SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST CHARTER CORPORATION
(Name of Registrant as Specified in Its Charter)
FIRST CHARTER CORPORATION
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (1) (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed :
<PAGE>
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on April 29, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of First Charter Corporation will be
held at the Cabarrus Country Club, located on Weddington Road NW, Concord, North
Carolina, on Tuesday, April 29, 1997, at 3:00 p.m., for the following purposes:
1. To elect five directors for terms expiring in 2000 and one
director for a term expiring in 1998.
2. To consider and vote upon a proposal to approve the adoption
of the Corporation's Stock Option Plan for Non-Employee
Directors,
3. To consider and vote upon a proposal to approve the adoption
of the Corporation's 1998 Employee Stock Purchase Plan;
4. To ratify the action of the Board of Directors in selecting
KPMG Peat Marwick LLP as independent public accountants to
audit the books of the Corporation for the current year; and
5. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Pursuant to the provisions of the North Carolina Business Corporation
Act, February 21, 1997 has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at such Annual Meeting and,
accordingly, only holders of Common Stock of record at the close of business on
that date will be entitled to notice of and to vote at such meeting and at any
adjournment or adjournments thereof.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend, please sign, date and return the accompanying proxy
promptly, so that your shares may be represented and voted at the Annual
Meeting. A return envelope is enclosed for your convenience.
By order of the Board of Directors,
James W. Townsend, Jr.
Secretary
March 5 , 1997
<PAGE>
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
------------------------------
PROXY STATEMENT
------------------------------
1997 Annual Meeting of Shareholders
to be held on April 29, 1997
The following proxy statement, first mailed or delivered to security
holders on or about March 5, 1997, is furnished in connection with the
solicitation by the Board of Directors of First Charter Corporation (the
"Corporation") of proxies for the Annual Meeting of Shareholders of the
Corporation to be held on April 29, 1997 at 3:00 p.m. at the Cabarrus Country
Club, located on Weddington Road NW, Concord, North Carolina, and at any
adjournment or adjournments thereof (the "Annual Meeting"). The principal
executive offices of the Corporation are located at 22 Union Street, North,
Concord, North Carolina 28025. The Corporation's telephone number is (704)
786-3300. The Corporation owns all of the outstanding capital stock of First
Charter National Bank, a national banking association ("FCNB"), and Bank of
Union, a North Carolina state-chartered commercial bank ("Union").
The accompanying form of proxy is for use at the Annual Meeting if a
shareholder either will be unable to attend in person or will attend but wishes
to vote by proxy. The proxy may be revoked in writing by the person giving it at
any time before it is exercised by notice to the Secretary of the Corporation or
by submitting a proxy having a later date, or it may be revoked by such person
appearing at the Annual Meeting and electing to vote in person. All shares of
the Corporation's common stock, $5.00 par value (the "Common Stock"),
represented by valid proxies received pursuant to this solicitation, and not
revoked before they are exercised, will be voted in the manner specified
therein. Where specifications are not made, proxies will be voted in favor of
(i) electing as directors of the Corporation the six nominees named in this
Proxy Statement, (ii) approving the Corporation's Stock Option Plan for
Non-Employee Directors, (iii) approving the Corporation's 1998 Employee Stock
Purchase Plan, and (iv) ratifying the action of the Board of Directors in
selecting KPMG Peat Marwick LLP to audit the books of the Corporation for the
current year, and will be voted in the discretion of the proxy holders on any
other matters presented at the Annual Meeting.
The entire cost of soliciting these proxies will be borne by the
Corporation. In following up the original solicitation of the proxies by mail,
the Corporation will request brokers and others to send proxies and proxy
material to the beneficial owners of the Common Stock and will reimburse them
for their expenses in so doing. If necessary, the Corporation may also use one
or more of its regular employees, who will not be specially compensated
therefor, to solicit proxies from the shareholders, either in person, by
telephone or by mail.
Pursuant to the provisions of the North Carolina Business Corporation
Act, as amended (the "Business Corporation Act"), February 21, 1997 has been
fixed as the record date in
<PAGE>
connection with the Annual Meeting and, accordingly, only holders of the
6,310,235 outstanding shares of Common Stock of record at the close
of business on that date will be entitled to notice of and to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote on each
of the matters to be voted upon at the Annual Meeting, except that shares held
by FCNB, whether or not held in a fiduciary capacity, may not be voted by FCNB
in the election of directors. The holders of a majority of the outstanding
shares entitled to be cast on a matter must be present in person or represented
by proxy at the Annual Meeting in order to constitute a quorum for the
transaction of business on that matter. In accordance with North Carolina law,
votes withheld from director nominees and abstentions from voting will be
counted for purposes of determining whether a quorum has been reached at the
Annual Meeting. Furthermore, pursuant to the rules of certain national
securities exchanges or associations, a broker holding shares of Common Stock in
nominee or "street" name must in certain circumstances obtain specific voting
instructions from beneficial owners of such shares in order to vote such shares.
Any such shares represented by a duly executed proxy returned by a broker will
be counted for purposes of determining whether a quorum exists, even if such
shares are not voted in certain matters where voting instructions were not
received ("broker non-votes").
PRINCIPAL SHAREHOLDERS
The following table sets forth each shareholder known to the
Corporation to beneficially own more than 5% of the outstanding shares of the
Common Stock as of December 31, 1996. The Common Stock is the only class of
equity securities of the Corporation outstanding.
<TABLE>
Shares
Beneficially Owned (1)
----------------------
Percent of
Name and Address Number Class
---------------- ------ -----
<S> <C>
First Union National Bank
of North Carolina
Capital Management Group
401 South Tryon Street
Charlotte, North Carolina 28202 376,690 (2) 6.0%
First Charter National Bank
Post Office Box 228
Concord, North Carolina 28025 764,466 (3) 12.1%
</TABLE>
- ----------
(1) Unless otherwise noted, all shares of Common Stock set forth in the
table are directly owned, with sole voting and investment power, by
such shareholder. The Corporation has obtained certain of the
information from schedules filed with the Securities and Exchange
Commission pursuant to Section 13(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(2) Includes 309,432 shares held in various fiduciary capacities with
respect to which First Union National Bank has shared voting power and
67,258 shares held in various fiduciary capacities with respect to
which it has sole voting power. First Union National Bank has shared
investment power with regard to 351,710 shares and sole investment
power with regard to 24,980 shares.
2
<PAGE>
(3) Includes 688,301 shares held in various fiduciary capacities with
respect to which FCNB has sole voting power and 76,165 shares held in
various fiduciary capacities with respect to which it has shared voting
power. FCNB has sole investment power with respect to 89,135 shares and
shared investment power with respect to 81,694 shares.
ELECTION OF DIRECTORS
Under the Corporation's Articles of Incorporation and Bylaws, the Board
of Directors of the Corporation shall have not fewer than five nor more than
twenty-five members as determined from time to time by not less than 75% of the
members of the Board of Directors or by the shareholders of the Corporation, and
the directors shall be divided into three classes having staggered three-year
terms. The Board of Directors has set the number of directors at seventeen. The
Corporation's Bylaws provide that the term of a director shall expire at the
first shareholders' meeting following the date on which such director reaches
age 70.
The terms of six directors expire at the Annual Meeting, five of whom
are serving three-year terms which expire in 1997 and one of whom is serving a
one-year term which expires in 1997. The Board has nominated for re-election the
six members of the Board of Directors whose terms expire at the Annual Meeting
and are eligible for re-election. Five of such members have been nominated to
serve for three-year terms expiring in 2000; Mr. Branson C. Jones, whose tenure
as a director will expire at the 1998 Annual Meeting of Shareholders pursuant to
the Corporation's mandatory retirement age policy, has been nominated to serve
for a one-year term expiring in 1998. It is intended that the persons named in
the accompanying form of proxy will vote to elect the five nominees listed below
as directors for three-year terms to expire in 2000, and the one nominee listed
below as director for a one-year term to expire in 1998, in each case unless
authority to so vote is withheld. Each nominee, if elected, will serve until the
Annual Meeting of Shareholders held in 1998 or 2000, as applicable or until such
person's earlier resignation or retirement, or until his successor shall be
elected and shall qualify to serve. Although management expects that each of the
nominees will be available for election, if a vacancy in the slate of nominees
is caused by death or other unexpected occurrence, it is intended that shares
represented by proxies in the accompanying form will be voted for the election
of a substitute nominee selected by the persons named in the proxy. Directors
will be elected by a plurality of the votes cast. Accordingly, neither votes
withheld from director nominees nor broker non-votes, if any, will have the
effect of a "negative" vote with respect to the election of directors. The Board
of Directors recommends a vote FOR all of the nominees for election as
directors.
The names of the nominees for election to the Board of Directors and of
the continuing directors, their ages, their principal occupations or employment
for the past five years, and certain other information with respect to such
persons is set forth below.
Nominees for Three-Year Terms Expiring in 2000
JANE B. BROWN, age 65, is a private investor. She has been a director since
1986.
MICHAEL R. COLTRANE, age 50, is the President and Chief Executive Officer of CT
Communications, Inc., a North Carolina telecommunications company. Mr. Coltrane
served as
3
<PAGE>
director of the Corporation from 1983 until 1985, and has currently served
as a director since 1988. Mr. Coltrane also serves as a director of CT
Communications, Inc., and a director of US Intelco Holdings, Inc.
J. ROY DAVIS, JR., age 63, is the Chairman of the Board of the Corporation and
FCNB. He is also the principal owner and Chief Executive Officer of S&D Coffee,
Inc., a coffee roasting and beverage distribution firm. He has been a director
since 1983.
JAMES B. FINCHER, age 67, is the owner and President of Mineral Springs Milling
and Farm Supplies, Inc., a provider of wholesale and retail agricultural
supplies. Mr. Fincher is also the owner and Vice President of Frontier Meat
Processing, Inc., and Vice President of FAFCO, Inc., a real estate development
and rental company. Mr. Fincher has been a director since 1995.
HUGH H. MORRISON, age 49, is the President of E. L. Morrison Co., Inc., a retail
building supply company. He has been a director since 1985.
Nominee for One-Year Term Expiring in 1998
BRANSON C. JONES, age 69, is Industry Consultant and Advisor of Oiles America
Corp., a manufacturer of automobile bearings. Mr. Jones has been a director
since 1983.
Directors With Terms Expiring in 1998
J. KNOX HILLMAN, JR., age 55, is the principal owner and Chief Executive Officer
of Shuford Insurance Agency, Inc., a general insurance agency. He has been a
director since 1984.
LAWRENCE M. KIMBROUGH, age 56, is the President and Chief Executive Officer of
the Corporation and FCNB. He has been a director since 1986.
DR. JERRY E. McGEE, age 54, is President of Wingate University. Prior to being
President of Wingate University, Dr. McGee served as Vice President for
Development at Furman University. Dr. McGee has been a director since 1995.
ROBERT F. LOWRANCE, age 48, is the owner of A&A Realty Company, a company
involved in retail and commercial real estate sales and development. He has been
a director since 1986.
ROBERT L. WALL, age 65, served as President of Cabarrus Memorial Hospital until
February 28, 1994, at which time he retired. He has been a director since 1983.
JAMES B. WIDENHOUSE, age 69, is a private investor. He has been a director since
1983.
Directors With Terms Expiring in 1999
WILLIAM R. BLACK, age 48, is a medical doctor specializing in oncology. He has
been a director since 1990.
4
<PAGE>
GRADY S. CARPENTER, age 68, is the President of Security Oil Company, Inc., a
wholesale oil distributor. He has been a director since 1986.
H. CLARK GOODWIN, age 62, is the President and Chief Executive Officer of Union.
Mr. Goodwin has been a director since 1995.
FRANK H. HAWFIELD, JR., age 63, is the Chairman of the Board of Union. Mr.
Hawfield is also the owner of Firestone Home and Auto Supply Store. Mr. Hawfield
has been a director since 1995.
T. DAVID PROPST, age 46, is the President of Earl's Tire Store, Inc. He has been
a director since 1986.
No family relationship as close as first cousin exists among the
directors, nominees for director or executive officers of the Corporation.
Compensation of Directors
During 1996, each director of the Corporation who was not employed by
the Corporation or its subsidiaries was paid $400 for each meeting of the Board
of Directors of the Corporation which he or she attended and $200 for each
Corporation committee meeting he or she attended. The Corporation also maintains
the Deferred Compensation Plan for Non-Employee Directors (the "Deferred
Compensation Plan"), pursuant to which directors, who are not also employees of
the Corporation or a subsidiary, may elect to defer all or a portion of such
director fees. Such deferred fees may be invested in a cash account, which is
credited with interest at an annual rate equal to FCNB's Prime Rate, or in a
stock-based account, in which the participant will be credited with units based
on the value of shares of Common Stock of the Corporation. Amounts invested in
the stock account are credited with additional amounts representing the value of
dividends declared from time to time by the Corporation. Under the Deferred
Compensation Plan, a participant may elect to receive amounts (payable in cash
only) in a lump sum or in equal installments over five years, following the
participant's death, disability, retirement from the Board of Directors or any
other date selected by the participant which is at least six months following
the participant's election date.
The Board of Directors of the Corporation has also adopted the Stock
Option Plan for Non-Employee Directors ("the Director Plan"), subject to
shareholder approval of the Director Plan at the Annual Meeting. See "Approval
of the First Charter Corporation Stock Option Plan for Non-Employee Directors"
for a description of the general terms and provisions of the Director Plan.
