SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 9, 1995
FIRST CHARTER CORPORATION
(Exact name of Registrant as specified in its Charter)
NORTH CAROLINA 0-15829 56-1355866
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
22 UNION STREET, NORTH, CONCORD, NORTH CAROLINA 28026-0228
(Address of principal executive offices) (Zip Code)
(704) 786-3300
(Registrant's telephone number, including area code)
ITEM 5. Other Events.
The following is an updated Description of Common Stock of
First Charter Corporation (the "Registrant"), which has been
previously filed with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and updated and amended from time to time. The
following description reflects various changes in the provisions
of the North Carolina Business Corporation Act (the "NCBCA"), as
well as changes in other regulatory restrictions and guidelines.
To the extent this description is inconsistent with prior
filings, it modifies and supersedes such filings.
DESCRIPTION OF REGISTRANT'S SECURITIES
AUTHORIZED CAPITAL
The Registrant is authorized to issue 10,000,000 shares of
Common Stock, par value $5.00 per share (the "Common Stock"), of
which 4,643,993 shares were issued and outstanding as of
September 30, 1995. As of September 30, 1995, 646,582 shares had
been reserved for potential issuance in connection with certain
employee benefit plans, 138,402 shares were reserved for issuance
under the Dividend Reinvestment Plan and 1,644,672 shares were
reserved for issuance in connection with a pending acquisition.
After taking account of the shares so reserved, the number of
authorized shares of Common Stock available for other corporate
purposes as of September 30, 1995 was 2,926,351. Under North
Carolina law, any outstanding shares of capital stock of the
Registrant reacquired by it would be considered authorized but
unissued shares.
VOTING AND OTHER RIGHTS
GENERAL. The holders of Common Stock are entitled to one
vote per share on each matter voted on at a shareholder's
meeting. A majority of the shares entitled to vote, represented
at a meeting in person or by proxy, constitutes a quorum, and, in
general, a majority of votes cast at a meeting is sufficient to
take action upon routine matters. Directors shall be elected by
a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present and each
shareholder entitled to vote in such an election shall be
entitled to vote each share of Common Stock owned by such
shareholder for as many persons as there are directors to be
elected. The holders of Common Stock do not have the right to
cumulate their votes in the election of directors, so long as the
Registrant has a class of shares registered under Section 12 of
the Exchange Act (unless action is taken to provide otherwise by
amendment to the Registrant's Restated Articles of Incorporation,
which action Management currently does not intend to propose).
In general, (i) amendments to the Registrant's Restated
Articles of Incorporation must be approved by each voting group
entitled to vote separately thereon by a majority of the votes
cast by that voting group, unless the amendment creates
dissenters' rights for a particular voting group, in which case
such amendment must be approved by a majority of the votes
entitled to be cast by such voting group; and (ii) the
dissolution of the Registrant must be approved by a majority of
all votes entitled to be cast thereon.
Shares of Common Stock of the Registrant are not entitled to
vote if they are owned, directly or indirectly, by a subsidiary
of the Registrant. Shares of Common Stock held by the Registrant
or by any of its subsidiaries in a fiduciary capacity (whether as
sole fiduciary or co-fiduciary) may be voted in the election of
directors and in all other matters by the registered owners,
unless otherwise limited by the terms of the instrument or court
order establishing the fiduciary relationship.
