payments described above, such payment to be made within 30 days of termination of
Employee’s employment, subject to section 409A of the Code and Section 6(v)(D) hereof.




          Such payment shall be made only following termination of the Employee’s employment under
circumstances entitling such Employee to Compensation hereunder. Such payment shall be subject to
applicable withholdings. The calculation of the amount due shall be made by the independent
accounting firm then performing the Company’s independent audit, and such calculation, including
but not limited to the discount factor used to determine present value, shall be conclusive.




          For purposes of this Agreement, the following terms shall have the meanings indicated:





	 	(i)     	 	Cause. Termination by the Company or the Bank for “Cause” shall mean (A)
termination on account of willful misconduct of a material nature by the





1










 








Employee in connection with performance of his duties as an employee; (B) use of
alcohol or narcotics that affects his ability to perform his duties as an employee;
(C) conviction of a felony or serious misdemeanor involving moral turpitude; (D)
embezzlement or theft from the Company or the Bank; (E) gross inattention to or
dereliction of duty; or (F) performance by the Employee of any other willful acts
which Employee knew or reasonably should have known would be materially detrimental
to the Company or the Bank.




	 	(ii)	 	Good Reason. Termination by the Employee for “Good Reason” shall mean (A) a
material reduction in Employee’s position, duties, responsibilities or status as in
effect immediately preceding the Change in Control, or a change in Employee’s title
resulting in a material reduction in his responsibilities or position with the Company
or the Bank as in effect immediately preceding the Change in Control, in either case
without Employee’s consent; (B) a material reduction in the rate of Employee’s base
salary as in effect immediately preceding the Change in Control or a material decrease
in the bonus percentage to which Employee was entitled pursuant to any of the Company’s
incentive bonus plans at the end of the fiscal year immediately preceding the Change in
Control, in either case without Employee’s consent; provided, however,
that nothing herein shall be construed to guarantee the Employee’s bonus award if
performance, either by the Company or Employee, is below target as set forth in any of
the Company’s such incentive bonus plans; or (C) the relocation of Employee, without
his consent, to a location outside a 30 mile radius of Charlotte, North
Carolina, following a Change in Control.
	 
	 	(iii)	 	Change in Control. For purposes of this Agreement, “Change in Control” shall
mean (A) the consummation of a merger, consolidation, share exchange or similar
transaction of the Company with any other corporation as a result of which the holders
of the voting capital stock of the Company as a group would receive less than 50% of
the voting capital stock of the surviving or resulting corporation; (B) the sale or
transfer (other than as security for obligations of the Company) of substantially all
the assets of the Company; (C) in the absence of a prior expression of approval by the
Board of Directors, the acquisition of more than 20% of the Company’s voting capital
stock by any person within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), other than a person, or group including a
person, who beneficially owned, as of the date of this Agreement, more than 5% of the
Company’s securities; (D) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company cease
for any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company’s shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period; or (E) any other change in control of
the Company of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the Exchange Act or the acquisition
of control, within the meaning of Section 2(a)(2) of the Bank Holding Company Act of
1956, as amended, or Section 602 of the Change in Bank Control Act of 1978, of the
Company by any person, company or other entity.
	 
	 	(iv)	 	Compensation. Employee’s Compensation shall consist of the following: (A)
Employee’s annual base salary, as paid by the Company or the Bank, in effect
immediately preceding the Change in Control and (B) the average of any bonus paid by
the Company or the Bank to Employee during the two most recent fiscal years ending
prior to such Change in Control pursuant to any of the Company’s incentive bonus plan.




2









 











          2.      Additional Benefits.





	 	(i)	 	Upon termination of Employee’s employment entitling Employee to Compensation
set forth in Section 1 hereof, the Company shall provide continued coverage to Employee
(including coverage for Employee’s dependents to the extent dependent coverage is
provided by the Company for its employees generally), for such 24 month period,
under such health care plans and programs in which Employee was entitled to participate
immediately prior to the date of such termination of employment, provided that their
continued participation is possible under the general terms and provisions of such
plans and programs. In the event that Employee and/or such dependents are barred from
participating in any such plan or program, the Company shall arrange to provide
Employee and/or such dependents with health insurance benefits for such 24
month period substantially similar to those which Employee and/or such dependents
would otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred. Such continued coverage shall be at no cost
to Employee and/or Employee’s dependents.
	 
	 	(ii)	 	However, in no event will Employee receive from the Company the health plan
coverage contemplated by this Section 2 if Employee receives comparable insurance from
any other source. Employee expressly agrees that Employee will immediately advise the
Company of the coverage of Employee or any of Employee’s eligible dependents under a
plan or program that provides health benefits that are comparable to those provided by
the Company.
	 
	 	(iii)	 	The Company and Employee acknowledge that the termination of the Employee’s
employment under circumstances entitling such Employee to Compensation hereunder will
trigger rights to continued health care plan coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”) and further acknowledge that such COBRA
coverage continuation period will commence on the termination of Employee’s employment
and not at the termination of coverage described in Subsections (i) and (ii) hereof.