Pursuant to the Director Plan, and subject to shareholder approval of such Plan,
the Compensation Committee of the Board of Directors has granted options to the
existing directors of the Corporation (none of whom is an officer as or employee
of the Corporation or any of its subsidiaries), including those nominees for
election as directors at the Annual Meeting, as follows:
(i) Each of Messrs. Black, Coltrane, Davis, Hawfield, Hillman,
Lowrance, McGee, Morrison, Propst and Wall and Ms. Brown: An option to purchase
500 shares of Common Stock
5
<PAGE>
with a term of ten years, exercisable in cumulative installments of 20% per
year over five years, at an exercise price of $21.25 per share (the fair market
value on the date of grant);
(ii) Each of Messrs. Jones and Widenhouse: An option to purchase 500
shares of Common Stock with a term of three years, exercisable in full one year
from the date of grant and remaining exercisable for two years following his
retirement from the Board of Directors of the Corporation, at an exercise price
of $21.25 per share;
(iii) Mr. Carpenter: An option to purchase 500 shares of Common Stock
with a term of four years, exercisable in cumulative installments of 50% over
two years and remaining exercisable for two years following his retirement from
the Board of Directors of the Corporation, at an exercise price of $21.25 per
share; and
(iv) Mr. Fincher: An option to purchase 500 shares of Common Stock with
a term of five years, exercisable in cumulative installments of 33 1/3% over
three years and remaining exercisable for two years following his retirement
from the Board of Directors of the Corporation, at an exercise price of $21.25
per share.
In addition, simultaneously the Compensation Committee granted to each
of the non-employee directors of FCNB and Union who are not also directors of
the Corporation an option to purchase 500 shares of Common Stock with a term of
ten years, exercisable in cumulative installments of 20% per year over five
years at an exercise price of $21.25 per share, all subject to shareholder
approval of the Director Plan.
The termination and/or vesting or accelerated exercise of the options,
upon death, disability, retirement, or otherwise, is further subject to the
discretion of the Compensation Committee of the Board of Directors, as described
in "Approval of the First Charter Corporation Stock Option Plan for Non-Employee
Directors."
Attendance of Directors
During 1996, each member of the Board of Directors of the Corporation
attended at least 75% of the total number of meetings of the Board of Directors
and any committee or committees on which he or she served. The Board of
Directors met 11 times during 1996.
Committees of the Board of Directors
The Corporation has Executive, Audit and Compensation Committees. The
Executive Committee reviews the regularly scheduled Board of Directors meeting
agendas. This Committee receives various reports from management and makes
recommendations based on management reports to the directors at the regularly
scheduled Board of Directors meetings. Pursuant to the Corporation's Bylaws, the
Executive Committee also serves as the nominating committee. In such capacity,
the Executive Committee determines the nominees for director in a given year and
may consider written nominations of candidates for election to the Board of
Directors submitted by shareholders to the Secretary of the Corporation that are
accompanied by certain information regarding such nominees. See "Election of
Directors -- Nominations for Director." The
6
<PAGE>
Executive Committee also serves the function previously served by the Asset/
Liability Committee. In such capacity, it monitors the financial condition
of the Corporation and makes adjustments in policies affecting lending,
pricing of services, investment securities and liability positions with a
view to current and anticipated interest rates and other economic conditions.
The Audit Committee reviews the work and reports of the Corporation's
internal auditors and, on an annual basis, reviews reports of the Corporation's
independent auditors and any examinations of regulatory agencies. The Audit
Committee also establishes the scope and detail of the audit program, which is
conducted by the internal auditors to protect against improper and unsound
practices and to furnish adequate protection of all assets and records. It also
reviews proposals from the independent public accountants and makes
recommendations to the full Board of Directors.
The Compensation Committee annually reviews and recommends to the Board
of Directors salary grade ranges and merit increase guidelines. In addition, it
recommends to the Board of Directors the annual budget request for all salaries
and overtime and specifically recommends to the Board of Directors all executive
officers' salaries. It reviews recommendations from management regarding major
benefit plans and recommends to the Board of Directors annually the formula for
matching contributions to the First Charter Retirement Savings Plan as well as
the formula for funding and payments under the Corporation's Executive Incentive
Bonus Plan. The Compensation Committee also grants options under and administers
the Corporation's Comprehensive Stock Option Plan and 1996 Employee Stock
Purchase Plan and will grant options under and administer the Corporation's 1998
Employee Stock Purchase Plan and Stock Option Plan for Non-Employee Directors.
In order to comply with certain restrictions under Rule 16b-3, the Compensation
Committee generally will be composed solely of directors who qualify as
"non-employee directors," as that term is defined under Section 16 of the
Exchange Act.
The members of each Committee are, and the number of meetings held by
each Committee during 1996 were, as follows:
Executive (14 meetings) Compensation Committee (6 meetings)
--------- -----------------------
Michael R. Coltrane Jane B. Brown
J. Roy Davis, Jr., Chairman Michael R. Coltrane
H. Clark Goodwin J. Roy Davis, Jr.
J. Knox Hillman, Jr. Frank H. Hawfield, Jr.
Branson C. Jones J. Knox Hillman, Jr., Chairman
Lawrence M. Kimbrough Jerry E. McGee
Hugh H. Morrison T. David Propst
Robert L. Wall Robert L. Wall
Audit (4 meetings)
Grady S. Carpenter
Michael R. Coltrane
Branson C. Jones, Chairman
Robert F. Lowrance
T. David Propst
James B. Widenhouse
7
<PAGE>
Nominations for Director
The Corporation's Bylaws set forth the procedures for a shareholder to
follow in order to nominate persons for election to the Board of Directors.
Pursuant to these procedures, a shareholder generally may properly bring a
nomination before the annual meeting of shareholders in a given year if the
shareholder provides written notice to the Corporation's Secretary at least 50
but not more than 75 days prior to the anniversary date of the shareholders'
meeting held in the prior year. This notice must set forth certain biographical
information relating to each person so nominated by the shareholder. In
addition, the notice must set forth such shareholder's beneficial ownership of
the Common Stock. In its discretion, the Executive Committee of the Board of
Directors may consider such nomination for the Board of Directors' slate of
nominees for that year. The Bylaws also set forth the time by which nominations
shall be submitted in the event that the annual meeting is held more than 30
days before or 60 days after the anniversary date of the previous year's annual
meeting. Finally, the Bylaws set forth under what circumstances a shareholder
may bring a nomination for director before a special meeting of shareholders and
the time within which such nomination must be submitted. Unless nominations are
presented in accordance with these provisions of the Bylaws, they will be
disregarded as invalid. Shareholders may obtain a copy of the Corporation's
Bylaws from the Corporation, upon written request to First Charter Corporation,
Post Office Box 228, Concord, North Carolina, 28026-0228, Attention: Robert O.
Bratton, and upon payment of $25.00 to cover the costs of reproduction and
mailing.
MANAGEMENT OWNERSHIP OF COMMON STOCK
The following table presents information regarding the beneficial
ownership of the Common Stock as of December 31, 1996 of (i) all current
directors and nominees for director, (ii) each executive officer of the
Corporation named in the Summary Compensation Table contained elsewhere herein
and (iii) all directors, nominees for director and executive officers as a
group.
<TABLE>
<CAPTION>
Shares
Beneficially Owned (1)
----------------------
Percent of
Name Number Class
---- ------ -----
<S> <C>
William R. Black 2,333 *
Robert O. Bratton 64,497 (2) 1.02
Jane B. Brown 50,729 *
Grady S. Carpenter 8,881 *
Michael R. Coltrane 62,716 (3) *
J. Roy Davis, Jr. 24,374 *
James B. Fincher 38,778 (4) *
Robert G. Fox 9,377 (5) *
H. Clark Goodwin 38,943 (6) *
Frank H. Hawfield, Jr. 13,008 *
J. Knox Hillman, Jr. 4,892 *
Branson C. Jones 29,600 (7) *
8
<PAGE>
Lawrence M. Kimbrough 41,827 (8) *
Robert F. Lowrance 7,960 *
Edward B. McConnell 1,920 (9) *
Jerry E. McGee 5,979 *
Hugh H. Morrison 29,584 (10) *
T. David Propst 12,618 (11) *
Robert L. Wall 6,068 (12) *
James B. Widenhouse 6,492 *
All directors, nominees and
executive officers of the
Corporation as a group (20 persons) 460,576 7.26%
- ---------------
*Less than 1%.
</TABLE>
(1) Unless otherwise noted, all shares of Common Stock set forth in the
table are directly owned, with sole voting and investment power, by
such shareholders.
(2) Includes 8,867 shares represented by options that are currently
exercisable or exercisable within 60 days, 2,597 shares owned by spouse
and 259 shares owned by minor children.
(3) Includes 7,206 shares owned by spouse as to which Mr. Coltrane
disclaims beneficial ownership.
(4) Includes 6,907 shares owned by spouse.
(5) Includes 4,960 shares represented by options that are currently
exercisable or exercisable within 60 days.
(6) Includes 169 shares owned by spouse, 1,863 shares owned by a minor
child and 6,000 shares represented by options that are currently
exercisable within 60 days.
(7) Includes 2,400 shares owned by spouse.
(8) Includes 17,961 shares represented by options that are currently
exercisable or exercisable within 60 days and 425 shares owned by
spouse.
(9) Includes 1,920 shares represented by options that are currently
exercisable or exercisable within 60 days.
(10) Includes 5,605 shares held in trust, 1,061 shares owned by spouse and
7,284 shares owned by minor children.
(11) Includes 2,577 shares owned by minor children.
(12) Includes 1,216 shares owned by spouse.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table indicates for the past three
years the compensation of the Chief Executive Officer and each other person who
served as an executive officer of the Corporation at December 31, 1996 (the
"named executive officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Awards
------
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options/SARs Compensation
Principal Position(s) Year ($) ($) ($) (#) ($)
- --------------------- ---- --- --- --- --- ---
<S> <C>
Lawrence M. Kimbrough 1996 $155,000 $91,760 (1) 5,880 $17,820 (2)
President and Chief 1995 138,000 91,080 4,100 16,372
Executive Officer 1994 132,500 92,750 7,633 9,364
Robert O. Bratton 1996 $115,000 $61,060 (1) 2,800 $16,106 (3)
Executive Vice 1995 102,000 50,490 2,500 11,674
President, Chief 1994 97,500 48,750 4,900 9,745
Operating Officer and
Chief Financial Officer
Robert G. Fox 1996 $105,000 $46,620 (1) 3,500 $14,892 (4)
Executive Vice 1995 100,000 49,500 2,400 11,442
President 1994 95,000 47,500 4,733 3,337
H. Clark Goodwin 1996 $125,000 $55,500 (1) 4,250 $26,088 (7)
President and Chief 1995 106,500 42,700 15,000 (6) 19,989
Executive Officer
of Union (5) 1994 100,000 12,600 0 11,783
Edward B. McConnell 1996 $96,250 $32,745 (1) 3,160 $8,719 (9)
Executive Vice 1995 N/A N/A N/A N/A
President (8) 1994 N/A N/A N/A N/A
</TABLE>
- ------------------
(1) Represents amounts paid pursuant to the Corporation's Executive
Incentive Bonus Plan. See "Report of Compensation Committee on
Executive Compensation" for a brief description of the Executive
Incentive Bonus Plan.
(2) Consists of (i) $15,480 contributed by the Corporation under the
Retirement Savings Plan (the "Savings Plan"), a defined contribution
plan intended to qualify under Sections 401(a) and 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) $2,340
representing the dollar value of the premium paid by the Corporation
for term life insurance.
(3) Consists of (i) $15,480 contributed by the Corporation under the
Savings Plan, and (ii) $626 representing the dollar value of the
premium paid by the Corporation for term life insurance.
(4) Consists of (i) $14,335 contributed by the Corporation under the
Savings Plan, and (ii) $557 representing the dollar value of the
premium paid by the Corporation for term life insurance.
(5) Mr. Goodwin first became an executive officer of the Corporation upon
consummation of the Corporation's acquisition of Union, effective
December 21, 1995. Compensation information with respect to periods
prior to that date reflect compensation of Mr. Goodwin from Bank of
Union.
(6) Represents options granted pursuant to the terms of the merger of the
Corporation and Union.
(7) Consists of (i) $15,480 contributed by the Corporation under the
Savings Plan, and (ii) $10,608 representing the dollar value of the
premium paid by the Corporation for term life insurance.
(8) Mr. McConnell first became an executive officer of the Corporation upon
his promotion to Executive Vice President in November, 1996.
(9) Consists of (i) $7,682 contributed by the Corporation under the Savings
Plan, and (ii) $1,037 representing the dollar value of the premium paid
by the Corporation for term life insurance.
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<PAGE>
Stock Option Plans
The Corporation has in effect the Comprehensive Stock Option Plan
pursuant to which the Compensation Committee may grant stock options to officers
and other key employees of the Corporation and its subsidiaries. In addition, at
fiscal year-end, the Corporation also had in effect the 1996 Employee Stock
Purchase Plan ("1996 ESPP"). Pursuant to the 1996 ESPP, no additional options
may be granted, and options outstanding at year-end are exercisable in 1998.
The following table indicates option grants pursuant to the
Comprehensive Stock Option Plan and the 1996 ESPP during fiscal year 1996 to the
named executive officers.
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise
Options/SARs to Employees or Base Grant Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date Value (3)
- ---- --- ---- ------ ---- ---------
<S> <C>
L. M. Kimbrough 4,500 (1) 11.65% $21.50 12/3/06 $ 28,080 (4)
1,380 (2) 5.35% $19.80 1/2/98 6,085 (5)
R. O. Bratton 2,800 (1) 7.25% $21.50 12/3/06 $ 17,472 (4)
R. G. Fox 2,500 (1) 6.48% $21.50 12/3/06 $ 15,600 (4)
1,000 (2) 3.88% $19.80 1/2/98 4,410 (5)
H. C. Goodwin 3,000 (1) 7.77% $21.50 12/3/06 $18,720 (4)
1,250 (2) 4.85% $19.80 1/2/98 5,513 (5)
E. B. McConnell 2,800 (1) 7.25% $21.50 12/3/06 $ 17,472 (4)
360 (2) 1.40% $19.80 1/2/98 1,588 (5)
</TABLE>
- ----------
(1) Represents shares covered by incentive stock options granted pursuant
to the Comprehensive Stock Option Plan. All such options granted under
the Comprehensive Stock Option Plan in 1996 vest at the rate of 20% per
year over five years, based on the date of grant. Such options have an
exercise price equal to 100% of fair market value of such shares on the
date of grant.
