Document:

ex10-5.htm

Exhibit 10.5

Two-Year Change of Control Agreement

 

This Amended and Restated Change of Control Agreement (the “Agreement”) is made and entered into as of December 23, 2009 (the “Effective Date”) by and among Charterbank, a federally-chartered savings bank having an office at 600 Third Avenue, West Point, GA 31833 (the “Bank”), Charter Financial Corporation, a federally-chartered corporation having an office at 600 Third Avenue, West Point, GA 31833 (the “Company”) and Lee Washam (the “Officer”).

 

Introductory Statement

 

The Bank and the Officer entered into a Change in Control Agreement, dated August 13, 2002, in connection with the mutual holding company reorganization of the Bank.  First Charter MHC (the “MHC”), the Company’s mutual holding company has adopted a Plan of Conversion and Reorganization under which the MHC will convert to stock form in a reorganization that will create Charter Financial Corporation (“Charter Financial”), a new Maryland stock holding company, that will be the successor to the Company and the MHC, and which will own 100% of the Bank.  In connection with this second step reorganization, the parties desire to amend and restate the Change in Control Agreement to increase its term to two (2) years.

 

The Board of Directors of the Bank has concluded that it is in the best interests of the Bank, the Company, Charter Financial and their prospective shareholders to establish a working environment for the Officer which minimizes the personal distractions that might result from possible business combinations in which the Company or the Bank might be involved following the Reorganization. To this end, the Bank has decided to provide the Officer with assurance that his compensation will be continued for a minimum period of two (2) years following termination of employment (the “Assurance Period”) if his employment terminates under specified circumstances related to a business combination. The Board of Directors of the Bank has decided to formalize this assurance by entering into this Change of Control Agreement with the Officer. The Board of Directors of the Company has authorized the Company to guarantee the Bank’s obligations under this Agreement.

 

The terms and conditions which the Bank, the Company and the Officer have agreed to are as follows.

 

Agreement

 

Section 1.           Effective Date; Term; Change of Control and Pending Change of Control Defined.

 

(a)           This Agreement shall take effect on the Effective Date and remain in effect during the period (the “Term”) beginning on the Effective Date and ending on the second anniversary of the date on which the Bank notifies the Officer of its intent to discontinue the Agreement (the “Initial Expiration Date”) or, if later, the second anniversary of the effective date of any Change of Control, as defined below, that occurs during the Term hereof.  Any discharge occurring during the Term shall be governed by this Agreement.

 

  

  

  

 

(b)           For all purposes of this Agreement, a “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

 

(i)           the consummation of a reorganization, merger or consolidation of the Company with one or more other persons, other than a transaction following which:

 

(A)         at least 51% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51 % of the outstanding equity ownership interests in the Company; and

 

(B)           at least 51% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the securities entitled to vote generally in the election of directors of the Company;

 

(ii)          the acquisition of all or substantially all of the assets of the Company or beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the outstanding securities of the Company entitled to vote generally in the election of directors by any person or by any persons acting in concert;

 

(iii)         a complete liquidation or dissolution of the Company;

 

(iv)         the occurrence of any event if, immediately following such event, at least 50% of the members of the Board of Directors of the Company do not belong to any of the following groups:

 

(A)         individuals who were members of the Board of Directors of the Company on the date of this Agreement; or

 

(B)         individuals who first became members of the Board of Directors of the Company after the date of this Agreement either:

 

(1)           upon election to serve as a member of the Board of Directors of the Company by affirmative vote of three-quarters of the members of such board, or of a nominating committee thereof in office at the time of such first election; or

 

  

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(2)           upon election by the shareholders to serve as a member of such board, but only if nominated for election by affirmative vote of three-quarters of the members of the Board of Directors of the Company, or of a nominating committee thereof, in office at the time of such first nomination;

 

provided, however, that such individual’s election or nomination did not result from an actual or threatened election contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on behalf of the Board of Directors of the Company; provided, however, that this section 1(b)(iv) shall only apply if the Company is not majority owned by First Charter, MHC; or

 

(v)          any event which would be described in section 1(b)(i), (ii), (iii) or (iv) if the term “Bank” were substituted for the term “Company” therein.

 

In no event, however, shall a Change of Control be deemed to have occurred as a result of (i) any acquisition of securities or assets of the Company, the Bank, or a subsidiary of either of them, by the Company, the Bank, or any subsidiary of either of them, or by any employee benefit plan maintained by any of them or (ii) the second-step conversion of First Charter, MHC to a stock form company and the issuance of shares of common stock of such stock form company in connection therewith. For purposes of this section 1(b), the term “person” shall have the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.

 

(c)          For purposes of this Agreement, a “Pending Change of Control” shall mean: (i) the signing of a definitive agreement for a transaction which, if consummated, would result in a Change of Control; (ii) the commencement of a tender offer which, if successful, would result in a Change of Control; or (iii) the circulation of a proxy statement seeking proxies in opposition to management in an election contest which, if successful, would result in a Change of Control; provided, however, that the Change of Control contemplated does, in fact, occur.

 

Section 2.           Discharge Prior to a Pending Change of Control.

 

The Bank may discharge the Officer at any time prior to the occurrence of a Pending Change of Control for any reason or for no reason. In such event:

 

(a)          The Bank shall pay to the Officer (or, in the event of his death, his estate) his earned but unpaid compensation (including, without limitation, salary and all other items which constitute wages under applicable law) as of the date of his termination of employment. This payment shall be made in accordance with the Bank’s normal payroll practices.

 

(b)          The Bank shall provide the benefits, if any, due to the Officer (or, in the event of his death, his estate, surviving dependents or his designated beneficiaries) under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the officers and employees of the Bank. The time and manner of payment or other delivery of these benefits and the recipients of such benefits shall be determined according to the terms and conditions of the applicable plans and programs.

 

  

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The payments and benefits described in sections 2(a) and (b) shall be referred to in this Agreement as the “Standard Termination Entitlements.”

 

Section 3.           Termination of Employment Due to Death.

 

The Officer’s employment with the Bank shall terminate, automatically and without any further action on the part of any party to this Agreement, on the date of the Officer’s death. In such event, the Bank shall pay and deliver to his estate and surviving dependents and beneficiaries, as applicable, the Standard Termination Entitlements.

 

Section 4.           Termination Due to Disability after Change of Control or Pending Change of Control.

 

The Bank may terminate the Officer’s employment after the occurrence of a Change of Control or a Pending Change of Control if the Officer is suffering from a Disability.  “Disability” means any condition which constitutes a “disability” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  A termination of employment due to Disability under this section 4 shall be effected by a notice of termination given to the Officer by the Bank and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Officer.  In the event the Officer becomes subject to a Disability:

 

(a)           The Bank shall pay and deliver to the Officer (or in the event of his death before payment, to his estate and surviving dependents and beneficiaries, as applicable) the Standard Termination Entitlements in the event of his termination of employment.

 

(b)           Subject to Section 8, in addition to the Standard Termination Entitlements, the Bank shall continue to pay the Officer his base salary, at the annual rate in effect for him immediately prior to the date the Disability commenced, during a period ending on the earliest of: (i) the expiration of one hundred and eighty (180) days after the date the Disability commenced; (ii) the date on which long-term disability insurance benefits are first payable to him under any long-term disability insurance plan covering employees of the Bank (the “LTD Eligibility Date”); (iii) the date of his death; and (iv) the expiration of the Assurance Period (the “Initial Continuation Period”). If the end of the Initial Continuation Period is neither the LTD Eligibility Date nor the date of his death, the Bank shall continue to pay the Officer his base salary, at an annual rate equal to sixty percent (60%) of the annual rate in effect for him immediately prior to the date the Disability commenced, during an additional period ending on the earliest of the LTD Eligibility Date, the date of his death and the expiration of the Assurance Period.  The payments under this subsection are referred to in this Agreement as the “Disability Benefits.”  Notwithstanding any other provision hereof, the Disability Benefits shall commence within the time period required by Section 8.

