<PAGE> 1
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------
FIRST CHARTER CORPORATION
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1355866
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
22 UNION STREET, NORTH
CONCORD, NORTH CAROLINA 28025
(704) 786-3300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------
LAWRENCE M. KIMBROUGH, PRESIDENT
FIRST CHARTER CORPORATION
22 UNION STREET, NORTH
CONCORD, NORTH CAROLINA 28025
(704) 786-3300
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
----------
COPY TO:
ANNE TEAM KELLY, ESQ.
SMITH HELMS MULLISS & MOORE, L.L.P.
201 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28202
----------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
----------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), other than securities offered only
in connection with dividend or interest reinvestment plans, check the following
box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of earlier effective
registration statement for the same offering.
[ ]
-----------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
----------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,000,000 shares $22.5625 $22,562,500 $6,655.94
=========================================================================================================================
</TABLE>
(1) Estimated solely for purposes of computing the registration fee in
accordance with Rule 457(c) under the Securities Act, based on the average
of the high and low prices of the Common Stock as reported on the Nasdaq
National Market on August 3, 1998.
<PAGE> 2
PROSPECTUS
1,000,000 SHARES
FIRST CHARTER CORPORATION
COMMON STOCK
FIRST CHARTER CORPORATION
AMENDED AND RESTATED
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
This Prospectus relates to 1,000,000 shares of Common Stock, no par
value (the "Common Stock"), of First Charter Corporation (the "Company")
registered for sale and distribution under the Company's Amended and Restated
Dividend Reinvestment and Stock Purchase Plan (the "Plan"). It is suggested that
this Prospectus be retained for future reference. The Plan offers shareholders
of the Company a simple and convenient method of reinvesting cash dividends to
purchase additional shares of the Company Common Stock, as well as purchasing
shares through optional cash payments. Registrar and Transfer Company, a New
Jersey corporation, has been appointed the administrator of the Plan (the "Plan
Administrator") to act as agent for shareholders electing to participate in the
Plan (the "Participants").
The dividends and optional cash payments invested pursuant to the Plan
will be used to purchase newly issued shares of Common Stock from the Company
("Original Issue Purchases") or to purchase shares of Common Stock in open
market or privately negotiated transactions ("Open Market Purchases"). The
purchase price of shares of Common Stock purchased pursuant to Original Issue
Purchases shall be an amount equal to 100% of the fair market value (as
determined pursuant to the Plan) of such shares on the date on which such shares
are purchased. The price at which the Plan Administrator shall be deemed to have
purchased shares for a Participant's account pursuant to Open Market Purchases
shall be the weighted average price of such shares paid by the Plan
Administrator for the Participant's allocable portion of shares purchased over a
particular period that Common Stock was purchased, plus such Participant's
proportionate share of the brokerage commission incurred thereon. Each
Participant's share of brokerage commissions may be less than he or she might
incur individually because the Plan Administrator will buy shares in volume.
Dividends will be reinvested on a quarterly basis, and optional cash payments
will be invested on a monthly basis. See "Description of the Amended and
Restated Dividend Reinvestment and Stock Purchase Plan."
Shareholders may enroll in the Plan by completing an Authorization Form
and returning it to Registrar and Transfer Company, 10 Commerce Drive, Cranford,
New Jersey 07016, Attention: First Charter Corporation Dividend Reinvestment
Plan Administrator. Shareholders who are participants in the Plan may terminate
their participation at any time. Shareholders who do not wish to participate in
the Plan will continue to receive cash dividends, if and when paid, by check.
The Company's Common Stock is reported on the Nasdaq National Market
under the trading symbol "FCTR." On August 3, 1998, the last reported sale price
of the Company's Common Stock was $22.25.
------------------------------
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR BANK DEPOSITS, ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF THE COMPANY,
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY AND INVOLVE INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH
CAROLINA (THE "COMMISSIONER") OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, THE
COMMISSIONER OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 4, 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), relating to the Common Stock offered
hereby. For further information pertaining to the shares of Common Stock to
which this Prospectus relates, reference is made to such Registration Statement,
including the exhibits and schedules filed as a part thereof. As permitted by
the rules and regulations of the Commission, certain information included in the
Registration Statement is omitted from this Prospectus. In addition, the Company
is subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the following public reference facilities maintained by the Commission: 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, upon payment of prescribed rates. The
public may obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet
web site that contains reports, proxy and information statements and other
information regarding issuers who file electronically with the Commission. The
address of that site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the
Commission pursuant to Section 13 of the Exchange Act, are incorporated by
reference herein and made a part hereof: (i) the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1997; (ii) the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1998; (iii) the
Company's Current Reports on Form 8-K filed on January 6, 1998, January 28,
1998, April 14, 1998, May 28, 1998 (as amended by Form 8-K/A-1 filed on August
4, 1998), July 10, 1998 and July 17, 1998; and (iv) the description of the
Company's Common Stock contained in its registration statement filed pursuant to
the Exchange Act, as amended and updated by subsequent reports filed for the
purpose of updating such description, including its Current Report on Form 8-K
dated January 28, 1998.
All reports and any definitive proxy or information statements filed by
the Company with the Commission pursuant to Section 13(a), 13(c), 14 and 15(d)
of the Exchange Act, subsequent to the date of this Prospectus and prior to the
termination of the offering of Common Stock made hereby, shall be deemed to be
incorporated by reference in this Prospectus and a part hereof from the date of
the filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF
ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS). WRITTEN REQUESTS FOR COPIES SHOULD BE DIRECTED TO ROBERT O. BRATTON,
CHIEF FINANCIAL OFFICER, FIRST CHARTER CORPORATION, 22 UNION STREET NORTH, POST
OFFICE BOX 228, CONCORD, NORTH CAROLINA 28026-0228. TELEPHONE REQUESTS MAY BE
DIRECTED TO (704) 786-3300.
2
<PAGE> 4
FIRST CHARTER CORPORATION
The Company is a bank holding company incorporated in 1983 under the
laws of the State of North Carolina and is registered under the Bank Holding
Company Act of 1956. Through its subsidiaries, the Company provides a wide array
of financial products and services throughout Cabarrus, Cleveland, Rutherford,
Rowan, Union and Mecklenburg Counties in North Carolina. The principal executive
offices of the Company are located at 22 Union Street, North, Concord, North
Carolina 28025, and its telephone number is (704) 786-3300.
As part of its operations, the Company regularly evaluates the potential
acquisition of or merger with, and holds discussions with, various financial
institutions. In addition, the Company periodically enters new markets and
engages in new activities in which it competes with established financial
institutions. There can be no assurance as to the success of any such new office
or activity. Furthermore, as the result of such expansions, the Company may from
time to time incur start-up costs that could affect the financial results of the
Company.
DESCRIPTION OF THE AMENDED AND RESTATED DIVIDEND
REINVESTMENT AND STOCK PURCHASE PLAN
The following, in question and answer form, are the provisions of the
Amended and Restated Dividend Reinvestment and Stock Purchase Plan (the "Plan")
of First Charter Corporation (the "Company"). Those holders of common stock of
the Company (the "Common Stock") who do not wish to participate in the Plan will
continue to receive cash dividends directly, if and when paid. The Plan
initially became effective on December 1, 1987 and was amended and restated
effective July 24, 1998.
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide owners of Common Stock with a
simple and convenient way of purchasing additional shares of Common Stock.
Participants in the Plan may purchase shares of Common Stock by (i) having the
cash dividends on all or a portion of their shares of Common Stock automatically
reinvested in shares of Common Stock, and (ii) by making optional cash payments
to the Plan which are then invested in shares of Common Stock.
The Company intends initially for the Plan Administrator, Registrar and
Transfer Company, to purchase shares of Common Stock for the Plan in the open
market. However, subject to certain requirements of the Securities and Exchange
Commission, the Company may direct the Plan Administrator to purchase shares of
Common Stock for the Plan directly from the Company. If the Plan Administrator
purchases shares directly from the Company, the Company will receive additional
funds that it will use for general corporate purposes, including investments in,
or extensions of credit to, its subsidiaries.
ADVANTAGES
2. What are the advantages of the Plan?
Typically, when a shareholder purchases shares of Common Stock on the
open market through a broker-dealer, the shareholder will pay a brokerage
commission in addition to the purchase price of the shares. When the Plan
Administrator purchases Common Stock on the open market for the Plan, the Plan
also pays brokerage commissions, and each Participant's Plan account is charged
with its pro rata share of these brokerage commissions. However, each
Participant's share of the brokerage commission may be less than he or she might
individually incur since the Plan Administrator will buy shares in volume and
pass commission savings on to the Participants. No other fees or service charges
are imposed on Participants in connection with the purchase of shares of Common
Stock under the Plan.
Participants also have the option of depositing with the Plan
Administrator their stock certificates for shares enrolled in the Plan for
dividend reinvestment. Therefore, Participants avoid the inconvenience and
expense of holding certificates for the shares of Common Stock that are enrolled
in the Plan. See Question 9.
3
<PAGE> 5
PARTICIPATION
3. Who is eligible to participate?
All registered holders of Common Stock (shareholders) are eligible to
participate in the Plan. Beneficial owners of Common Stock whose shares are held
in registered names other than their own, such as trustees, bank nominees or
brokers, must arrange for the holder of record to participate in the Plan or
have the shares transferred to their own names before enrolling in the Plan.
After enrollment in the Plan as described below, a Participant must always have
at least one whole share of Common Stock enrolled in dividend reinvestment to
continue to participate in the Plan.
4. How does a shareholder become a participant?
An eligible shareholder may enroll in the Plan by signing the
Authorization Form and returning it to the Plan Administrator at its address set
forth in Question 22. An Authorization Form, together with a postage-paid
envelope addressed to the Plan Administrator, is enclosed with this document,
and additional forms may be obtained at any time by written request to the Plan
Administrator at its address set forth in Question 22.
5. What does the Authorization Form provide?
The Authorization Form allows an eligible shareholder to enroll in the
Plan by electing to have the cash dividends on shares of Common Stock registered
in that shareholder's name reinvested in additional shares of Common Stock from
time to time. The Authorization Form must indicate the number of whole shares
that a shareholder wishes to enroll in the Plan for dividend reinvestment, which
may be all or any portion of the shares of Common Stock registered in the
shareholder's name (but not less than one whole share). The shareholder also
must include his or her social security number or taxpayer identification number
on the Authorization Form, and failure to supply this information may result in
backup withholding of income taxes from dividend payments owed to such
shareholder with respect to Common Stock enrolled in the Plan. See Question 23.