(2) Represents shares covered by options granted pursuant to the
Corporation's 1996 ESPP. Pursuant to the 1996 ESPP, eligible employees
are notified of the number of shares with respect to which options can
be granted to such employee thereunder, and then each employee elects
the number of shares to be so covered by the options. The numbers in
the table represent the number of shares so elected. Options granted
under the 1996 ESPP are exercisable two years from date of grant, at
which time they expire if not exercised. Options granted under the 1996
ESPP have an exercise price equal to 90% of the fair market value of
such shares on the date of grant.
(3) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The actual value, if any, an executive
may realize will depend on the excess of the stock price over the
exercise
11
<PAGE>
price on the date the option is exercised, so that there is no
assurance the value realized by an executive will be at or near the
value estimated by the Black-Scholes model.
(4) The estimated values under the Black-Scholes model for options granted
under the Comprehensive Stock Option Plan are based on the following
assumptions: exercise price is 100% of the fair market value at date of
grant; exercise term is ten years; no discounts have been taken for
vesting or restrictions; the risk free rate is 6.3% (based on the
10-year Treasury note yield as of the date the options were issued);
the volatility factor is 21% (based on the preceding 3 years); and the
dividend yield is 2.9% (based on the preceding 12 months).
(5) The estimated values under the Black-Scholes model for options granted
under the 1996 ESPP are based on the following assumptions: exercise
price is 90% of the fair market value at date of grant; exercisable
term is two years; no discounts have been taken for vesting or
restrictions; the risk free rate is 5.11% (based on the two-year
Treasury note yield as of the date the options were issued); the
volatility factor is 25% (based on the preceding 2 years); and the
dividend yield is 2.9% (based on the preceding 12 months).
The following table sets forth a summary of certain information with
respect to the exercise of stock options during 1996 by the named executive
officers and the value of such executive's unexercised stock options held at
fiscal year end (including options outstanding under the Comprehensive Stock
Option Plan and options outstanding under the 1996 ESPP).
Aggregated Option/SAR Exercises in
Last
Fiscal Year and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of
Shares Securities Underlying Value of Unexercised
Acquired on Value Unexercised Options/SARs In-the-money Options/SARs
Exercise Realized at Fiscal Year-End (#) at Fiscal Year-End($) (1)
---------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --- --- ----------- ------------- ----------- -------------
<S> <C>
L. M. Kimbrough 0 $ 0 17,961 10,907 $ 191,273 $ 30,790
R. O. Bratton 400 $ 5,468 8,867 6,727 $ 82,412 $ 18,939
R. G. Fox 0 $ 0 4,960 6,287 $ 33,986 $ 18,394
H. C. Goodwin 0 $ 0 6,000 24,000 $ -- $ --
E. B. McConnell 0 $ 0 1,480 5,020 $ 5,570 $ 7,655
- -------------------
(1) Determined based on the closing price of $21.50 of the Common Stock as
reported on the NASDAQ National Market System as of December 31, 1996.
</TABLE>
Change in Control and Employment Agreements
The Corporation has entered into Change in Control Agreements with
certain of its officers, including Messrs. Kimbrough, Bratton, Fox and
McConnell. These agreements provide for certain payments to such officers in the
event their employment is terminated following a "change in control" of the
Corporation. For purposes of the Agreements, a "change in control" generally
includes a merger or similar transaction involving the Corporation in which the
Corporation's shareholders receive less than 50% of the voting stock of the
surviving corporation, the sale or transfer of substantially all the
Corporation's assets, certain acquisitions of more than
12
<PAGE>
20% of the Common Stock by any person or group other than a person or group
who owned more than 5% of the Common Stock as of the date of the agreements
unless prior approval of the Board is received, certain instances in
which the composition of the Corporation's Board of Directors changes
by more than 50% during a two year period, or any other transaction that
would constitute a change in control required to be reported by the
Corporation in a proxy statement or the acquisition of control of the
Corporation under applicable federal banking laws. To be entitled for payments
upon such a change in control, (a) the officer's employment must be
terminated other than for cause, or (b) the officer must terminate his
employment for good reason, in either case within one year following
the change in control. "Cause" is defined generally as willful
misconduct, use of narcotics or alcohol in a manner that affects the officer's
duties, conviction of a felony or serious misdemeanor involving moral turpitude,
embezzlement or theft or gross inattention or dereliction of duty. "Good reason"
generally means a material reduction in the officer's duties or a change in
title resulting in reduction of the officer's duties, a material reduction in
salary or bonus, or the relocation of the officer to an area more than 30 miles
from their primary employment location immediately preceding a change in
control. The respective agreements of the named executive officers provide for
continued payment of base salary and average bonus amounts, as well as certain
continued benefits provided to employees generally, for a period of 24 months
(35 months in the case of Mr. Kimbrough) following an event which would entitle
such officer to payments under his agreement.
In addition, Mr. Goodwin currently has an employment agreement with
Union, which terminates on March 31, 2000. Pursuant to this agreement, Mr.
Goodwin serves as the President and Chief Executive Officer of Union and
receives a base salary of $125,000 per year. Such base salary is reviewed
annually by the Board of Directors of the Corporation, which may increase such
base salary from time to time. Pursuant to the employment agreement, generally
Mr. Goodwin also is entitled to certain vacation benefits and to participate in
discretionary bonuses granted by Union's board, to participate in Union's
retirement and medical plans and to receive other fringe benefits applicable to
Union's executives. The agreement generally can be terminated by the Board of
Directors of Union at any time upon 30 days' notice, provided that upon
termination by Union for other than "just cause," Mr. Goodwin is entitled to
receive his salary through the end of the then-current term of the agreement.
"Just cause" is defined generally as personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violations of law and material breach
of the agreement. Furthermore, if Mr. Goodwin dies during the term of the
agreement, the agreement is terminated and his estate shall receive his salary
through the end of the month in which his death occurs, and in certain instances
involving action by the applicable banking regulators, the agreement will be
terminated and Mr. Goodwin will receive salary only through the date of
termination. Finally, upon Mr. Goodwin's disability (as defined), generally he
is entitled to receive his compensation for 30 days thereafter.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Recommendations regarding the compensation of the Corporation's
executive officers generally are presented by the Compensation Committee (the
"Committee") to the Corporation's entire Board of Directors for approval. Each
member of the Committee is a "non-employee director," as that term is defined
under Rule 16b-3 under Section 16 of the Exchange Act ("Rule
13
<PAGE>
16b-3"). The Senior Management Personnel Committee prepares recommendations
on salary grade ranges and merit increase guidelines for review and approval
by the Committee as well as the annual budget request for salaries and
benefits. The Senior Management Personnel Committee approves salaries for
all personnel, with the exception of executive officers, within the
parameters of the annual salary administration program. The Chief Executive
Officer ("CEO") presents recommendations to the Committee for the annual
salaries of all executive officers other than the CEO. The Committee, in
turn, reviews and analyzes all information submitted to it. Thereafter the
Committee determines its recommendations to the Board of Directors
regarding compensation of all executive officers of the Corporation, including
recommendations regarding the compensation of the CEO. During 1996, the Board
of Directors approved all recommendations of the Committee.
Set forth below is a report of the Committee regarding executive
compensation for fiscal year 1996.
Executive Compensation Policies and Program. The Corporation's
executive compensation program is designed to
o Attract and retain qualified management of the Corporation;
o Enhance short-term financial gains of the Corporation; and
o Enhance long-term shareholder value in the Corporation.
The total compensation package for executives of the Corporation
includes cash and equity-based compensation. Annual compensation may consist of
a base salary, a bonus and grants of stock options. The Corporation's policy is
generally to provide base salary that might fall below the median base salary
paid to comparable executives, while focusing more on incentive compensation
that is linked to the performance of the Corporation. The Corporation strives,
however, to provide each executive officer with total annual cash compensation
(base salary and bonus) in an amount that would be paid on the open market for a
fully qualified officer of that position.
The Committee utilized information from several sources in determining
levels of total annual compensation for 1996 (salary and potential bonus
amounts, each as discussed below). The Committee's goal was to maintain levels
of such total annual compensation that fall within the 50th and 75th percentiles
as set forth in such sources. The sources used by the Committee were (i) SNL
Executive Compensation Review, which compiles information regarding financial
institutions located throughout the Southeast and the nation with $250 to $500
million in assets; (ii) Sheshunoff Bank Executive and Director Compensation
Survey, which compiles information regarding financial institutions located
throughout the Southeast and the nation with $250 to $500 million in assets; and
(iii) Bank Administration Institutes Key Executive Compensation Survey, which
compiles information regarding financial institutions located throughout the
Southeast and the nation with $250 to $500 million in assets. Each of these
sources provides compensation information considering various job descriptions
and sizes of banks. The institutions included in these sources are not
necessarily the same group of institutions that comprise the Independent
14
<PAGE>
Bank Index used in the Performance Graph contained elsewhere in this Proxy
Statement. The Southeastern component of each of the above surveys is
believed to be comparable to those used in the Independent Bank Index.
Base Salaries. Generally, the Committee determines the level of base
salary for the CEO and the four other executive officers of the Corporation and
salary ranges for all other personnel, in each case based on competitive norms
derived from the annual surveys described above. The Committee also considers
employment agreements, if any, pursuant to which such executives may be entitled
to certain salaries. Actual salary changes are based upon a written evaluation
of each individual's performance based on numerous criteria and the weighing of
such criteria using a previously agreed-upon formula. In addition, with respect
to each executive, including the CEO, the Committee considers the individual's
performance, including such individual's total level of experience in the
banking industry, his record of performance and contribution to the success of
the Corporation relative to his job responsibilities and overall service to the
Corporation. During 1996, the Committee used the information set forth in the
surveys to maintain 1996 base salaries for its executive officers that
approximates the median salaries reported in the surveys.
Bonuses. The Corporation also maintains the Executive Incentive Bonus
Plan (the "Bonus Plan") for executive officers, from which performance-oriented
bonuses may be paid to certain key executive officers in any given year. The
Committee annually determines the executive officers eligible to participate in
the Bonus Plan. In general, those executives that are considered to have major
policy input with respect to the Corporation, or who are in a position to
generate a major impact on the Corporation's earnings, are selected to
participate in the Bonus Plan. Actual bonuses paid pursuant to the Bonus Plan
are based on various return on assets ("ROA") levels of the Corporation at
fiscal year end. No bonuses may be paid unless the Corporation reaches a minimum
ROA, determined at the beginning of each year.
Pursuant to the Bonus Plan, the Committee annually establishes a bonus
pool amount for each participating executive, which is equal to a given
percentage of the base salary of such executive. Such percentages are determined
based on the executive's relative responsibilities and ability to impact the
financial and operating performance of the Corporation. At year-end, the
Committee applies a multiple to the bonus pool amounts to determine the actual
amounts available to be awarded to participants. The multiple used is based on a
scale of various ROA amounts as determined by the Committee at the beginning of
a fiscal year. Of the amount eligible to be paid to a participant, 50% is paid
to the executive on a non-discretionary basis. The remaining half of the
eligible amount may be paid to the participant, in the discretion of the
Committee, based on the participant's individual performance. When evaluating
the performance of a participant, the Committee considers the Corporation's
actual operating performance (such as reduced levels of past due loans, reduced
levels of non-performing and restructured loans, improvements in asset quality
and corresponding reductions in provision amounts, increased noninterest income
and continued control of corporate expenses) in relation to its targeted long
range action plan and the executive's ability to impact the various components
thereof. Other criteria considered include the executive's initiative,
contribution to overall corporate performance and managerial ability.
15
<PAGE>
The Corporation achieved an ROA of 1.69% with respect to the 1996
fiscal year, which resulted in a multiple of 1.48 to be applied to each
executive's bonus pool to determine the amount available to be awarded as
bonuses. Fifty percent of each bonus pool was awarded to the respective
executive on a non-discretionary basis. Furthermore, the remainder of each
executive's bonus pool was awarded to him based upon the evaluation process
described above.
Options. Stock options comprise the final component of executives' core
annual compensation. This equity-based compensation is designed to be a
long-term incentive for executives to enhance shareholder value in the
Corporation. The Corporation maintains the Comprehensive Stock Option Plan (the
"Stock Option Plan") pursuant to which the Corporation may grant stock options
(both statutory and nonstatutory) to its key employees. The Committee
administers the Stock Option Plan in its sole discretion, including the
determination of the individuals to whom options will be granted, the terms on
which such options are granted and the number of shares subject to such options.
In general, when determining the key employees to whom options shall be granted,
the Committee considers such employees' relative job responsibilities and
abilities to impact the financial and operating performance of the Corporation.
When granting options, the Committee considers a scale whereby the
aggregate value of options granted is based on a multiple of base salary. When
the Committee granted options in 1996, it considered several factors, including
the number of stock options currently held by executives and their terms, the
maximum aggregate number of options to be granted under the Stock Option Plan in
1996, as well as the cumulative amount outstanding, and the aggregate number of
options to be granted as a percentage of total shares outstanding. Based on
these factors, the Committee determined that the aggregate value of options to
be granted to each executive generally should continue to be at the median of
the scale. Accordingly, using the scale, the Committee determined the applicable
multiple of base salary for each executive and granted options to such executive
with an aggregate value (based on the closing price of the Common Stock on the
date of grant) equal to such amount.
