Document:

EX-10.1

 

EXHIBIT 10.1

TRANSITION AGREEMENT AND RELEASE

      THIS TRANSITION AGREEMENT AND RELEASE (the “Agreement”) made and entered into by and
between LAWRENCE M. KIMBROUGH (the “Executive”) and FIRST CHARTER CORPORATION, a North Carolina
corporation (“First Charter”) (collectively defined and referred to as the “Parties”);

WITNESSETH:

      WHEREAS, since in or about 1986, Executive has been and is currently employed by First Charter
as President and Chief Executive Officer, and is highly knowledgeable about the business and
operations of First Charter, the banking industry and its customers;

      WHEREAS, Executive has indicated his desire to retire from First Charter, effective January
31, 2006;

      WHEREAS, First Charter and Executive desire to enter into this Agreement to conclude their
employment relationship, 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;

      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 President and Chief Executive Officer of First Charter shall
start on April 28, 2005. Despite Executive’s transition from his position, the Parties further
agree that following Executive’s signing of this Agreement, and provided all conditions of this
Agreement are met by Executive, after April 28, 2005, Executive shall: (a) continue to be employed
by First Charter as President and Chief Executive Officer for a period through June 30, 2005 (the
“Role Transition Date”), and (b) voluntarily relinquish his duties and responsibilities as
President and Chief Executive Officer and as a Director on the Board of Directors of First Charter
(the “Board”) and the Board of Directors of First Charter Bank but continue to be employed by First
Charter as President Emeritus for a period beginning July 1, 2005 through January 31, 2006, upon
which Executive’s official employment with First Charter shall end, effective January 31, 2006 (the
“Separation Date”) (collectively defined and referred to as the “Transition Period”).

      The Parties agree that during the Transition Period, Executive will reasonably cooperate with
First Charter in the completion of financial and other records and the transition of his position
responsibilities during regular business hours, including but not limited to work on other specific
project assignments and transition issues that may arise with respect to subject matters that are
within the current scope of his job duties, responsibilities and expertise.

 

 

      The Parties expressly acknowledge and 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 as modified below through January 31, 2006, whether or not he is
actually required to perform complete, full-time services for First Charter during the Transition
Period. 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 January 31, 2006, 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.

      Executive and First Charter further acknowledge and agree that except for Executive’s
confidentiality, return of records and covenant not to compete obligations under the December 19,
2001 Employment Agreement between Executive and First Charter (the “Employment Agreement”), which
confidentiality and covenant not to compete obligations shall continue to remain in full force and
effect, (a) the Employment Agreement shall be terminated effective January 31, 2006, and shall be
of no further force and effect; and (b) any and all past and ongoing respective obligations between
the Parties under the Employment Agreement (including obligations that would otherwise survive the
termination or end of such Employment Agreement), are hereby terminated and forever released,
acquitted and discharged. Executive further acknowledges and agrees that a breach by him of such
confidentiality, return of records and covenant not to compete obligations shall constitute a
breach by him of this Agreement.

      2. Nature of Separation. The Parties agree that the end of the employment
relationship between the Parties shall be treated as a voluntary retirement in the personnel
records of First Charter.

      3. Transition Period Compensation. The Parties agree that following the Effective
Date of this Agreement (as defined in provision 16 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 $14,423.07 (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. Bonuses. 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 2005 (ending December 31, 2005) 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
President and Chief Executive Officer through June 30, 2005, as set forth in provision 4.f.
below.

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      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 policy 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 after the June
30, 2005 Role Transition Date, Executive must receive advance authorization from First
Charter’s then CEO or his/her designee for business and Company-related travel expenses
incurred by Executive.

      d. Company Car. Executive shall continue to have the use of the Buick Park
Avenue owned by First Charter and currently used by Executive (the “Company Car”) during the
Transition Period through June 30, 2005 (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 CEO
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.
However, First Charter agrees that following the Effective Date of this Agreement (as
defined in provision 16 below), and provided all conditions of this Agreement are and
continue to be met by Executive, Executive shall be allowed to purchase the Company Car at
the lesser of the depreciated book value or the then present NADA “blue book” market value
as of June 30, 2005 on or within ten (10) business days following 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 June 30, 2005 Role
Transition Date, after which the Parties agree that any such further accrual shall cease.
Executive, in turn, agrees promptly and accurately to account for all such time used by
Executive during such period.

      f. Benefits. With the exception of the PTO/leave limitations set forth in
provision 3.e. above and the benefits and payments set forth in provision 4 below, 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 401(k) plan
participation, and all group health, 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 the Company and
provided Executive otherwise remain eligible to participate in such plans and policies by
their terms.