6. After enrollment, may a Participant change the number of participating
shares?
Yes. A Participant who decides to change the number of shares enrolled
in dividend reinvestment must sign and return a new Authorization Form to the
Plan Administrator indicating the revised number of whole shares (but not less
than one) that are to be enrolled in dividend reinvestment. See Question 21
concerning withdrawal of shares from dividend reinvestment.
7. When may a shareholder enroll in the Plan?
An eligible shareholder may enroll in the Plan at any time. If a
properly completed Authorization Form enrolling shares of Common Stock for
dividend reinvestment is received by the Plan Administrator at least one
business day prior to the record date established for payment of a particular
cash dividend, reinvestment of cash dividends with respect to such shares will
commence with that dividend. If the Authorization Form is received after the
record date established for a particular cash dividend, then the reinvestment of
cash dividends will not begin until the dividend payment date following the next
record date.
DIVIDEND REINVESTMENT
8. How does dividend reinvestment work under the Plan?
If shares of Common Stock are enrolled in the Plan for dividend
reinvestment, the cash dividends that otherwise would be paid to the Participant
for such shares will instead be received by the Plan Administrator on behalf of
the Participant. The Plan Administrator then will use the cash dividends to
purchase additional shares of Common Stock for the Participant's Plan account.
See Question 14. As shares are purchased through dividend reinvestment and
credited to the Participant's Plan account, these shares automatically will be
enrolled in the Plan for future dividend reinvestment.
4
<PAGE> 6
9. What does a shareholder do with stock certificates for shares enrolled
in dividend reinvestment?
Participants may, but are not required to, deposit with the Plan
Administrator their certificates for shares of Common Stock enrolled in dividend
reinvestment under the Plan at no cost. These shares will then be held in the
name of one of the Plan Administrator's nominees and will thereafter be credited
to and maintained in the Participant's Plan account. This feature allows a
Participant to avoid the risk and cost associated with the loss, theft or
destruction of stock certificates so deposited. To deposit certificates, a
Participant must send the certificates representing shares enrolled in dividend
reinvestment to the Plan Administrator by registered mail with written
instructions to deposit them in the Participant's Plan account. Participants
should not endorse the certificates or complete the assignment section.
OPTIONAL CASH PAYMENTS
10. What are optional cash payments?
Participants who remain eligible to participate and who are active
participants in the Plan may make optional cash payments to the Plan
Administrator for the direct purchase of Common Stock under the Plan. Shares
purchased with a Participant's optional cash payments will be credited to the
Participant's Plan account and automatically will be enrolled in the Plan for
future dividend reinvestment. Participants are not required to make any optional
cash payments to participate in the Plan.
11. Are there any limits on optional cash payments by Participants?
Each optional cash payment must be at least $25, and a Participant's
aggregate optional cash payments may not exceed $3,000 in any calendar quarter.
A calendar quarter is a three month period beginning on each January 1, April 1,
July 1 and October 1 of each year.
12. How do Participants make optional cash payments?
An eligible Participant may make optional cash payments at any time (i)
by check or money order made payable to Registrar and Transfer Company, (ii) by
authorizing a periodic automatic draft of the Participant's deposit account at a
bank or other depository institution in accordance with its and the Plan
Administrator's rules and procedures or (iii) by any other method permitted by
the Plan Administrator from time to time. An optional cash payment made by check
or money order should include the Participant's taxpayer identification number,
the Company's name and the Participant's account number under the Plan, and
should be submitted, together with the perforated form from the Participant's
periodic statement of account, to the Plan Administrator at its address set
forth in Question 22. The Plan Administrator may, in its sole discretion, accept
an optional cash payment which is sent without the perforated form as long as
the Participant has included on the check or money order information sufficient
to identify the Participant's taxpayer identification number and the Company's
name. Optional cash payments that cannot be identified to the satisfaction of
the Plan Administrator will be returned to the Participant. In addition,
optional cash payments that do not satisfy the other requirements of the Plan
will be returned to the Participant. A Participant can receive a refund of any
optional cash payment upon written request received by the Plan Administrator at
least two business days prior to the date such funds are to be invested by the
Plan Administrator.
13. When should optional cash payments be made?
Optional cash payments may be made at any time. However, all optional
cash payments will be held in a non-interest bearing account maintained by the
Plan Administrator, pending investment in shares of Common Stock as described in
Question 14, and no interest will be paid on any optional cash payment for the
period following receipt but prior to investment. Accordingly, Participants may
wish to delay transmittal of optional cash payments until shortly before the
investment date (see Question 14), while still allowing enough time for the Plan
Administrator to receive the funds at least five business days prior to such
date. Any optional cash payments not received by the Plan Administrator in time
to be included in purchases of Common Stock for a particular month may, in the
discretion of the Plan Administrator, either be returned to the Participant or
be included in purchases for the next month.
5
<PAGE> 7
PURCHASES OF COMMON STOCK BY THE PLAN
14. When and how will shares of Common Stock be purchased for a
Participant's Plan account?
Cash dividends and optional cash payments held for a Participant's Plan
account will be commingled with the cash dividends and optional cash payments
held for all other accounts under the Plan and will be applied to the purchase
of Common Stock. The Plan Administrator will make arrangements to use reinvested
dividends to purchase Common Stock on a quarterly basis, on or about the
applicable dividend payment date. The Plan Administrator will make arrangements
to use optional cash payments to purchase Common Stock at least once monthly, on
or about the 15th day of each calendar month. In the discretion of the Plan
Administrator, purchases of Common Stock made with reinvested cash dividends may
be made together with purchases of Common Stock made with optional cash payments
in those months that cash dividends are paid. In any case, purchases may be made
over a number of days to meet the requirements of the Plan.
Shares needed to meet the requirements of the Plan may be acquired on
any securities exchange on which the Common Stock is traded, in the
over-the-counter market, in negotiated transactions or by purchasing shares
being sold under the Plan by other Participants (all referred to as the "open
market"). In addition, in the discretion of the Company and subject to
requirements of the Securities and Exchange Commission, shares may be purchased
directly from the Company to be issued from authorized but unissued shares. If
the Plan Administrator purchases shares in the open market, a Participant's
price per share will be the weighted average price of shares purchased over the
relevant period to satisfy Plan requirements, plus the Participant's
proportionate share of the brokerage commission incurred by the Plan
Administrator in connection with such open market purchases during such period.
If the Plan Administrator purchases shares directly from the Company, a
Participant's price per share will be the fair market value of the Common Stock
on the day the shares are purchased. "Fair market value" with respect to any day
means the average of the high and low asked prices for shares of Common Stock,
calculated over the five business days prior to such date, or in the absence of
such information, as determined by the Plan Administrator on the basis of such
market quotations or other market information as it deems appropriate.
A Participant's account will be credited with a number of shares of
Common Stock equal to the amount of cash dividends and/or optional cash payments
invested on behalf of the Participant, divided by the applicable price per share
of Common Stock, with fractional shares computed to at least three decimal
places. Certificates for shares of Common Stock purchased under the Plan will
not customarily be issued to the Participants. Instead, the Plan Administrator
will hold all shares in the name of one of its nominees, and the shares of
Common Stock that a Participant buys under the Plan will be credited to and
maintained in the Participant's Plan account. This feature protects against
loss, theft or destruction of stock certificates. The Participant will receive a
periodic statement detailing the status of the Participant's holdings. See
Question 16 concerning requests for stock certificates and Question 17
concerning periodic reports to Participants.
In certain circumstances, the lack of shares available for purchase, the
compliance with banking and securities laws, the observance of rules and
regulations or governmental regulatory bodies or other conditions may result in
delays or temporary curtailment or suspension of purchases of Common Stock under
the Plan. Typically, purchases will resume when shares are again available or
when purchases are again permitted. However, if for any reason an optional cash
payment or cash dividend is not invested in shares of Common Stock within 30
days of receipt by the Plan Administrator, the Plan Administrator will promptly
return to each Participant a check for the amount of funds representing such
cash dividends or optional cash payments held on the Participant's account.
Because the Plan Administrator will arrange for the purchase of shares
on behalf of the Plan, neither the Company nor any Participant in the Plan has
the authority or power to control either the timing or pricing of shares
purchased or the selection of the broker making the purchase. Therefore,
Participants will not be able to time precisely their purchases through the Plan
and will bear the market risk associated with fluctuations in the price of the
Company's Common Stock. That is, it is possible that the market price of the
Common Stock could go up or down before the broker purchases stock with the
Participant's funds.
15. Are there any expenses to Participants in connection with purchases
under the Plan?
Each Participant's account under the Plan will be charged with its pro
rata share of brokerage commissions incurred by the Plan Administrator when it
purchases Common Stock for the Plan in open market purchases. However,
Participants will not incur any brokerage commissions for purchases of Common
Stock made under the Plan directly from the Company.
6
<PAGE> 8
No other fees or service charges will be imposed on Participants in connection
with purchases of Common Stock for accounts under the Plan. See Question 18
concerning a Participant's expenses for sales of Common Stock under the Plan.
REQUESTS FOR STOCK CERTIFICATES
16. Can a shareholder receive stock certificates for shares purchased under
the Plan or deposited into the Plan?
Certificates for any number of shares credited to and maintained in the
Participant's Plan account from time to time will be issued to the Participant
without charge upon the Participant's written request to the Plan Administrator
at its address set forth in Question 22. Certificates will be issued for whole
shares only. In the event a Participant's request involves a fractional share, a
check for the value of the fractional share, determined based on the closing
price of the Common Stock on the effective date of the Participant's request,
will be mailed to the Participant. Certificates will be issued in, and checks
will be made payable to, the name in which the Plan account is registered.
Unless a Participant specifically requests the discontinuation of dividend
reinvestment for the shares issued to the Participant, these shares will remain
enrolled in the Plan for dividend reinvestment. See Question 21 concerning
discontinuation of dividend reinvestment and liquidation of accounts.