In addition to the Stock Option Plan, the Corporation maintains an
employee stock purchase program pursuant to which options are granted
periodically to all employees of the Corporation, including executive officers,
at an exercise price equal to 90% of the fair market value of the stock at the
date of grant. The number of shares subject to options granted to each employee,
including executive officers, is determined automatically based on base salary
levels of all employees.
Other. In addition to the above forms of compensation, the Corporation
also provides group term life insurance for its employees, including its
executive officers. Executive officers also participate in the Corporation's
Retirement Savings Plan (the "Savings Plan"), which is a defined contribution
plan intended to qualify under Section 401(a) of the Code and containing a cash
or deferred arrangement under Section 401(k) of the Code. Pursuant to the
Savings Plan, an eligible employee may elect to defer between 1% and 10% of
compensation. In addition, the Corporation contributes annually to each
participant's account, out of net profits of the Corporation, 3% of the
participant's base compensation plus a portion of a discretionary matching
amount as determined by the Board of Directors from time to time, allocated to
participants' accounts in proportion to their elective deferrals up to 6% for
such year. Furthermore, an additional discretionary amount as determined by the
Board of Directors from time to time may
16
<PAGE>
be contributed to the accounts of participants, based on the level of
employee contributions, and is allocated to participants' accounts in
proportion to their base compensation for such year. Finally, certain of the
Corporation's executives including the CEO are parties to change in control
agreements that provide for continued salary, bonus and benefits for a
certain period of time upon termination of employment following a change in
control of the Corporation.
Compensation of Chief Executive Officer. The Board of Directors of the
Corporation determines the compensation of the CEO based upon recommendations of
the Committee. The CEO's base salary is determined by a review of salaries of
top executives of comparable financial institutions, using the process
previously described. In keeping with the Corporation's general policy with
respect to base salary and bonus, the CEO's base salary is set at an amount
which generally is lower than the base salaries for comparable executives. The
Committee instead places more emphasis on available cash bonus, as a means of
directly linking the CEO's total annual compensation to the performance of the
Corporation. Total annual compensation for the CEO in 1996 was slightly below
the median for comparable executives. The Corporation achieved an ROA of 1.69%
with respect to the 1996 fiscal year, which resulted in a multiple of 1.48 that
was applied to the CEO's bonus pool amount to determine the amount of bonus
available to be awarded. In accordance with the terms of the Bonus Plan, 50% of
this amount was awarded to the CEO on a nondiscretionary basis. The remainder of
the CEO's bonus pool was awarded to him as the result of an evaluation of (a)
the Corporation's overall improved financial and operating performance in 1996,
including record increases in earnings, increases in trust department income,
decreases in past due and classified loans and containment of costs in general,
as well as (b) certain individual criteria, including initiative, contribution
to corporate performance and managerial ability. The Board of Directors of the
Corporation has approved the CEO's participation in the Bonus Plan in 1997.
Finally, the Committee made a stock option grant to the CEO pursuant to the
Corporation's Stock Option Plan in December 1996. In determining the number of
shares subject to options so granted, the Committee considered the CEO's
responsibilities and potential contribution to the performance of the
Corporation relative to that of the other executives, and the actual number of
shares subject to such options was determined using the scale previously
described.
Submitted by the Compensation Committee of the Board of Directors:
Jane B. Brown J. Knox Hillman, Jr.
Michael R. Coltrane Jerry E. McGee
J. Roy Davis, Jr. T. David Propst
Frank H. Hawfield, Jr. Robert L. Wall
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION IN COMPENSATION DECISIONS
Michael R. Coltrane, a member of the Compensation Committee, served as
Executive Vice President of the Corporation and First Charter until 1988.
17
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Common Stock with the Independent Bank Index, a
published banking industry index, and the Standard & Poor's 500 Stock Index, a
broad equity market index, assuming in each case the investment of $100 on
December 31, 1990 and the reinvestment of dividends.
FIRST CHARTER CORPORATION
Five-Year Performance Index
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
FIRST CHARTER CORPORATION 100 180 278 371 580 592
INDEPENDENT BANK INDEX 100 130 163 197 268 313
S&P 500 INDEX 100 108 118 120 165 203
18
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FCNB and Union have had, and expect to have in the future, banking
transactions in the ordinary course of business with directors, officers and
principal shareholders of the Corporation and its subsidiaries and their
associates. All loans and commitments included in such transactions were made
and are expected to be made on substantially the same terms, including interest
rate and collateral, as those prevailing at the time for comparable transactions
with other borrowers and did not and are not expected to involve more than the
normal risk of collectibility or present other unfavorable features.
APPROVAL OF THE FIRST CHARTER CORPORATION STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
The Board of Directors of the Corporation has determined that it is
desirable and in the best interests of the Corporation and its shareholders to
provide the directors of the Corporation and its subsidiaries, who are not also
officers or employees of the Corporation or a subsidiary ("Non-Employee
Directors"), an increased proprietary interest in the Corporation, both as
compensation for past performance and contribution to the Corporation's
historical success and as added incentive to contribute to the Corporation's
future performance. Therefore, the Board of Directors has adopted the First
Charter Corporation Stock Option Plan for Non-Employee Directors (the "Director
Plan"), which is subject to the approval of the shareholders of the Corporation.
The text of the Director Plan is set forth in its entirety as Exhibit A to this
Proxy Statement, and the following summary is qualified by reference thereto.
The proposal for approval of the Director Plan will require the affirmative vote
of the holders of a majority of the votes cast with respect to this matter at
the Annual Meeting. Accordingly, neither abstentions nor broker non-votes, if
any, with respect to this matter will have the effect of a negative vote with
respect to this matter. The Board of Directors recommends that the shareholders
vote FOR the adoption of the Director Plan.
The Corporation has reserved 150,000 shares of its Common Stock for
issuance under the Director Plan, subject to adjustment generally to protect
against dilution in the event of changes in capitalization of the Corporation.
If an outstanding option expires or terminates for any reason without having
been exercised in full, the shares remaining subject to such option, but not
purchased, shall again be available for grants of options under the Director
Plan.
Options to be granted under the Director Plan will be nonstatutory
options.
Administration
The Director Plan will be administered by the Compensation Committee of
the Board of Directors (the "Committee"), which shall consist of at least three
members. Generally, all the members of the Committee must constitute
"non-employee directors" for purposes of Rule 16b-3. Under Rule 16b-3 as in
effect on the date hereof, a "non-employee director" generally is a director who
is not an officer or employee of the Corporation or its subsidiaries, who does
not receive any other compensation from the Corporation or its subsidiaries
other than standard
19
<PAGE>
director compensation and who does not have any other interest in a
transaction with, or have a relationship with, the Corporation or its
subsidiaries that would require disclosure in the Corporation's Proxy
Statement. Generally, the Committee will have complete authority to determine
the Non-Employee Directors to whom options shall be granted, as well as the
terms of such options, and, subject to the consent of the optionee, to modify or
amend the terms of any outstanding options, all as hereinafter described. The
Committee also shall have discretion to interpret the Director Plan, to
prescribe rules regarding the operation of the Director Plan and to make other
determinations necessary or advisable for the administration of the Director
Plan.
Grants of Options
Non-Employee Directors of the Corporation and its subsidiaries will be
eligible to receive nonstatutory options under the Director Plan. Currently, 25
persons qualify as Non-Employee Directors. Pursuant to and subject to the
provisions of the Director Plan, the Committee has the sole discretion to
determine the Non-Employee Directors to whom options will be granted, the timing
of any grants, the numbers of shares subject to such options and the terms of
such options, the vesting schedules, if any, with respect to such options and
the periods during which such options may be exercised, and any other vesting,
acceleration or termination provisions. There is no limit on the number of
options that may be granted to a Non-Employee Director from time to time, and
the terms of any such options may differ between the Non-Employee Directors to
whom options are granted. The exercise price of all options granted under the
Director Plan will be 100% of the fair market value of the Common Stock on the
date the option is granted. The terms and provisions of options granted under
the Director Plan shall be set forth in a stock option agreement between the
Corporation and the optionee that complies with and is subject to the provisions
of the Director Plan.
Accelerated Vesting; Termination of Options
The Director Plan provides that any options that are not fully vested
at the time of an optionee's mandatory retirement from the Board of Directors of
the Corporation or a subsidiary, as applicable, shall become immediately vested
in full at such time. Furthermore, all options shall become immediately vested
in full in the event of the death or disability of a director prior to the
expiration of the stated option period. Finally, all options shall become
immediately vested in full in the event of certain changes in control of the
Corporation. See "-Miscellaneous" below.
Except as hereinafter described, generally all options will terminate
upon the expiration of the stated option period. If an optionee ceases to be a
director during such option period for any reason other than death, disability
or retirement as a director as a result of the Corporation's or a subsidiary's
mandatory retirement age policy, such option will terminate immediately, unless
the Committee, in its sole discretion, allows such person to exercise the option
following such termination during a period not to exceed the expiration of the
stated option period. If an optionee ceases to be a director during such option
period by reason of death or disability, such option will terminate one year
following the date of death or disability.
Furthermore, upon the dissolution or liquidation of the Corporation,
all options granted under the Director Plan shall terminate. Upon the adoption
of a plan of such dissolution or
20
<PAGE>
liquidation, however, all outstanding options generally shall become
immediately exercisable in full, regardless of their terms.
Manner of Exercise of Options
Options may be exercised in whole or in part from time to time. The
price due upon exercise of an option by a Non-Employee Director may be paid in
(i) cash or by check, (ii) by delivery of shares of Common Stock valued at their
then current fair market value, (iii) if authorized by the Committee at the time
of exercise or if otherwise specified in the applicable stock option agreement,
by promissory note payable to the Corporation, or (iv) any combination of (i),
(ii) or (iii) thereof. Furthermore, if authorized by the Committee at the time
of exercise or if otherwise specified in the applicable stock option agreement,
an optionee may exercise his or her option as to only a part of the shares
covered thereby and then, in an essentially simultaneous transaction, use the
shares so acquired in payment of the exercise price for additional option
shares.
If at any time the Corporation in its sole discretion determines that
satisfaction of applicable withholding tax or other withholding liabilities is
necessary or desirable in connection with the exercise of a nonstatutory option,
the exercise of such nonstatutory option shall be subject to the payment by such
optionee of the amount necessary to satisfy the Corporation's withholding
obligation as approved by the Committee prior thereto.
Miscellaneous
Options granted under the Director Plan will be nontransferable other
than at death or pursuant to a qualified domestic relations order and generally
will be exercisable during an optionee's lifetime only by such optionee.
The Director Plan provides that upon certain mergers or other
reorganizations to which the Corporation or any subsidiary is a party that
involve an exchange or conversion or other adjustment of the Common Stock, each
optionee shall be entitled upon the exercise of his or her options to receive
the number and class of securities or other property to which such optionee
would have been entitled in the merger or reorganization if such optionee had
exercised such option prior to such merger or reorganization.
The Director Plan also provides that, upon the occurrence of certain
events relating to a change in control of the Corporation, outstanding options
will become immediately vested and exercisable in full (subject to any
appropriate adjustments in the number of shares subject to the option and the
option price) and generally remain exercisable through the terms of the
respective options, subject to earlier termination as described herein. Such
events include the adoption of a plan of merger or similar transaction involving
the Corporation in which the Corporation's shareholders would receive less than
50% of the voting stock of the surviving corporation, the approval by the Board
of Directors of the sale or transfer of a majority of the stock of a significant
subsidiary or substantially all the assets of the Corporation or a significant
subsidiary, certain acquisitions of more than 20% of the Corporation's stock by
any person or group other than a person or group who beneficially owned, as of
the date of approval of the Director Plan by the
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Board of Directors, more than 5% of the Common Stock unless prior approval
of the Board of Directors is received, certain instances in which the
composition of the Corporation's Board of Directors changes by more than 50%
during a two-year period, or any other transaction that would constitute a
change in control generally required to be reported by the Corporation in its
proxy statement or the acquisition of control of the Corporation under the
applicable federal banking laws.
The Director Plan generally is subject to suspension, termination,
modification or amendment at any time by the Board of Directors without
shareholder approval, as deemed in the best interest of the Corporation. To the
extent necessary to comply with Rule 16b-3 or the rules of the NASDAQ National
Market or any other national securities exchange on which the Common Stock may
be listed, however, the Board of Directors shall submit any such amendment or
modification to the shareholders for approval.
Unless earlier terminated, the Director Plan shall terminate on the
date as of which there are no longer any options available to be granted
thereunder.
Federal Income Tax Consequences
The grant of nonstatutory options under the Director Plan will not
result in any income being taxed to the optionee at the time of the grant or in
any tax deduction for the Corporation at such time. At the time a nonstatutory
option is exercised, the optionee will be treated as having received ordinary
income equal to the excess of the fair market value of the shares of Common
Stock acquired as of the date of exercise over the price paid for such shares.
At that time, the Corporation will be allowed a deduction for federal income tax
purposes equal to the amount of ordinary income attributable to the optionee
upon exercise. The optionee's holding period for the shares of Common Stock
acquired will commence as of the date of exercise, and the tax basis of the
shares will be the greater of their fair market value at the time of exercise or
the exercise price.
Recent Grants
Subject to shareholder approval of the Director Plan, the Compensation
Committee has granted an option to purchase 500 shares of Common Stock to each
of the following Non-Employee Directors of the Corporation (including those
nominees for election as director at the Annual Meeting): Messrs. William R.
Black, Grady S. Carpenter, Michael R. Coltrane, J. Roy Davis, Jr., James B.
