<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
FIRST CHARTER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on June 6, 2000
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of First Charter Corporation will be
held at The Oasis Auditorium at University Place, 604 Daniel Burnham Way,
Charlotte, North Carolina on Tuesday, June 6, 2000, at 5:00 p.m., for the
following purposes:
1. To elect six directors with terms expiring in 2003, three
directors with terms expiring in 2002 and two directors with
terms expiring in 2001;
2. To adopt the First Charter Corporation 2000 Omnibus Stock Option
and Award Plan;
3. To approve an amendment to the Corporation's Amended and Restated
Articles of Incorporation to increase the number of authorized
shares of Common Stock to 100,000,000 shares;
4. To approve an amendment to the Corporation's Amended and Restated
Articles of Incorporation to authorize the issuance of 2,000,000
shares of Preferred Stock;
5. To ratify the action of our Board of Directors in selecting KPMG
LLP as our independent certified public accountants for 2000; and
6. To transact any other business properly brought before the
meeting or any adjournment thereof.
Pursuant to the provisions of the North Carolina Business Corporation
Act, April 18, 2000 has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of Common Stock of record at the close of business on that date will be
entitled to notice of and to vote at the meeting and at any adjournment thereof.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend, please sign, date and return the accompanying proxy promptly
(or vote by phone or on the Internet in accordance with the instructions on the
proxy card), so that your shares may be represented and voted at the Annual
Meeting.
By order of the Board of Directors,
James W. Townsend, Jr.
Secretary
April 28, 2000
<PAGE> 3
FIRST CHARTER CORPORATION
22 Union Street, North
Concord, North Carolina 28025
----------------------------------------
PROXY STATEMENT
----------------------------------------
2000 Annual Meeting of Shareholders
to be held on June 6, 2000
INFORMATION ABOUT ANNUAL MEETING AND VOTING
BACKGROUND INFORMATION
The principal executive offices of First Charter Corporation are located
at 22 Union Street, North, Concord, North Carolina 28025 and our telephone
number is (704) 786-3300. We own all of the outstanding capital stock of First
Charter National Bank, a national banking association ("FCNB"), and own all of
the outstanding capital stock of Lincoln Bank of North Carolina, Cabarrus Bank
of North Carolina and Community Bank & Trust Co., each a North Carolina state
bank.
Incidentally, the term "Corporation" (as well as the words "we," "us" and
"our") refer to First Charter Corporation. References to "you" or "your" refer
to our shareholders. The term "Common Stock" means the Corporation's outstanding
common stock.
PURPOSE OF PROXY STATEMENT
The Board of Directors of First Charter Corporation is soliciting your
proxy for voting at our Annual Meeting of Shareholders to be held on Tuesday,
June 6, 2000 at 5:00 p.m., at The Oasis Auditorium at University Place, 604
Daniel Burnham Way, Charlotte, North Carolina. This proxy statement has been
mailed to shareholders on or about April 28, 2000.
BUSINESS TO BE TRANSACTED
At the Annual Meeting, we will ask you to:
- Elect six directors with terms expiring in 2003, three directors
with terms expiring in 2002 and two directors with terms expiring
in 2001;
- Adopt the First Charter Corporation 2000 Omnibus Stock Option and
Award Plan (the "2000 Plan");
- Approve an amendment to the Corporation's Amended and Restated
Articles of Incorporation to increase the number of authorized
shares of Common Stock to 100,000,000 shares (the "Articles of
Incorporation Common Stock Amendment");
<PAGE> 4
- Approve an amendment to the Corporation's Amended and Restated
Articles of Incorporation to authorize the issuance of 2,000,000
shares of Preferred Stock (the "Articles of Incorporation
Preferred Stock Amendment");
- Ratify the action of our Board of Directors in selecting KPMG LLP
as our independent certified public accountants for 2000; and
- Consider and vote upon any other business properly before the
meeting.
No other items are scheduled to be voted upon.
WHO MAY VOTE
Shareholders as of the close of business on April 18, 2000 (the "Record
Date") are entitled to vote at the Annual Meeting. Each share of Common Stock is
entitled to one vote on each of the matters voted upon at the meeting, except
that shares held by FCNB, whether or not held in a fiduciary capacity, may not
be voted by FCNB in the election of directors.
HOW TO VOTE
Shareholders may vote:
- In person;
- By mail via the proxy card;
- By telephone in accordance with the instructions on your proxy
card; or
- On the Internet in accordance with the instructions on your proxy
card.