REPORTS TO PARTICIPANTS
17. What kind of reports will be sent to Participants?
Each Participant will receive a statement of account at the end of each
month in which there has been a transaction that has affected the Participant's
account, but no less frequently than quarterly. The statement of account will
include information describing each transaction. Specifically, it will include
information as to dividends received on behalf of the Participant, optional cash
payments received from the Participant, amounts invested for the Participant,
costs of purchases, number of shares purchased (including fractional shares),
total shares credited to the Participant's account and other information for the
year to date. Each year, in January, a Form 1099 will be sent to each
Participant that will include certain information pertaining to the
Participant's account and necessary for income tax purposes. This Form 1099
should be retained by the Participant for preparation of its income tax returns.
All notices, statements, reports and other information and documents
will be mailed to a Participant's address of record. Therefore, a Participant
should promptly notify the Plan Administrator at its address set forth in
Question 22 of any change in address.
SALES
18. May a Participant sell shares held in the Participant's Plan account?
A Participant may request the Plan Administrator to sell all shares, or
any number of whole shares, credited to the Participant's Plan account by
providing written instructions to the Plan Administrator at its address set
forth in Question 22. The Plan Administrator will make arrangements to sell such
shares through broker-dealers selected by the Plan Administrator or in a
negotiated transaction without a broker, including a sale to the Company or a
sale to the Plan for purchase on behalf of other Plan Participants, in the Plan
Administrator's sole discretion. Shares being sold by a Participant may be
aggregated with shares being sold by other Participants who have requested
sales. The sales price per share will be the weighted average sales price of
shares sold over the relevant period, as volume dictates. Following the
completion of the sale, the Plan Administrator will send a check to the
Participant, payable to the name in which the Plan account is registered, for
the proceeds of the sale, less (i) an administrative fee of $15.00, (ii) the
Participant's proportionate share of brokerage commissions incurred by the Plan
Administrator in connection with the sales over the relevant period, and (iii)
any required tax withholdings. If a Participant's Plan account falls below one
whole share, the Plan Administrator in its discretion will liquidate the
fractional share and remit the value to the Participant, determined based on the
closing price of the Common Stock on the effective date of the sale as reported
on a national securities exchange or the Nasdaq Stock Market, as applicable. The
Company reserves the right to instruct the Plan Administrator to limit sales
under the Plan in a uniform manner.
7
<PAGE> 9
Because the Plan Administrator will arrange for the sale of shares on
behalf of the Plan, neither the Company nor any Participant in the Plan has the
authority or power to control either the timing or pricing of shares sold or the
selection of the broker making the sale. Therefore, Participants will not be
able to time precisely their sales through the Plan and will bear the market
risk associated with fluctuations in the price of the Company's Common Stock.
That is, it is possible that the market price of the Common Stock could go up or
down before the broker sells the Participant's shares.
A Participant may choose to sell shares held in his or her Plan account
through a stockbroker chosen by the Participant. If so, the Participant should
request a certificate for his or her shares from the Plan Administrator prior to
the sale. See Question 16.
19. What happens to dividend reinvestment if a Participant sells all shares
held in his or her Plan account?
This may depend on whether the Participant has shares enrolled in
dividend reinvestment that have not been deposited with the Plan Administrator
and for which the Participant still holds a stock certificate registered in the
Participant's name (referred to as "certificated shares"). If a Participant does
not have any certificated shares enrolled in dividend reinvestment, and the
Participant sells all of the shares held in the Participant's Plan account, then
dividend reinvestment will be terminated and the Participant's Plan account will
be closed. However, if a Participant has certificated shares that are enrolled
in dividend reinvestment, then even if the Participant sells all of the shares
held in his or her Plan account, in the discretion of the Plan Administrator
dividend reinvestment will continue with respect to all of the Participant's
certificated shares that are still enrolled in dividend reinvestment.
20. What happens to dividend reinvestment if a Participant sells
certificated shares registered in the Participant's name?
If all of a Participant's certificated shares are enrolled in dividend
reinvestment, and the Participant sells all or a portion of these shares, then
in the discretion of the Plan Administrator participation in dividend
reinvestment will continue with respect to the remaining portion of the
Participant's certificated shares, if any, together with all shares still held
in the Participant's Plan account. If all of a Participant's certificated shares
not enrolled in dividend reinvestment, and the Participant sells all or a
portion of these shares, then in the discretion of the Plan Administrator
participation in dividend reinvestment will continue with respect to (i) the
lesser of the number of certificated shares originally enrolled in dividend
reinvestment or all certificated shares remaining following the sale, if any,
together with (ii) all shares still held in the Participant's Plan account.
DISCONTINUATION OF DIVIDEND REINVESTMENT AND ACCOUNT LIQUIDATION
21. How does a Participant discontinue the reinvestment of dividends under
the Plan?
A Participant may discontinue the reinvestment of dividends under the
Plan for all shares or any portion of the whole shares enrolled in dividend
reinvestment by notifying the Plan Administrator in writing at its address set
forth in Question 22. Any termination notice received at least five business
days prior to a record date will be effective as to dividends paid for such
record date, and a termination notice received after such time will not be
effective until dividends paid for such record date have been reinvested. In the
discretion of the Plan Administrator, a request for discontinuation of dividend
reinvestment with respect to some, but not all, of a Participant's shares will
be effective first with respect to any certificated shares then enrolled in
dividend reinvestment. Thereafter, if necessary the Plan Administrator will
withdraw shares from the Participant's Plan account upon the discontinuation of
dividend reinvestment and the Participant will receive a stock certificate for
the number of whole shares so withdrawn. Any remaining shares credited to the
Participant's account will continue to participate in dividend reinvestment
under the Plan. In the discretion of the Plan Administrator, if the
Participant's Plan account falls below one whole share, the Plan Administrator
will liquidate the fractional share and remit the value to the Participant,
determined based on the closing price of the Common Stock on the effective date
of the withdrawal from dividend reinvestment, as reported on a national
securities exchange or the Nasdaq Stock Market, as applicable.
Upon total discontinuation of dividend reinvestment, a Participant will
receive a stock certificate for all whole shares credited to the Participant's
account under the Plan, and any fractional share will be liquidated and the Plan
Administrator will remit the value to the discontinuing Participant, determined
as described above. At the option of the Participant, upon
8
<PAGE> 10
total discontinuation of dividend reinvestment, a Participant may request that
all shares credited to his or her Plan account be sold. Upon receipt of any such
written instructions, the Plan Administrator will arrange for the sale of the
Participant's shares, and will forward the proceeds to the Participant, in the
manner set forth in Question 18.
All certificates will be issued in, and checks will be made payable to,
the name in which the Plan account is registered.
ADMINISTRATION
22. Who administers the Plan for Participants?
Registrar and Transfer Company (the "Plan Administrator") administers
the Plan for Participants, keeps records, sends periodic statements of account
to Participants and performs other duties relating to the Plan. Communications
and inquiries may be directed to Registrar and Transfer Company, 10 Commerce
Drive, Cranford, New Jersey 07016, telephone (800) 368-5948.
FEDERAL TAX CONSEQUENCES
23. What are the federal income tax consequences of participation in the
Plan?
Shares that are purchased under the Plan through dividend reinvestment
and optional cash payments will have a tax basis equal to the purchase price per
share, and the holding period for shares acquired under the Plan will begin on
the day after the shares are credited to a Participant's account, all as
indicated on the Participant's periodic statements of account. A Participant
receiving cash dividends will be treated as having received such dividends on
all of his or her shares of Common Stock, including dividends on shares held for
the Participant's Plan account even though these dividends are automatically
reinvested pursuant to the Plan. All such dividends are generally taxable as
ordinary income, regardless of whether they are paid directly to the Participant
or reinvested pursuant to the terms of the Plan. In addition, a Participant may
recognize gain or loss upon the sale of shares acquired pursuant to the Plan
based upon the gross proceeds of such sale, transaction costs and the tax basis
of such shares. IT IS IMPORTANT THAT PARTICIPANTS RETAIN ALL YEAR-END STATEMENTS
IN ORDER TO HAVE A RECORD OF THE TAX BASIS ATTRIBUTABLE TO SHARES ACQUIRED
PURSUANT TO THE PLAN.
The Plan Administrator will comply with all applicable Internal Revenue
Service requirements concerning the filing of information returns for dividends
credited to each account under the Plan, and such information will be provided
to the Participant by a duplicate of that form or in a final statement of
account for each calendar year. With respect to Participants whose dividends or
other form of distribution are subject to United States domestic or foreign tax
withholding, the Plan Administrator will comply with all applicable Internal
Revenue Service requirements concerning the amounts of tax to be withheld, which
will be deducted from the dividends credited to the Participant's account prior
to investment or from any distributions due to the Participant, as applicable.
The foregoing is only a general outline of some of the applicable
federal tax requirements. Each Participant should consult his or her own tax
adviser for additional information regarding specific tax consequences of
participation in the Plan. Information for income tax purposes for Participants
in the Plan will be printed on the Participant's periodic statements of account
and Forms 1099.
OTHER INFORMATION
24. How will stock dividends and stock splits on shares held in Plan
accounts be handled?
In the event that dividends are paid in shares of Common Stock, or if
shares of Common Stock are distributed in connection with any stock split or
similar transaction, the shares of Common Stock payable to a Participant with
respect to all shares of the Company's Common Stock owned by the Participant
(whether or not such shares are enrolled in dividend reinvestment under the Plan
and whether such shares are registered in the Participant's name or held in the
Participant's Plan account) will be credited to the Participant's Plan account
and will be subject to future dividend reinvestment, and no stock certificates
will be issued to the Participant at such time for such shares.
9
<PAGE> 11
25. What happens if the Company has a Common Stock rights offering?
In the event that the Company makes available to its shareholders rights
to purchase additional shares or other securities, the Plan Administrator will
sell all rights accruing to shares held for Participants' accounts under the
Plan if a purchaser can be located. The proceeds will be combined with any other
funds for reinvestment in connection with the next dividend payment date on
which shares of Common Stock are to be purchased pursuant to dividend
reinvestment. These proceeds will be treated as if they were optional cash
payments.
26. How will a Participant's Plan Shares be voted at a meeting of
shareholders?