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      g. Club/Membership Fees. First Charter agrees that it 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 and the Charlotte City Club
during the Transition Period through Executive’s final Separation Date, less applicable
deductions required by law. The Parties also acknowledge and agree First Charter shall
continue to pay and/or reimburse Executive for customary local, state and national
professional organizations to which a public financial institution President and Chief
Executive Officer regularly belongs and charges for membership in other local civic
organizations/clubs during the Transition Period through the June 30, 2005 Role Transition
Date, after which the Parties agree that such payments and reimbursements shall cease. The
Parties further acknowledge and agree that the continued, authorized payments set forth in
this provision 3.g. shall not include any payments or reimbursements for service charges,
dining charges, donations, golf fees and other non-business expenses related to such
memberships.

      h. Other Perquisites. With the exception of the OPT Capital Plan (in which
Executive currently is not deferring compensation during 2005) or 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
as set forth in Schedule B to Executive’s current Employment Agreement, including Money
Purchase Pension Plan, Employee Stock Purchase Plan and Supplemental Agreement for Deferred
Compensation participation, as such plans may be established, amended, replaced or
terminated from time to time in the absolute and sole discretion of the Company 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 June 30, 2005, 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. Executive agrees that he shall
review and confirm with Human Resources his PTO balance and past activity during the last
6-month period for general accuracy. The Parties further acknowledge that First Charter
will report such payment as W-2 income for the applicable tax year in which it is received.

      b. Expense Reimbursement. Regardless of whether Executive signs this Agreement,
the Parties agree that the total expense reimbursements due Executive for 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

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and the submission of appropriate receipts and other reimbursement information
from Executive to First Charter concerning the same, whichever is later.

      c. Health/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 health and dental benefits for
him and his eligible dependents under the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”). In addition, the Parties acknowledge and agree that, for purposes of COBRA, the
date of Executive’s “qualifying event” is and will be January 31, 2006. Executive further
agrees that all conversion, buy-out and other fees, premiums, payments and other expenses
related to such coverage continuation under COBRA or otherwise shall be the absolute and
sole obligation of Executive, and that First Charter shall have no premium, payment or
financial obligation for such coverage continuation, if and as elected.

      d. 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: (1) First Charter’s Amended and Restated Supplemental Agreement for Deferred
Compensation with Executive dated December 19, 2001 (the “SERP”), and (2) First Charter’s
Option Plan Trust Deferred Compensation Plan (the “OPT”), if and as applicable. The Parties
further agree that except for any applicable First Charter in-kind 401(k) match
traditionally contributed by First Charter to the OPT for and on behalf of Executive in or
about February 2006, Executive will not accrue any additional awards, credits, contributions
or benefits under the SERP or the OPT following January 31, 2006. Executive’s rights to,
and First Charter’s obligations concerning, vested benefits that Executive has accrued under
the SERP and the OPT through January 31, 2006 and distributions to Executive arising under
the same shall be governed by and made in accordance with the terms and conditions of such
plans and applicable law.

      e. Stock Options. First Charter agrees that following the Effective Date of
this Agreement (as defined in provision 16 below), and provided all conditions of this
Agreement are and continue to be met by Executive, the vesting of 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 First Charter’s Comprehensive
Stock Plan (collectively, the “Share Options”) shall be accelerated, and all such
unexercised, non-vested options shall automatically and fully vest, effective January 31,
2006. In addition, Executive and First Charter agree that except as otherwise set forth in
this provision 4.e., the Share Options 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.

      Executive acknowledges and agrees that as set forth in First Charter’s Omnibus Stock
Option Award Plan and First Charter’s Comprehensive Stock Plan documents, if he desires,
Executive will be required to exercise all outstanding, non-lapsed vested stock options with
First Charter within ninety (90) days following his separation from employment with the
Company, effective January 31, 2006. In addition, a schedule

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listing the outstanding, non-lapsed stock 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 January 31, 2006 is attached as
Exhibit A.

      f. Incentive Compensation Payment. First Charter agrees that despite
Executive’s transition from active employment as President and Chief Executive Officer of
First Charter effective upon the Role Transition Date, following the Effective Date of this
Agreement (as defined in provision 16 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 2005 (ending December 31, 2005)
through the June 30, 2005 Role Transition Date (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, based upon Executive’s June 30, 2005 Role Transition Date, if
upon calculation of the Annual Incentive Bonus amounts for employees after
the end of fiscal year 2005 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 6/12th of such amount as a
Pro-Rata Annual Incentive Bonus = .50 x $10,000 = $5,000.