QUORUM TO TRANSACT BUSINESS
A quorum for the transaction of business at the Annual Meeting consists
of the majority of the issued and outstanding shares of Common Stock entitled to
vote on a particular matter, present in person or represented by proxy. As of
the Record Date, 31,074,511 shares of Common Stock were issued and outstanding.
If you attend in person and indicate your presence, or mail in a properly dated
proxy card (or if you vote by phone or on the Internet in accordance with the
instructions on the proxy card), your shares will be counted toward a quorum.
VOTING OF SHARES VIA PROXY
If you have submitted a properly executed proxy via the mail (or if you
vote by phone or on the Internet in accordance with the instructions on the
proxy card) and a quorum is established, your shares will be voted as you
indicate. However, if you mail in your proxy card and sign and date your card,
but do not mark it, your shares will be voted in favor of the election of all of
the nominated directors, in favor of adopting the 2000 Plan, in favor of
approving the Articles of Incorporation Common Stock Amendment, in favor of the
Articles of Incorporation Preferred Stock Amendment and in favor of ratifying
KPMG LLP as our independent certified public accountants for 2000. If you sign
and date your proxy card and withhold voting for any or all of the nominated
directors (as explained on the proxy card) or abstain regarding the other
matters to be voted upon, your vote will be recorded as being
2
<PAGE> 5
withheld or as an abstention, as the case may be, but it will have no effect on
the outcome of the vote. Proxies submitted by brokers that do not indicate a
vote for some or all of the proposals because they do not have discretionary
voting authority and have not received instructions as to how to vote on those
proposals (so-called "broker non-votes") will be counted for purposes of
determining a quorum but will not affect the outcome of the vote.
REVOCATION OF PROXY
If you later decide to revoke or change your proxy, you may do so by: (1)
sending a written statement to that effect to the Secretary of the Corporation;
or (2) submitting a properly signed proxy with a later date; or (3) voting in
person at the Annual Meeting.
VOTE NECESSARY FOR ACTION
Directors are elected by a plurality vote of shares present at the
meeting, meaning that the director nominee with the most affirmative votes for a
particular slot is elected for that slot. In an uncontested election for
directors, the plurality requirement is not a factor. The adoption of the 2000
Plan, approval of the Articles of Incorporation Common Stock Amendment, approval
of the Articles of Incorporation Preferred Stock Amendment and the ratification
of the appointment of KPMG LLP as our independent certified public accountants
for 2000 requires an affirmative vote of the majority of the shares present and
voting at the meeting.
DUPLICATE PROXY STATEMENTS AND CARDS
You may receive more than one proxy statement, proxy card or Annual
Report. This duplication will occur if title to your shares is registered
differently or your shares are in more than one type of account maintained by
Registrar and Transfer Company, our transfer agent. To have all your shares
voted, please sign and return all proxy cards or make sure that you vote all of
your shares by phone or over the Internet.
OTHER BUSINESS
We know of no other matters to be presented for shareholder action at the
Annual Meeting. If other matters are properly presented at the meeting, your
signed and dated proxy card, or your vote via telephone or the Internet, gives
authority to Robert O. Bratton, David E. Keul and Anne C. Forrest to vote your
shares in accordance with their best judgment.
EXPENSES OF SOLICITATION
We will pay the cost of preparing, assembling and mailing this
proxy-soliciting material. In addition to the use of the mail, proxies may be
solicited personally or by telephone, by our officers and employees without
additional compensation. We pay all costs of solicitation, including certain
expenses of brokers and nominees who mail proxy material to their customers or
principals.
3
<PAGE> 6
ELECTION OF DIRECTORS
Our Articles of Incorporation and Bylaws provide that the Board of
Directors will consist of at least five but not more than twenty-five members.
The exact number of directors is determined by either the agreement of at least
75% of the members of the Board of Directors or by vote of the shareholders. The
directors are divided into three classes having staggered three-year terms. Each
class of directors is as nearly equal in number as possible. Our Bylaws provide
that a director's term will expire at the first shareholders' meeting after that
director reaches age 70. There are currently sixteen directors of the
Corporation. The Board has approved, by the required percentage, an increase in
the size of the Board of Directors from sixteen to seventeen members.
By action of the Board of Directors on January 26, 2000, Harold D.
Alexander, James E. Burt, III, Charles A. James, Walter H. Jones, Jr., Samuel C.