The Company will mail each Participant proxy materials including a proxy
card representing all the shares of Common Stock for which the Participant holds
stock certificates registered in his or her name and all the shares, both whole
and fractional, held in the Participant's Plan account. The proxy will be voted
as indicated by the Participant. If the Participant does not return the proxy
card, or if the Participant returns an unsigned proxy card, none of his or her
shares will be voted.
27. May a Participant transfer, assign or pledge Plan Shares?
Except as described in Question 18, a Participant cannot sell, transfer,
assign or pledge shares credited to and maintained in the Participant's Plan
account for any purpose while the shares are credited to the Participant's Plan
account. If a Participant wishes to sell directly or transfer, assign or pledge
these shares, the Participant must first request a certificate for the shares in
accordance with Question 16 above.
28. May the Plan be changed or discontinued?
Yes. Although the Company intends to continue the Plan, the Company
reserves the right to suspend, modify or terminate the Plan at any time.
Participants will be notified of any such suspension, modification or
termination. The Company and the Plan Administrator also reserve the right to
change any administrative procedures of the Plan, and the Company reserves the
right to change the Plan Administrator at any time.
29. What is the responsibility of the Plan Administrator and/or the Company?
The Plan Administrator receives the Participant's dividend payments and
optional cash payments, invests such amounts in shares of Common Stock,
maintains continuing records of each Participant's Plan account and advises
Participants as to all transactions in and the status of their Plan accounts.
The Plan Administrator acts in the capacity of agent for the Participants.
All notices from the Plan Administrator to a Participant will be
addressed to the Participant at the last address of record with Plan
Administrator. The mailing of a notice to a Participant's last address of record
will satisfy the Plan Administrator's duty of giving notice to such Participant.
Therefore, a Participant must notify the Plan Administrator at its address set
forth in Question 22 promptly of any change of address.
Neither the Plan Administrator nor the Company shall have any
responsibility beyond the exercise of ordinary care for any reasonable and
prudent actions taken or omitted pursuant to the Plan, including, without
limitation, any claim for liability arising out of failure to terminate a
Participant's account upon such Participant's death or adjudicated incompetency
prior to receipt of written notice of death or adjudicated incompetency or
arising out of or relating to purchase or sales prices reflected in
Participants' Plan accounts, the dates of purchases or sales of shares or
fluctuations in the market value of the Common Stock after purchase or sale of
shares, nor shall they have any duties, responsibilities or liabilities except
as expressly set forth in the Plan.
The payment of dividends is at the discretion of the Company's Board of
Directors and will depend on future earnings, the financial condition of the
Company and other factors. The Board of Directors may change the amount and
timing of dividends at any time without notice.
10
<PAGE> 12
Plan Participants should recognize that neither the Company nor the Plan
Administrator can assure the Participant of a profit or protection from a loss
on Common Stock purchased under the Plan.
SECURITIES AND EXCHANGE COMMISSION'S POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
There are no contracts between the Company and its directors and
officers nor resolutions adopted by the Company, relating to indemnification.
However, the Company's Amended and Restated Articles of Incorporation grant the
Company's Board of Directors the authority to adopt resolutions approving the
indemnification, to the fullest extent permitted by law, of any person made a
party to any action or proceedings by reason of the fact such person was serving
as a director, officer, employee or agent of the Company. In addition, in
accordance with the provisions of the North Carolina Business Corporation Act,
as amended (the "NCBCA Act"), the Company's Bylaws provide that, in addition to
the indemnification of directors and officers otherwise provided by the NCBCA
Act, the Company shall, under certain circumstances, indemnify its directors,
executive officers and certain other designated officers against any and all
liability and expense, including reasonable attorneys' fees, in any proceeding
(including without limitation a proceeding brought by or on behalf of the
Company itself), arising out of their status or activities as directors and
officers, except for liability or litigation expense incurred on account of
activities of such person which at the time taken were known or believed by such
person to be clearly in conflict with the best interests of the Company. The
Company's Bylaws further provide that the Company shall also indemnify such
person for reasonable costs, expenses, and attorneys' fees incurred in
connection with the enforcement of the rights to indemnification granted in the
Bylaws, if it is determined in accordance with the procedures set forth in the
Bylaws that such person is entitled to indemnification thereunder. Pursuant to
such bylaw and as authorized by statute, the Company maintains insurance on
behalf of its directors and officers against liability asserted against such
persons in such capacity whether or not such directors or officers have the
right to indemnification pursuant to the bylaw or otherwise. In addition, the
Company's Amended and Restated Articles of Incorporation prevent the recovery by
the Company or any of its shareholders of monetary damages against its directors
to the fullest extent permitted by the NCBCA Act. Further, the NCBCA Act
contains various provisions prescribing the extent to which directors and
officers shall or may be indemnified.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
USE OF PROCEEDS
The net proceeds from the sale of any newly issued shares of Common
Stock offered pursuant to the Plan will be used for general corporate purposes
of the Company, including investments in, or extensions of credit to, the
Company's subsidiaries. No proceeds from Open Market Purchases of shares of
Common Stock will be received by the Company.
LEGAL MATTERS
Certain legal matters with respect to the Plan and in connection with
the Common Stock being offered hereby will be passed upon for the Company by
Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina. As of June 30,
1998, attorneys at Smith Helms Mulliss & Moore, L.L.P. beneficially owned an
aggregate of approximately 8,500 shares of Common Stock.
11
<PAGE> 13
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of HFNC Financial Corp.
incorporated in this Prospectus by reference to the Company's Form 8-K/A-1 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which expressed an unqualified opinion and included an explanatory
paragraph referring to certain litigation discussed at Note 11, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
12
<PAGE> 14
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER AT
ANY TIME SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION ..................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE .............................................................. 2
FIRST CHARTER CORPORATION ................................................. 3
DESCRIPTION OF THE AMENDED AND RESTATED
DIVIDEND REINVESTMENT AND STOCK
PURCHASE PLAN .......................................................... 3
Purpose ............................................................. 3
Advantages .......................................................... 3
Participation ....................................................... 4
Dividend Reinvestment ............................................... 4
Optional Cash Payments .............................................. 5
Purchases of Common Stock by the Plan ............................... 6
Requests for Stock Certificates ..................................... 7
Reports to Participants ............................................. 7
Sales ............................................................... 7
Discontinuation of Dividend Reinvestment and
Account Liquidation ............................................... 8
Administration ...................................................... 9
Federal Tax Consequences ............................................ 9
Other Information ................................................... 9
SECURITIES AND EXCHANGE COMMISSION'S
POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES ............................................. 11
USE OF PROCEEDS ........................................................... 11
LEGAL MATTERS ............................................................. 11
EXPERTS ................................................................... 12
</TABLE>
================================================================================
================================================================================
FIRST CHARTER CORPORATION
AMENDED AND RESTATED
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
----------
PROSPECTUS
----------
Dated August 4, 1998
================================================================================
<PAGE> 15
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities Act Registration Fee......... $ 6,655.94
Printing and Engraving Expenses......... 9,000.00
Legal Fees and Expenses................. 10,000.00
Accounting Fees and Expenses............ 5,000.00
Miscellaneous........................... 4,344.06
---------
Total................................... $ 35,000.00
-----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
There are no contracts between the Registrant and its directors and
officers nor resolutions adopted by the Registrant, relating to indemnification.
However, the Registrant's Amended and Restated Articles of Incorporation grants
to the Registrant's Board of Directors the authority to adopt resolutions
approving the indemnification, to the fullest extent permitted by law, of any
person made a party to any action or proceeding by reason of the fact such
person was serving as a director, officer, employee or agent of the Registrant.
In addition, in accordance with the provisions of the North Carolina Business
Corporation Act, as amended (the "NCBCA Act"), the Registrant's Bylaws provide
that, in addition to the indemnification of directors and officers otherwise
provided by the NCBCA Act, the Registrant shall, under certain circumstances,
indemnify its directors, executive officers and certain other designated
officers against any and all liability and expense, including reasonable
attorneys' fees, in any proceeding (including without limitation a proceeding
brought by or on behalf of the Registrant itself) arising out of their status or
activities as directors and officers, except for liability or litigation expense
incurred on account of activities of such person which at the time taken were
known or believed by such person to be clearly in conflict with the best
interests of the Registrant. The Registrant's Bylaws further provide that the
Registrant shall also indemnify such person for reasonable costs, expenses and
attorneys' fees incurred in connection with the enforcement of the rights to
indemnification granted in the Bylaws, if it is determined in accordance with
the procedures set forth in the Bylaws that such person is entitled to
indemnification thereunder. Pursuant to such bylaw and as authorized by statute,
the Registrant maintains insurance on behalf of its directors and officers
against liability asserted against such persons in such capacity whether or not
such directors or officers have the right to indemnification pursuant to the
bylaw or otherwise. In addition, the Registrant's Amended and Restated Articles
of Incorporation prevent the recovery by the Registrant or any of its
shareholders of monetary damages against its directors to the fullest extent
permitted by the NCBCA Act.
In addition to the above-described provisions, Section 55-8-50 through
55-8-58 of the NCBCA Act contain provisions prescribing the extent to which
directors and officers shall or may be indemnified. Section 55-8-51 of the NCBCA
Act permits a corporation, with certain exceptions, to indemnify a present or
former director against liability if (i) he conducted himself in good faith,
(ii) he reasonably believed (x) in the case of conduct in his official capacity
with the corporation, that his conduct was in the best interests of the
corporation and (y) in all other cases his conduct was at least not opposed to
the corporation's best interest, and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful. A
corporation may not indemnify a director in connection with a proceeding by or
in the right of the corporation in which the director was adjudged liable to the
corporation or in connection with a proceeding charging improper personal
benefit to him whether or not involving action in his official capacity, in
which he was adjudged liable on the basis that personal benefit was improperly
received by him. The above standard of conduct is determined by the Board of
Directors, or a committee or special legal counsel or the shareholders as
prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA Act require a corporation to
indemnify a director or officer in the defense of any proceeding to which he was
a party because of his capacity as a director or officer against reasonable
expenses when he is wholly successful in his defense, unless the articles of
incorporation provide otherwise. Upon
II-1
<PAGE> 16
application, the court may order indemnification of the director or officer if
the court determines that he is entitled to mandatory indemnification under
Section 55-8-52, in which case the court shall also order the corporation to pay
the reasonable expenses incurred to obtain the court ordered indemnification or
if he is adjudged fairly and reasonably so entitled in view of all relevant
circumstances, under Section 55-8-54. Section 55-8-56 allows a corporation to
indemnify and advance expenses to an officer, employee or agent who is not a
director to the same extent, consistent with public policy, as a director or as
otherwise set forth in the corporation's articles of incorporation or bylaws or
by resolution of the Board of Directors or contract.