Fincher, Frank H. Hawfield, Jr., J. Knox Hillman, Jr., Branson C. Jones, Robert
F. Lowrance, Jerry E. McGee, Hugh H. Morrison, T. David Propst, Robert L. Wall
and James B. Widenhouse and Ms. Jane B. Brown. The Compensation Committee has
also granted an option to purchase 500 shares of Common Stock to each of the
Non-Employee Directors of FCNB and Union who are not also directors of the
Corporation, subject to shareholder approval. See "Election of
Directors--Compensation of Directors" for additional information regarding the
terms of the options granted to such Non-Employee Directors. On February 19,
1997, the closing price per share of the Common Stock as reported on the NASDAQ
National Market was $ 21.25.
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APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Corporation has adopted the First Charter
Corporation 1998 Employee Stock Purchase Plan (the "1998 ESPP"), which is
subject to the approval of the shareholders of the Corporation. The text of the
1998 ESPP is set forth in its entirety as Exhibit B to this Proxy Statement, and
the following summary is qualified by reference thereto. The proposal for
approval of the 1998 ESPP will require the affirmative vote of the holders of a
majority of the votes cast with respect to this matter at the Annual Meeting.
Accordingly, neither abstentions nor broker non-votes, if any, with respect to
this matter will have the effect of a negative vote with respect to this matter.
The Board of Directors recommend the shareholders vote FOR the adoption of the
1998 ESPP.
The 1998 ESPP is designed to give all employees an increased personal
interest in the success and progress of the Corporation by encouraging them to
become owners or increase their ownership of Common Stock of the Corporation. It
is substantially similar in operation and effect to the 1996 ESPP currently in
effect which expires on January 2, 1998. The maximum number of shares of the
Corporation's Common Stock subject to the 1998 ESPP will be 150,000 shares,
subject to adjustment generally to protect against dilution in the event of
changes in the capitalization of the Corporation.
The 1998 ESPP provides for the granting of options to all eligible
employees of the Corporation and its subsidiaries, both officers and
non-officers, entitling them to purchase shares of the Common Stock of the
Corporation at a discounted price. All employees of the Corporation, FCNB and
Union will be eligible to participate in the 1998 ESPP, except part-time and
temporary employees and employees owning 5% or more of the total voting power or
value of all classes of stock of the Corporation. Under the 1998 ESPP, only
those directors and nominees for election as director who also are full-time
employees of the Corporation, FCNB or Union will be eligible to receive options.
Currently, there are approximately 251 employees of the Corporation, FCNB and
Union who will be eligible to participate in the 1998 ESPP. If the Board of
Directors determines to grant any options pursuant to the 1998 ESPP, each
eligible employee will receive an option to purchase up to the largest whole
number of shares obtained by dividing the employee's annual compensation (as
defined in the 1998 ESPP) at the date the option is granted by $100. Generally,
however, no option may allow an employee to purchase shares having an aggregate
fair market value (determined at the date of grant) in excess of $25,000 in any
calendar year.
Generally, an option granted under the 1998 ESPP will terminate 24
months from the date the option is granted, and the option generally is
exercisable only at the end of the 24-month period. However, the 1998 ESPP
provides that if an employee's employment terminates for any reason other than
retirement with the consent of the Corporation (as defined in the 1998 ESPP),
medical disability (as defined in the 1998 ESPP) or death, then such employee's
options terminate immediately. If an employee retires with the consent of the
Corporation, such options may be exercised within 30 days of his or her date of
retirement, and if an employee becomes medically disabled or dies, such employee
(or his or her estate, personal representative or beneficiary) may exercise the
option within one year of death or disability, but in either case not later than
five days prior to the expiration date of the option.
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The 1998 ESPP provides that options will become immediately exercisable
in full regardless of their terms, upon the occurrence of certain events
involving a change in control of the Corporation. Such events include the
adoption of a plan of merger or similar transaction involving the Corporation in
which the Corporation's shareholders would receive less than 50% of the voting
stock of the surviving corporation, the approval by the Board of Directors of
the sale or transfer of a majority of the stock of a significant subsidiary or
substantially all the assets of the Corporation or a significant subsidiary,
certain acquisitions of more than 20% of the Corporation's stock by any person
or group other than a person or group who beneficially owned, as of the date the
Board of Directors grants options under the 1998 ESPP, more than 5% of the
Common Stock unless prior approval of the Board of Directors is received,
certain instances in which the composition of the Corporation's Board of
Directors changes by more than 50% during a two-year period, or any other
transaction that would constitute a change in control generally required to be
reported by the Corporation in its proxy statement or the acquisition of control
of the Corporation under the applicable federal banking laws. In addition, upon
the approval of the dissolution or liquidation of the Corporation, all options
shall become exercisable in full. Upon the occurrence of the dissolution or
liquidation of the Corporation, or upon the consummation of a merger or
consolidation in which the Corporation's shareholders do not receive at least
50% of the voting stock of the resulting corporation, all options not exercised
shall terminate.
The purchase price of shares covered by an option will be 90% of the
fair market value of the stock on the date options are granted. The fair market
value generally will be determined by reference to the mean between the high and
low sales prices as reported on the NASDAQ National Market. Each employee who
elects to participate shall sign an election form authorizing monthly payroll
deductions for a specific number of shares. Such payroll deductions will be held
by the Corporation and credited with simple interest based on an annual interest
rate equal to First Charter National Bank's Prime Rate in effect from time to
time, based on the balance for such employee's account. The balance in such
account at the end of the option period will be used to purchase shares under
the 1998 ESPP for the benefit of that employee. If such employee terminates the
option without exercising it, however, the balance in the account shall be paid
to the employee. An employee may elect to discontinue participation and withdraw
funds at any time. Thereafter, such employee shall be able to participate in the
Corporation's stock purchase program only if and when a new plan is offered.
Options will not be transferable except by will or by the laws of descent and
distribution, and will be exercisable, during the employee's lifetime, only by
such employee.
The Board of Directors shall set a date for grant of the options at its
discretion. Accordingly, adoption of the plan by the shareholders will not
result in any grant of options unless and until additional action is taken by
the Board of Directors. The 1998 ESPP will be administered by the Compensation
Committee of the Board of Directors of the Corporation. The Compensation
Committee will be able to prescribe rules and regulations for such
administration and to decide questions with respect to the interpretation or
application of the 1998 ESPP. In addition, the Compensation Committee will have
the authority to alter, amend, suspend or discontinue the 1998 ESPP at any time
without notice, except that no such action may adversely affect the rights of
any employee who has been granted an option. In addition, the Compensation
Committee may not increase the number of shares of Common Stock subject to
option under the 1998 ESPP, change the formula by which the price at which
options may be exercised is
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determined or increase the number of shares that an employee who is granted an
option may purchase.
The options under the 1998 ESPP will be statutory stock options of the
kind recognized by Section 423 of the Code. For federal income tax purposes,
neither the grant nor the exercise of the options will be a taxable event to the
participants. The disposition, however, of the shares acquired through the
exercise of the options will be a taxable event. The tax consequences of such a
disposition will depend upon the respective holding periods of the options and
the option shares.
If a disposition of the shares is made after the expiration of two
years from the date the option was granted and one year after the date the
shares were acquired upon exercise of the options, a portion of the gain, if
any, will be taxed as ordinary income, which portion will be determined by
subtracting the option price from the lesser of (a) the fair market value of the
shares on the date the option was granted or (b) the fair market value of the
shares on the disposition date. The remaining portion of the gain, if any, will
be taxed as capital gain for federal income tax purposes. When the holding
periods described above are met, the Corporation is not allowed to deduct any
amount for federal income tax purposes with respect to the issuance or exercise
of the options or the sale of the underlying shares.
If a disposition of the shares is made within two years of the date the
option was granted or one year of the date the shares were acquired upon
exercise of the options, the amount of the gain, if any, which will be taxed as
ordinary income will be determined by subtracting the option price from the fair
market value of the shares on the date on which the option was exercised. The
amount treated as ordinary income would be added to the employee's basis in
calculating whether any capital gain or loss is to be recognized on the
disposition. In the year of such early disposition, in general the Corporation
will be entitled to a business deduction for federal income tax purposes in an
amount equal to the ordinary income.
As described above, upon certain events involving a change in control
of the Corporation, all options will immediately become exercisable. In general,
if the total amount of payments in the nature of compensation that are
contingent upon a "change in control" of the Corporation (as defined in Section
280G of the Code) equals or exceeds three times a recipient's "base amount"
(typically such recipient's average annual compensation for the five years
preceding the change in control), then, subject to certain exceptions, the
payments may be treated as parachute payments under Section 280G of the Code. In
such event, a portion of the payments would be nondeductible to the Corporation
and the recipient would be subject to a 20% excise tax on such portion of the
payments under Section 4999 of the Code.
The 1998 ESPP is not qualified under the provisions of Section 401(a)
of the Code and is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
The closing sales price of the Common Stock as reported on the NASDAQ
National Market on February 19, 1997 was $21.25. On the basis of current
salaries, an aggregate of 6,250 shares would be subject to options to be issued
to the executive officers of the Corporation as
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follows (subject to any limitations set forth in the Plan regarding
aggregate market value of shares subject to option under the 1998 ESPP or
otherwise):
Lawrence M. Kimbrough 1,550
Robert O. Bratton 1,150
Robert G. Fox, Jr. 1,150
H. Clark Goodwin 1,250
Edward B. McConnell 1,150
All current executive
officers as a group 6,250
All employees, including
non-executive officers 67,482
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
public accountants, as its auditors for the fiscal year 1997. KPMG Peat Marwick
LLP has acted in this capacity since 1983. The Corporation has been advised by
KPMG Peat Marwick LLP that neither the firm nor any of its members or associates
has any direct financial interest or material indirect financial interest in the
Corporation or its subsidiaries other than as its auditors. Although the
selection and appointment of the independent auditors are not required to be
submitted to a vote of the shareholders, the Board of Directors deems it
advisable to obtain the shareholders' ratification of this appointment. The
Board of Directors understands that a representative from KPMG Peat Marwick LLP
will be present at the shareholders' meeting, will have the opportunity to make
a statement if he desires to do so and will be available to respond to
appropriate questions. The Board of Directors recommends a vote FOR ratification
of the appointment of this firm as independent auditors of the Corporation for
the 1997 fiscal year. Should the shareholders not ratify the appointment of KPMG
Peat Marwick LLP, the Board of Directors will consider a change in auditors for
the next fiscal year.
ANNUAL REPORT
The 1996 Annual Report of the Corporation, including financial
statements, accompanies this Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Exchange Act, directors and officers of
the Corporation are required to file reports with the Securities and Exchange
Commission indicating their holdings of and transactions in the Common Stock. To
the Corporation's knowledge, based solely on its review of the copies of such
reports furnished to the Corporation and written representations that no other
reports were required, insiders of the Corporation complied with all filing
requirements on a timely basis.
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SHAREHOLDER PROPOSALS FOR CONSIDERATION
AT THE 1998 ANNUAL MEETING
Written shareholder proposals for consideration for the 1998 Annual
Meeting of Shareholders should be addressed to the Corporate Secretary, Post
Office Box 228, Concord, North Carolina 28026-0228, and received by the
Corporation no later than November 5, 1997.
FORM 10-K
COPIES OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING EXHIBITS, ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO FIRST
CHARTER CORPORATION, POST OFFICE BOX 228, CONCORD, NORTH CAROLINA 28026-0228,
ATTENTION: ROBERT O. BRATTON, CHIEF FINANCIAL OFFICER. COPIES OF EXHIBITS ARE
AVAILABLE UPON PAYMENT OF $25.00 TO COVER THE COSTS OF REPRODUCTION.
OTHER BUSINESS
The Board of Directors knows of no other matter to come before the
meeting. However, if any other matter requiring a vote of the shareholders
should arise, it is the intention of the persons named in the enclosed proxy to
vote such proxy in accordance with their best judgment.
By Order of the Board of Directors,
James W. Townsend, Jr.
Secretary
DATED: March 5, 1997
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EXHIBIT A
FIRST CHARTER CORPORATION
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
First Charter Corporation, a North Carolina corporation (the
"Corporation"), hereby establishes this Stock Option Plan for Non-Employee
Directors for the benefit of the Corporation and its Subsidiaries (hereinafter
defined), employees, shareholders and directors.
Article I - General Provisions
Section 1.1 Purpose. This First Charter Corporation Stock Option Plan
for Non-Employee Directors (the "Plan") is intended to secure for First Charter
Corporation and its shareholders the benefits arising from ownership of the
Corporation's Common Stock by the non-employee members of the Boards of
Directors of the Corporation and its Subsidiaries. The Plan is designed to help
attract and retain superior individuals for service on the Board of Directors of
the Corporation and its Subsidiaries and to provide each such non-employee
director with an additional incentive to contribute to the success of the
Corporation. It is also intended that the Plan shall satisfy the requirements of
Rule 16b-3 under the Exchange Act (hereinafter defined).
Section 1.2 Definitions.
(a) "Board of Directors" means the Board of Directors of the
Corporation or of a Subsidiary, unless otherwise specified.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Committee" shall have the meaning set forth in Section 2.1
hereof.
(d) "Common Stock" means the common stock, par value $5.00 per
share, of the Corporation to be issued pursuant to the Plan.
(e) "Corporation" means First Charter Corporation.
(f) "Director" shall have the meaning set forth in Section 3.2
hereof.
(g) "Disability" means the inability of an Optionee to engage in
his or her profession by reason of any medically determinable
physical or mental impairment which can be expected to result
in death or which is to last or can be expected to last for a
continuous period of not less than twelve months, as
determined by the Committee in its sole discretion upon
certification thereof by a qualified physician selected by the
Committee after such physician examines the Optionee.
(h) "Effective Date" means February 19, 1997.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(j) "Fair Market Value" means the closing sales price of a share
of Common Stock if the Common Stock is listed on a national
securities exchange or reported on the NASDAQ National Market;
or the average of the closing bid and asked prices for a share
of Common Stock in the over-the-counter market as reported by
the NASDAQ National Market or the NASDAQ Stock Market if the
Common Stock is not listed on a national securities exchange
or the NASDAQ National Market or if there is no closing sales
price reported on the NASDAQ National Market; or the fair
value of a share of Common Stock determined in good faith by
the Board of Directors if the Common Stock is not listed on a
national securities exchange or reported on the NASDAQ
National Market or the NASDAQ Stock Market or the
over-the-counter market.