King, Jr. and L. D. Warlick, Jr. were elected to the Board of Directors
conditioned upon consummation of the merger of Carolina First BancShares, Inc.
("CFBI"), with and into the Corporation. The merger was consummated on April 4,
2000 and such individuals became members of the Board of Directors at that time.
In addition, John M. McCaskill and J. Knox Hillman resigned from the Board of
Directors effective August 29, 1999 and September 8, 1999, respectively. The
terms of six of our directors expire at the Annual Meeting. In addition, since
Harold D. Alexander, James E. Burt, III, Samuel C. King and L. D. Warlick, Jr.
were appointed by the Board of Directors since the last annual meeting, the
corporate law of the state of North Carolina requires that these directors stand
for election at the Annual Meeting, which is the first meeting following their
appointment, even though their terms are not scheduled to expire at the Annual
Meeting.
The Board has nominated William W. Waters, who has not previously served
on the Board, for election as a director with a term expiring in 2002 and has
nominated for re-election the six remaining members of the Board of Directors
whose terms expire at the Annual Meeting and the four other directors that have
been appointed since the last annual meeting. It is intended that the persons
named in the accompanying form of proxy will vote to elect these eleven nominees
listed below unless authority to vote is withheld. The nominees will serve until
the annual meeting of shareholders in the year specified below or until an
earlier resignation or retirement or until a successor shall be elected and
shall qualify to serve. We expect that each of the nominees will be available
for election. However, if a vacancy in the slate of nominees is caused by death
or other unexpected occurrence, it is intended that shares represented by the
accompanying proxy will be voted for the election of a substitute nominee
selected by the persons named in the proxy. WE RECOMMEND A VOTE FOR ALL OF THE
NOMINEES FOR ELECTION AS DIRECTORS.
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<PAGE> 7
The names, ages and principal occupation (which has continued for the
past five years unless otherwise indicated) and certain other information for
each of the nominees and continuing directors is set forth below.
NOMINEES FOR TERMS EXPIRING IN 2003
MICHAEL R. COLTRANE, age 53, is the President and Chief Executive Officer
of CT Communications, Inc., a North Carolina telecommunications company. Mr.
Coltrane also serves as the Vice Chairman of the Corporation and of FCNB. He
served as a director of the Corporation from 1983 until 1985 and has currently
served as a director since 1988. Mr. Coltrane also serves as a director of CT
Communications, Inc.
J. ROY DAVIS, JR., age 66, is the principal owner and Chief Executive
Officer of S&D Coffee, Inc., a coffee roasting and beverage distribution firm.
He also serves as the Chairman of the Board of the Corporation and FCNB. Mr.
Davis has been a director since 1983.
CHARLES F. HARRY III, age 63, is President of Grover Industries, Inc., a
textile company. Mr. Harry has been a director since December 1997.
CHARLES A. JAMES, age 53, is the President of Mt. Pleasant Insurance
Agency; the President of Mt. Pleasant Enterprises, Inc., a land development
company; Director of Albemarle Knitting Corp.; Co-owner of Mt. Pleasant Bonded
Warehouse; Partner of All Secure Storage; Partner of North Branch Properties, a
real estate investment; and Partner of Earnhardt Interchange Properties, a real
estate/land investment. Mr. James has been a director of the Corporation since
April 2000.
WALTER H. JONES, JR., age 58, is a partner in the law firm of Homesley,
Jones, Gaines, Homesley & Dudley. Mr. Jones has been a director of the
Corporation since April 2000.
HUGH H. MORRISON, age 52, is the President of E. L. Morrison Co., Inc., a
retail building supply company. Mr. Morrison has been a director since 1985.
NOMINEES FOR TERMS EXPIRING IN 2002
JAMES E. BURT, III, age 62, is an Executive Vice President of the
Corporation. Prior to the merger of CFBI into the Corporation, Mr. Burt was the
President of CFBI from 1990 and the Chief Executive Officer of CFBI from 1998.
Mr. Burt has been a director of the Corporation since April 2000.
L. D. WARLICK, JR., age 60, is the President of Warlick Funeral Home in
Lincolnton, North Carolina. Mr. Warlick has served as a director of the
Corporation since April 2000.
WILLIAM W. WATERS, age 58, is the President of Waters Construction Co.
Mr. Waters has been nominated to stand for election at the annual meeting.