In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.
The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete. It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnification shall
or may be made and accordingly are set forth in Exhibit 99.2 hereto and
incorporated herein by reference.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<S> <C>
4.1 Amended and Restated Articles of Incorporation of Registrant (incorporated herein by reference
to Exhibit 3.1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1997)
4.2 Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995)
4.3 Specimen of Common Stock Certificate of Registrant
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P., regarding legality of Common Stock
23.1 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney
24.2 Certified Resolution
99.1 Registrant's Amended and Restated Dividend Reinvestment and Stock Purchase Plan
99.2 Provisions of North Carolina law relating to indemnification of directors and officers (incorporated
by reference to Exhibit 99.10 of the Registrant's Registration Statement on Form S-4, Registration
No. 333-35905)
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
II-2
<PAGE> 17
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Concord, North Carolina, on August 4, 1998.
FIRST CHARTER CORPORATION
(Registrant)
By: /s/ LAWRENCE M. KIMBROUGH
------------------------------------------
Lawrence M. Kimbrough
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ LAWRENCE M. KIMBROUGH President, Chief Executive August 4, 1998
- - --------------------------------- Officer and Director
Lawrence M. Kimbrough (Principal Executive
Officer)
/s/ ROBERT O. BRATTON Executive Vice President August 4, 1998
- - --------------------------------- (Principal Financial
Robert O. Bratton and Principal Accounting
Officer)
WILLIAM R. BLACK* Director August 4, 1998
- - ---------------------------------
William R. Black
MICHAEL R. COLTRANE* Director August 4, 1998
- - ---------------------------------
Michael R. Coltrane
Director , 1998
- - ---------------------------------
J. Roy Davis, Jr.
T. CARL DEDMON* Director August 4, 1998
- - ---------------------------------
T. Carl Dedmon
Director , 1998
- - ---------------------------------
James B. Fincher
</TABLE>
<PAGE> 19
<TABLE>
<S> <C> <C>
JOHN J. GODBOLD, JR.* Director August 4, 1998
- - ---------------------------------
John J. Godbold, Jr.
H. CLARK GOODWIN* Director August 4, 1998
- - ---------------------------------
H. Clark Goodwin
CHARLES F. HARRY III* Director August 4, 1998
- - ---------------------------------
Charles F. Harry III
FRANK H. HAWFIELD, JR.* Director August 4, 1998
- - ---------------------------------
Frank H. Hawfield, Jr.
J. KNOX HILLMAN, JR.* Director August 4, 1998
- - ---------------------------------
J. Knox Hillman, Jr.
JERRY E. MCGEE* Director August 4, 1998
- - ---------------------------------
Jerry E. McGee
Director , 1998
- - ---------------------------------
Hugh H. Morrison
THOMAS R. REVELS* Director August 4, 1998
- - ---------------------------------
Thomas R. Revels
</TABLE>
*By: /s/ LAWRENCE M. KIMBROUGH
-----------------------------
Lawrence M. Kimbrough
Attorney-in-Fact
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description Page No.
----------- ----------- ----------
<S> <C> <C>
4.1 Amended and Restated Articles of Incorporation of Registrant (incorporated herein by reference
to Exhibit 3.1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1997)
4.2 Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995)
4.3 Specimen of Common Stock Certificate of Registrant
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P., regarding legality of Common Stock
23.1 Consent of Smith Helms Mulliss & Moore, L.L.P. (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Deloitte & Touche LLP
24.1 Power of Attorney
24.2 Certified Resolution
99.1 Registrant's Amended and Restated Dividend Reinvestment and Stock Purchase Plan
99.2 Provisions of North Carolina law relating to indemnification of directors and officers (incorporated
by reference to Exhibit 99.10 of the Registrant's Registration Statement on Form S-4, Registration
No. 333-35905)
</TABLE>
<PAGE> 1
EXHIBIT 4.3
FORM OF COMMON STOCK
CERTIFICATE
[FACE OF STOCK CERTIFICATE]
FIRST CHARTER CORPORATION
NUMBER COMMON STOCK
NO PAR VALUE NO PAR VALUE
CUSIP 319439 10 5
INCORPORATED UNDER THE LAWS OF THE STATE OF NORTH CAROLINA
THIS CERTIFIES THAT _______________ IS THE OWNER OF _________________
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE,
OF FIRST CHARTER CORPORATION
The shares presented by this certificate are transferable only on the stock
transfer books of the Corporation by the holder of record hereof, or by his duly
authorized attorney or legal representative, upon the surrender of this
certificate properly endorsed. This certificate and the shares represented
hereby are subject to the provisions of the Articles of Incorporation, all
amendments thereto, and the Bylaws of the Corporation. This certificate is not
valid until countersigned and registered by the Corporation's transfer agent and
registrar. The shares represented by this certificate are not a deposit or an
account and are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused a facsimile of its corporate seal to be hereunto affixed.
Dated:
Chief Executive Officer and President
Corporate Secretary
<PAGE> 2
[REVERSE SIDE OF STOCK CERTIFICATE]
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _________ Custodian ___________
(Cust) (Minor)
TEN ENT - as tenant by the entireties Under Uniform Gift to Minors
JT TEN - as joint tenants with right Act ______________________
of survivorship and not as (State)
tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________________ hereby sell, assign and
transfer unto
Please insert Social Security or Other
Identifying Number of Assignee
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Please print or typewrite name and address
including postal zip code of assignee)
- - --------------------------------------------------------------------------------
___________________________________________________ Shares of the common stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _____________________________________________ Attorney to transfer the
said stock on the books of the within-named Corporation with full power of
substitution in the premises.
Dated
----------------------------- -----------------------------------------
-----------------------------------------
Notice: the Signature to this Assignment
must correspond with the name as written
upon the face of the certificate, in
every particular, without alteration or
enlargement of any change whatever.
In the Presence of:
- - --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD SMITH, HELMS, MULLIS AND MOORE, L.L.P.]
August 4, 1998
First Charter Corporation
22 Union Street, North
Concord, North Carolina 28025
Re: Registration Statement on Form S-3 with Respect to the Possible
Offering and Sale of 1,000,000 Shares of Common Stock Pursuant
to an Amended and Restated Dividend Reinvestment and Stock
Purchase Plan
Ladies and Gentlemen:
In connection with the possible offering and sale from time to time of
up to 1,000,000 shares of the Common Stock, no par value (the "Shares"), of
First Charter Corporation (the "Corporation"), upon the terms and conditions set
forth in the Registration Statement on Form S-3 (the "Registration Statement"),
filed on August 4, 1998 by the Corporation with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the prospectus
constituting a part thereof (the "Prospectus"), we are of the opinion that when
(a) the Registration Statement shall become effective, and (b) the Shares have
been sold upon the terms and conditions set forth in the Registration Statement
and the Prospectus, the Shares will be validly authorized and legally issued,
fully paid and nonassessable.
We hereby consent (1) to be named in the Registration Statement and in
the Prospectus as attorneys who will pass upon the legality of the Shares and
(2) to the filing of a copy of this opinion as Exhibit 5.1 of the Registration
Statement.
Very truly yours,
/s/ SMITH, HELMS, MULLIS AND MOORE, L.L.P.
<PAGE> 1
EXHIBIT 23.2
The Board of Directors
First Charter Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
Charlotte, North Carolina
July 31, 1998
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
First Charter Corporation on Form S-3 of our report dated August 12, 1997,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
HFNC Financial Corp. for the year ended June 30, 1997 which is included in First
Charter Corporation's Form 8-K/A-1 and to the reference to us under the heading
"Experts" in the Prospectus, which is a part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Hickory, North Carolina
August 3, 1998
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of First Charter Corporation
(the "Corporation") and the several undersigned Officers and Directors thereof
whose signatures appear below hereby makes, constitutes and appoints Lawrence M.
Kimbrough and Robert O. Bratton, and each of them acting individually, its and
his true and lawful attorneys, with full power to act without the other and with
full power of substitution, to execute, deliver and file in its name and on its
and his behalf, and in each of the undersigned Officer's and Director's capacity
or capacities as shown below, (a) a Registration Statement on Form S-3 (or other
appropriate form) with respect to the registration under the Securities Act of
1933, as amended (the "Securities Act"), of 1,000,000 shares of the Common Stock
of the Corporation for sale and distribution from time to time to shareholders
of the Corporation pursuant to the automatic reinvestment of dividends paid on
the Corporation's Common Stock and the investment of additional cash
contributions, pursuant to the Dividend and Reinvestment and Stock Purchase
Plan, and any and all amendments, including any and all post-effective
amendments, to the foregoing and any and all documents in support thereof or
supplemental thereto, and (b) such registration statements, petitions,
applications, consents to service of process or other instruments, and any and
all amendments or supplements to the foregoing and any and all documents in
support thereof or supplemental thereto, as may be necessary or advisable to
qualify or register the securities covered by said Registration Statement under
such state or other securities laws, regulations and requirements as may be
applicable; and each of the Corporation and said Officers and Directors hereby
grants to said attorneys, and to each of them, full power and authority to do
and perform each and every act and thing whatsoever as said attorneys or
attorney may deem necessary or advisable to carry out fully the intent of this
power of attorney to the same extent and with the same effect as the Corporation
might or could do, and as each of said Officers and Directors might or could do
personally in his capacity or capacities as aforesaid, and each of the
Corporation and said Officers and Directors hereby ratifies and confirms all
acts and things which said attorneys or attorney might do or cause to be done by
virtue of this power of attorney and its or his signature as the same may be
signed by said attorneys or attorney, or either of them, to any or all of the
following (and/or any and all amendments and supplements to any or all thereof):
such Registration Statement under the Securities Act, and all such registration
statements, petitions, applications, consents to service of process and other
instruments, and any and all amendments to the foregoing and any and all
documents in support thereof or supplemental thereto, under such securities
laws, regulations and requirements as may be applicable.