      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 2006. 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
2005 Annual Incentive Plan amounts set forth in this provision 4.f.

      g. Equipment. First Charter agrees that following the Effective Date of this
Agreement (as defined in provision 16 below), and provided all conditions of this Agreement
are and continue to be met by Executive, First Charter shall allow Executive to retain
possession of First Charter’s cellular telephone currently issued to him.

      h. 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 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

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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.

      i. Tax Penalty Protection. First Charter agrees that following the Effective
Date of this Agreement (as defined in provision 16 below), and provided all conditions of
this Agreement are and continue to be met by Executive, in the event a determination is made
by legislation, regulation, ruling or administrative or court decision to Executive or First
Charter that the aggregate amount of any payment made to Executive under this Agreement and
any other payment to or for the benefit of Executive in the nature of compensation whereby
the receipt of which is contingent on a change in control of First Charter as defined by the
Internal Revenue Code of 1986, as amended (the “Code”) constitute “excess parachute
payments” as defined in Code Sections 280G and 4999 (as well as any successor provisions or
similar sections thereof), Executive shall be entitled to receive from First Charter, in
addition to and separate from any other amounts payable under this Agreement, a lump sum
payment equal to 100% of any imposed and determined excise tax under Code Section 4999, plus
an amount equal to the federal and state income tax, FICA, and Medicare taxes (based upon
Executive’s projected marginal income tax rates) on such lump sum payment, if and as
applicable. The amounts under this provision 4.i. shall be paid to Executive as soon as may
be practicable after such final determination is made. First Charter and Executive further
agree to mutually and reasonably determine whether or not such excise tax determination has
occurred or whether any appeal to such determination should be made.

      5. No Other Payments or Benefits. Except for the payments and benefits described
above in this Agreement and Executive’s general right to elect certain coverage continuation under
COBRA, Executive acknowledges that he is not entitled to any additional wages, pay, payments,
bonuses, incentive pay, commissions, compensation, severance pay, stock options, deferred
compensation, dividends, PTO pay, vacation pay, sick pay, sick reserve pay, Director fees,
consideration or benefits of any kind from First Charter, including but not limited to any
severance, change in control or other payments to Executive under the Employment Agreement, except
that Executive shall not forfeit any vested deferred compensation, 401(k), pension or stock
benefits earned by him during his employment with First Charter, if any.

      6. Ongoing Obligations. Executive hereby acknowledges and agrees that in addition to
the obligations set forth in this Agreement, during the Transition Period and following Executive’s
separation from employment with First Charter, Executive shall continue to honor all return of
records and applicable confidentiality, conflict of interest and non-compete obligations previously
agreed to by him with First Charter in the Employment Agreement or otherwise, and/or in accordance
with applicable federal or state law, and that such obligations shall continue to remain in full
force and effect for the relevant term for each. Executive also acknowledges and agrees that any
breach by him of such obligations shall be deemed to be a breach by Executive of this Agreement,
which shall allow additional remedies in accordance with provision 12 below.

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      7. Return of Documents/Data. Executive acknowledges and agrees that: (1) all files,
customer records, customer lists, research and development data, manuals, letters,
contracts, agreements, proposals, notes, notebooks, records (including all computer and
electronic records), reports, memoranda and all other First Charter materials, documents and data
used, prepared or collected by Executive as part of his employment with First Charter, in whatever
form, and (2) all Confidential Information (as defined in the Employment Agreement) and records
containing any Confidential Information that came into his possession while an employee of First
Charter, whether prepared by Executive or others, are and will remain the property of First
Charter. Upon the end of his employment with First Charter, Executive will return and make
available to First Charter prior to the last day of Executive’s employment all such documents and
information, as well as all documents and other materials of any kind that constitute or contain
any Confidential Information, in Executive’s possession or control, regardless of how stored or
maintained, including all originals, copies and compilations and all information stored or
maintained on computer, tapes, discs or any other electronic or other form of technology.

      8. Reasonableness. Executive acknowledges and agrees that during his tenure with
First Charter for the past 20+ years, he has had access to comprehensive long-term strategy and
confidential business data for First Charter throughout its operations. Executive agrees that the
restrictions placed upon him by provision 6 of this Agreement are reasonable given the nature of
his current position with First Charter, the area in which First Charter markets its products and
services, and the consideration provided by First Charter to Executive pursuant to the Employment
Agreement and this Agreement, as applicable. Specifically, Executive acknowledges and agrees that
the length of the covenant not to compete and other restricted activities set forth in the
Employment Agreement are reasonable and that the defined competitive activity and restricted
territory are reasonable. Accordingly, Executive agrees not to contest the validity or
enforceability of provision 6 of this Agreement or the non-compete requirements contained in the
Employment Agreement, and agrees that if any court or arbitration panel should hold any provision
of those sections to be unenforceable, the remaining provisions will nonetheless be enforceable
according to their terms. Further, if any provision or subsection of the non-compete requirements
in the Employment Agreement is held to be overbroad as written, Executive agrees that a court or
arbitration panel should view such provisions and subsections as separable and uphold those
separable provisions and subsections deemed to be reasonable.