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<PAGE> 8
NOMINEES FOR TERMS EXPIRING IN 2001
HAROLD D. ALEXANDER, age 64, is the President and owner of Young &
Alexander, Inc., an electrical contractor. Mr. Alexander has been a director of
the Corporation since April 2000.
SAMUEL C. KING, JR., age 52, is the President of King's Office Supply,
Inc.; and the President of King Cain, Inc., d/b/a Mail Boxes Etc. since 1998.
Mr. King has been a director of the Corporation since April 2000.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2002
WILLIAM R. BLACK, age 51, is a medical doctor specializing in oncology.
Dr. Black has been a director since 1990.
JOHN J. GODBOLD, JR., age 59, was Executive Vice President of FCNB until
his retirement effective January 1, 1999. Prior to the merger of Carolina State
Bank into FCNB, Mr. Godbold served as President and Chief Executive Officer and
a director of CSB. Mr. Godbold has been a director since December 1997.
FRANK H. HAWFIELD, JR., age 66, is the owner of Firestone Home and Auto
Supply Store, a retail home and auto supply company. Mr. Hawfield has been a
director since 1995.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2001
LAWRENCE M. KIMBROUGH, age 59, is the President and Chief Executive
Officer of the Corporation and FCNB. Mr. Kimbrough has been a director since
1986.
DR. JERRY E. McGEE, age 57, has been President of Wingate University
since August 1992. Prior to being President of Wingate University, Dr. McGee
served as Vice President for Development at Furman University. Dr. McGee has
been a director since 1995.
THOMAS R. REVELS, age 47, is the President of healthgram.com, an Internet
information services company. From January 1998 until February 2000, Mr. Revels
was the President and Chief Executive Officer of Novant Health, Inc., Southern
Piedmont Region/Presbyterian Healthcare ("Novant"), a healthcare services
company. Prior to being President and Chief Executive Officer of Novant, Mr.
Revels served as President and Chief Executive Officer of Northeast Medical
Center, a healthcare services company, from April 1997 to December 1997. Prior
to that time, from May 1994 to April 1997, he served as President and Chief
Executive Officer of Cabarrus Memorial Hospital, a healthcare services company.
From October 1989 to May 1994, Mr. Revels served as Executive Vice President and
Chief Operating Officer of McLeod Regional Medical Center, a healthcare services
company. Mr. Revels has been a director since July 1997.
No director has a family relationship as close as first cousin with any
other director, nominee for director or executive officer of the Corporation.
6
<PAGE> 9
COMPENSATION OF DIRECTORS
During 1999, each director of the Corporation who was not employed by the
Corporation or its subsidiaries (an "outside director") was paid (1) $250 per
quarter for his services as a director, (2) $400 for each meeting of the Board
of Directors of the Corporation attended, and (3) $200 for each committee
meeting attended.
We also maintain the Deferred Compensation Plan for Non-Employee
Directors (the "Deferred Compensation Plan"). This plan permits outside
directors to elect to defer all or a portion of their fees. The deferred fees
may be invested in a cash account, which is credited with interest at an annual
rate equal to FCNB's Prime Rate, or in a stock-based account, in which the
participant will be credited with units based on the value of shares of Common
Stock. Amounts invested in the stock account are credited with additional
amounts representing the value of dividends declared and paid from time to time.
Under the Deferred Compensation Plan, a participant may elect to receive amounts
(payable in cash only) in a lump sum or in equal installments over five years,
following the participant's death, disability, retirement from the Board of
Directors or any other date selected by the participant which is at least six
months following the participant's election date.
We also maintain the Stock Option Plan for Non-Employee Directors (the
"Director Option Plan"). The Compensation Committee from time to time may grant
non-qualified options to purchase Common Stock to outside directors of the
Corporation or a subsidiary in accordance with this plan. The terms and
provisions of any options granted, including the termination and/or vesting or
accelerated exercise of the options, upon death, disability, retirement or
otherwise, is subject to the discretion of the Compensation Committee. The
exercise price of any option, must be equal to the fair market value of the
Common Stock on the date of grant. In October 1999, the Compensation Committee
granted an option to purchase 1,800 shares of Common Stock to each of the
outside directors of the Corporation and its subsidiaries at that time. The
options granted to these persons have terms of ten years and are exercisable in
cumulative installments of 20% per year over five years, at an exercise price of
$18.00 per share.