(k) "Grant Date" means the date of the Committee's authorization
of such grant as indicated in the Optionee's Stock Option
Agreement.
(l) "Option" means the right granted by the Corporation to an
Optionee to purchase shares of Common Stock pursuant to the
Plan. All Options granted hereunder shall be nonstatutory
options and will not qualify for special income tax treatment
under Code Section 422.
(m) "Optionee" means a Director to whom an Option is granted
hereunder.
(n) "Option Period" shall have the meaning set forth in Section
3.4(a) hereof.
(o) "Option Price" shall have the meaning set forth in Section 3.3
hereof.
(p) "Plan" means the First Charter Corporation Stock Option Plan
for Non-Employee Directors.
(q) "Stock Option Agreement" means a formal written agreement
between the Corporation and an Optionee in such form and
containing such provisions not inconsistent with the
provisions of the Plan as the Committee shall from time to
time approve setting forth the terms and conditions of the
grant of an Option to purchase shares of Common Stock pursuant
to the Plan.
(r) "Subsidiary" means a subsidiary corporation of the Corporation
as that term is defined in Section 424(f) of the Code.
"Subsidiaries" means more than one Subsidiary.
(s) The term "vest," or any derivation thereof, as used in this
Plan, shall mean the time or times at which an Option or a
portion thereof shall become exercisable. The use of the term
"vest" or any derivation thereof shall not create on the part
of any Optionee any absolute right to an Option or absolute
right to exercise such Option, which right shall at all times
be determined in the discretion of the Committee,
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subject to the express provisions of the Plan and the
applicable Stock Option Agreement.
Article II - Administration
Section 2.1 Appointment of Committee. The Board of Directors of the
Corporation shall appoint a committee for the administration of the Plan, which
generally shall be the Compensation Committee of the Board of Directors and
shall consist of not less than three directors of the Corporation. The Committee
shall at all times be composed solely of "non-employee directors" within the
meaning of Rule 16b-3 under the Exchange Act, in effect as of the date hereof or
as hereafter amended, to the extent that the Board of Directors of the
Corporation deems necessary or as may be required from time to time under
Section 16 of the Exchange Act. No member of the Committee or member of the
Board of Directors of the Corporation shall be liable for any action or
determination made in good faith with respect to the Plan or to any Option
granted thereunder.
Section 2.2 Authority of Committee. Subject to the other provisions of
the Plan and with a view to effecting its purpose, the Committee shall have sole
authority in its absolute discretion: (i) to construe and interpret the Plan;
(ii) to define the terms used herein; (iii) to prescribe, amend and rescind
rules and regulations relating to the Plan; (iv) to determine the time or times
when Options shall be granted; (v) to determine the Option Periods; (vi) to
determine the number of shares to be subject to each Option; (vii) to determine
the Directors to whom Options shall be granted; (viii) to determine whether any
Options granted shall become vested over a period of time and, if so, when such
Options shall become fully vested; (ix) to amend or modify the terms of any
Options granted hereunder, but only with the consent of the Optionee; (x) to
determine any other vesting, acceleration or termination provisions applicable
to any such options in addition to those set forth in the Plan or a Stock Option
Agreement; and (xi) to make any other determinations necessary or advisable for
the administration of the Plan and to do everything necessary or appropriate to
administer the Plan. All decisions, determinations, and interpretations made by
the Committee shall be binding and conclusive for all purposes upon all persons
including, without limitation, the Corporation, its Subsidiaries, the Committee
and each of the members thereof, the directors, officers and employees of the
Corporation and of the Subsidiaries, the Optionees, and their respective
successors in interest.
Section 2.3 Committee Administration. The members of the Committee
shall serve at the pleasure of the Board of Directors of the Corporation, which
may fill vacancies, however caused, in the Committee, all in accordance with the
Bylaws of the Corporation. The Committee shall select one of its members as its
chairman and shall hold its meetings at such times and places as it shall deem
advisable. A majority of its members shall constitute a quorum, and all actions
of the Committee shall be taken by a majority of its members. Any action of the
Committee evidenced by a written instrument, signed by a majority of its
members, shall be fully as effective as if it had been taken by a vote of a
majority of its members at a meeting duly called and held. The Committee shall
(i) appoint a secretary, who may be but need not be a member of the Committee,
(ii) keep minutes of its meetings, and (iii) make such rules and regulations for
the
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conduct of its business as it shall deem advisable, as set forth in or
pursuant to the Bylaws of the Corporation.
Section 2.4 Privileges of Stock Ownership. No person entitled to
exercise any Option granted under the Plan shall have any of the rights or
privileges of a shareholder of the Corporation in respect of any shares of stock
issuable upon exercise of such Option until certificates representing such
shares shall have been issued and delivered. No shares shall be required to be
issued and delivered upon exercise of any Option under the Plan unless and until
all of the requirements of law and of all regulatory agencies having
jurisdiction over the issuance and delivery of the securities shall have been
fully complied with. No adjustment shall be made for dividends or any other
distributions for which the record date is prior to the date on which such stock
certificate is issued.
Section 2.5 Reservation of Shares of Common Stock. The Corporation,
during the term of this Plan, will at all times reserve and keep available such
number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Plan. In addition, the Corporation will from time to time,
as is necessary to accomplish the purposes of this Plan, seek to obtain from any
regulatory agency having jurisdiction any requisite authority in order to issue
and sell shares of Common Stock hereunder. The inability of the Corporation to
obtain from any regulatory agency having jurisdiction the authority deemed by
the Corporation's counsel to be necessary for the lawful issuance and sale of
any shares of its stock hereunder shall relieve the Corporation of any liability
in respect of the non-issuance or sale of the stock as to which the requisite
authority shall not have been obtained.
Section 2.6 Tax Withholding. The exercise of any Option granted under
the Plan is subject to the condition that if at any time the Corporation shall
determine, in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as a condition of, or in any connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in such event, the exercise of such
Option shall not be effective unless such withholding tax or other withholding
liabilities shall have been satisfied in a manner acceptable to the Corporation.
Any such exercise and the satisfaction of such withholding liabilities shall be
approved by the Committee prior thereto.
Article III - Options
Section 3.1 Stock Subject to Option. Subject to adjustment as provided
in Section 3.9 hereof, shares to be issued upon the exercise of Options shall be
authorized but unissued shares of Common Stock, and the aggregate number of
shares of Common Stock which may be issued upon exercise of all Options under
the Plan shall not exceed one hundred and fifty thousand (150,000). If any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the shares remaining subject to such Option, but
not purchased, shall again be available for grants of Options under the Plan.
Section 3.2 Eligibility for and Grant of Options. In the discretion of
the Committee, Options may be granted to any individual member of the Board of
Directors who is not an officer
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or full-time employee of the Corporation or any Subsidiary (each, a "Director").
In determining those Directors to whom Options may be granted hereunder, the
Committee may take into account the historical performance of the Corporation,
as well as the anticipated future performance, and such other factors as
it shall deem relevant in connection with accomplishing the purposes
of the Plan. A Director who has been granted an Option or Options may be
granted additional Options if the Committee shall so determine. Following
a grant of an Option, the Corporation shall tender to each Optionee for
signature a Stock Option Agreement, which Stock Option Agreement shall
comply with and be subject to the terms and conditions contained herein.
Section 3.3 Exercise Price. The exercise price per share of Common
Stock covered by any Option (the "Option Price") shall be the Fair Market Value
per share on the Grant Date.
Section 3.4 Termination of Option. Except as otherwise provided in
Sections 3.9 and 4.2 hereof, an Option shall terminate and no longer be
exercisable and be of no force or effect upon the expiration of the term of
years from the Grant Date (the "Option Period") as indicated in such Optionee's
Stock Option Agreement. Notwithstanding the foregoing, however, if (i) such
Optionee ceases to be a director during the Option Period for any reason other
than death, disability or retirement as a director as a result of the
Corporation's or a Subsidiary's mandatory retirement age policy, such Option
shall terminate and no longer be exercisable immediately upon such termination
as director, unless the Committee, in its sole and complete discretion, permits
such Optionee to exercise all or any part of such Option by a date not later
than the expiration of the stated Option Period; or (ii) if the Optionee ceases
to be a director during the Option Period by reason of the Optionee's death or
Disability, such option shall terminate and no longer be exercisable upon the
expiration of one (1) year after such date of death or Disability, during which
such one (1) year period the Option may be exercised (to the extent otherwise
exercisable) by the Optionee (in the case of Disability) or the person to whom
the Optionee's rights hereunder shall have passed by will or by the laws of
descent and distribution.
Section 3.5 Vesting. All Options granted hereunder that are not
otherwise vested shall become fully vested upon the first to occur of (i) the
last day of any vesting schedule provided in the respective Stock Option
Agreement, (ii) the occurrence of any event described in Section 3.9(c) hereof,
(iii) the death or Disability of the Optionee, and (iv) the date the Optionee
retires from the Board of Directors as a result of the Corporation's or a
Subsidiary's mandatory retirement age policy. The exercise of any such Options
shall be subject to the provisions of this Plan, the applicable Stock Option
Agreement and the authorization of the Committee.
Section 3.6 Exercise of Option. Options granted hereunder may only be
exercised following shareholder approval of the Plan. At any time following
shareholder approval of the Plan and before termination of the Option as
provided in Section 3.4, the vested portion of an Option may be exercised by
written notice to the Corporation at its offices at Post Office Box 228,
Concord, North Carolina 28026-0228, Attention: Robert O. Bratton, or such other
address to which the office may be relocated, which notice shall (i) be signed
by the Optionee or by the Optionee's successors, as provided in Section 3.4,
(ii) state the number of shares with respect to which the Option is being
exercised, and (iii) contain such other representations as the Committee may
require. Payment in full of the Option Price of purchased shares shall be made
at the time of
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the exercise of the Option (i) in cash or by check payable to the order of the
Corporation, (ii) by delivery of shares of Common Stock of the Corporation
already owned by, and in the possession of, the Optionee, (iii) if authorized
by the Committee or if specified in the Stock Option Agreement representing
the Option being exercised, by a promissory note made by the Optionee in
favor of the Corporation, upon the terms and conditions determined by the
Committee and secured by the shares issuable upon exercise, complying with
applicable law (including, without limitation, state corporate and federal
margin requirements), (iv) or any combination thereof. Furthermore, if
authorized by the Committee at the time of exercise or if specified in the Stock
Option Agreement representing the Option being exercised, an Optionee may
exercise his or her option as to only a part of the Shares covered thereby, and
then in an essentially simultaneous transaction use the shares so acquired in
payment of the Option Price for additional Option shares. Shares of Common Stock
previously held by the Optionee and surrendered in accordance with rules and
regulations adopted by the Committee for the purpose of making full or partial
payment of the Option Price shall be valued for such purpose at the Fair Market
Value thereof on the date the Option is exercised. As soon as practicable after
said notice and the Option Price have been received by the Corporation, the
Corporation shall deliver to the Optionee a stock certificate registered in the
Optionee's name representing the Option shares.
Section 3.7 Partial Exercises of Options. Subject to any vesting
schedule that may be provided in the applicable Stock Option Agreement, Options
granted hereunder shall be exercisable in whole, or in part from time to time,
during the Option Period. Any exercise of an Option for less than the total
number of shares of Common Stock identified in the Stock Option Agreement shall
be deemed to be an exercise in part and such Option may again be exercised for
the remaining number of shares of Common Stock subject thereto in accordance
with the terms of this Plan at such time or times determined by the Optionee,
provided that at each such time such Option is still exercisable under the terms
of the applicable Stock Option Agreement and the Plan.
Section 3.8 Status as a Director. Nothing contained herein or in any
Option granted hereunder or in any Stock Option Agreement issued hereunder shall
confer upon any Optionee any right to be continued or re-elected as a director
of the Corporation or a Subsidiary, as the case may be, which removal of or
election of directors shall be governed in all cases by the respective Bylaws of
the Corporation and its Subsidiaries and by applicable law.
Section 3.9 Adjustments Upon Changes in Capitalization; Continuation of
Exercise Rights.
(a) The total amount of shares with respect to which Options may be
granted hereunder and Option rights (both as to the number of shares subject to
Option and the Option Price(s) thereof) shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Common Stock
resulting from payment of a stock dividend on the Common Stock, a subdivision or
combination of shares of the Common Stock or from a reclassification of the
Common Stock, and (in accordance with the provisions contained in the next
following paragraph) in the event of a merger or consolidation.
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(b) After (i) the merger of one or more corporations into the
Corporation or any Subsidiary, (ii) any merger of the Corporation or any
Subsidiary into another corporation, (iii) any consolidation of the Corporation
or any Subsidiary and one or more other corporations, or (iv) any other
corporate reorganization of any form involving the Corporation or any Subsidiary
as a party thereto, which such event involves any exchange, conversion,
adjustment or other modification of the outstanding shares of the Common Stock,
each Optionee at the time of such corporate reorganization shall be entitled to
receive, at no additional cost, upon any exercise of his Option and in lieu of
the number of shares as to which such Option shall then be so exercised, the
number and class of shares of stock or other securities or such other property
to which such Optionee would have been entitled pursuant to the terms of the
agreement of merger or reorganization if at the time of such merger or
reorganization such Optionee had been a holder of record of a number of shares
of Common Stock equal to the number of shares with respect to which such Option
shall then be so exercised. Comparable rights shall accrue to each Optionee in
the event of successive mergers or consolidations of the character described
above.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an Option.