      The restrictions and obligations in provision 6 of this Agreement and the non-compete
requirements contained in the Employment Agreement shall survive Executive’s last day of employment
with First Charter and shall be in addition to any restrictions imposed upon Executive by statute
or at common law. The Parties further acknowledge and agree that the restrictions and obligations
in provision 6 of this Agreement and the non-compete requirements contained in the Employment
Agreement shall continue to be enforceable regardless of whether there is a subsequent dispute
between the Parties concerning any alleged breach of this Agreement.

      9. Release. In consideration of the Transition Period, Executive’s continued
employment by First Charter through the Separation Date, and the Transition Period Compensation,
Pro-Rata Annual Incentive Bonus, accelerated Share Option vesting, and other good and valuable
consideration described in this Agreement, Executive, for himself, his heirs, executors, legal
representatives, administrators, successors and assigns, hereby fully releases, discharges and
covenants not to sue First Charter, First Charter Bank, First Charter Insurance

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Services, First Charter Realty Investment, First Charter Brokerage Services, FCNB Real Estate,
Inc., and all subsidiary and affiliate companies of such entities, as well as such entities’
respective officers, directors, trustees, employees, agents, predecessors, successors and assigns
(collectively, the “Releasees”), of and from any and all claims, actions, lawsuits, damages,
administrative charges, or demands of any kind whatsoever, whenever or wherever they arose, that
Executive has, may have or may have had at the time of or prior to his execution of this Agreement
arising out of or related to: (a) Executive’s entering into this Agreement, or (b) Executive’s
prior Employment Agreement (collectively, the “Released Claims”), including but not limited to
Released Claims arising under the Age Discrimination in Employment Act of 1967, the North Carolina
Wage and Hour Act, the North Carolina Retaliatory Employment Discrimination Act, the North Carolina
Equal Employment Practices Act, and all other federal, state and local civil rights acts,
regulations, orders and claims, whether under tort or contract, or under statute or otherwise.
Executive further agrees not to file, institute or pursue any lawsuit, claim or administrative
action against the Releasees relating to the Released Claims.

      The Parties, however, agree that this release shall not: (i) include any claims relating to
the obligations of First Charter under this Agreement; (ii) affect Executive’s vested and accrued
rights as a participant in any vested deferred compensation, 401(k), pension or stock benefits of
First Charter; or (iii) affect any rights or claims that may arise out of events occurring after
the date this Agreement is signed. The Parties further expressly understand and agree that this
release is and shall continue to be enforceable regardless of whether there is a subsequent dispute
between the Parties concerning any alleged breach of this Agreement.

      10. Agreement Confidentiality. The Parties agree that the terms of this Agreement,
including the amounts of any payments made as outlined in provisions 3 and 4 above, shall remain
confidential. The Parties, however, agree that: (a) First Charter may disclose the terms of this
Agreement to officers, directors and management level employees of First Charter and First Charter
Bank, to professionals representing them, to their insurance agents and carriers, and to affiliates
and employees of the same with a need to know or in order to give effect to this Agreement; and (b)
Executive may disclose the terms of this Agreement to his spouse, children, accountant or tax
return preparer to the extent necessary in preparing his tax returns or to receive relevant tax
advice, and attorney in a legally recognized privileged communication, provided that such third
parties comply with the confidentiality requirements set forth above. In addition, the Parties
agree that they are permitted to disclose the terms of this Agreement to the IRS, the North
Carolina Department of Revenue, and other applicable state departments of taxation, if necessary,
and as otherwise required by law. The Parties further agree that First Charter may also disclose
the terms of this Agreement in its proxy statements or other public securities filings as required
by law.

      Executive agrees that he shall be responsible for any disclosure of the terms of this
Agreement by his spouse, children, accountant, tax return preparer or attorney contrary to the
terms of this provision 10 as though such disclosures were made by him. Executive further
acknowledges and agrees that this provision 10 is a material provision of the Agreement and that
any breach by him or the individuals to whom he disclosed information regarding this Agreement of
this provision 10 shall be deemed to be a breach by Executive of the Agreement.

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      11. Cooperation/Community Support. Executive agrees to cooperate with and provide
assistance to First Charter and its legal counsel in connection with any present or future
litigation (including arbitration or administrative hearings) or investigation affecting First
Charter in which, in the reasonable judgment of First Charter’s counsel, Executive’s assistance or
cooperation is needed. Executive shall, when requested by First Charter, provide testimony or
other assistance and shall travel at First Charter’s request in order to fulfill this obligation.
Provided, however, that, in connection with such litigation or investigation, First Charter shall
attempt to accommodate Executive’s schedule, shall provide him with reasonable notice in advance of
the times in which his cooperation or assistance is needed, and shall reimburse Executive for any
reasonable expenses incurred in connection with such matters. In addition, during the Transition
Period following the June 30, 2005 Role Transition Date outlined in provision 1 above, Executive
agrees to provide limited assistance to First Charter in answering questions that may arise
relating to business activities previously performed by Executive for First Charter and in
attending reasonable, limited community and/or public relations events as a representative for or
on behalf of First Charter, if and as requested by First Charter’s then CEO.