 

  

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Section 5.           Discharge with Cause after Change of Control or Pending Change of Control.

 

(a)           The Bank may terminate the Officer’s employment with “Cause” after the occurrence of a Change of Control or Pending Change of Control, but a termination shall be deemed to have occurred with “Cause” only if:

 

(i)           the Board of Directors of the Bank and the Board of Directors of the Company, by separate majority votes of their entire membership, determine that the Officer should be discharged because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order, or any material breach of this Agreement; and

 

(ii)           at least forty-five (45) days prior to the vote contemplated by section 1(b)(i), the Bank has provided the Officer with notice of its intent to discharge the Officer for Cause, detailing with particularity the facts and circumstances which are alleged to constitute Cause (the “Notice of Intent to Discharge”); and

 

(iii)         after the giving of the Notice of Intent to Discharge and before the taking of the vote contemplated by section 5(a)(i), the Officer (together with his legal counsel, if he so desires) is afforded a reasonable opportunity to make both written and oral presentations before the Board of Directors of the Bank for the purpose of refuting the alleged grounds for Cause for his discharge; and

 

(iv)         after the vote contemplated by section 5(a)(i), the Bank has furnished to the Officer a notice of termination which shall specify the effective date of his termination of employment (which shall in no event be earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Board of Directors of the Bank, certified by its corporate secretary and signed by each member of the Board of Directors voting in favor of adoption of the resolution(s), authorizing the termination of the Officer’s employment with Cause and stating with particularity the facts and circumstances found to constitute Cause for his discharge (the “Final Discharge Notice”).

 

(b)          If the Officer is discharged with Cause in accordance with section 5(a) hereof, the Bank shall pay and provide to him (or, in the event of his death, to his estate, his surviving beneficiaries and his dependents) the Standard Termination Entitlements only. Following the giving of a Notice of Intent to Discharge, the Bank shall temporarily suspend the Officer’s duties and authority and, in such event, shall also suspend the payment of salary and other cash compensation, but not the Officer’s participation in retirement insurance and other employee benefit plans. If the Officer is not discharged, or is discharged without Cause, within forty-five (45) days after the giving of a Notice of Intent to Discharge, payments of salary and cash compensation shall resume, and all payments withheld during the period of suspension shall be promptly restored. If the Officer is discharged with Cause not later than forty-five (45) days after the giving of the Notice of Intent to Discharge, all payments withheld during the period of suspension shall be deemed forfeited and shall not be included in the Standard Termination Entitlements. If the Bank does not give a Final Discharge Notice to the Officer within ninety (90) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Officer with Cause shall require the giving of a new Notice of Intent to Discharge.

 

  

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Section 6.           Discharge without Cause and Change of Control or Pending Change of Control.

 

The Bank may discharge the Officer without Cause at any time after the occurrence of a Change of Control or Pending Change of Control, and in such event:

 

(a)           The Bank shall pay and deliver to the Officer (or in the event of his death before payment, to his estate and surviving dependents and beneficiaries, as applicable) the Standard Termination Entitlements.

 

(b)           Subject to Section 8, in addition to the Standard Termination Entitlements:

 

(i)           During the Assurance Period, the Bank shall provide for the Officer and his dependents continued group life, health (including hospitalization, medical and major medical), dental, accident and long-term disability insurance benefits on substantially the same terms and conditions (including any required premium-sharing arrangements, co-payments and deductibles) in effect for them immediately prior to the Officer’s resignation. The coverage provided under this section 6(b)(i) may, at the election of the Bank, be secondary to the coverage provided as part of the Standard Termination Entitlements and to any employer-paid coverage provided by a subsequent employer or through Medicare, with the result that benefits under the other coverages will offset the coverage required by this section 6(b)(i).

 

(ii)           The Bank shall make a lump sum payment to the Officer (or, in the event of his death before payment, to his estate), in an amount equal to two (2) times the value of the salary, bonus, short-term and long-term cash compensation that the Officer received in the calendar year preceding that in which the termination of employment with the Bank occurs to compensate the Officer for the payments the Officer would have received during the Assurance Period. Such lump sum shall be paid in lieu of all other payments of salary, bonus, short-term and long-term cash compensation provided for under this Agreement in respect of the period following any such termination. Such payment shall be made (without discounting for early payment) within the time period required by Section 8.

 

The payments and benefits described in section 6(b) are referred to in this Agreement as the “Additional Entitlements”.

 

 

  

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Section 7.           Resignation after Change of Control or Pending Change of Control.

 

(a)          The Officer may resign from his employment with the Bank at any time. A resignation under this section 7 shall be effected by notice of resignation given by the Officer to the Bank and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Officer. The Officer’s resignation of any of the positions within the Bank or the Company to which he has been assigned shall be deemed a resignation from all such positions.

 

(b)           The Officer’s resignation shall be deemed to be for “Good Reason” if the effective date of resignation occurs during the Term, but on or after the effective date of a Change of Control, and is on account of:

 

(i)           the failure of the Bank (whether by act or omission of the Board of Directors, or otherwise) to appoint or re-appoint or elect or re-elect the Officer to the position with Bank that he held immediately prior to the Change of Control (the “Assigned Office”) or to a more senior office;

 

(ii)          a material failure by the Bank, whether by amendment of the certificate of incorporation or organization, by-laws, action of the Board of Directors of the Bank or otherwise, to vest in the Officer the functions, duties, or responsibilities customarily associated with the Assigned Office; provided that the Officer shall have given notice of such failure to the Bank, and the Bank has not fully cured such failure within thirty (30) days after such notice is deemed given;

 

(iii)         any reduction of the Officer’s rate of base salary in effect from time to time, whether or not material, or any failure (other than due to reasonable administrative error that is cured promptly upon notice) to pay any portion of the Officer’s compensation as and when due;

 

(iv)         any change in the terms and conditions of any compensation or benefit program in which the Officer participates which, either individually or together with other changes, has a material adverse effect on the aggregate value of his total compensation package; provided that the Officer shall have given notice of such material adverse effect to the Bank, and the Bank has not fully cured such material adverse effect within thirty (30) days after such notice is deemed given; provided, however, that this section 7(b)(iv) shall not apply if the change in the terms and conditions of the compensation or benefit program affects all participants in such program equally;

 

(v)          any material breach by the Bank of any material term, condition or covenant contained in this Agreement; provided that the Officer shall have given notice of such material adverse effect to the Bank, and the Bank has not fully cured such material adverse effect within thirty (30) days after such notice is deemed given; or

 

  

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(vi)          a change in the Officer’s principal place of employment to a place that is not the principal executive office of the Bank, or a relocation of the Bank’s principal executive office to a location that is both more than thirty-five (35) miles away from the Officer’s principal residence and more than thirty-five (35) miles away from the location of the Bank’s principal executive office on the day before the occurrence of the Change of Control.