(c) In the event of (i) the adoption of a plan of merger,
consolidation, share exchange or similar transaction of the Corporation with any
other corporation or association as a result of which the holders of the voting
capital stock of the Corporation as a group would receive less than 50% of the
voting capital stock of the surviving or resulting corporation, (ii) the
approval by the Board of Directors of the Corporation of an agreement providing
for the sale or transfer (other than as security for obligations of the
Corporation) by the Corporation of the majority of the stock of a significant
Subsidiary of the Corporation or substantially all of the assets of the
Corporation or of a significant Subsidiary of the Corporation, (iii) the
acquisition of more than 20% of the Corporation's voting capital stock by any
person within the meaning of Section 13(d)(3) of the Exchange Act, other than a
person, or group including a person, who beneficially owned, as of the Effective
Date hereof, more than five percent of the Corporation's securities, in the
absence of a prior expression of approval by the Board of Directors of the
Corporation, (iv) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by the Corporation's
shareholders, of each new director was approved by the vote of at least
two-thirds of the directors of the Corporation then still in office who were
directors at the beginning of the period; or (v) any other change in control of
the Corporation of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act or the
acquisition of control, within the meaning of Section 2(a)(2) of the Bank
Holding Company Act of 1956, as amended, or Section 602 of the Change in Bank
Control Act of 1978, of the Corporation by any person, company or other entity,
then any Option granted hereunder shall immediately become exercisable in full,
subject to any appropriate adjustments in the number of shares subject to such
Option and the Option Price(s) thereof, and shall remain exercisable for the
remainder of the respective Option Period, subject to all of the terms hereof
and the Stock Option Agreement with respect thereto not inconsistent with this
paragraph.
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(d) Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Corporation each Option granted hereunder
shall terminate; provided, however, that following the adoption of a plan of
dissolution or liquidation, and in any event prior to such dissolution or
liquidation (and as provided above regarding certain mergers and
consolidations), each Option granted hereunder shall remain exercisable in full,
subject to all of the terms hereof and of the Stock Option Agreement with
respect thereto not inconsistent with this paragraph.
(e) The grant of an Option pursuant to this Plan shall not affect in
any way the right or power of the Corporation or any of its Subsidiaries to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure, or to merge or consolidate, or to dissolve, liquidate or
sell, or transfer all or part of its business or assets.
Section 3.10 Non-Transferability of Options. No Option granted
hereunder shall be transferable by the Optionee other than by will, or, if
Optionee dies intestate, by the laws of descent and distribution of the state of
Optionee's domicile at the time of death or except pursuant to a qualified
domestic relations order. Except as provided in Section 3.4 hereof, all Options
granted hereunder shall be exercisable only by the Optionee during the
Optionee's lifetime.
Article IV - Miscellaneous Provisions
Section 4.1 Amendment and Termination. This Plan may be amended or
terminated by the Board of Directors of the Corporation without shareholder
approval as deemed in the best interests of the Corporation; provided, however,
that the Board of Directors of the Corporation shall submit any amendments to
the shareholders for approval to the extent necessary to maintain compliance
with the requirements of Rule 16b-3 of the Exchange Act, as it may be amended
from time to time, or the NASDAQ National Market or the NASDAQ Stock Market or
any other national securities exchange on which the Common Stock may be listed.
Unless earlier terminated, the Plan shall terminate on the date as of which
there are no longer any Options available to be granted under the Plan;
provided, however, that subject to the provisions set forth above, prior to such
date the Board of Directors can amend the Plan to provide for more shares to be
subject to options hereunder.
Section 4.2 Shareholder Approval. This Plan is subject to approval of
the shareholders of the Corporation within twelve (12) months from the Effective
Date. Notwithstanding any other provision hereof, Options may be granted
hereunder prior to obtaining shareholder approval, but no Option granted
hereunder may be exercised prior to the approval hereof by the shareholders of
the Corporation. In the event the shareholders of the Corporation do not approve
this Plan within twelve (12) months from the Effective Date, all Options granted
hereunder shall be void.
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Section 4.3 Gender and Number. Words used herein in the masculine
gender shall be read in the feminine or neuter wherever the context so requires,
and the plural shall include the singular.
ATTEST: FIRST CHARTER CORPORATION
/s/ James W. Townsend, Jr. By: /s/ Lawrence M. Kimbrough
Secretary President and Chief Executive
Officer
CORPORATE SEAL
Date: February 19, 1997
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EXHIBIT B
FIRST CHARTER CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I. Purposes:
This First Charter Corporation 1998 Employee Stock Purchase Plan
(hereinafter called the "Plan") is intended to be an employment incentive and to
encourage stock ownership by all eligible employees, including officers, of
First Charter Corporation (hereinafter called the "Corporation") and its
subsidiary corporations (the "Subsidiaries"), as that term is defined in Section
424(f) of the Internal Revenue Code of 1986, as now in force or hereafter
amended (the "Code"), in order to increase their proprietary interest in the
Corporation's success and to encourage them to remain in the employ of the
Corporation or a Subsidiary. It is further intended that options issued pursuant
to this Plan (hereinafter called "Options") shall constitute options issued
pursuant to an "employee stock purchase plan" within the meaning of Section 423
of the Code and that transactions under the Plan shall satisfy the requirements
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
ARTICLE II. Administration:
The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Corporation (the "Committee"), which shall consist of
not less than three directors. The Committee shall at all times be composed
solely of "non-employee directors" within the meaning of Rule 16b-3 of the
Exchange Act, in effect as of the date hereof or as hereafter amended, to the
extent that the Board of Directors deems necessary or as may be required from
time to time under Section 16 of the Exchange Act. Subject to the provisions of
the Plan, the Committee may, from time to time, prescribe rules and regulations
for the administration of the Plan and may decide questions which may arise with
respect to the interpretation or application of said Plan. No member of the
Board of Directors who is not otherwise employed by the Corporation or a
Subsidiary shall be eligible to receive an Option.
ARTICLE III. Eligibility:
Each employee of the Corporation and of its Subsidiaries (including
officers) shall be granted as of a date to be determined by the Board of
Directors (the "Option Date"), but in no instance more than twelve (12) months
after the shareholders of the Corporation have approved the Plan (which
shareholder approval shall be considered to be the Plan's adoption within the
meaning of Section 423 of the Code), an Option under this Plan to purchase the
Corporation's authorized but unissued $5.00 par value Common Stock (herein
sometimes called "Common Stock"), except that there shall be excluded: (i)
employees whose customary employment is under twenty (20) hours per week; (ii)
employees whose customary employment is for not more than five (5) months in any
calendar year; and (iii) any employee who, if having received an Option
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hereunder, would own, immediately after the Option was granted, stock possessing
five percent (5%) or more of the total combined voting power or value of any
classes of stock of the Corporation, or of any of its Subsidiaries. For purposes
of determining stock ownership of an employee under (iii) hereof, the rules of
Section 424(d) of the Code and Section 1.423-2(d) of the Treasury Regulations
thereunder shall apply, and Common Stock which the employee may purchase under
any outstanding options shall be treated as owned by the employee.
ARTICLE IV. Stock:
The stock subject to the Options to be issued hereunder shall be the
Corporation's Common Stock. Subject to the provisions of subsection (i) of
Article V hereof, the maximum number of such shares to be issued upon the
exercise of the Options granted hereunder shall be an aggregate of 150,000
shares.
An eligible employee (hereinafter called "Optionee") shall receive an
option to purchase up to the largest whole number of shares obtained by dividing
Optionee's Annual Compensation (as hereinafter defined) by One Hundred Dollars
($100.00). The term "Annual Compensation" as used herein is defined as regular
fixed basic annual compensation at the rate in effect on the Option Date, and
does not include any bonus, overtime payment, sales commission, contribution to
an employee benefit plan or other similar payment or contribution.
Except as expressly provided otherwise in Article V hereof, payment for
Common Stock purchased under the Option shall be made only by payroll deductions
over the designated Purchase Period (as hereinafter defined).
Notwithstanding the foregoing provisions of this Plan, no Option shall
permit an Optionee to purchase in any single calendar year a number of shares
which, together with all other shares of the Corporation and any Subsidiaries
which such Optionee may be entitled to purchase in such year pursuant to options
issued under any employee stock purchase plan, has an aggregate fair market
value (determined in each case as of the date such options are granted) in
excess of $25,000. This limitation applies only to options granted under
"employee stock purchase plans" as defined by Section 423 of the Code and does
not limit the amount of stock which an Optionee may purchase under any other
stock option or bonus plans then in effect.
ARTICLE V. Terms and Conditions of Options:
Options granted hereunder shall be evidenced by a Notice of the Grant
of an Option to each Optionee, which notice shall: (i) be in such form as the
Board of Directors shall determine; (ii) incorporate, by reference, the terms
and provisions of this Plan; and (iii) be issued to each Optionee on or about
the Option Date.
Subject always to the requirement that, except as otherwise specified
in Article IV hereof, all Optionees shall have the same rights and privileges,
such Options shall be subject to the following terms and conditions:
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(a) Option Price: The price of shares purchased under any Option issued
hereunder (the "Option Price") shall be an amount equal to ninety (90%) percent
of the fair market value of the Common Stock on the Option Date but not less
than the par value of such stock. For so long as shares of the Common Stock of
the Corporation are listed on a national securities exchange or reported on the
NASDAQ National Market, "fair market value" as of a given date shall mean, for
purposes of this Plan, the mean between the high and low sales prices of the
Common Stock on that date, said mean to be based on the sale of a minimum of 100
shares of said stock; or if less than 100 shares of said stock are sold on such
date or if no sales prices are quoted, "fair market value" shall mean the
average of the closing bid and asked prices for such stock in the
over-the-counter market as reported by the NASDAQ National Market or the NASDAQ
Stock Market. If the Common Stock is not listed on a national securities
exchange or reported on the NASDAQ National Market or quoted in the
over-the-counter market, "fair market value" shall be the fair value thereof
determined in good faith by the Board of Directors. In making such
determination, the Board of Directors shall consider the financial condition of
the Corporation and its recent operating results, values of publicly-traded
securities of other financial institutions giving effect to the relative book
values and earnings of such institutions and the lack of liquidity of the
Corporation's shares, and such other factors as the Board in its discretion
deems relevant.
(b) Term of Options: The term of each Option shall extend for a period
of twenty-four (24) months commencing with the Option Date with respect to such
Option, said term being hereinafter called the "Purchase Period."
(c) Purchase Account: Each Optionee shall notify the Corporation, on
such forms as shall be provided by the Corporation, within seven (7) days
following actual receipt by the Optionee of such forms, of the number of shares
which the Optionee wishes to have the right to purchase as of the last day of
the Purchase Period (hereinafter referred to as the "Purchase Date"), which
election may be for either all or any part of the shares subject to the Option
(such shares, so elected, shall be hereinafter called the "Elected Shares").
Although, as more fully provided hereinafter, on the Purchase Date an
Optionee may decline to purchase all or any part of the Optionee's Elected
Shares, such Optionee, in the event the Optionee's Elected Shares are less than
all of the shares subject to the Option, may not purchase more than the
Optionee's Elected Shares on the Purchase Date.
Except as provided in subsection (h) of this Article V, each Optionee
shall authorize the Corporation and its Subsidiaries to withhold from the
Optionee's after tax compensation, beginning as soon as practicable following
the making of the election described above as to Elected Shares and continuing
throughout the duration of the Purchase Period, amounts sufficient to accumulate
over such period (with allowances for interest as provided for herein) the
aggregate Purchase Price of the Optionee's Elected Shares. Such withheld amounts
may be used by the Corporation for general corporate purposes, but the
Corporation shall maintain a record of each Optionee's funds as a "Purchase
Account." Such funds so accumulated within said Purchase Account may be
withdrawn, paid or applied toward the Purchase Price of Elected Shares only
pursuant to the provisions contained in this Plan.
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(d) Interest Payable on the Purchase Account: Except as provided in
Article XI hereof, the Corporation shall credit to Purchase Accounts simple
interest based on the First Charter National Bank Prime Rate in effect from time
to time, computed on a 365-day basis, on the amount deducted from the Optionee's
salary payments and contributed to the Purchase Account annually. Such interest
shall be credited annually on a date determined by the Committee. The Optionee
is responsible for all income taxes associated with the interest credited to the
Optionee's Purchase Account.
(e) Dates on Which Option Shall be Exercised: Except as provided in
subsections (h) and (i) of this Article V, each Option which is exercised shall
be exercised as of the Purchase Date.
(f) Manner of Exercising Option: Except as provided in subsections (h)
and (i) of this Article V, each Optionee shall, on such forms as shall be
provided by the Corporation, at least five (5) business days prior to the
Purchase Date, notify the Corporation of the Optionee's election either to: (i)
exercise the Option to purchase all or any part of the Elected Shares or, in
lieu thereof, (ii) decline to so exercise the Option, which election, in either
event, shall be effective as of said Purchase Date.
In the event the Optionee so exercises the Option, the Optionee shall
tender to the Corporation all funds then on deposit in the Optionee's Purchase
Account, including interest, along with such other amounts as may be necessary
to purchase all or any part of the Optionee's Elected Shares. Any excess of
funds over the required purchase price shall be paid to the Optionee and the
Purchase Account closed.
In the event the Optionee declines to so exercise the Option, all
funds, including interest, then in the Optionee's Purchase Account, shall be
paid to said Optionee and the Purchase Account closed.
Should the Optionee fail to deliver the notification form referred to
in this subsection (f), such failure shall be deemed an election by said
Optionee to decline to exercise the Option.