      Executive further agrees that during the Transition Period and for an additional two (2) year
period following the Separation Date, he will not make or cause others to make, whether in writing
or orally, disparaging statements with respect to First Charter, or its subsidiaries, affiliate
companies, businesses, officers or employees, and that he will maintain a publicly cordial
relationship with First Charter and its employees in his conversations with employees, customers,
the financial/insurance services community and other third party individuals. First Charter, in
turn, agrees that during the Transition Period and for an additional two (2) year period following
the Separation Date, the current individuals within First Charter’s Senior Executive Team will not
make or cause others to make, whether in writing or orally, disparaging statements with respect to
Executive or his prior employment with First Charter, and that such Senior Executive Team members
shall maintain a publicly cordial relationship with Executive in their conversations with
employees, customers, the financial/insurance services community, and other third parties.

      Despite the above, and except as otherwise set forth in this provision 11 below, the Parties
agree that nothing in this provision 11 shall be deemed to interfere with Executive’s ordinary and
regular rights as a shareholder of First Charter, including but not limited to Executive’s right to
engage in appropriate communications with the Board of Directors of First Charter regarding general
issues affecting Executive’s status and rights as a shareholder. However, Executive agrees that in
consideration of the payments and other benefits outlined above, the definition of “Competitive
Activity” contained in his Employment Agreement as referenced in provision 6 shall also include:
(a) acquiring, offering to acquire, or agreeing to acquire, directly or indirectly and/or in
concert with others, by purchase or otherwise, more than one percent of the outstanding voting
securities of First Charter or direct or indirect rights to acquire more than one percent of the
outstanding voting securities of First Charter, or any assets of First Charter; or (b) directly or
indirectly and/or in concert with others making any public announcement with respect to, submitting
a proposal for, or offering of (with or without conditions) any of the actions prohibited in
subpart (a) above of this provision 11.

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      12. Breach. Executive agrees to submit to the jurisdiction of the courts of North
Carolina and agrees that, in the event of any breach or threatened breach of provisions 6-11 of
this Agreement by Executive, First Charter shall be entitled to an injunction, without bond,
restraining such breach. In addition, Executive and First Charter agree that the prevailing party
in any legal action to enforce the terms of this Agreement, including but not limited to provisions
6-11 above, shall be entitled to costs and attorneys’ fees relating to any such proceeding, but
nothing herein shall be construed as prohibiting the Parties from pursuing other remedies available
to them for any breach or threatened breach.

      Moreover, Executive also agrees that if Executive breaches any of provisions 6-11 above,
Executive shall forfeit at the time of the breach the right to any additional future Transition
Period Compensation or other payments or benefits under provisions 3, 4.e., 4.f., 4.g. and 4.i. of
this Agreement. In such case, Executive and First Charter agree that the obligations contained in
provisions 6-11 of this Agreement shall remain valid and enforceable based on the consideration
actually provided. Moreover, Executive agrees that in the event of any such breach, First Charter
shall be entitled to costs and reasonable attorneys’ fees relating to any proceeding to enforce or
collect a refund of the amounts set forth in this provision.

      13. Responsibility for Taxes. The Parties agree that First Charter will report the
above Transition Period Compensation under provision 3 and separation benefits under provision 4 as
W-2 income for the applicable tax year(s) in which it they are received and/or legally accounted
as taxable income, if and as required by law. Executive understands and agrees that except as
otherwise noted in provision 4.i. above, he is responsible for any federal or state tax liability,
penalties, interest, tax payments or tax judgments against him that could arise as a result of this
Agreement. In addition, Executive agrees that he has had the opportunity to consult with his own,
independent accountant and/or counsel regarding any and all tax issues related to this Agreement.
Executive also agrees that First Charter, the Releasees, and their respective officers, employees,
accountants, attorneys and agents are in no way indemnifying or making any representation,
statement or guarantee to Executive as to his past, current or future tax liability or the ultimate
position that the IRS or any applicable state tax agency may take with respect to the tax treatment
of such prior or future wages, payments, compensation and benefits, including those payments and
provision set forth in provisions 3 and 4 of this Agreement.

      14. Acknowledgment by Executive. First Charter specifically advises Executive to
consult a lawyer before signing this Agreement concerning the terms of this Agreement and his
rights under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. Executive
acknowledges that he has carefully read this Agreement, that he knows and understands the contents
of this Agreement, that he has had ample opportunity to review the terms of this Agreement, that he
is under no pressure to execute this Agreement, that he has consulted with or had the opportunity
to consult with a lawyer regarding this Agreement, and that he executes this Agreement of his own
free will.