APPROVAL OF MERGERS AND TAKEOVERS. The Restated Articles of
Incorporation of the Registrant provide that a plan for the
Registrant to consolidate with, or merge with or into, any other
corporation or convey to any corporation or other person or
otherwise dispose of all or substantially all of its assets or to
dispose of by any means all or substantially all the stock or
assets of any major subsidiary will not be submitted to the
shareholders for approval unless such plan is approved by the
affirmative vote of 75% of the number of directors fixed in the
manner set forth in the Bylaws. The Articles of Incorporation
further provide that the Board of Directors, in its evaluation of
such a plan, shall consider all relevant factors, including the
social and economic effects on employees, customers, communities
and others. If submitted to the shareholders, such plan may be
approved only by (a) the affirmative vote of not less than 75% of
the aggregate voting power of the outstanding stock entitled to
vote thereon, and (b) by the affirmative vote of at least 50% of
the voting power of the outstanding stock of shareholders
entitled to vote thereon other than controlling shareholders, if
(i) any shareholder entitled to vote thereon is a person who,
including affiliates of such person, is the beneficial owner (as
the terms are defined in the Exchange Act and in the rules
thereunder) of more than 20% of the voting power of the
Registrant (a "controlling shareholder"), provided that shares
held, voted or otherwise controlled by a person as a trustee,
plan administrator, officer of the Registrant or otherwise
pursuant to an employee benefit plan of the Registrant or of an
affiliate of the Registrant shall not be deemed to be
beneficially owned by a person for the purpose of determining
whether any person is a controlling shareholder, and (ii) prior
to the acquisition of 20% of the voting power of the Registrant
by a shareholder, the Board of Directors of the Registrant had
not unanimously approved such consolidation, merger, conveyance
or disposition.
AMENDMENT OF BYLAWS. The shareholders of the Registrant may
act to amend or repeal any of the Registrant's Bylaws. Any Bylaw
adopted, amended or repealed by the shareholders generally may
not be readopted, amended or repealed by the Board of Directors
of the Registrant unless otherwise authorized by the
shareholders.
DISSENTERS' RIGHTS. The shareholders of the Registrant
shall have dissenters' rights to appraisal with respect to their
shares of Common Stock as provided by statute in connection with
certain types of merger or share exchange transactions.
Dissenters' rights are also available with respect to certain
sales of all or substantially all of the property of the
Registrant and certain amendments to the Registrant's Restated
Articles of Incorporation that materially and adversely affect
certain enumerated rights of a dissenter's shares.
DIRECTORS AND CLASSES OF DIRECTORS
Under the Registrant's Bylaws, the number of directors shall
be not fewer than five nor more than twenty-five, as determined
from time to time by resolution of the shareholders or by the
vote of not less than 75% of the members of the Board of
Directors. Accordingly, either the directors or the shareholders
of the Registrant have the authority to increase or decrease the
number of directors, which is currently fixed at 14, within this
range. Under state law, however, only the shareholders of the
Registrant have the right to change the range for the size of the
Board, by amendment to the Registrant's Restated Articles of
Incorporation or Bylaws.
The Board of Directors of the Registrant is divided into
three classes so that each director serves for a term ending on
the date of the third annual meeting following the annual meeting
at which such director was elected. In the event of any increase
in the authorized number of directors, the newly created
directorships resulting from such increase shall be apportioned
among the three classes of directors so as to maintain such
classes as nearly equal as possible. Because of the
classification of directors, unless the shareholders act under
North Carolina law to remove directors from office, two annual
meetings generally would be required to elect a majority of the
Board of Directors and three, rather than one, would be required
to replace the entire board.
Vacancies, whether arising from an increase in the number of
directors or from the failure by shareholders to elect the full
authorized number of directors, may be filled by the shareholders
or by the Board of Directors (by the affirmative vote of a
majority of the remaining directors if less than a quorum of
directors remains). Generally, directors may be removed by the
shareholders with or without cause by the affirmative vote of a
majority of the shares cast, unless the Registrant's Restated
Articles of Incorporation are amended to provide that directors
can be removed only for cause.
ANTI-TAKEOVER ASPECTS OF CERTAIN PROVISIONS
The provisions of the Registrant's Bylaws and Articles of
Incorporation regarding the staggered Board of Directors and
merger vote requirements may have certain anti-takeover effects
with respect to the Registrant. Such provisions could make the
Registrant a less attractive target for a hostile takeover bid or
render more difficult or discourage a merger proposal, the
assumption of control through the acquisition of a large block of
Common Stock or the removal of incumbent management. Such
provision may inhibit or impede fluctuations in the market price
of the Common Stock, which may result from actual or potential
takeover attempts. The Registrant is not aware of any pending or
threatened attempt to acquire control of the Registrant or change
in management.