 

In all other cases, a resignation by the Officer shall be deemed to be without Good Reason. In the event of resignation, the Officer shall state in his notice of resignation whether he considers his resignation to be a resignation with Good Reason, and if he does, he shall state in such notice the grounds which constitute Good Reason. The Officer’s determination of the existence of Good Reason shall be conclusive in the absence of fraud, bad faith or manifest error.

 

(c)           In the event of the Officer’s resignation for any reason, the Bank shall pay and deliver the Standard Termination Entitlements. In the event of the Officer’s resignation with Good Reason, subject to Section 8, the Bank shall also pay and deliver the Additional Termination Entitlements.

 

Section 8.           Terms and Conditions of the Additional Termination Entitlements or Disability Benefits

 

The Bank and the Officer hereby stipulate that the damages which may be incurred by the Officer following any termination of employment are not capable of accurate measurement as of the date first above written and that the Additional Termination Entitlements or Disability Benefits (as applicable) constitute reasonable damages under the circumstances and shall be payable without any requirement of proof of actual damage and without regard to the Officer’s efforts, if any, to mitigate damages. The Bank and the Officer further agree that the Bank may condition the payment and delivery of the Additional Termination Entitlements or Disability Benefits (as applicable) on: (a) its receipt of the Officer’s resignation from any and all positions which he holds as an officer, director or committee member with respect to the Bank or the Company or any subsidiary or affiliate of either of them; and/or (b) its receipt from the Officer, within such time period as may be allowed by the Bank, and the nonrevocation within any time period permitted in such agreement, of an agreement providing for a release, covenant not to sue, and nondisparagement of the Bank, the Company and their respective officers, directors, shareholders, subsidiaries, affiliates, and related parties in form and substance satisfactory to the Bank and the Company, of any liability to the Officer, whether for compensation or damages, in connection with his employment with the Bank or the Company and the termination of such employment, except for the Standard Termination Entitlements and the Additional Termination Entitlements or Disability Benefits, as applicable (the “Release Agreement”).  The Bank shall provide the Release Agreement in sufficient time so that if the Officer timely executes and delivers the Release Agreement, the revocation period provided therein shall expire (or if no revocation period is provided, the Effective Date of the Release Agreement shall occur) within sixty (60) days following termination of employment in the case of the Additional Termination Entitlements or the commencement of the Disability in the case of Disability Benefits.  Payment of the Additional Termination Entitlements shall be made, or commence, as the case may be, within sixty (60) days following the Officer’s termination of employment, provided, however, if the Officer is a “specified employee” within the meaning of Code Section 409A, payment shall be delayed for six (6) months after termination of employment to the extent required to avoid a tax under Code Section 409A.  The term “termination of employment” and similar terms when used in this Agreement shall mean a termination of employment that constitutes a “separation from service” within the meaning of Code Section 409A.  Payment of Disability Benefits shall commence within sixty (60) days following the commencement of the Disability and the first payment shall include all payments accrued to the date of such payment.

 

  

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Section 9.           No Effect on Employee Benefit Plans or Programs.

 

The termination of the Officer’s employment during the Assurance Period or thereafter, whether by the Bank or by the Officer, shall have no effect on the rights and obligations of the parties hereto under the Bank’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or such other employee benefit plans or programs, or compensation plans or programs, as may be maintained by, or cover employees of, the Bank from time to time; provided, however, that nothing in this Agreement shall be deemed to duplicate any compensation or benefits provided under any agreement, plan or program covering the Officer to which the Bank or Company is a party and any duplicative amount payable under any such agreement, plan or program shall be applied as an offset to reduce the amounts otherwise payable hereunder.

 

Section 10.         Successors and Assigns.

 

This Agreement will inure to the benefit of and be binding upon the Officer, his legal representatives and testate or intestate distributees, and the Company and the Bank and their respective successors and assigns, including Charter Financial or any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of the Company or the Bank may be sold or otherwise transferred. Failure of the Bank to obtain from any successor its express written assumption of the Company’s or Bank’s obligations hereunder at least sixty (60) days in advance of the scheduled effective date of any such succession shall, if such succession constitutes a Change of Control, constitute Good Reason for the Officer’s resignation on or at any time during the Term following the occurrence of such succession.

 

Section 11.         Notices.

 

Any communication required or permitted to be given under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party:

 

  

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If to the Officer:

 

Lee Washam

313 Ashford Circle

LaGrange, GA 30240

 

If to the Company or the Bank:

 

Charter Financial Corporation

600 Third Avenue

West Point, GA 31833

Attention:           Chairman, Personnel & Compensation Committee of the Board of Directors

 

Section 12.           Indemnification for Attorneys’ Fees.

 

Subject to applicable regulations and the Office of Thrift Supervision (the “OTS”), the Bank shall indemnify, hold harmless and defend the Officer against reasonable costs, including legal fees, incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved, as a result of his efforts, in good faith, to defend or enforce the terms of this Agreement; provided, however, that the Officer shall have substantially prevailed on the merits pursuant to a judgment, decree or order of a court of competent jurisdiction or of an arbitrator in an arbitration proceeding. The determination whether the Officer shall have substantially prevailed on the merits and is therefore entitled to such indemnification, shall be made by the court or arbitrator, as applicable. The indemnification payment shall be made within thirty (30) days of such determination.  In the event of a settlement pursuant to a settlement agreement, any indemnification payment under this section 12 shall be made only after a determination by the members of the Board (other than the Officer and any other member of the Board to which the Officer is related by blood or marriage) that the Officer has acted in good faith and that such indemnification payment is in the best interests of the Bank.

 

Section 13.           Severability.

 

A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

 

Section 14.           Waiver.

 

Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant, or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

 

  

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Section 15.           Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

 

Section 16.           Governing Law.

 

This Agreement shall be governed by and construed and enforced in accordance with the federal laws of the United States and, to the extent that federal law is inapplicable, in accordance with the laws of the State of Georgia applicable to contracts entered into and to be performed entirely within the State of Georgia.

 

Section 17.           Headings and Construction.

 

The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

 

Section 18.           Entire Agreement; Modifications.

 

This instrument contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof. No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto.

 

Section 19.           Required Regulatory Provisions.

 

The following provisions are included for the purposes of complying with various laws, rules and regulations applicable to the Bank:

 

(a)           Notwithstanding anything herein contained to the contrary, in no event shall the aggregate amount of compensation payable to the Officer hereunder exceed three times the Officer’s average annual compensation (within the meaning of OTS Regulatory Bulletin 27a or any successor thereto) for the last five consecutive calendar years to end prior to his termination of employment with the Bank (or for his entire period of employment with the Bank if less than five calendar years). The compensation payable to the Officer hereunder shall be further reduced (but not below zero) if such reduction would avoid the assessment of excise taxes on excess parachute payments (within the meaning of section 280G of the Code).

 

(b)           Notwithstanding anything herein contained to the contrary, any payments to the Officer by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with section 18(k) of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. §1828(k), and any regulations promulgated thereunder.

 

  

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(c)           Notwithstanding anything herein contained to the contrary, if the Officer is suspended from office and/or temporarily prohibited from participating in the conduct of the affairs of the Bank pursuant to a notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(3) or 1818(g)(1), the Bank’s obligations under this Agreement shall be suspended as of the date of service of such notice, unless stayed by appropriate proceedings. If the charges in such notice are dismissed, the Bank, in its discretion, may (i) pay to the Officer all or part of the compensation withheld while the Bank’s obligations hereunder were suspended and (ii) reinstate, in whole or in part, any of the obligations which were suspended.