ATTENDANCE OF DIRECTORS
During 1999, the Board of Directors held ten meetings. Each director
attended at least 75% of the aggregate number of meetings of the Board of
Directors, and of all committees of the Board of Directors on which he served,
which were held when he was a director, except for Mr. Coltrane who attended 70%
of such meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The following is a brief description of the duties of each of our
committees and a list of the members of each such committee.
Executive Committee. The committee reviews management reports and makes
recommendations to the directors at the regularly scheduled Board of Directors
meetings. Our Bylaws provide that the Executive Committee also serves as the
nominating committee. In
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<PAGE> 10
this capacity, the Executive Committee determines the nominees for director in a
given year and may consider written nominations of candidates for election to
the Board of Directors properly submitted by shareholders to the Secretary of
the Corporation. The executive committee met eight times during 1999. J. Roy
Davis, Jr. (chairman), Michael R. Coltrane, John J. Godbold, Jr., Lawrence M.
Kimbrough, Jerry E. McGee and Hugh H. Morrison are the current members of the
executive committee.
Audit Committee. The Audit Committee reviews the work and reports of
our internal auditors. This committee reviews our independent auditors reports
and any examinations made by regulatory agencies. The Audit Committee also
establishes the scope and detail of the audit program, which is conducted by the
internal auditors to protect against improper and unsound practices and to
furnish adequate protection of all of our assets and records. It also reviews
proposals from the independent certified public accountants and makes
recommendations to the full Board of Directors. The Audit Committee met once
during 1999. John J. Godbold, Jr. (chairman), Charles F. Harry, III, and Frank
H. Hawfield, Jr. are the current members of the audit committee.
Compensation Committee. The Compensation Committee annually reviews and
recommends to the Board of Directors salary grade ranges and merit increase
guidelines for our employees and the employees of our subsidiaries. In addition,
the committee recommends to the Board of Directors the annual budget request for
all salaries and overtime and specifically recommends to the Board of Directors
all executive officers' salaries. It also reviews recommendations from
management regarding major benefit plans and recommends to the Board of
Directors annually the formula for matching contributions to the First Charter
Retirement Savings Plan as well as the formula for funding and payments under
the Corporation's Executive Incentive Bonus Plan. The Compensation Committee
also grants options under and administers our Comprehensive Stock Option Plan
(the "Stock Option Plan"), the 1999 Employee Stock Purchase Plan ("1999 ESPP"),
the Director Option Plan and, if the 2000 Plan is approved, such plan is
expected to be administered by the Compensation Committee. In order to comply
with certain restrictions under Rule 16b-3, the Compensation Committee generally
will be composed solely of directors who qualify as "non-employee directors," as
that term is defined under Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Compensation Committee met eight times during
1999. Jerry E. McGee (chairman), Michael R. Coltrane, J. Roy Davis, Jr., Frank
H. Hawfield, Jr. and Thomas R. Revels are the current members of the
Compensation Committee.
Asset-Liability Management Committee. The Asset-Liability Management
Committee monitors our financial condition and makes adjustments in policies
affecting lending, pricing of services, investment securities and liability
positions with a view to current and anticipated interest rates and other
economic conditions. The Asset-Liability Management Committee met four times
during 1999. Michael R. Coltrane (chairman), William R. Black, J. Roy Davis,
Jr., Lawrence M. Kimbrough and Thomas R. Revels are the current members of the
Asset-Liability Management Committee.
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<PAGE> 11
NOMINATIONS FOR DIRECTOR
Our Bylaws set forth the procedures for you to follow in order to
nominate persons for election to the Board of Directors. Generally, you may
properly bring a nomination before the annual meeting of shareholders in a given
year if you provide written notice to the Corporation's Secretary at least 50
days, but not more than 75 days, prior to the anniversary date of the prior
year's shareholder meeting. This notice must include certain biographical
information relating to the person nominated. You must also inform us of the
number of shares of Common Stock you beneficially own. The Executive Committee
may (in its discretion) consider the nomination for the Board of Directors'
slate of nominees for that year. The Bylaws provide a different time frame for
submitting nominations if the annual meeting is held more than 30 days before or
60 days after the anniversary date of the prior year's meeting. Finally, the
Bylaws set forth under what circumstances you may submit a nomination for
director before a special meeting of shareholders and the time within which the
nomination must be submitted. Unless nominations are presented in accordance
with these Bylaw provisions, they will be disregarded and invalid. You may
obtain a copy of the Bylaws, upon written request to First Charter Corporation,
Post Office Box 228, Concord, North Carolina, 28026-0228, Attention: Robert O.