          3.      Limit on Payments. It is the intention of the Company and Employee that no portion of the
payment made under this Agreement, or payments to or for Employee under any other agreement or
plan, be deemed to be an excess parachute payment as defined in section 280G of the Code or any
successor provision. The Company and Employee agree that the present value of any payment
hereunder and any other payment to or for the benefit of Employee in the nature of compensation,
receipt of which is contingent on a Change in Control of the Company, and to which section 280G of
the Code or any successor provision thereto applies, shall not exceed an amount equal to one dollar
less than the maximum amount that Employee may receive without becoming subject to the tax imposed
by section 4999 of the Code or any successor provision or which the Company may pay without loss of
deduction under section 280G of the Code or any successor provisions. Present value for purposes
of this Agreement shall be calculated in accordance with section 1274(b)(2) of the Code or any
successor provision. In the event that the provisions of sections 280G and 4999 of the Code or any
successor provisions are repealed without succession, this Section 3 shall be of no further force
or effect.




          4.       Effect of Agreement. Nothing contained in this Agreement shall confer upon Employee any
right to continued employment by the Company or the Bank or shall interfere in any way with the
right of the Company or the Bank to terminate his employment at any time for any reason. The
provisions of this Agreement shall not affect in any way the right or power of the Company to
change its business structure or to effect a merger, consolidation, share exchange or similar
transaction, or to dissolve or liquidate, or sell or transfer all or part of its business or assets.




3









 








          5.      Source of Payment. All payments provided for under this Agreement shall be paid in cash
from the general funds of the Company, and no special or separate fund shall be established, and no
other segregation of assets shall be made to assure payment, except as provided to the contrary in
funded benefits plans. Employee shall have no right, title or interest whatsoever in or to any
investments that the Company may make to aid the Company in meeting its obligations hereunder.
Nothing contained herein, and no action taken pursuant to the provisions hereof, shall create or be
construed to create a trust of any kind or a fiduciary relationship between the Company and
Employee or any other person. To the extent that any person acquires a right to receive payments
from the Company hereunder, such right shall be no greater than the right of an unsecured creditor
of the Company.




          6.      General Provisions.





	 	(i)	 	Binding Effect. This Agreement shall be binding upon, and inure to the benefit
of, Employee and the Company and their respective permitted successors and assigns.
Neither this Agreement nor any right or interest hereunder shall be assignable by
Employee, his beneficiaries, or legal representatives without the Company’s prior
written consent. The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation, share exchange or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in form
and substance satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the date Employee’s
employment was terminated. As used in this Agreement, “Company” shall mean the Company
as defined herein and any successor to its business and/or assets as aforesaid that
executes and delivers the agreement provided for in this Section 6(i) or that otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law.
Employee agrees that Fifth Third Bancorp’s assumption of this Agreement pursuant to the
merger of the Company into Fifth Third Bancorp (or a Fifth Third affiliate), if and
when that merger occurs, as provided for in their merger agreement, is satisfactory in
form and substance to Employee for purposes hereof.
	 
	 	(ii)	 	Amendment of Agreement. This Agreement may not be modified or amended except
by an instrument in writing signed by the parties hereto, except as provided in
Subsection (v) below.
	 
	 	(iii)	 	Headings and Gender. The headings of paragraphs herein are included solely
for convenience of reference and shall not control the meaning or interpretation of any
of the provisions of this Agreement. Throughout this Agreement, whenever the context
requires or permits, the masculine gender shall include the feminine and vice versa.
	 
	 	(iv)	 	Governing Law. This Agreement has been executed and delivered in the State of
North Carolina, and its validity, interpretation, performance, and enforcement shall be
governed by the laws of such state.
	 
	 	(v)	 	Compliance With Code Section 409A.






	 	(A)	 	This Agreement is intended to qualify for the short term
deferral exclusion from the requirements of section 409A of the Code, as such
exclusion is





4









 











	 	 	 	described in Treas. Reg. §1.409A-1(b)(4). Accordingly, notwithstanding any
other provision of this Agreement, the Company may amend this Agreement at
any time to the extent required to qualify for such exclusion under Code
section 409A to ensure that all of the compensation provided under this
Agreement will not be subject to section 409A, as the Company may determine
to be necessary or appropriate.
	 
	 	(B)	 	Each provision of this Agreement that involves the deferral of
compensation that could be subject to Code section 409A shall be interpreted in
a manner that complies with the short term deferral exclusion from the
requirements of such section, and each provision that conflicts with such
exclusion shall be neither valid nor enforceable. This Agreement may not be
amended in any way to accelerate the payment of any amounts otherwise payable
to Employee as of the effective date of such amendment, except as may be
permitted by such exclusion under Code section 409A.
	 
	 	(C)	 	Notwithstanding any provision of this Agreement, the Company
may terminate this Agreement at any time under any circumstances permitted by
section 409A and, if the Company so desires, cause all of its obligation
hereunder to be paid out in lump sum payments in cash as soon as practicable
following such termination.
	 
	 	(D)	 	The Company and Employee further acknowledge that, even if
Employee is determined to be a “specified employee” as such term is defined in
section 409A of the Code on the termination of Employee’s employment, that the
payments to Employee in Section 1 shall be not be required to be postponed to
comply with section 409A because of the application of the short term deferral
exclusion from the requirements of that section.
	 
	 	(E)	 	Employee acknowledges that any tax, interest, and/or penalty
resulting from non-compliance with section 409A of the Code is his
responsibility and not that of the Company, the Bank, or any of their
successors.





     IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above stated.



	 	 	 	 	 	 	 
	 	 	FIRST CHARTER CORPORATION
	 
	 	 	By:	 	/s/ Josephine P. Sawyer	 
	 	 	 	 	 	 	 
	 	 	 	 	Josephine P. Sawyer
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE:
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Cecil O. Smith
	 	(SEAL)
	 	 	 	 	 






5