IN WITNESS WHEREOF, First Charter Corporation has caused this power of
attorney to be signed on its behalf, and each of the undersigned Officers and
Directors of the Corporation in the capacity or capacities noted has hereunto
set his hand on the date indicated.
FIRST CHARTER CORPORATION
By: /s/ Lawrence M. Kimbrough
------------------------------------------
Lawrence M. Kimbrough
President and Chief Executive Officer
Dated: July 15, 1998
<PAGE> 2
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lawrence M. Kimbrough President, Chief Executive July 15, 1998
- - ------------------------------------------ Officer and Director
Lawrence M. Kimbrough (Principal Executive
Officer)
/s/ Robert O. Bratton Executive Vice President July 15, 1998
- - ------------------------------------------ (Principal Financial
Robert O. Bratton and Principal Accounting
Officer)
/s/ William R. Black Director July 15, 1998
- - ------------------------------------------
William R. Black
/s/ Michael R. Coltrane Director July 15, 1998
- - ------------------------------------------
Michael R. Coltrane
Director July __, 1998
- - ------------------------------------------
J. Roy Davis, Jr.
/s/ T. Carl Dedmon Director July 15, 1998
- - ------------------------------------------
T. Carl Dedmon
Director July __, 1998
- - ------------------------------------------
James B. Fincher
/s/ John J. Godbold, Jr. Director July 15, 1998
- - ------------------------------------------
John J. Godbold, Jr.
/s/ H. Clark Goodwin Director July 15, 1998
- - ------------------------------------------
H. Clark Goodwin
/s/ Charles F. Harry III Director July 15, 1998
- - ------------------------------------------
Charles F. Harry III
/s/ Frank H. Hawfield, Jr. Director July 15, 1998
- - ------------------------------------------
Frank H. Hawfield, Jr.
/s/ J. Knox Hillman, Jr. Director July 15, 1998
- - ------------------------------------------
J. Knox Hillman, Jr.
/s/ Jerry E. McGee Director July 15, 1998
- - ------------------------------------------
Jerry E. McGee
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Director July __, 1998
- - ------------------------------------------
Hugh H. Morrison
/s/ Thomas R. Revels Director July 15, 1998
- - ------------------------------------------
Thomas R. Revels
</TABLE>
<PAGE> 1
EXHIBIT 24.2
FIRST CHARTER CORPORATION
CERTIFICATE OF SECRETARY
I, David E. Keul, Assistant Corporate Secretary of First Charter
Corporation, a corporation organized and existing under the laws of the State of
North Carolina (the "Corporation"), do hereby certify that the following is a
true and correct copy of a resolution duly adopted by the Board of Directors of
the Corporation at a meeting of the Board of Directors held on July 15, 1998, at
which meeting a quorum was present and acting throughout, and that such
resolution is in full effect and has not been amended or rescinded as of the
date hereof.
IN WITNESS WHEREOF, I have hereupon set my hand and affixed the seal of
the Corporation this 4th day of August, 1998.
/s/ DAVID E. KEUL
---------------------------------
David E. Keul
Assistant Corporate Secretary
(CORPORATE SEAL)
<PAGE> 2
FURTHER RESOLVED, that Lawrence M. Kimbrough and Robert O. Bratton, and
each of them with full power to act without the other, be, and they hereby are,
authorized and empowered to sign the aforesaid Registration Statement and any
amendment or amendments (including post-effective amendments) thereto on behalf
of and as attorneys for the Corporation and on behalf of and as attorneys for
any of the following, to wit: the principal executive officer, the principal
financial officer, the principal accounting officer, and any other officer of
the Corporation, including the Chairman of the Board of Directors and the
President of the Corporation; and
<PAGE> 1
EXHIBIT 99.1
AMENDED AND RESTATED
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The following, in question and answer form, are the provisions of the
Amended and Restated Dividend Reinvestment and Stock Purchase Plan (the "Plan")
of First Charter Corporation (the "Company"). Those holders of common stock of
the Company (the "Common Stock") who do not wish to participate in the Plan will
continue to receive cash dividends directly, if and when paid. The Plan
initially became effective on December 1, 1987 and was amended and restated
effective July 24, 1998.
PURPOSE
1. What is the purpose of the Plan?
The purpose of the Plan is to provide owners of Common Stock with a
simple and convenient way of purchasing additional shares of Common Stock.
Participants in the Plan may purchase shares of Common Stock by (i) having the
cash dividends on all or a portion of their shares of Common Stock automatically
reinvested in shares of Common Stock, and (ii) by making optional cash payments
to the Plan which are then invested in shares of Common Stock.
The Company intends initially for the Plan Administrator, Registrar and
Transfer Company, to purchase shares of Common Stock for the Plan in the open
market. However, subject to certain requirements of the Securities and Exchange
Commission, the Company may direct the Plan Administrator to purchase shares of
Common Stock for the Plan directly from the Company. If the Plan Administrator
purchases shares directly from the Company, the Company will receive additional
funds that it will use for general corporate purposes, including investments in,
or extensions of credit to, its subsidiaries.
ADVANTAGES
2. What are the advantages of the Plan?
Typically, when a shareholder purchases shares of Common Stock on the
open market through a broker-dealer, the shareholder will pay a brokerage
commission in addition to the purchase price of the shares. When the Plan
Administrator purchases Common Stock on the open market for the Plan, the Plan
also pays brokerage commissions, and each Participant's Plan account is charged
with its pro rata share of these brokerage commissions. However, each
Participant's share of the brokerage commission may be less than he or she might
individually incur since the Plan Administrator will buy shares in volume and
pass commission savings on to the Participants. No other fees or service charges
are imposed on Participants in connection with the purchase of shares of Common
Stock under the Plan.
<PAGE> 2
Participants also have the option of depositing with the Plan
Administrator their stock certificates for shares enrolled in the Plan for
dividend reinvestment. Therefore, Participants avoid the inconvenience and
expense of holding certificates for the shares of Common Stock that are enrolled
in the Plan. See Question 9.
PARTICIPATION
3. Who is eligible to participate?
All registered holders of Common Stock (shareholders) are eligible to
participate in the Plan. Beneficial owners of Common Stock whose shares are held
in registered names other than their own, such as trustees, bank nominees or
brokers, must arrange for the holder of record to participate in the Plan or
have the shares transferred to their own names before enrolling in the Plan.
After enrollment in the Plan as described below, a Participant must always have
at least one whole share of Common Stock enrolled in dividend reinvestment to
continue to participate in the Plan.
4. How does a shareholder become a participant?
An eligible shareholder may enroll in the Plan by signing the
Authorization Form and returning it to the Plan Administrator at its address set
forth in Question 22. An Authorization Form, together with a postage-paid
envelope addressed to the Plan Administrator, is enclosed with this document,
and additional forms may be obtained at any time by written request to the Plan
Administrator at its address set forth in Question 22.
5. What does the Authorization Form provide?
The Authorization Form allows an eligible shareholder to enroll in the
Plan by electing to have the cash dividends on shares of Common Stock registered
in that shareholder's name reinvested in additional shares of Common Stock from
time to time. The Authorization Form must indicate the number of whole shares
that a shareholder wishes to enroll in the Plan for dividend reinvestment, which
may be all or any portion of the shares of Common Stock registered in the
shareholder's name (but not less than one whole share). The shareholder also
must include his or her social security number or taxpayer identification number
on the Authorization Form, and failure to supply this information may result in
backup withholding of income taxes from dividend payments owed to such
shareholder with respect to Common Stock enrolled in the Plan. See Question 23.
6. After enrollment, may a Participant change the number of participating
shares?
Yes. A Participant who decides to change the number of shares enrolled
in dividend reinvestment must sign and return a new Authorization Form to the
Plan Administrator indicating the revised number of whole shares (but not less
than one) that are to be enrolled in dividend reinvestment. See Question 21
concerning withdrawal of shares from dividend reinvestment.
2
<PAGE> 3
7. When may a shareholder enroll in the Plan?
An eligible shareholder may enroll in the Plan at any time. If a
properly completed Authorization Form enrolling shares of Common Stock for
dividend reinvestment is received by the Plan Administrator at least one
business day prior to the record date established for payment of a particular
cash dividend, reinvestment of cash dividends with respect to such shares will
commence with that dividend. If the Authorization Form is received after the
record date established for a particular cash dividend, then the reinvestment of
cash dividends will not begin until the dividend payment date following the next
record date.
DIVIDEND REINVESTMENT
8. How does dividend reinvestment work under the Plan?
If shares of Common Stock are enrolled in the Plan for dividend
reinvestment, the cash dividends that otherwise would be paid to the Participant
for such shares will instead be received by the Plan Administrator on behalf of
the Participant. The Plan Administrator then will use the cash dividends to
purchase additional shares of Common Stock for the Participant's Plan account.
See Question 14. As shares are purchased through dividend reinvestment and
credited to the Participant's Plan account, these shares automatically will be
enrolled in the Plan for future dividend reinvestment.
9. What does a shareholder do with stock certificates for shares enrolled
in dividend reinvestment?
Participants may, but are not required to, deposit with the Plan
Administrator their certificates for shares of Common Stock enrolled in dividend
reinvestment under the Plan at no cost. These shares will then be held in the
name of one of the Plan Administrator's nominees and will thereafter be credited
to and maintained in the Participant's Plan account. This feature allows a
Participant to avoid the risk and cost associated with the loss, theft or
destruction of stock certificates so deposited. To deposit certificates, a
Participant must send the certificates representing shares enrolled in dividend
reinvestment to the Plan Administrator by registered mail with written
instructions to deposit them in the Participant's Plan account. Participants
should not endorse the certificates or complete the assignment section.
OPTIONAL CASH PAYMENTS
10. What are optional cash payments?
Participants who remain eligible to participate and who are active
participants in the Plan may make optional cash payments to the Plan
Administrator for the direct purchase of Common Stock under the Plan. Shares
purchased with a Participant's optional cash payments will be credited to the
Participant's Plan account and automatically will be enrolled in the Plan for
future dividend reinvestment. Participants are not required to make any optional
cash payments to participate in the Plan.