Bratton, and upon payment of $25.00 to cover the costs of reproduction and
mailing.
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<PAGE> 12
OWNERSHIP OF COMMON STOCK
The following table shows, as of April 4, 2000, the number of shares of
Common Stock and the percent of outstanding Common Stock beneficially owned by
(i) all current directors and nominees for director, (ii) each executive officer
of the Corporation named in the Summary Compensation Table contained elsewhere
herein and (iii) all directors, nominees for director and executive officers as
a group. Based upon a search of filings made with the Securities and Exchange
Commission, no shareholder of the Corporation owns 5 percent or more of our
Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned(1)
-----------------------------
Name Number(2) Percent of Class
- ---- --------- ----------------
<S> <C> <C>
Harold D. Alexander 122,219 *
William R. Black 49,193 *
James E. Burt, III 144,573 *
Robert O. Bratton 99,513(3) *
Michael R. Coltrane 76,710(4) *
J. Roy Davis, Jr. 34,340 *
Robert G. Fox, Jr. 30,276 *
John J. Godbold, Jr. 292,477 *
Charles F. Harry III 92,567 *
Frank H. Hawfield, Jr. 19,599 *
Charles A. James 139,704 *
Robert E. James, Jr. 25,000(5) *
Walter H. Jones, Jr. 38,009 *
Lawrence M. Kimbrough 97,381(6) *
Samuel C. King 67,729 *
Edward B. McConnell 14,557 *
Carl T. McFarland, Jr. 5,000(7) *
Jerry E. McGee 13,794 *
Hugh H. Morrison 52,809 *
Thomas R. Revels 3,378 *
L. D. Warlick, Jr. 150,393 *
William W. Waters 51,015 *
All directors, nominees for director and executive officers
of the Corporation as a group (22 persons) 1,498,105 4.81%
</TABLE>
- ---------------------
* Less than 1%.
(1) Unless otherwise noted, the persons named in the table have sole voting
and investment power over shares included in the table.
(2) Includes shares represented by options that are currently exercisable or
exercisable within 60 days of April 4, 2000 in the following amounts: Mr.
Black 2,760; Mr. Bratton 22,924; Mr. Coltrane 2,760; Mr. Davis 2,760; Mr.
Fox 23,234; Mr. Godbold 1,920; Mr. Harry 1,320; Mr. Hawfield 2,760; Mr.
Robert James 14,000; Mr. Kimbrough 36,742; Mr. McConnell 11,907; Mr.
McGee 2,760; Mr. Morrison 1,680; and Mr. Revels 1,320.
(3) Includes 1,951 restricted shares granted under the Corporation's
Restricted Stock Award Program.
(4) Includes 8,647 shares owned by Mr. Coltrane's spouse as to which he
disclaims beneficial ownership.
(5) Includes 10,000 restricted shares granted under the Corporation's
Restricted Stock Award Program.
(6) Includes 3,902 restricted shares granted under the Corporation's
Restricted Stock Award Program.
(7) Represents 5,000 restricted shares granted under the Corporation's
Restricted Stock Award Program.
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<PAGE> 13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows the compensation of the
Chief Executive Officer and our five other most highly compensated executive
officers during 1999 (the "named executive officers"), for the past three years.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------ -------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Salary Bonus Compensation Award Options/SARs Compensation
Principal Position(s) Year ($) ($) ($)(2) ($)(3) (#) ($)
- --------------------- ---- -------- -------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence M. Kimbrough 1999 $250,000 $131,250(1) $ 507 -- 46,309 $18,450(4)
President and Chief 1998 198,454 50,000 -- $ 99,989 -- 19,374
Executive Officer 1997 156,546 120,900 -- -- 3,900 19,110
Robert O. Bratton 1999 $175,000 $ 73,500(1) $ 585 -- 17,717 $16,956(4)
Executive Vice 1998 138,818 42,000 -- $ 49,994 -- 19,374
President, Chief 1997 116,182 67,275 -- -- 2,400 17,396
Operating Officer and
Chief Financial
Officer
Robert G. Fox, Jr. 1999 $145,000 $ 44,805(1) $ 507 -- 10,872 $16,790(4)
Executive Vice 1998 125,000 37,500 -- -- -- 19,374
President 1997 115,000 67,275 -- -- 8,400 17,373
Edward B. McConnell 1999 $130,000 $ 40,170(1) $ 507 -- 8,973 $16,236(4)
Executive Vice 1998 125,000 37,500 -- -- -- 19,374
President (5) 1997 115,000 67,275 -- -- 2,400 15,705
Robert E. James, Jr. 1999 $160,417 $120,375(1) $48,099 $181,250 35,000 $ 3,593(4)
Group Executive Vice
President
Carl T. McFarland, Jr. 1999 $ 28,333 $ 60,000(1) -- $ 97,500 8,000 $ 29(4)
Group Executive
Vice President
</TABLE>
- ---------------------
(1) Represents amounts paid pursuant to the Corporation's Executive Annual
Incentive Plan. The amount for Mr. James also includes a signing bonus in
the amount of $53,000. See "Report of Compensation Committee on Executive
Compensation" for a brief description of the Executive Annual Incentive
Plan.