      15. Waiting Period. Executive hereby acknowledges and understands that after
receiving this Agreement from First Charter, he shall have at least twenty-one (21) days to
consider signing this Agreement, and is further aware of his right to consult with an attorney
prior to signing this Agreement. By signing this Agreement, Executive acknowledges his right to
consider whether to sign this Agreement for a period of at least twenty-one (21) days. If
Executive elects not to take twenty-one (21) days to sign this Agreement, Executive acknowledges
that the period of time used by him prior to signing this Agreement was ample

11

 

time to consider and review this Agreement, it being expressly understood that First Charter
is imposing no requirement or duress on Executive to take less than twenty-one (21) days to
consider signing this Agreement. If Executive does not sign this Agreement within twenty-one (21)
days of presentation by First Charter, he further acknowledges that First Charter has the option to
withdraw its offer set forth in this Agreement.

      16. Revocation Rights. Executive acknowledges and understands that he shall have
seven (7) days from the date this Agreement is signed by him to revoke this Agreement, if he so
chooses, by advising First Charter in writing of the revocation. Any such revocation of this
Agreement must be in writing, signed by Executive, and delivered to Ms. Laura Blalock, Executive
Vice President, Human Resources, First Charter Corporation, P.O. Box 37937, Charlotte, North
Carolina 28237-7937. However, Executive acknowledges that the payments and other benefits outlined
in provisions 3 and 4 above will not become payable until: (a) First Charter has received a signed
copy of this Agreement from Executive; and (b) the 7-day revocation period has passed without
Executive’s revocation. Otherwise, if this Agreement is not revoked within seven (7) days from the
signing of this Agreement by Executive, it shall become effective and enforceable as to all Parties
on the eighth day following the signing of this Agreement by all Parties (the “Effective Date”).

      17. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of Executive, First Charter and its respective successors, assigns, heirs and personal
representatives; provided, that Executive may not assign any of his rights, title or interest in
this Agreement. The Parties, however, agree that nothing in this Agreement shall preclude (a)
Executive from designating a beneficiary and/or trust to receive any benefit payable upon
Executive’s death, or (b) the executors, administrators or other legal representatives of Executive
or Executive’s estate from assigning any rights hereunder to the person or persons entitled
thereunto. Executive further acknowledges and agrees that in the event of the transfer and/or
assignment of this Agreement to a successor or assignee of First Charter, this Agreement shall
remain valid and be fully enforceable by such entity. As used in this Agreement, “First Charter”
shall mean First Charter as defined herein and any successor to its business and/or assets as
aforesaid that expressly assumes the obligations of this Agreement or that otherwise becomes bound
by the terms and provisions of this Agreement by operation of law.

      18. No Admissions. This Agreement does not constitute any admission by First Charter
or the Releasees of any violation by them of any contract, agreement, plan, statute, ordinance,
constitutional provision or other law, and this Agreement shall in no manner be deemed an
admission, finding, or indication for any purpose whatsoever that First Charter or the Releasees
have at any time, including the present, committed any unlawful acts against Executive or treated
him unfairly or improperly in any way, and Executive further understands and acknowledges that
First Charter enters into this Agreement solely to resolve all matters between the Parties in an
amicable fashion.

      19. Governing Law. The Parties agree that this Agreement shall be deemed to be a
contract made under, and for all purposes shall be governed by and construed in accordance with,
the internal laws and judicial decisions of the State of North Carolina, except as superseded by
federal law.

12

 

      20. Dissolution or Merger. In the event that First Charter consolidates or merges
into or with, or transfers all or substantially all of its assets to, another entity, and such
other entity assumes this Agreement, the term “First Charter” as used herein shall mean such other
entity, and the Parties agree that this Agreement shall continue in full force and effect without
any further action on the part of either First Charter, its successor or assign, or Executive.

      21. Waiver of Breach. No waiver of any breach of this Agreement shall operate or be
construed as a waiver of any subsequent breach by any party. No waiver shall be valid unless in
writing and signed by the party waiving any particular provision.

      22. Severability. The Parties understand and agree that every provision of this
Agreement is severable from each other provision of this Agreement. Thus, the Parties agree that
if any part of the covenants or provisions contained in this Agreement is determined by a court of
competent jurisdiction or by any arbitration panel to which a dispute is submitted to be invalid,
illegal or incapable of being enforced, then such covenant or provision, with such modification as
shall be required in order to render such covenant or provision not invalid, illegal or incapable
of being enforced, shall remain in full force and effect, and all other covenants and provisions
contained in this Agreement shall, nevertheless, remain in full force and effect to the fullest
extent permissible by law. The Parties further agree that, if any court or panel makes such a
determination, such court or panel shall have the power to reduce the duration, scope and/or area
of such provisions and/or delete specific words and phrases by “blue penciling” and, in its reduced
or blue penciled form, such provisions shall then be enforceable as allowed by law.