3
<PAGE> 4
11. Are there any limits on optional cash payments by Participants?
Each optional cash payment must be at least $25, and a Participant's
aggregate optional cash payments may not exceed $3,000 in any calendar quarter.
A calendar quarter is a three month period beginning on each January 1, April 1,
July 1 and October 1 of each year.
12. How do Participants make optional cash payments?
An eligible Participant may make optional cash payments at any time (i)
by check or money order made payable to Registrar and Transfer Company, (ii) by
authorizing a periodic automatic draft of the Participant's deposit account at a
bank or other depository institution in accordance with its and the Plan
Administrator's rules and procedures or (iii) by any other method permitted by
the Plan Administrator from time to time. An optional cash payment made by check
or money order should include the Participant's taxpayer identification number,
the Company's name and the Participant's account number under the Plan, and
should be submitted, together with the perforated form from the Participant's
periodic statement of account, to the Plan Administrator at its address set
forth in Question 22. The Plan Administrator may, in its sole discretion, accept
an optional cash payment which is sent without the perforated form as long as
the Participant has included on the check or money order information sufficient
to identify the Participant's taxpayer identification number and the Company's
name. Optional cash payments that cannot be identified to the satisfaction of
the Plan Administrator will be returned to the Participant. In addition,
optional cash payments that do not satisfy the other requirements of the Plan
will be returned to the Participant. A Participant can receive a refund of any
optional cash payment upon written request received by the Plan Administrator at
least two business days prior to the date such funds are to be invested by the
Plan Administrator.
13. When should optional cash payments be made?
Optional cash payments may be made at any time. However, all optional
cash payments will be held in a non-interest bearing account maintained by the
Plan Administrator, pending investment in shares of Common Stock as described in
Question 14, and no interest will be paid on any optional cash payment for the
period following receipt but prior to investment. Accordingly, Participants may
wish to delay transmittal of optional cash payments until shortly before the
investment date (see Question 14), while still allowing enough time for the Plan
Administrator to receive the funds at least five business days prior to such
date. Any optional cash payments not received by the Plan Administrator in time
to be included in purchases of Common Stock for a particular month may, in the
discretion of the Plan Administrator, either be returned to the Participant or
be included in purchases for the next month.
PURCHASES OF COMMON STOCK BY THE PLAN
14. When and how will shares of Common Stock be purchased for a
Participant's Plan account?
Cash dividends and optional cash payments held for a Participant's Plan
account will be commingled with the cash dividends and optional cash payments
held for all other accounts under the
4
<PAGE> 5
Plan and will be applied to the purchase of Common Stock. The Plan Administrator
will make arrangements to use reinvested dividends to purchase Common Stock on a
quarterly basis, on or about the applicable dividend payment date. The Plan
Administrator will make arrangements to use optional cash payments to purchase
Common Stock at least once monthly, on or about the 15th day of each calendar
month. In the discretion of the Plan Administrator, purchases of Common Stock
made with reinvested cash dividends may be made together with purchases of
Common Stock made with optional cash payments in those months that cash
dividends are paid. In any case, purchases may be made over a number of days to
meet the requirements of the Plan.
Shares needed to meet the requirements of the Plan may be acquired on
any securities exchange on which the Common Stock is traded, in the
over-the-counter market, in negotiated transactions or by purchasing shares
being sold under the Plan by other Participants (all referred to as the "open
market"). In addition, in the discretion of the Company and subject to
requirements of the Securities and Exchange Commission, shares may be purchased
directly from the Company to be issued from authorized but unissued shares. If
the Plan Administrator purchases shares in the open market, a Participant's
price per share will be the weighted average price of shares purchased over the
relevant period to satisfy Plan requirements, plus the Participant's
proportionate share of the brokerage commission incurred by the Plan
Administrator in connection with such open market purchases during such period.
If the Plan Administrator purchases shares directly from the Company, a
Participant's price per share will be the fair market value of the Common Stock
on the day the shares are purchased. "Fair market value" with respect to any day
means the average of the high and low asked prices for shares of Common Stock,
calculated over the five business days prior to such date, or in the absence of
such information, as determined by the Plan Administrator on the basis of such
market quotations or other market information as it deems appropriate.
A Participant's account will be credited with a number of shares of
Common Stock equal to the amount of cash dividends and/or optional cash payments
invested on behalf of the Participant, divided by the applicable price per share
of Common Stock, with fractional shares computed to at least three decimal
places. Certificates for shares of Common Stock purchased under the Plan will
not customarily be issued to the Participants. Instead, the Plan Administrator
will hold all shares in the name of one of its nominees, and the shares of
Common Stock that a Participant buys under the Plan will be credited to and
maintained in the Participant's Plan account. This feature protects against
loss, theft or destruction of stock certificates. The Participant will receive a
periodic statement detailing the status of the Participant's holdings. See
Question 16 concerning requests for stock certificates and Question 17
concerning periodic reports to Participants.
In certain circumstances, the lack of shares available for purchase,
the compliance with banking and securities laws, the observance of rules and
regulations or governmental regulatory bodies or other conditions may result in
delays or temporary curtailment or suspension of purchases of Common Stock under
the Plan. Typically, purchases will resume when shares are again available or
when purchases are again permitted. However, if for any reason an optional cash
payment or cash dividend is not invested in shares of Common Stock within 30
days of receipt by the Plan Administrator, the Plan Administrator will promptly
return to each Participant a check for the amount of funds representing such
cash dividends or optional cash payments held on the Participant's account.
5
<PAGE> 6
Because the Plan Administrator will arrange for the purchase of shares
on behalf of the Plan, neither the Company nor any Participant in the Plan has
the authority or power to control either the timing or pricing of shares
purchased or the selection of the broker making the purchase. Therefore,
Participants will not be able to time precisely their purchases through the Plan
and will bear the market risk associated with fluctuations in the price of the
Company's Common Stock. That is, it is possible that the market price of the
Common Stock could go up or down before the broker purchases stock with the
Participant's funds.
15. Are there any expenses to Participants in connection with purchases
under the Plan?
Each Participant's account under the Plan will be charged with its pro
rata share of brokerage commissions incurred by the Plan Administrator when it
purchases Common Stock for the Plan in open market purchases. However,
Participants will not incur any brokerage commissions for purchases of Common
Stock made under the Plan directly from the Company. No other fees or service
charges will be imposed on Participants in connection with purchases of Common
Stock for accounts under the Plan. See Question 18 concerning a Participant's
expenses for sales of Common Stock under the Plan.
REQUESTS FOR STOCK CERTIFICATES
16. Can a shareholder receive stock certificates for shares purchased under
the Plan or deposited into the Plan?
Certificates for any number of shares credited to and maintained in the
Participant's Plan account from time to time will be issued to the Participant
without charge upon the Participant's written request to the Plan Administrator
at its address set forth in Question 22. Certificates will be issued for whole
shares only. In the event a Participant's request involves a fractional share, a
check for the value of the fractional share, determined based on the closing
price of the Common Stock on the effective date of the Participant's request,
will be mailed to the Participant. Certificates will be issued in, and checks
will be made payable to, the name in which the Plan account is registered.
Unless a Participant specifically requests the discontinuation of dividend
reinvestment for the shares issued to the Participant, these shares will remain
enrolled in the Plan for dividend reinvestment. See Question 21 concerning
discontinuation of dividend reinvestment and liquidation of accounts.
REPORTS TO PARTICIPANTS
17. What kind of reports will be sent to Participants?
Each Participant will receive a statement of account at the end of each
month in which there has been a transaction that has affected the Participant's
account, but no less frequently than quarterly. The statement of account will
include information describing each transaction. Specifically, it will include
information as to dividends received on behalf of the Participant, optional cash
payments received from the Participant, amounts invested for the Participant,
costs of purchases, number of shares purchased (including fractional shares),
total shares credited to the Participant's account and other information for the
year to date. Each year, in January, a Form 1099 will be sent to each
6
<PAGE> 7
Participant that will include certain information pertaining to the
Participant's account and necessary for income tax purposes. This Form 1099
should be retained by the Participant for preparation of its income tax returns.
All notices, statements, reports and other information and documents
will be mailed to a Participant's address of record. Therefore, a Participant
should promptly notify the Plan Administrator at its address set forth in
Question 22 of any change in address.
SALES
18. May a Participant sell shares held in the Participant's Plan account?
A Participant may request the Plan Administrator to sell all shares, or
any number of whole shares, credited to the Participant's Plan account by
providing written instructions to the Plan Administrator at its address set
forth in Question 22. The Plan Administrator will make arrangements to sell such
shares through broker-dealers selected by the Plan Administrator or in a
negotiated transaction without a broker, including a sale to the Company or a
sale to the Plan for purchase on behalf of other Plan Participants, in the Plan
Administrator's sole discretion. Shares being sold by a Participant may be
aggregated with shares being sold by other Participants who have requested
sales. The sales price per share will be the weighted average sales price of
shares sold over the relevant period, as volume dictates. Following the
completion of the sale, the Plan Administrator will send a check to the
Participant, payable to the name in which the Plan account is registered, for
the proceeds of the sale, less (i) an administrative fee of $15.00, (ii) the
Participant's proportionate share of brokerage commissions incurred by the Plan
Administrator in connection with the sales over the relevant period, and (iii)
any required tax withholdings. If a Participant's Plan account falls below one
whole share, the Plan Administrator in its discretion will liquidate the
fractional share and remit the value to the Participant, determined based on the
closing price of the Common Stock on the effective date of the sale as reported
on a national securities exchange or the Nasdaq Stock Market, as applicable. The
Company reserves the right to instruct the Plan Administrator to limit sales
under the Plan in a uniform manner.
Because the Plan Administrator will arrange for the sale of shares on
behalf of the Plan, neither the Company nor any Participant in the Plan has the
authority or power to control either the timing or pricing of shares sold or the
selection of the broker making the sale. Therefore, Participants will not be
able to time precisely their sales through the Plan and will bear the market
risk associated with fluctuations in the price of the Company's Common Stock.
That is, it is possible that the market price of the Common Stock could go up or
down before the broker sells the Participant's shares.