(2) Represents the value of one share of preferred stock in FCNB Real Estate,
Inc. as part of the First Charter National Bank Bonus Plan. The amount of
this one-time bonus was $500 for the share plus an additional amount to
cover income taxes associated with this bonus. Also included in the
amount for Mr. James was $47,592 for relocation expenses.
(3) These amounts are the dollar values of restricted stock awards granted
each year. Each value is determined by multiplying the number of shares
in each award by the closing market price of common stock on the date of
grant. Holders of restricted stock received the same cash dividends as
other stockholders owning common stock. The restrictions imposed on the
restricted shares will lapse with respect to one-fifth of the shares on
the last day of each year, beginning the year the options were granted.
In the event the participant's employment with the Corporation ends due
to the participant's death, disability or retirement with the consent of
the Corporation, or because the Corporation undergoes a change of
control, all restrictions will lapse and all restricted shares will be
released to the participants. As of December 31, 1999, the aggregate
number and market value of all restricted shares held by participants
were as follows: Kimbrough 3,902 ($58,042); Bratton 1,951 ($29,021);
Robert James 10,000 ($148,750) and McFarland 5,000 ($74,375). At December
31, 1999, these restricted shares had vested 40% with
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<PAGE> 14
respect to the restricted shares owned by Mr. Kimbrough and Mr. Bratton
and had vested 20% with respect to the restricted shares owned by Mr.
Robert James and Mr. McFarland.
(4) Consists of amounts contributed by the Corporation under the Retirement
Savings Plan and the Money Purchase Pension Plan (the "Retirement
Plans"), and the dollar value of the premium paid by the Corporation for
term life insurance. The dollar amount that represents contribution under
the Retirement Plans are as follows: Kimbrough $16,128; Bratton $16,128;
Fox $16,128; McConnell $15,656; and James $3,098. The dollar amount of
premiums paid by the Corporation for the term life insurance are as
follows: Kimbrough $2,322; Bratton $828; Fox $662; McConnell $580; and
James $495.
(5) Mr. McConnell ceased to be an officer of the Company effective March 31,
2000.
STOCK OPTION PLANS
We have in effect the Comprehensive Stock Option Plan pursuant to which
the Compensation Committee may grant stock options to officers and other key
employees of the Corporation and its subsidiaries. In addition, if shareholders
vote to approve the 2000 Plan, we may grant stock options to officers and other
key employees pursuant to that plan. We also have in effect the 1998 Employee
Stock Purchase Plan and the 1999 ESPP.
The following table indicates option grants pursuant to our plans during
our last fiscal year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- -----------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise
Options/SARs to Employees or Base Grant Date
Granted in Fiscal Price Expiration Present
Name (#) Year ($/Sh) Date Value (3)
- ---- ------------ -------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
L. M. Kimbrough 19,904(1) 7.50% $23.125 1/21/09 $179,058(4)
8,842(1) 3.33% $18.125 1/21/09 $ 54,392(4)
11,536(1) 4.35% $18.125 1/21/09 $ 70,964(4)
5,027(1) 1.89% $18.125 1/21/09 $ 30,924(4)
1,000(2) .38% $14.93 12/31/99 $ 4,737(5)
R. O. Bratton 7,729(1) 2.91% $18.125 1/21/09 $ 47,545(4)
9,288(1) 3.50% $23.125 1/21/09 $ 83,555(4)
700(2) .26% $14.93 12/31/99 $ 3,316(5)
R. G. Fox, Jr. 10,247(1) 3.86% $18.125 1/21/09 $ 63,035(4)
625(2) .24% $14.93 12/31/99 $ 2,960(5)
E. B. McConnell 8,348(1) 3.14% $18.125 1/21/09 $ 51,353(4)
625(2) .24% $14.93 12/31/99 $ 2,960(5)
R. E. James, Jr. 27,210(1) 10.25% $18.125 1/29/09 $170,522(4)
7,790(1) 2.93% $14.93 1/29/09 $ 48,819(4)
C.T. McFarland, Jr. 8,000(1) 3.01% $19.50 11/1/09 $ 61,664(4)
</TABLE>
- ---------------------
(1) Represents shares covered by incentive stock options granted pursuant to
the Comprehensive Stock Option Plan. All such options granted under the
Comprehensive Stock Option Plan in 1999 vest at the rate of 20% per year
over five years, commencing on the first anniversary of the date of
grant. Such options have an exercise price equal to 100% of fair market
value of such shares on the date of grant.