 

(d)           Notwithstanding anything herein contained to the contrary, if the Officer is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(4) or (g)(1), all prospective obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights and obligations of the Bank and the Officer shall not be affected.

 

(e)           Notwithstanding anything herein contained to the contrary, if the Bank is in default (within the meaning of section 3(x)(1) of the FDI Act, 12 U.S.C. §1813(x)(1), all prospective obligations of the Bank under this Agreement shall terminate as of the date of default, but vested rights and obligations of the Bank and the Officer shall not be affected.

 

(f)           Notwithstanding anything herein contained to the contrary, all prospective obligations of the Bank hereunder shall be terminated, except to the extent that a continuation of this Agreement is necessary for the continued operation of the Bank: (i) by the Director of the OTS or his designee or the Federal Deposit Insurance Corporation (“FDIC”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in section 13(c) of the FDI Act, 12 U.S.C. §1823(c); (ii) by the Director of the OTS or his designee at the time such Director or designee approves a supervisory merger to resolve problems related to the operation of the Bank or when the Bank is determined by such Director to be in an unsafe or unsound condition. The vested rights and obligations of the parties shall not be affected.

 

If and to the extent that any of the foregoing provisions shall cease to be required or by applicable law, rule or regulation, the same shall become inoperative as though eliminated by formal amendment of this Agreement.

 

Section 20.           Guaranty.

 

The Company, hereby irrevocably and unconditionally guarantees to the Officer the payment of all amounts, and the performance of all other obligations, due from the Bank in accordance with the terms of this Agreement as and when due without any requirement of presentment, demand of payment, protest or notice of dishonor or nonpayment

 

  

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In Witness Whereof, the Bank and the Company have caused this Agreement to be executed and the Officer has hereunto set his hand, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	 	/s/ Lee Washam	 
	 	 	 	Lee Washam	 
	 	 	 	 	 	 
	 	 	 	CharterBank	 
	 	 	 	 	 	 
	Attest:	 	 	 	 
	 	 	 	 	 	 
	
By: 

	/s/ Bonnie F. Bonner	 	
By: 

	
/s/ Robert L. Johnson

	 
	
Name:  Bonnie F. Bonner 

	 	Name:  Robert L. Johnson	 
	
Title:  Assistant Secretary 

	 	
Title:  Chief Executive Officer

	 

 

[Seal]

	 	 	 	 	 	 	 	 	 
	 	 	 	Charter Financial Corporation	 
	 	 	 	 	 	 
	Attest:	 	 	 	 
	 	 	 	 	 	 
	
By: 

	/s/ Bonnie F. Bonner	 	
By: 

	
/s/ Robert L. Johnson

	 
	
Name:  Bonnie F. Bonner 

	 	Name:  Robert L. Johnson	 
	
Title:  Assistant Secretary 

	 	
Title:  Chief Executive Officer and President

	 

 

[Seal]

 

 

13ex10-6.htm

    
      
        

      

    

    Exhibit
10.6

     

    CHARTERBANK

    SALARY
CONTINUATION PLAN

    

    THIS  SALARY CONTINUATION
PLAN AGREEMENT (this “Agreement”) is entered into as of this first day
January, 2009 by and between Charterbank, a federally chartered thrift,
supervised by the Office of Thrift Supervision (the “Employer”), located in West
Point, Georgia, and Robert Johnson, an individual resident of Georgia
(hereinafter referred to as the “Executive” or “Participant”) .

    

    WHEREAS, the Executive has
contributed substantially to the success of the Employer and the Employer
desires that the Executive continue in its employ;

     

    WHEREAS, to encourage the
Executive to remain an employee of the Employer, the Employer is willing to
provide salary continuation benefits to the Executive, payable out of the
Employer’s general assets; and

     

    WHEREAS, the parties hereto
intend that this Agreement shall be considered an unfunded arrangement
maintained primarily to provide supplemental retirement benefits for the
Executive, and shall be considered a plan described in Section 301(a)(3) of the
Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).

     

    WHEREAS this Plan is intended
to comply with the requirements of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).  Accordingly, the intent of the parties
hereto is that the Plan shall be operated and interpreted consistent with the
requirements of Code Section 409A.

    

    NOW THEREFORE, in
consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows.

     

    ARTICLE
1

    DEFINITIONS

     

    Whenever
used in this Agreement, the following terms have the meanings specified
—

     

    1.1           “Accrual Balance” means the
liability that should be accrued by the Employer under accounting principles
generally accepted in the United States (“GAAP”) for the Employer’s obligation
to the Executive under this Agreement, by applying Accounting Principles Board
Opinion No. 12, as amended by Statement of Financial Accounting Standards No.
106, and the calculation method and discount rate specified hereinafter, but
without regard to the reduction in Section 2.6.  The initial Accrual
Balance shall be equal to the liability accrued by the Employer as of the
Effective Date, but without regard to the reduction in Section 2.6. The
projected Accrual Balance is detailed on Schedule A including
annual accruals. The Accrual Balance shall be calculated assuming a level
principal amount and interest as the discount rate is accrued each
period.  The principal accrual is determined such that when it is
credited with interest each month, the Accrual Balance at Normal Retirement Age
equals the present value of the gross normal retirement benefits described in
Section 2.1.1.  At the end of each Plan Year, the Accrual Balance
shall be adjusted to reflect the Employer’s obligation under Sections 2.1.1 in
terms of the Executive’s actual base salary for that Plan Year.  The
discount rate means the rate used by the Plan Administrator for determining the
Accrual Balance.  The rate is based on the yield on a 20-year
corporate bond rated Aa by Moody’s, rounded to the nearest 1⁄4%, or as otherwise
determined by a Regulatory Body applicable to the Employer. The initial discount
rate is 6.00%.  In its sole discretion, the Plan Administrator may
adjust the discount rate to maintain the rate within reasonable standards
according to GAAP and consistent with the Interagency Advisory on Accounting for
Deferred Compensation Agreements which states that the “cost of those benefits
shall be accrued over that period of the employee’s service in a systematic and
rational manner.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2           “Affiliate” means an entity
controlling, controlled by or under common control with the Employer, with
control meaning direct or indirect ownership of equity securities with the
ordinary voting power of more than fifty percent (50%) of the equity securities
of an entity.

     

    1.3           “Beneficiary” means each
designated person, or the estate of the deceased Executive, entitled to
benefits, if any, upon the death of the Executive, determined according to
Article 4.

     

    1.4           “Beneficiary Designation Form”
means the form established from time to time by the Plan Administrator
that the Executive completes, signs, and returns to the Plan Administrator to
designate one or more Beneficiaries.

     

    1.5           “Board” means the Board of
Directors of the Employer.

     

    1.6           “Change in Control” means a
change in the ownership or effective control of the relevant corporation, or in
the ownership of a substantial portion of the assets of the relevant
corporation, as such change is defined in Treasury Regulations Section
1.409A-3(i)(5).  The “relevant corporation” means the Employer or any
corporation that is a majority shareholder (i.e., owns more than fifty
percent (50%) of the total fair market value and the total voting power of the
equities securities) of the Employer or of any corporation in a chain of
corporations in which each corporation is a majority shareholder of another
corporation in the chain, ending in the Employer; provided, however, that for
purposes of determining whether a “change in the effective control of the
relevant corporation” has occurred, the sole relevant corporation shall be the
corporation for which no other corporation is a majority
shareholder.  As of the Effective Date, the relevant corporations are
the Employer, Charter Financial Corporation and First Charter, MHC; provided,
however, that for purposes of determining whether a “change in the effective
control of the relevant corporation” has occurred, the sole relevant corporation
is First Charter, MHC.  Notwithstanding anything herein to the
contrary, the sale of shares of Charter Financial Corporation or reorganization
of First Charter MHC, in either case as part of a conversion or partial
conversion of the direct or indirect ownership of the Employer from a mutual
holding company structure to a stock holding company structure shall not be
deemed to be a Change in Control.