A Participant may choose to sell shares held in his or her Plan account
through a stockbroker chosen by the Participant. If so, the Participant should
request a certificate for his or her shares from the Plan Administrator prior to
the sale. See Question 16.
19. What happens to dividend reinvestment if a Participant sells all shares
held in his or her Plan account?
7
<PAGE> 8
This may depend on whether the Participant has shares enrolled in
dividend reinvestment that have not been deposited with the Plan Administrator
and for which the Participant still holds a stock certificate registered in the
Participant's name (referred to as "certificated shares"). If a Participant does
not have any certificated shares enrolled in dividend reinvestment, and the
Participant sells all of the shares held in the Participant's Plan account, then
dividend reinvestment will be terminated and the Participant's Plan account will
be closed. However, if a Participant has certificated shares that are enrolled
in dividend reinvestment, then even if the Participant sells all of the shares
held in his or her Plan account, in the discretion of the Plan Administrator
dividend reinvestment will continue with respect to all of the Participant's
certificated shares that are still enrolled in dividend reinvestment.
20. What happens to dividend reinvestment if a Participant sells
certificated shares registered in the Participant's name?
If all of a Participant's certificated shares are enrolled in dividend
reinvestment, and the Participant sells all or a portion of these shares, then
in the discretion of the Plan Administrator participation in dividend
reinvestment will continue with respect to the remaining portion of the
Participant's certificated shares, if any, together with all shares still held
in the Participant's Plan account. If all of a Participant's certificated shares
are not enrolled in dividend reinvestment, and the Participant sells all or a
portion of these shares, then in the discretion of the Plan Administrator
participation in dividend reinvestment will continue with respect to (i) the
lesser of the number of certificated shares originally enrolled in dividend
reinvestment or all certificated shares remaining following the sale, if any,
together with (ii) all shares still held in the Participant's Plan account.
DISCONTINUATION OF DIVIDEND REINVESTMENT AND ACCOUNT LIQUIDATION
21. How does a Participant discontinue the reinvestment of dividends under
the Plan?
A Participant may discontinue the reinvestment of dividends under the
Plan for all shares or any portion of the whole shares enrolled in dividend
reinvestment by notifying the Plan Administrator in writing at its address set
forth in Question 22. Any termination notice received at least five business
days prior to a record date will be effective as to dividends paid for such
record date, and a termination notice received after such time will not be
effective until dividends paid for such record date have been reinvested. In the
discretion of the Plan Administrator, a request for discontinuation of dividend
reinvestment with respect to some, but not all, of a Participant's shares will
be effective first with respect to any certificated shares then enrolled in
dividend reinvestment. Thereafter, if necessary the Plan Administrator will
withdraw shares from the Participant's Plan account upon the discontinuation of
dividend reinvestment and the Participant will receive a stock certificate for
the number of whole shares so withdrawn. Any remaining shares credited to the
Participant's account will continue to participate in dividend reinvestment
under the Plan. In the discretion of the Plan Administrator, if the
Participant's Plan account falls below one whole share, the Plan Administrator
will liquidate the fractional share and remit the value to the Participant,
determined based on the closing price of the Common Stock on the effective date
of the withdrawal from dividend reinvestment, as reported on a national
securities exchange or the Nasdaq Stock Market, as applicable.
8
<PAGE> 9
Upon total discontinuation of dividend reinvestment, a Participant will
receive a stock certificate for all whole shares credited to the Participant's
account under the Plan, and any fractional share will be liquidated and the Plan
Administrator will remit the value to the discontinuing Participant, determined
as described above. At the option of the Participant, upon total discontinuation
of dividend reinvestment, a Participant may request that all shares credited to
his or her Plan account be sold. Upon receipt of any such written instructions,
the Plan Administrator will arrange for the sale of the Participant's shares,
and will forward the proceeds to the Participant, in the manner set forth in
Question 18.
All certificates will be issued in, and checks will be made payable to,
the name in which the Plan account is registered.
ADMINISTRATION
22. Who administers the Plan for Participants?
Registrar and Transfer Company (the "Plan Administrator") administers
the Plan for Participants, keeps records, sends periodic statements of account
to Participants and performs other duties relating to the Plan. Communications
and inquiries may be directed to Registrar and Transfer Company, 10 Commerce
Drive, Cranford, New Jersey 07016, telephone (800) 368-5948.
FEDERAL TAX CONSEQUENCES
23. What are the federal income tax consequences of participation in the
Plan?
Shares that are purchased under the Plan through dividend reinvestment
and optional cash payments will have a tax basis equal to the purchase price per
share, and the holding period for shares acquired under the Plan will begin on
the day after the shares are credited to a Participant's account, all as
indicated on the Participant's periodic statements of account. A Participant
receiving cash dividends will be treated as having received such dividends on
all of his or her shares of Common Stock, including dividends on shares held for
the Participant's Plan account even though these dividends are automatically
reinvested pursuant to the Plan. All such dividends are generally taxable as
ordinary income, regardless of whether they are paid directly to the Participant
or reinvested pursuant to the terms of the Plan. In addition, a Participant may
recognize gain or loss upon the sale of shares acquired pursuant to the Plan
based upon the gross proceeds of such sale, transaction costs and the tax basis
of such shares. IT IS IMPORTANT THAT PARTICIPANTS RETAIN ALL YEAR-END STATEMENTS
IN ORDER TO HAVE A RECORD OF THE TAX BASIS ATTRIBUTABLE TO SHARES ACQUIRED
PURSUANT TO THE PLAN.
The Plan Administrator will comply with all applicable Internal Revenue
Service requirements concerning the filing of information returns for dividends
credited to each account under the Plan, and such information will be provided
to the Participant by a duplicate of that form or in a final statement of
account for each calendar year. With respect to Participants whose dividends or
other form of distribution are subject to United States domestic or foreign tax
withholding, the Plan Administrator will comply with all applicable Internal
Revenue Service requirements concerning the amounts of tax
9
<PAGE> 10
to be withheld, which will be deducted from the dividends credited to the
Participant's account prior to investment or from any distributions due to the
Participant, as applicable.
The foregoing is only a general outline of some of the applicable
federal tax requirements. Each Participant should consult his or her own tax
adviser for additional information regarding specific tax consequences of
participation in the Plan. Information for income tax purposes for Participants
in the Plan will be printed on the Participant's periodic statements of account
and Forms 1099.
OTHER INFORMATION
24. How will stock dividends and stock splits on shares held in Plan
accounts be handled?
In the event that dividends are paid in shares of Common Stock, or if
shares of Common Stock are distributed in connection with any stock split or
similar transaction, the shares of Common Stock payable to a Participant with
respect to all shares of the Company's Common Stock owned by the Participant
(whether or not such shares are enrolled in dividend reinvestment under the Plan
and whether such shares are registered in the Participant's name or held in the
Participant's Plan account) will be credited to the Participant's Plan account
and will be subject to future dividend reinvestment, and no stock certificates
will be issued to the Participant at such time for such shares.
25. What happens if the Company has a Common Stock rights offering?
In the event that the Company makes available to its shareholders
rights to purchase additional shares or other securities, the Plan Administrator
will sell all rights accruing to shares held for Participants' accounts under
the Plan if a purchaser can be located. The proceeds will be combined with any
other funds for reinvestment in connection with the next dividend payment date
on which shares of Common Stock are to be purchased pursuant to dividend
reinvestment. These proceeds will be treated as if they were optional cash
payments.
26. How will a Participant's Plan Shares be voted at a meeting of
shareholders?
The Company will mail each Participant proxy materials including a
proxy card representing all the shares of Common Stock for which the Participant
holds stock certificates registered in his or her name and all the shares, both
whole and fractional, held in the Participant's Plan account. The proxy will be
voted as indicated by the Participant. If the Participant does not return the
proxy card, or if the Participant returns an unsigned proxy card, none of his or
her shares will be voted.
27. May a Participant transfer, assign or pledge Plan Shares?
Except as described in Question 18, a Participant cannot sell,
transfer, assign or pledge shares credited to and maintained in the
Participant's Plan account for any purpose while the shares are credited to the
Participant's Plan account. If a Participant wishes to sell directly or
transfer, assign or pledge these shares, the Participant must first request a
certificate for the shares in accordance with Question 16 above.
10
<PAGE> 11
28. May the Plan be changed or discontinued?
Yes. Although the Company intends to continue the Plan, the Company
reserves the right to suspend, modify or terminate the Plan at any time.
Participants will be notified of any such suspension, modification or
termination. The Company and the Plan Administrator also reserve the right to
change any administrative procedures of the Plan, and the Company reserves the
right to change the Plan Administrator at any time.
29. What is the responsibility of the Plan Administrator and/or the
Company?
The Plan Administrator receives the Participant's dividend payments and
optional cash payments, invests such amounts in shares of Common Stock,
maintains continuing records of each Participant's Plan account and advises
Participants as to all transactions in and the status of their Plan accounts.
The Plan Administrator acts in the capacity of agent for the Participants.
All notices from the Plan Administrator to a Participant will be
addressed to the Participant at the last address of record with Plan
Administrator. The mailing of a notice to a Participant's last address of record
will satisfy the Plan Administrator's duty of giving notice to such Participant.
Therefore, a Participant must notify the Plan Administrator at its address set
forth in Question 22 promptly of any change of address.
Neither the Plan Administrator nor the Company shall have any
responsibility beyond the exercise of ordinary care for any reasonable and
prudent actions taken or omitted pursuant to the Plan, including, without
limitation, any claim for liability arising out of failure to terminate a
Participant's account upon such Participant's death or adjudicated incompetency
prior to receipt of written notice of death or adjudicated incompetency or
arising out of or relating to purchase or sales prices reflected in
Participants' Plan accounts, the dates of purchases or sales of shares or
fluctuations in the market value of the Common Stock after purchase or sale of
shares, nor shall they have any duties, responsibilities or liabilities except
as expressly set forth in the Plan.
The payment of dividends is at the discretion of the Company's Board of
Directors and will depend on future earnings, the financial condition of the
Company and other factors. The Board of Directors may change the amount and
timing of dividends at any time without notice.
Plan Participants should recognize that neither the Company nor the
Plan Administrator can assure the Participant of a profit or protection from a
loss on Common Stock purchased under the Plan.
11