      23. Counterparts. This Agreement may be executed in duplicate counterparts, each of
which shall be deemed an original and all of which shall constitute but one and the same
instrument.

      24. Entire Agreement. Except as otherwise set forth in this Agreement, this Agreement
constitutes the entire agreement among the Parties pertaining to the subject matter contained
herein and supersedes any and all prior and contemporaneous agreements, representations, promises,
inducements and understandings of the Parties. This written Agreement cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or written
agreements. Moreover, this written Agreement may not be later modified except by a further writing
signed by a duly authorized officer of First Charter and Executive. Notwithstanding the foregoing,
nothing contained herein shall prevent or restrain in any manner First Charter from instituting an
action or claim in court, or such other forum as may be appropriate, to enforce the terms of any
ongoing, post-employment confidentiality and other obligations of Executive set forth and/or
referenced in this Agreement or any similar agreement relating to First Charter’s confidential or
proprietary business information or trade secrets.

      25. Notice. Except as otherwise set forth in this Agreement, whenever any notice is
required hereunder, it shall be given in writing addressed as follows:

	 	 	 	 	 
	To First Charter:

	 	Laura Nelson Blalock
	 	 
	

	 	EVP, Human Resources	 	 
	

	 	First Charter Corporation	 	 
	

	 	P.O. Box 37937	 	 
	

	 	Charlotte, North Carolina 28237-7937	 	 
	 
	 	 	 	 
	To Executive:

	 	Lawrence M. Kimbrough	 	 
	

	 	617 Ardrey Circle	 	 
	

	 	Davidson, North Carolina 28036	 	 

13

 

      Notice shall be deemed given and effective on the earlier of three (3) days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail, certified, return
receipt requested, or when actually received. Either party may change the address for notice by
notifying the other party of such change in accordance with this provision 25.

      IN WITNESS WHEREOF, the Board of Directors of First Charter has approved this Agreement and
caused it to be executed in its name by its Chairman and duly attested to, at the April 27, 2005
meeting of the Board of Directors of First Charter, and Lawrence M. Kimbrough has accepted this
Agreement and has hereunto set his hand and seal, as of the date set forth below.

[Signatures on Next Page]

14

 

	 	 	 	 	 
	 	FIRST CHARTER CORPORATION

 	 
	 	By:  	/s/ James E. Burt, III (SEAL)
 	 
	 	 	Name:  	James E. Burt, III 	 
	 	 	Title:  	Chairman, Board of Directors 	 
	 

	 	 	 	 	 
	 	ATTEST:

 	 
	 	By:  	/s/  Stephen J. Antal
 	 
	 	 	Name:  	Stephen J. Antal 	 
	 	 	Title:  	Senior Vice President, General Counsel
and Corporate Secretary 	 
	 

Accepted and signed by Executive, this the 27th day of April, 2005.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Lawrence M. Kimbrough
 	 
	 	Lawrence M. Kimbrough 	 
	 	 	 
	 

Sworn to and subscribed before me

this the 27th day of April, 2005.

/s/ Judy E. Montague

Notary Public

My Commission Expires: 6/3/05

15<PAGE>
                                                                    EXHIBIT 10.1

                        [Acuity Brands, Inc. Letterhead]

April 26, 2005

Edward H. Bastian
[Address]

Dear Ed:

I am pleased to confirm our offer to you of the position of Senior Vice
President and Chief Financial Officer for Acuity Brands, Inc. ("Acuity" or
"Acuity Brands"). I believe this is an exciting opportunity for you, and I am
confident that you will have a significant impact on the future success of the
Corporation. This letter confirms the details of our offer.

EFFECTIVE DATE

You will assume the duties of your new position effective as of June 1, 2005
(the "Effective Date").

DUTIES

You will be employed on a full-time basis as the Senior Vice President and Chief
Financial Officer for Acuity Brands and will report to the Chairman and Chief
Executive Officer. In that capacity, you will perform the duties and
responsibilities normally associated with that position, including those
described on Exhibit "A" attached hereto.

COMPENSATION

BASE SALARY
Your starting base salary will be $31,250 per month, paid on a monthly basis in
arrears and based on an annual salary of $375,000. Your salary will be reviewed
annually beginning October 2005.

SIGN-ON BONUS

You will receive a sign-on bonus of $250,000, which will be paid in lieu of
relocation expenses. Should you voluntarily terminate your employment with
Acuity Brands, Inc. within three years of the Effective Date, you will be
required to repay the sign-on bonus on a pro rata, after tax basis, assuming a
tax rate of 45%.