     

    1.7           “Disability” means the
Executive suffers from a disability as defined in Treasury Regulations Section
1.409A-3(i)(4).  The determination of Disability will be made by the
Social Security Administration, by the insurer under the Employer’s disability
plan, or by a physician selected by the Executive and reasonably acceptable to
the Employer; provided that in each case the definition of “Disability” employed
must be consistent with the foregoing regulations.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.8           “Early Retirement Date” means
the date of the Executive’s Termination of Employment upon or following the
completion of ten (10) Years of Service with the Employer and attaining age
sixty-two (62), but before Normal Retirement Age, for reasons other than death,
Disability, Termination for Cause, termination under Article 6 of this
Agreement, or Termination of Employment within two (2) years after a Change in
Control.

     

    1.9           “Early Termination Date”
means the date of the Executive’s Termination of Employment upon or following
completion of ten (10) Years of Service but before reaching his Early Retirement
Date or his Normal Retirement Date, for reasons other than death, Disability,
Termination for Cause, termination under Article 6 of this Agreement, or
Termination of Employment within two (2) years after a Change in
Control.

     

    1.10        
“Effective Date” means
January 1, 2009.

     

    1.11       
 “Final Base
Salary” means the Executive’s average annual base salary for the highest
three (3) consecutive calendar year period ending at the earlier of the
Executive’s Normal Retirement Age or the date of the Executive’s Termination of
Employment within two (2) years after a Change in Control.

     

    1.12        
“Normal Retirement Age”
means the later of the date the Executive reaches age sixty-five (65) or
completes ten (10) Years of Service.

     

    1.13       
 “Normal Retirement Date”
means the date of the Executive’s Termination of Employment on or after
the Executive’s Normal Retirement Age, for reasons other than death, Termination
for Cause, termination under Article 6 of this Agreement, or Termination of
Employment within two (2) years after a Change in Control.

     

    1.14       
“Person” means an
individual, corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization or other
entity.

     

    1.15         “Plan Administrator” means
the plan administrator described in Article 9.

     

    1.16         “Plan Year” means a
twelve-month period commencing on January 1, and ending on December 31 of each
year.  The initial Plan Year shall commence on the Effective Date of
this Agreement and end on December 31 of the year in which occurs the Effective
Date.

     

    1.17         “Regulatory Body” means The
Office of the Comptroller of the Currency (OCC), the Board of Governors of the
Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC),
and the Office of Thrift Supervision (OTS), also known as “the
agencies.”

     

    1.18         “Specified Employee” means an
employee who at the time of Termination of Employment is a “specified employee”
within the meaning of Treasury Regulations Section 1.409A-1(i) with respect to
the Employer or any entity aggregated with the Employer as the “service
recipient” within the meaning of Treasury Regulations Section
1.409A-1(g).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    1.19         “Termination for Cause” and
“Cause” shall have the
same definition specified in any effective severance or employment agreement
existing between the Executive and the Employer or an Affiliate at the date of
the Executive’s Termination of Employment. If the Executive is not a party to a
severance or employment agreement containing a definition of termination for
cause, Termination for Cause means the Employer or an Affiliate terminates the
Executive’s employment because of:

     

    (a)
fraud;

     

    (b)
embezzlement;

     

    (c)
commission by the Executive of a felony;

     

    (d) a
material breach of, or the willful failure or refusal by the Executive to
perform and discharge the Executive’s duties, responsibilities and obligations
to the Employer or an Affiliate;

     

    (e) any
act of moral turpitude or willful misconduct by the Executive intended to result
in personal enrichment of the Executive at the expense of the Employer or an
Affiliate, or which has a material adverse impact on the business or reputation
of the Employer or an Affiliate (such determination to be made by the Board in
its reasonable judgment);

     

    (f)
intentional material damage to the property or business of the Employer or an
Affiliate;

     

    (g) gross
negligence; or

     

    (h) the
ineligibility of the Executive to perform his duties because of a ruling,
directive or other action by any agency of the United States or any state of the
United States having regulatory authority over the Employer or an
Affiliate;

     

    but in
each case only if:

     

    (1) the
Executive has been provided with written notice of any assertion that there is a
basis for termination for Cause which notice shall specify in reasonable detail
specific facts regarding any such assertion,

     

    (2) such
written notice is provided to the Executive a reasonable time (and in any event
no less than three business days) before the Board meets to consider any
possible termination for Cause,

     

    (3) at or
prior to the meeting of the Board to consider the matters described in the
written notice, an opportunity is provided to the Executive and his counsel to
be heard before the Board with respect to the matters described in the written
notice,

     

    (4) any
resolution or other Board action held with respect to any deliberation regarding
or decision to terminate the Executive for Cause is duly adopted by a vote of at
least two-thirds of the entire Board (excluding the Executive) at a meeting of
the Board duly called and held, and

     

    (5) the
Executive is promptly provided with a copy of the resolution or other corporate
action taken with respect to such termination.

     

    No act or
failure to act by the Executive shall be considered willful unless done or
omitted to be done by him not in good faith and without reasonable belief that
his action or omission was in the best interests of the Employer.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    1.20         “Termination of Employment”
with the Employer means the Executive’s termination of employment from
the Employer and all entities aggregated with the Employer as the “service
recipient” within the meaning of Treasury Regulations Section 1.409A-1(g) that
constitutes a “separation from service” within the meaning of Treasury
Regulations Section 1.409A-1(h).

     

    1.21          “Year of Service” means each
year the Participant is employed by the Employer measured on an elapsed time
basis from the first day worked through Termination of Employment.

     

    ARTICLE
2

    RETIREMENT
BENEFITS

     

    2.1           Normal Retirement
Benefit.  Upon the Executive’s Normal Retirement Date, the
Executive shall receive the benefit described in this Section 2.1 in lieu of any
other benefit under Article 2 of this Agreement.

     

    
      	
               
      

            	
              2.1.1.

            	
              Amount of Gross
      Benefit.  The gross annual Normal Retirement Benefit
      under this Section 2.1 is an amount equal to fifty percent (50%) of the
      Executive’s Final Base Salary.

            

    

    

    
      	
               
      

            	
              2.1.2.

            	
              Payment of
      Benefit.  The Employer shall pay an annual benefit to the
      Executive equal to the gross annual Normal Retirement Benefit in twelve
      (12) equal monthly installments for fifteen (15) years beginning on the
      first day of the month after the Executive’s Normal Retirement Date,
      subject to reduction as provided in Section
2.6.

            

    

     

    2.2           Early Retirement
Benefit.  Upon the Executive’s Early Retirement Date, the
Executive shall receive the benefit described in this Section 2.2 in lieu of any
other benefit under Article 2 of this Agreement.

     

    
      	
               
      

            	
              2.2.1.

            	
              Amount of Gross
      Benefit.  The gross benefit under this Section 2.2 is an
      amount equal to the Accrual Balance earned as of the last day of the month
      immediately preceding the Executive’s Early Retirement
    Date.

            

    

     

    
      	
               
      

            	
              2.2.2.