LIQUIDATION RIGHTS
In the event of liquidation, the holders of Common Stock
would be entitled to receive pro rata any assets legally
available for distribution to shareholders with respect to shares
held by them.
PREEMPTIVE AND OTHER RIGHTS
The Common Stock does not have any preemptive rights,
redemption privileges, sinking fund privileges or conversion
rights. All the outstanding shares of Common Stock are validly
issued, fully paid and nonassessable. The Common Stock is traded
on The NASDAQ Stock Market as a NASDAQ National Market security.
First Charter National Bank acts as transfer agent and registrar
for the Common Stock. As of November 7, 1995, there were 1,035
shareholders of record of the Registrant.
DISTRIBUTIONS
GENERAL REQUIREMENTS. The Registrant may issue share
dividends in Common Stock to the holders of shares of Common
Stock. In addition, the holders of shares of Common Stock will
be entitled to receive such other distributions as the Board of
Directors of the Registrant may declare, subject to any
restrictions contained in the Registrant's Restated Articles of
Incorporation (of which there currently are none), unless after
giving effect to such distribution, (i) the Registrant would not
be able to pay its debts as they become due in the usual course
of business or (ii) the Registrant's total assets would be less
than the sum of the Registrant's total liabilities plus the
amount that would be needed, if the Registrant were to be
dissolved at the time of the distribution, to satisfy claims of
shareholders which have preferential rights superior to the
rights of holders of Common Stock.
RESTRICTIONS ON SUBSIDIARY DIVIDENDS. Although the
Registrant is not subject to the restrictions on dividends
applicable to national banks, the ability of the Registrant to
make distributions to holders of Common Stock is dependent to a
large extent upon the ability of its subsidiary bank, First
Charter National Bank, to pay dividends. First Charter National
Bank is subject to restrictions on dividends applicable to
national banks. Under current regulations, the amount of
dividends that may be paid by a national bank without approval of
the Comptroller of the Currency (the "Comptroller") is the sum of
the bank's net profits (as defined by statute) for that year in
which it is making the dividend payment plus its retained net
profits (as defined by statute) for the preceding two years.
In addition, no dividend may be declared or paid on the
common stock of a national bank until cumulative dividends on
outstanding preferred stock have been paid in full, and no
dividends may be paid if the bank is in default on the payment of
any assessment due the Federal Deposit Insurance Corporation
("FDIC"). The Comptroller also has authority under the Financial
Institutions Supervisory Act to prohibit a national bank from
engaging in what, in his opinion, constitutes an unsafe or
unsound practice in conducting its business. Under certain
circumstances relating to the financial condition of a national
bank, as where the payment of dividends would deplete a bank's
capital base to an inadequate level, the Comptroller may
determine that the payment of dividends would be an unsafe or
unsound banking practice.
CAPITAL GUIDELINES. The ability of First Charter National
Bank, as well as of the Registrant, to pay dividends in the
future is influenced by the various minimum capital requirements
and the capital and non-capital standards established under the
Federal Deposit Insurance Corporation Improvement Act of 1991.
The Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), the Comptroller and the FDIC have
issued substantially similar risk-based and leverage capital
guidelines applicable to United States banking organizations. In
addition, those regulatory agencies may from time to time require
that a banking organization maintain capital above the minimum
levels, whether because of its financial condition or actual or
anticipated growth.
The Federal Reserve Board risk-based guidelines define a
two-tier capital framework. Tier 1 capital consists of common
and qualifying preferred shareholders' equity, less certain
intangibles and other adjustments. Tier 2 capital consists of
subordinated and other qualifying debt, and the allowance for
loan losses up to 1.25% of risk-weighted assets. The sum of Tier
1 and Tier 2 capital less investments in unconsolidated
subsidiaries represents qualifying total capital, at least 50% of
which must consist of Tier 1 capital. Risk-based capital ratios
are calculated by dividing Tier 1 and total capital by risk-
weighted assets. Assets and off-balance sheet exposures are
assigned to one of four categories of risk weights, based
primarily on relative credit risk. The minimum Tier 1 capital
ratio is 4% and the minimum total capital ratio is 8%.