ANNUAL INCENTIVE PLAN

You will participate in the Acuity Brands, Inc. Management Compensation and
Incentive Plan, currently providing an annual bonus opportunity of 55% of salary
at target performance, with a maximum opportunity of 110% of salary. Your fiscal
year 2005 bonus will be calculated pro rata based on the number of weeks of your
employment with Acuity Brands during the fiscal year ending August 31, 2005.

<PAGE>
ED BASTIAN                                                               PAGE 2

LONG-TERM INCENTIVE PLAN

You will participate in the Acuity Brands, Inc. Long-Term Incentive Plan (the
"Plan"). Under the terms of the Plan you will have the opportunity for awards
calculated as a percentage of your base salary and determined by your position
in Tier 1 of the award structure, by the performance of Acuity Brands, and by
your contribution to that performance. Your base salary multiplied by 90% will
be used as the starting point for any annual award that may be granted beginning
in fiscal year 2006, adjusted for the performance of Acuity Brands for the
fiscal year ended August 31, 2005 and your individual performance for the
portion of the year you are employed.

You will receive a one-time initial award under the Plan of 25,000 time-vesting
restricted shares, which will vest in four equal annual installments beginning
one year from the Effective Date, and a stock option for 25,000 shares, which
will vest in three equal annual installments beginning one year from the
Effective Date and will have an exercise price equal to the fair market value
(closing price) of Acuity Brands common stock on the Effective Date.

RETIREMENT PLANS

You will be eligible to participate in the Acuity Brands, Inc. 401(k) Plan,
which currently includes a company match of 60% of deferrals up to 6% of salary,
subject to applicable federal limitations.

You will be eligible to participate in the Acuity Brands, Inc. 2002 Supplemental
Executive Retirement Plan (the "SERP"), as it may be revised or replaced to
comply with Section 409A of the Internal Revenue Code. Your benefits under the
SERP will be determined pursuant to the standard provisions of the SERP in
accordance with the effective date of your eligibility.

DEFERRED COMPENSATION PLAN

You will be eligible to participate in the Acuity Brands, Inc. Supplemental
Deferred Savings Plan (the "SDSP" or "Plan") under the standard provisions of
the Plan or such subsequent deferred compensation plan that may be adopted to
comply with Section 409A of the Internal Revenue Code. Under the current
provisions of the SDSP, you may defer up to 50% of your annual cash compensation
(base salary and bonus), which earns interest at the prime rate. (As an
executive officer with eligibility for the SERP, you will not be eligible to
receive the company contribution or match under the SDSP.)

MEDICAL, LIFE INSURANCE, AND OTHER EMPLOYEE BENEFITS

You will be eligible to participate in the medical, dental, life insurance,
disability, and other benefit programs generally made available to employees of
Acuity Brands, which include:

Medical
Prescription Drug Plan
Life Insurance
Short-Term Disability
Long-Term Disability
Flex Benefit Program
Voluntary Dental Program
Voluntary EyeMed Program

VACATION

You will be entitled to four (4) weeks vacation per calendar year.

<PAGE>
ED BASTIAN                                                               PAGE 3

EMPLOYMENT AT WILL/SEVERANCE PAYMENTS/CHANGE IN CONTROL

Your employment will be at will and may be terminated by either Acuity Brands,
Inc. or by you at any time for any reason, with or without notice. Except in the
event of a termination in connection with a Change in Control of Acuity Brands,
Inc. (as defined in the Severance Protection Agreement that will cover you), you
will be covered by a Severance Agreement consistent with those provided other
senior vice presidents of the Corporation, which provides you a severance
benefit in the event your employment in this position is terminated for any
reason other than voluntary termination (including early or normal retirement),
termination upon death or Disability, or termination by Acuity Brands for Cause.
The terms Cause and Disability used in this paragraph will be defined in the
Severance Agreement.

With respect to Change in Control situations, you will be covered by a Severance
Protection Agreement with the same provisions as are generally applicable to
officers of Acuity Brands at a multiple of two times base salary. In the event
of your termination in connection with a Change in Control that entitles you to
benefits under the Severance Protection Agreement, you will receive the greater
of the payments and benefits provided under the Severance Protection Agreement
or the severance payment described above.

The base salary, annual incentive, long-term incentive, nonqualified retirement
benefits, and any severance payment will be structured to provide the tax
deductibility to Acuity Brands, Inc. of the payments and benefits under the
Internal Revenue Code of 1986.

We look forward to your joining Acuity Brands and to a long and mutually
satisfactory relationship. This letter outlines your employment relationship
with Acuity Brands; if you agree with the employment terms as outlined above,
please sign and date both copies of this letter agreement and return one copy to
me at your earliest convenience.

Sincerely,

/s/ Vernon J. Nagel

Vernon J. Nagel
Chairman and Chief Executive Officer

ACCEPTED AND AGREED TO THIS
26th day of April, 2005

       /s/ Edward H. Bastian
--------------------------------------
           Edward H. Bastian

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