(g) Termination of Option: An Optionee may at any time on or before the
Purchase Date terminate the Option in its entirety by written notice of such
termination delivered in the manner set forth in Article X hereof. Such
termination shall become effective upon receipt of such notice by the
Corporation. Upon such termination, all funds, including interest credited, then
in the Optionee's Purchase Account shall be paid to the Optionee and the
Optionee's Purchase Account closed, and all rights and privileges of the
Optionee granted pursuant to this Plan and the Option granted hereunder shall be
terminated. Any interest accrued but not credited to the Purchase Account will
be forfeited.
(h) Termination of Employment: In the event that an Optionee's
employment by the Corporation or a Subsidiary is terminated other than by
retirement with the consent of the Corporation, medical disability (determined
in accordance with the Corporation's long term disability plan then in effect)
or by death, all rights and privileges of Optionee granted pursuant to the Plan
and of the Option granted hereunder shall terminate, and all funds, including
interest, then on deposit on the Optionee's Purchase Account shall be paid to
the Optionee and the
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Optionee's Purchase Account closed. If any termination of employment is due
to retirement with the consent of the Corporation, the Optionee shall
have the right within thirty (30) days thereafter, but not later than five
(5) business days prior to the Purchase Date, to exercise the Option to
purchase all or any part of the Optionee's Elected Shares. If the Optionee
shall become medically disabled or die while in the employment of the
Corporation or any Subsidiary of the Corporation during the term of the Option,
the Optionee's estate, personal representative or beneficiary shall have the
right, at any time, within twelve (12) months from the date of the Optionee's
medical disability or death, but not later than five (5) business days prior to
the Purchase Date, to exercise the employee's Option to purchase all or any part
of the Elected Shares. Options exercised pursuant to the terms of this
subsection (h) of this Article V may be exercised (during the specified times)
as to all or any part of the Elected Shares by written notice delivered in the
manner set forth in Article X hereof and tendering with such notice payment of
any or all funds, including amounts credited to said Optionee's Purchase Account
and such other amounts as may be necessary to aggregate the required purchase
price, and shall be deemed exercised as of the date such notice is delivered,
except if such notice is delivered less than ten (10) business days prior to the
Purchase Date, they shall be deemed exercised as of the Purchase Date. Failure
to deliver such notice and payment within the time provided shall be deemed an
election not to exercise the Option, upon which the Option shall terminate, and
all funds, including interest then in the Optionee's Purchase Account, shall be
paid to the Optionee or his estate and the Purchase Account closed.
Retirement of an Optionee at the Optionee's Normal Retirement Date in
accordance with the provisions of any Retirement Plan adopted by the Corporation
or by any Subsidiary shall be deemed to be a retirement with the consent of the
Corporation. Whether any other terminations of employment (either at an Optional
Retirement Date in accordance with the provision of any such Retirement Plan or
otherwise) are to be considered retirements with the consent of the Corporation
and whether authorized leaves of absence or absences on military or government
service or for other reasons shall constitute a termination of employment for
the purposes of the Plan, shall be determined by the Committee, the
determination of which shall be final and conclusive. Employment by the
Corporation or any Subsidiary shall be deemed to be continuous and not to
terminate during any uninterrupted period in which any employee in the
employment of the Corporation or any Subsidiary, but only if and so long, in the
case of employment by a Subsidiary, as employment by such Subsidiary will, under
the applicable provisions of the Code as then in effect, result in the same tax
treatment as would be accorded if such Optionee were an employee of the
Corporation.
(i) Adjustment of Options; Exercisability Upon Certain Events: In the
event of reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, offering of rights or any other
change in the structure of shares of Common Stock of the Corporation, the total
amount of shares on which Options may be granted under the Plan and options
rights (both as to the number of shares and the option price) shall be
appropriately adjusted for any increase or decrease in the number of outstanding
shares of Common Stock; provided, however, that any fractional shares resulting
from any such adjustment shall be eliminated.
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After (i) the merger of one or more corporations into the Corporation
or any Subsidiary, (ii) any merger of the Corporation or any Subsidiary into
another corporation, (iii) any consolidation of the Corporation or any
Subsidiary and one or more other corporations, or (iv) any other corporate
reorganization of any form involving the Corporation or any Subsidiary as a
party thereto, which such event involves any exchange, conversion, adjustment or
other modification of the outstanding shares of the Common Stock, each Optionee
at the time of such corporate reorganization shall be entitled to receive, at no
additional cost, upon any exercise of his Option and in lieu of the number of
shares as to which such Option shall then be so exercised, the number and class
of shares of stock or other securities or such other property to which such
Optionee would have been entitled pursuant to the terms of the agreement of
merger or reorganization if at the time of such merger or reorganization such
Optionee had been a holder of record of a number of shares of Common Stock equal
to the number of shares with respect to which such Option shall then be so
exercised. Comparable rights shall accrue to each Optionee in the event of
successive mergers or consolidations of the character described above. The
foregoing adjustments and the manner of application of the foregoing provisions
shall be determined by the Committee in its sole discretion. Any such adjustment
may provide for the elimination of any fractional shares which might otherwise
become subject to an Option.
In the event of (i) the adoption of a plan of merger, consolidation,
share exchange or similar transaction of the Corporation with any other
corporation or association as a result of which the holders of the voting
capital stock of the Corporation as a group would receive less than 50% of the
voting capital stock of the surviving or resulting corporation; (ii) the
approval by the Board of Directors of the Corporation of an agreement providing
for the sale or transfer (other than as security for obligations of the
Corporation) by the Corporation of a majority of the stock of a significant
Subsidiary of the Corporation or substantially all of the assets of the
Corporation or of a significant Subsidiary of the Corporation; (iii) the
acquisition of more than 20% of the Corporation's voting capital stock by any
person within the meaning of Section 13(d)(3) of the Exchange Act, other than a
person, or group including a person, who beneficially owned, as of the Option
Date, more than 5% of the Corporation's securities, in the absence of a prior
expression of approval of the Board of Directors of the Corporation; (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation cease for any reason
to constitute at least a majority thereof unless the election, or the nomination
for election by the Corporation's shareholders, of each new director was
approved by the vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period; or (v) any other
change in control of the Corporation of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A under the
Exchange Act or the acquisition of control, within the meaning of Section
2(a)(2) of the Bank Holding Company Act of 1956, as amended, or Section 602 of
the Change in Bank Control Act of 1978, of the Corporation by any person,
company or other entity, then any Option granted hereunder shall become
immediately exercisable as to the Optionee's Elected Shares, subject to any
appropriate adjustments in the number of shares subject to the Option and the
purchase price thereof, and shall remain exercisable through the Purchase Date,
subject to all of the terms hereof not inconsistent with this subsection (i).
Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Corporation each Option granted under the Plan
shall terminate, but the
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Optionee shall have the right, following the adoption of a plan of
dissolution or liquidation and in any event prior to such dissolution
or liquidation to exercise his Option to purchase his Elected Shares,
subject to all of the other terms hereof not inconsistent with this
subsection (i).
The grant of an Option pursuant to this Plan shall not affect in any
way the right or power of the Corporation or any of its Subsidiaries to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure, or to merge or consolidate, or to dissolve, liquidate or
sell, or transfer all of any part of the business or assets.
(j) Assignability: No Option granted hereunder shall be assignable or
transferable except by will or by the laws of decent and distribution and shall
be exercisable, during the lifetime of Optionee, only by said Optionee.
(k) Rights as a Shareholder: No Optionee shall have any rights as a
shareholder with respect to shares purchased pursuant to the Options to be
granted hereunder until full payment has been made for such shares and a stock
certificate for such shares has been actually issued to said Optionee. No
adjustment will be made for dividends or other rights for which the record date
is prior to the date of such issuance.
(1) Registration: Each Option under the Plan shall be granted on the
condition that a registration statement under the Securities Act of 1933, as
amended, with respect to the Common Stock subject to such Option has become
effective and a copy of the Prospectus has been delivered to the Optionee.
ARTICLE VI. Term of Plan:
The term of said Plan shall be for a period commencing on the Option
Date, and ending on the Purchase Date.
ARTICLE VII. Amendments:
The Committee may, from time to time, alter, amend, suspend or
discontinue the Plan at any time without notice, provided that no Optionee's
existing rights are adversely affected thereby; provided further, upon any such
amendment or modification, all Optionees shall continue to have the same rights
and privileges as other Optionees (except as otherwise provided in Article IV
hereof); and provided further, that no such amendment of the Plan shall, except
as provided in subsection (i) of Article V hereof: (a) increase above one
hundred fifty thousand (150,000) the total number of shares which may be
offered; (b) change the formula by which the price for which the Common Stock
shall be sold is determined; or (c) increase the maximum number of shares which
any Optionee may purchase. The Board of Directors shall submit any amendments to
the shareholders of the Corporation for approval to the extent necessary to
maintain compliance with the requirements of Rule 16b-3 of the Exchange Act.
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ARTICLE VIII. Application of Funds:
The proceeds received by the Corporation from the sale of its Common
Stock pursuant to Options granted under this Plan, except as otherwise provided
herein, will be used for general corporate purposes.
ARTICLE IX. No Obligation to Purchase Shares:
The granting of an Option pursuant to this Plan shall impose no
obligation upon the Optionee to purchase any shares covered by such Option.
ARTICLES X. Notices:
Any notice which the Corporation or Optionee may be required or
permitted to give to each other shall be in writing and shall be deemed given
when delivered personally or deposited in the U.S. Mail, first class postage
prepaid, addressed as follows: Chief Financial Officer, First Charter
Corporation, Post Office Box 228, Concord, North Carolina 28026-0228, or at such
other address as the Corporation, by notice to the Optionee, may designate in
writing from time to time; and to the Optionee, at the address shown on the
records of the Corporation, or at such other address as the Optionee, by notice
to the Corporation, may designate in writing from time to time.
ARTICLE XI. Closing of Purchase Account:
In the event that under any provision hereof an Optionee's Purchase
Account is to be closed and any balance not applied to the purchase of all or
any part of such Optionee's Elected Shares is to be paid to Optionee, such
payment shall be made within thirty (30) days following the date that the right
to such payment accrues and shall include interest payable up to such date,
after which no additional interest shall accrue.
ARTICLE XII. The Right of the Corporation to Terminate Employment:
Nothing contained in the Plan or in any Option granted pursuant to the
Plan shall confer upon any Optionee any right to be continued in the employment
of the Corporation or any of its Subsidiaries, or shall interfere in any way
with the right of the Corporation or any of its Subsidiaries, as the case may
be, to terminate his or her employment at any time for any reason.
ARTICLE XIII. Effectiveness of the Plan:
The Plan shall become effective only if:
(a) The Plan shall have been adopted by the Board of Directors of the
Corporation; and
44
<PAGE>
(b) The Plan shall have been approved by the affirmative vote of at
least a majority of the votes cast with respect to approval of the Plan at the
shareholders' meeting at which the Plan is considered.
ATTEST: FIRST CHARTER CORPORATION
/s/ James W. Townsend, Jr. By: /s/ Lawrence M. Kimbrough
Secretary President and Chief Executive
Officer
CORPORATE SEAL
Date: February 19, 1997
45
<PAGE>
******************************************************************************
APPENDIX
PROXY THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF
FIRST CHARTER CORPORATION
Annual Meeting of Shareholders, April 29, 1997
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Shareholder of
First Charter Corporation, a North Carolina corporation (the "Corporation"),
hereby constitutes and appoints Jerry E. McGee, James B. Widenhouse and Robert
F. Lowrance, and each or any of them, severally as attorneys and proxies for the
undersigned, with full power of substitution, for and on behalf of the
undersigned to act and vote as indicated below, according to the number of
shares of the Corporation's Common Stock held of record by the undersigned on
April 29, 1997, and as fully as the undersigned would be entitled to act and
vote if personally present at the Annual Meeting of Shareholders to be held at
the Cabarrus Country Club, Weddington Road NW, Concord, North Carolina at 3:00
p.m., April 29, 1997, and any adjournment or adjournments thereof (the "Annual
Meeting"), as follows:
(1) ELECTION OF DIRECTORS
FOR electing the five nominees for terms expiring in 2000 and one
nominee for a term expiring in 1998 listed below
WITHHOLD AUTHORITY to vote for election of all nominees listed below.
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Terms Expiring 2000 Term Expiring 1998
------------------- ------------------
Jane B. Brown James B. Fincher Branson C. Jones
Michael R. Coltrane Hugh H. Morrison
J. Roy Davis, Jr.
(2) APPROVAL OF THE ADOPTION OF THE FIRST CHARTER CORPORATION STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
( )FOR ( )AGAINST ( )ABSTAIN
(3) APPROVAL OF THE ADOPTION OF THE FIRST CHARTER CORPORATION 1998 EMPLOYEE
STOCK PURCHASE PLAN
( )FOR ( )AGAINST ( )ABSTAIN
(4) RATIFICATION OF SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1997
( )FOR ( )AGAINST ( )ABSTAIN
(5) In their discretion, the proxies are authorized to act and vote upon any
other business which may properly be brought before said meeting or any
adjournment or adjournments thereof.
The undersigned hereby ratifies and confirms all that said attorneys and proxies
or any of them lawfully do or cause to be done by virtue hereof. A majority of
said attorneys and proxies who shall be present and acting as such at the Annual
Meeting of Shareholders or any adjournment thereof, or if only one such attorney
and proxy be present and acting, then that one, shall have and may exercise all
powers hereby conferred.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF PROPOSALS 1, 2 , 3 AND 4.
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting of
Shareholders, dated March 5, 1997, the
Proxy Statement and the 1996 Annual Report
to Shareholders furnished therewith.
Dated this ____ day of ____________, 1997.
____________________________________(SEAL)
____________________________________(SEAL)
NOTE: Signature should agree with name on
stock certificate as printed thereon. When
shares are held by joint tenants, both
should sign. Executors, administrators,
trustees and other fiduciaries, and
persons signing on behalf of corporations
or partnerships, should so indicate when
signing.
PLEASE MARK, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY. THANK YOU.