The leverage ratio is determined by dividing Tier 1 capital
by total adjusted assets. Although the stated minimum ratio is
3%, most banking organizations are required to maintain ratios of
at least 100 to 200 basis points above 3%.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Registrant has adopted a bylaw, as permitted by the
NCBCA, which provides that, in addition to the indemnification of
directors and officers otherwise provided by the NCBCA, the
Registrant shall indemnify directors, executive officers and
certain other designated officers against all liability and
litigation expense, including reasonable attorneys' fees, arising
out of their status or activities as directors or officers,
except for liability or litigation expense incurred on account of
activities that were at the time known or reasonably should have
been known by such director or officer to be clearly in conflict
with the best interests of the corporation. Pursuant to such
bylaw, the Registrant may also maintain insurance on behalf of
its directors and officers against liability asserted against
such persons in such capacity whether or not such directors or
officers have the right to indemnification pursuant to the bylaw
or otherwise.
In addition to the above-described indemnification
provisions, Sections 55-8-50 through 55-8-58 of the NCBCA contain
provisions prescribing the extent to which directors and officers
shall or may be indemnified. Section 55-8-51 of the NCBCA
permits a corporation, with certain exceptions, to indemnify a
current or former director against liability if (i) he conducted
himself in good faith, (ii) he reasonably believed (x) that his
conduct in his official capacity with the corporation was in its
best interests and (y) in all other cases his conduct was at
least not opposed to the corporation's best interests, and (iii)
in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. A corporation may not
indemnify a current or former director in connection with a
proceeding by or in the right of the corporation in which such
director was adjudged liable to the corporation or in connection
with a proceeding charging improper personal benefit to him in
which he was adjudged liable on such basis. The above standard
of conduct is determined by the Board of Directors, or a
committee or special legal counsel or the shareholders as
prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA require a
corporation to indemnify a director or officer in the defense of
any proceeding to which he was a party because of his capacity as
a director or officer against reasonable expenses when he is
wholly successful in his defense, unless the articles of
incorporation provide otherwise. Upon application, the court may
order indemnification of the director or officer if he is
adjudged fairly and reasonably so entitled under Section 55-8-54.
Section 55-8-56 allows a corporation to indemnify and
advance expenses to an officer, employee or agent who is not a
director to the same extent as a director or as otherwise set
forth in the corporation's articles of incorporation or bylaws or
by resolution of the board of directors.
LIMITATION OF DIRECTOR LIABILITY
The Restated Articles of Incorporation of the Registrant
provide that, to the fullest extent permitted by the NCBCA, a
director of the Registrant shall not be personally liable to the
Registrant, its shareholders or otherwise for monetary damages
for breach of his duty as a director. This provision precludes
any claim by the shareholders of the Registrant for monetary
damages based on a breach of duty of directors, with the
following exceptions under the NCBCA: (i) acts or omissions that
such director at the time of such breach knew or believed were
clearly in conflict with the best interests of the corporation,
(ii) certain unlawful distributions, including unlawful
redemptions of shares, (iii) any transaction from which such
director derived an improper personal benefit or (iv) acts or
omissions occurring prior to the effectiveness of the provision
on April 27, 1988.
EFFECTIVE LAW
The rights of holders of the Common Stock of the Registrant
are dependent, directly or indirectly, on applicable state and
federal statutes and regulations which are subject to change from
time to time. The Registrant has not undertaken to update the
foregoing description in each case where such a change may affect
the rights of shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
FIRST CHARTER CORPORATION
By: /S/ LAWRENCE M. KIMBROUGH
Lawrence M. Kimbrough
President
Dated: November 9, 1995