            	
              Payment of
      Benefit.  The Employer shall pay a benefit to the
      Executive equal to the gross benefit in Section 2.2.1 in one hundred
      eighty (180) equal monthly installments beginning on the first day of the
      month after the Executive’s Early Retirement Date, subject to reduction as
      provided in Section 2.6.

            

    

     

    2.3           Early Termination
Benefit.  Following the Executive’s Early Termination Date, the
Executive shall receive the benefit described in this Section 2.3 in lieu of any
other benefit under Article 2 of this Agreement.

     

    
      	
               
      

            	
              2.3.1.

            	
              Amount of Gross
      Benefit.  The gross benefit under this Section 2.3 is an
      amount equal to the Accrual Balance earned as of the last day of the Plan
      Year immediately preceding or coinciding with the Executive’s Early
      Termination Date.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              2.3.2.

            	
              The
      Employer shall pay a benefit to the Executive equal to the gross benefit
      in Section 2.3.1 in one hundred eighty (180) equal monthly installments
      beginning on the first day of the month after the Executive’s Normal
      Retirement Age, subject to reduction as provided in Section
      2.6.

            

    

     

    2.4           Disability
Benefit.  Upon the Executive’s Disability before reaching
Normal Retirement Age, the Executive shall receive the benefit described in this
Section 2.4 in
lieu of any other benefit under this Agreement.

     

    
      	
               
      

            	
              2.4.1.

            	
              Amount of Gross
      Benefit.  The gross annual benefit under this Section 2.4
      is an amount equal to the Normal Retirement Benefit computed as though the
      Executive had continued to be employed by the Employer at his rate of
      annual base salary in effect at the date of his Disability until attaining
      his Normal Retirement Age.

            

    

     

    
      	
               
      

            	
              2.4.2.

            	
              Payment of
      Benefit.  The Employer shall pay an annual benefit to the
      Executive equal to the gross annual benefit in Section 2.4.1 in twelve
      (12) equal monthly installments for fifteen (15) years beginning on the
      first day of the month after the Executive’s Disability, subject to
      reduction as provided in Section
2.6.

            

    

     

    2.5           Change in Control Benefit.
Upon a Termination of Employment within two (2) years after a Change of Control,
the Executive shall receive the benefit described in this Section 2.5 in lieu of
any other benefit under this Agreement.

     

    
      	
               
      

            	
              2.5.1.

            	
              Amount of Gross
      Benefit.  The gross benefit under this Section 2.5 is an
      amount equal to the gross annual Normal Retirement Benefit set forth in
      Section 2.1.1, or the Executive’s Accrual Balance as of the last day of
      the Plan Year preceding the effective date of the Change in Control,
      whichever is greater.

            

    

     

    
      	
               
      

            	
              2.5.2.

            	
              Payment of
      Benefit.  The Employer shall pay a benefit to the
      Executive equal to the gross benefit in Section 2.5.1 in one hundred
      eighty (180) equal monthly installments beginning on the first day of the
      month after the month after the Executive’s Termination of Employment,
      subject to reduction as provided in Section
2.6.

            

    

     

    2.6           Offset.  If the
Executive’s benefit under the Benefit Restoration Plan of Charter Financial
Corporation (the “Benefit Restoration Plan”) is paid in one hundred twenty (120)
monthly installments, then each of the last one hundred twenty (120) monthly
installments payable under Article 2 or Article 3 of this Plan shall be
reduced by each corresponding monthly installment payment paid under the Benefit
Restoration Plan during such one hundred twenty (120) month
period.  If the Executive’s benefit under the Benefit Restoration Plan
is paid in a lump sum, then each monthly installment under Article 2 or Article
3 of this Plan shall be reduced by the amount of the monthly payment that would
have been made under the Benefit Restoration Plan if one hundred eighty (180)
equal monthly installments with a present value using the discount rate in
Section 1.1 equal to such lump sum had been paid under such Benefit Restoration
Plan.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    2.7           Restriction on Timing of
Distributions. Notwithstanding any provision
of this Agreement to the contrary, benefit distributions that are made to a
Specified Employee
upon Termination of Employment may not commence earlier than six (6) months
after the date of such Termination of Employment.  Therefore, in
the event this Section 2.7 is applicable to the Executive, any
distribution which would otherwise be paid to the Executive within the first six
months following the Termination of Employment shall be accumulated and paid to
the Executive in
a lump sum on the first day of the seventh month following the Termination of
Employment.  All subsequent distributions shall be paid in the manner
specified.

     

    ARTICLE
3

    DEATH
BENEFITS

     

    3.1           Death During Active
Service.  If the Executive dies
while employed by the Employer, instead of any benefits payable under Article 2
of this Agreement the Executive’s Beneficiary shall receive the benefits
described in this Section 3.1 in lieu of any other benefits under this
Agreement.

     

    
      	
               
      

            	
              3.1.1

            	
              Amount of Gross
      Benefit.  The gross benefit under this Section 3.1.1
      is an amount equal to the Accrual Balance earned as of the last day of the
      Plan Year immediately preceding or coinciding the date of the Executive’s
      death.

            

    

     

    
      	
               
      

            	
              3.1.2

            	
              Payment of
      Benefit.  The Employer shall pay a death benefit to the
      Executive’s Beneficiary equal to the gross benefit in Section 3.1.1 in one
      hundred eighty (180) equal monthly installments beginning on the first day
      of the month after the Executive’s death, subject to reduction as provided
      in Section 2.6.

            

    

     

    3.2           Death During Benefit
Period.  If the Executive dies after benefit payments under
Article 2 of this Agreement commence but before receiving all such payments, or
if the Executive is entitled to benefit payments under Article 2 but dies before
payments commence, the remaining payments shall be payable to the Executive’s
Beneficiary in accordance with the applicable payment provisions of Article 2,
until fully disbursed.  Payments shall be made in the same amounts
they would have been made to the Executive had the Executive
survived.

     

    ARTICLE
4

    CODE
SECTION 409A

    AND
ADDITIONAL DISTRIBUTION RULES

    

    4.1           Change in Form or Timing of
Distributions.   This Agreement may be amended by the Employer
and the Executive (or after the Executive’s death, the Beneficiary) to change
the form of timing of distributions hereunder; provided, however, that all
changes in the form or timing of distributions hereunder must comply with the
following requirements.  The changes:

     

    
      	
               
      

            	
              (a)

            	
              shall
      not take effect until at least twelve (12) months after the amendment is
      made; and

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              shall,
      except for payments described in Section 2.4 or Article 3, delay the
      payments for a minimum of five (5) years from the date the payments were
      originally scheduled to be made.

            

    

    

    4.2           Separate
Payments.  For purposes of Code Section 409A, the right to a
series of installment payments shall be treated as the right to a series of
separate payments.

     

    4.3           Compliance with Code Section 409A.
This Agreement shall be interpreted and administered consistent with Code
Section 409A.

     

    4.4           One Benefit Only.
Notwithstanding any provision of this Agreement, the Executive and the
Executive’s Beneficiary are entitled to one benefit derived from Article 2 of
this Agreement, which shall be determined by the first event to occur that is
dealt with by Article 2 of this Agreement. Subsequent occurrence of events dealt
with by Article 2 shall not entitle the Executive or the Executive’s Beneficiary
to other or additional benefits derived from Article 2.

     

    ARTICLE
5

    BENEFICIARIES

     

    5.1           Beneficiary
Designations.  The Executive shall have the right to designate
at any time a Beneficiary to receive any benefits payable under this Agreement
upon the death of the Executive.  The Beneficiary designated under
this Agreement may be the same as or different from the beneficiary designation
under any other benefit plan of the Employer in which the Executive
participates.

     

    5.2           Beneficiary Designation:
Change.  The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the
Plan Administrator or its designated agent.  The Executive’s
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved.  The Executive shall have the
right to change a Beneficiary by completing, signing, and otherwise complying
with the terms of the Beneficiary Designation Form and the Plan Administrator’s
rules and procedures, as in effect from time to time.  Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The
Plan Administrator shall be entitled to rely on the last Beneficiary Designation
Form filed by the Executive and accepted by the Plan Administrator before the
Executive’s death.

     

    5.3           Acknowledgment.  No designation or change
in designation of a Beneficiary shall be effective until received in writing by
the Plan Administrator or its designated agent.

     

    5.4           No Beneficiary
Designation.  If the Executive dies without a valid beneficiary
designation, or if all designated Beneficiaries predecease the Executive, then
the Executive’s spouse shall be the designated Beneficiary.  If the
Executive has no surviving spouse, the benefits shall be distributed to the
personal representative of the Executive’s estate; provided, however, that the
personal representative of the Executive’s estate may assign the right to
receive payment to the heirs under the Executive’s estate, or in the absence of
a will, the Executive’s heirs in accordance with the applicable intestacy
statute.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    5.5           Facility of
Payment.  If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Employer may pay such benefit to the guardian, legal
representative, or person having the care or custody of the minor, incapacitated
person, or incapable person.  The Employer may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit.  Distribution shall completely discharge
the Employer from all liability for the benefit.

     

    ARTICLE
6

    GENERAL
LIMITATIONS

     

    6.1           Termination for
Cause.  If the Executive experiences a Termination of
Employment which is a Termination for Cause, notwithstanding any provision of
this Agreement to the contrary, this Agreement and the Employer’s obligations
under this Agreement shall terminate as of the effective date of the Termination
for Cause.

     

    6.2           Suicide or Misstatement No
benefits shall be paid under this Agreement if the Executive commits suicide
within two years after the Effective Date of this Agreement or if the Executive
makes any material misstatement of fact on any application for life insurance
purchased by the Employer.

     

    6.3           Removal. Despite any contrary
provision of this Agreement, if the Executive is removed from office or
permanently prohibited from participating in the Employer’s affairs by an order
issued under section 8(e) or 8(g) of the Federal Deposit Insurance Act, 12
U.S.C. 1818(e) or 1818(g), all obligations of the Employer under this Agreement
shall terminate as of the effective date of the order.

     

    6.4           Default Despite any contrary
provision of this Agreement, if the Employer is in “default” or “in danger of
default”, as those terms are defined in of section 3(x) of the Federal Deposit
Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement shall
terminate.

     

    6.5           FDIC Open-Employer Assistance.
All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the Employer, at the time the Federal Deposit Insurance
Corporation enters into an agreement to provide assistance to or on behalf of
the Employer under the authority contained in section 13(c) of the Federal
Deposit Insurance Act. 12 U.S.C. 1823(c).

     

    6.6           No Golden
Parachutes.  Notwithstanding anything contained in this
Agreement to the contrary, no payments shall be made hereunder in contravention
of the golden parachute payment and indemnification payment restrictions
contained in regulations adopted pursuant to Section 18(k) of the Federal
Deposit Insurance Act, 12 U.S.C. 1828(k).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    ARTICLE
7

    CLAIMS
AND REVIEW PROCEDURES

     

    7.1           Claims
Procedure.  A person or beneficiary (a “claimant”) who has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows –

    
 

    
      	
               
      

            	
              7.1.1

            	
              Initiation - Written
      Claim.  The claimant initiates a claim by submitting to
      the Employer a written claim for the benefits. If the claim relates to the
      contents of a notice received by the claimant, the claim must be made
      within 60 days after the notice was received by the claimant. All other
      claims must be made within 180 days after the date of the event that
      caused the claim to arise. The claim must state with particularity the
      determination desired by the
claimant.

            

    

     

    
      	
               
      

            	
              7.1.2

            	
              Timing of Employer
      Response.  The Employer shall respond to such claimant
      within ninety (90) days after receiving the claim.  If the
      Employer determines that special circumstances require additional time for
      processing the claim, the Employer can extend the response period by an
      additional ninety (90) days by notifying the claimant in writing, prior to
      the end of the initial ninety (90)-day period, that an additional period
      is required.  The notice of extension must set forth the special
      circumstances and the date by which the Employer expects to render its
      decision.

            

    

     

    
      	
               
      

            	
              7.1.3

            	
              Notice of
      Decision.  If the Employer denies part or all of the
      claim, the Employer shall notify the claimant in writing of such
      denial.  The Employer shall write the notification in a manner
      calculated to be understood by the claimant.  The notification
      shall set forth:

            

    

     

    
      	
               
      

            	
              7.1.4

            	
              The
      specific reasons for the denial,

            

    

     

    
      	
               
      

            	
              7.1.5

            	
              A
      reference to the specific provisions of the Agreement on which the denial
      is based,

            

    

     

    
      	
               
      

            	
              7.1.6

            	
              A
      description of any additional information or material necessary for the
      claimant to perfect the claim and an explanation of why it is
      needed,

            

    

     

    
      	
               
      

            	
              7.1.7

            	
              An
      explanation of the Agreement’s review procedures and the time limits
      applicable to such procedures, and

            

    

     

    
      	
               
      

            	
              7.1.8

            	
              A
      statement of the claimant’s right to bring a civil action under ERISA
      section 502(a) following an adverse benefit determination on
      review.

            

    

     

    7.2           Review
Procedure.  If the Employer denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the
Employer of the denial, as follows

    

    
      	
               
      

            	
              7.2.1

            	
              Initiation - Written
      Request.  To initiate the
      review, the claimant, within 60 days after receiving the Employer’s notice
      of denial,
      must file with the Employer a written request for
  review.

            

    

     

    
      	
               
      

            	
              7.2.2

            	
              Additional Submissions -
      Information Access.  The claimant shall then have the
      opportunity to submit written comments, documents, records and other
      information relating to the claim.  The Employer shall also
      provide the claimant, upon request and free of charge, reasonable access
      to, and copies of, all documents, records and other information relevant
      (as defined in applicable ERISA regulations) to the claimant’s claim for
      benefits.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              7.2.3

            	
              Considerations on
      Review.  In considering the review, the Employer shall
      take into account all materials and information the claimant submits
      relating to the claim, without regard to whether such information was
      submitted or considered in the initial benefit
    determination.

            

    

     

    
      	
               
      

            	
              7.2.4

            	
              Timing of Employer
      Response.  The Employer shall respond in writing to such
      claimant within sixty (60) days after receiving the request for
      review.  If the Employer determines that special circumstances
      require additional time for processing the claim, the Employer can extend
      the response period by an additional sixty (60) days by notifying the
      claimant in writing, prior to the end of the initial sixty (60)-day
      period, that an additional period is required.  The notice of
      extension must set forth the special circumstances and the date by which
      the Employer expects to render its
decision.

            

    

     

    
      	
               
      

            	
              7.2.5

            	
              Notice of
      Decision.  The Employer shall notify the claimant in
      writing of its decision on review.  The Employer shall write the
      notification in a manner calculated to be understood by the
      claimant.  The notification shall set forth
  –

            

    

     

    
      	
               
      

            	
              7.2.5.1

            	
              The
      specific reasons for the denial,

            

    

     

    
      	
               
      

            	
              7.2.5.2

            	
              A
      reference to the specific provisions of the Agreement on which the denial
      is based,

            

    

     

    
      	
               
      

            	
              7.2.5.3

            	
              A
      statement that the claimant is entitled to receive, upon request and free
      of charge, reasonable access to, and copies of, all documents, records and
      other information relevant (as defined in applicable ERISA regulations) to
      the claimant’s claim for benefits,
and

            

    

     

    
      	
               
      

            	
              7.2.5.4

            	
              A
      statement of the claimant’s right to bring a civil action under ERISA
      Section 502(a).

            

    

     

    ARTICLE
8

    MISCELLANEOUS

     

    8.1           Amendments and
Termination.  Subject to Section 7.13 of this Agreement, (a)
this Agreement may be amended solely by a written agreement signed by the
Employer and by the Executive, and (b) except for termination occurring under
Article 5, this Agreement may be terminated solely by a written agreement signed
by the Employer and by the Executive.

    

    8.2           Binding
Effect.  This Agreement shall bind the Executive and the
Employer and their beneficiaries, survivors, executors, successors,
administrators, and transferees.

    

    8.3           No Guarantee of Employment.
This Agreement is not an employment
policy or contract.  It does not give the Executive the right to
remain an employee of the Employer, nor does it interfere with the Employer’s
right to discharge the Executive.  It also does not require the
Executive to remain an employee nor interfere with the Executive’s right to
terminate employment at any time.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    8.4            Non-Transferability.  Benefits
under this Agreement cannot be sold, transferred, assigned, pledged, attached,
or encumbered in any manner.

    

    8.5            Tax
Withholding.  The Employer shall withhold any taxes that are
required to be withheld from the benefits provided under this
Agreement.

    

    8.6            Applicable
Law.  Except to the extent preempted by the laws of the United
States of America, the validity, interpretation, construction, and performance
of this Agreement shall be governed by and construed in accordance with the laws
of the State of Georgia, without giving effect to the principles of conflict of
laws of such state.

    

    8.7            Unfunded
Arrangement.  The Executive and the Executive’s Beneficiary are
general unsecured creditors of the Employer for the payment of benefits under
this Agreement.  The benefits represent the mere promise by the
Employer to pay such benefits.  The rights to benefits are not subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors.  Any insurance
on the Executive’s life is a general asset of the Employer to which the
Executive and Beneficiary have no preferred or secured claim.

    

    8.8            Severability.  If
any provision of this Agreement is held invalid, such invalidity shall not
affect any other provision of this Agreement, and each such other provision
shall continue in full force and effect to the full extent consistent with
law.  If any provision of this Agreement is held invalid in part, such
invalidity shall not affect the remainder of the provision, and the remainder of
such provision together with all other provisions of this Agreement shall
continue in full force and effect to the full extent consistent with
law.

    

    8.9            Headings.  The
headings of sections herein are included solely for convenience of reference and
shall not affect the meaning or interpretation of any provision of this
Agreement.

    

    8.10          Notices.  All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid.  Unless otherwise changed by notice, notice shall be properly
addressed to the Executive if addressed to the address of the Executive on the
books and records of the Employer at the time of the delivery of such notice,
and properly addressed to the Employer if addressed to the Board of Directors,
at CharterBank, 1233 O.G. Skinner Drive, West Point, Georgia 31833.

    

    8.11          Entire
Agreement.  This Agreement constitutes the entire agreement
between the Employer and the Executive concerning the subject matter
hereof.  No rights are granted to the Executive under this Agreement
other than those specifically set forth herein.

    

    8.12          Payment of Legal
Fees.  In the event litigation ensues between the parties
concerning the enforcement of the obligations of the parties under this
Agreement, the Employer shall promptly pay (but not later than two (2) months
after such expenses are incurred) all costs and expenses in connection with such
litigation until such time as a final determination (excluding any appeals) is
made with respect to the litigation.  If the Employer prevails on the
substantive merits of each material claim in dispute in such litigation, the
Employer shall be entitled to receive from the Executive all reasonable costs
and expenses, including without limitation attorneys’ fees, incurred by the
Employer on behalf of the Executive in connection with such litigation, and the
Executive shall pay such costs and expenses to the Employer promptly upon demand
by the Employer.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    8.13          Termination or Modification of
Agreement Because of Changes in Law, Rules or Regulations.  The
Employer is entering into this Agreement on the assumption that certain existing
tax laws, rules, and regulations will continue in effect in their current
form.  If that assumption materially changes and the change has a
material detrimental effect on this Agreement, then the Employer reserves the
right to terminate or modify this Agreement accordingly, subject to the written
consent of the Executive, which shall not be unreasonably
withheld.  This Section 8.13 shall become null and void effective
immediately if a Change in Control occurs.

    

    ARTICLE
9

    ADMINISTRATION
OF AGREEMENT

     

    9.1            Plan Administrator
Duties.  This Agreement shall be administered by a Plan
Administrator consisting of the Board of Directors of the Employer or such
committee or person(s) as the Board of Directors of the Employer shall
appoint.  The Plan Administrator shall have the sole and absolute
discretion and authority to interpret and enforce all appropriate rules and
regulations for the administration of this Agreement and the rights of the
Participant under this Agreement, to decide or resolve any and all questions or
disputes arising under this Agreement, including benefits payable under this
Agreement and all other interpretations of this Agreement, as may arise in
connection with the Agreement.

    

    9.2            Agents.  In the
administration of this Agreement, the Plan Administrator may employ agents and
delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with
counsel, who may be counsel to the Employer.

    

    9.3            Binding Effect of
Decisions.  The decision or action of the Plan Administrator
with respect to any question arising out of or in connection with the
administration, interpretation, and application of the Agreement and the rules
and regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement.  No Executive
or Beneficiary shall be deemed to have any right, vested or nonvested, regarding
the continued use of any previously adopted assumptions, including but not
limited to the discount rate and calculation method described in Section
1.1.

    

    9.4            Indemnity of Plan
Administrator.  The Plan Administrator shall not be liable to
any person for any action taken or omitted in connection with the interpretation
and administration of this Agreement, unless such action or omission is
attributable to the willful misconduct of the Plan Administrator or any of its
members.  The Employer shall indemnify and hold harmless the members
of the Plan Administrator against any and all claims, losses, damages, expenses,
or liabilities arising from any action or failure to act with respect to this
Agreement, except in the case of willful misconduct by the Plan Administrator or
any of its members.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    9.5            Employer
Information.  To enable the Plan
Administrator to perform its functions, the Employer shall supply full and
timely information to the Plan Administrator on all matters relating to the date
and circumstances of the retirement, Disability, death, or Termination of
Employment of the Executive and such other pertinent information as the Plan
Administrator may reasonably require.

    

    IN WITNESS WHEREOF, the
Executive and a duly authorized Officer of the Employer have signed this
Agreement as of the date first written above.

     

    
      	
              THE
      EXECUTIVE:

            	 	
              CHARTERBANK

            	 
	 
      	 	 
      	 	 
	/s/
      Robert
      Johnson	 	
              By:

            	/s/
      Thomas M. Lane	 
	
              Robert
      Johnson

            	 	 
      	 	 
	 
      	 	
              Its:

            	Chairman,
      Personnel and Compensation Committee	 

    

     

     

    14

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