12
<PAGE> 15
(2) Represents shares covered by options granted pursuant to the
Corporation's 1999 ESPP. Pursuant to the 1999 ESPP, eligible employees
are notified of the number of shares with respect to which options can be
granted to such employee thereunder, and then each employee elects the
number of shares to be so covered by the options. The numbers in the
table represent the number of shares so elected. Options granted under
the 1999 ESPP are exercisable in the year they are granted, after which
they expire if not exercised. Options granted under the 1999 ESPP have an
exercise price equal to 85% of the fair market value of such shares on
the date of the grant.
(3) Based on the Black-Scholes option pricing model adapted for use in
valuing executive stock options. The actual value, if any, an executive
may realize will depend on the excess of the stock price over the
exercise price on the date the option is exercised. There is no assurance
the value realized by an executive will be at or near the value estimated
by the Black-Scholes model.
(4) The estimated values under the Black-Scholes model for options granted
under the Comprehensive Stock Option Plan, are based on the following
assumptions: exercise price is 100% of the fair market value at date of
grant; exercise term is ten years; no discounts have been taken for
vesting or restrictions; the risk free rate used is based on the 10-year
Treasury note yield as of the date the options were issued; the
volatility factor is 38% (based on the preceding 12 months); and the
dividend yield is 4.57% (based on the preceding 12 months).
(5) The estimated values under the Black-Scholes model for options granted
under the 1999 ESPP are based on the following assumptions: exercise
price is 85% of the fair market value at the date of grant; exercisable
term is the year in which the options are granted; no discounts have been
taken for vesting or restrictions; the risk free rate is 4.69% (based on
the two-year Treasury note yield as of the date the options were issued);
the volatility factor is 38% (based on the preceding 12 months); and the
dividend yield is 4.57% (based on the preceding 12 months).
The following table provides a summary of the stock option exercises
during 1999 by the named executive officers and the value of each executive's
unexercised stock options held at fiscal year end under the Comprehensive Stock
Option Plan.
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND OPTION/SAR VALUES AT 12/31/99
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying In-the-money
Shares Unexercised Options/SARs Options/SARs (1)
Acquired at 12/31/99 (1) at 12/31/99
on Value --------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. M. Kimbrough 1,000 $0 27,680 38,889 $18,374 $0
R. O. Bratton 700 $0 19,520 15,247 $39,879 $0
R. G. Fox, Jr. -- -- 20,610 12,158 $32,026 $0
R. E. James, Jr. -- -- 7,000 28,000 $ 0 $0
E. B. McConnell -- -- 10,862 8,311 $ 6,820 $0
C. T. McFarland, Jr. -- -- 0 8,000 $ 0 $0
</TABLE>
- ---------------------
(1) Determined based on the closing price of $14.875 of the Common Stock as
reported by the Nasdaq National Market as of December 31, 1999.
CHANGE IN CONTROL AND EMPLOYMENT AGREEMENTS
Lawrence M. Kimbrough. Effective July 21, 1999, the Corporation entered
into a three year employment agreement with Lawrence M. Kimbrough pursuant to
which Mr. Kimbrough is employed by the Corporation as Chief Executive Officer.
Under the terms of the agreement, Mr. Kimbrough will receive a base salary of
$250,000 per year, plus benefits, and may be entitled to receive annual bonus
compensation from one or more
13
<PAGE> 16
arrangements including but not limited to the Executive Annual Incentive Plan
(the "Incentive Plan").
At the end of the initial three year term of Mr. Kimbrough's agreement,
and at the end of each succeeding 12 month period, the agreement will be
extended for an additional 12 month period, until the earlier to occur of Mr.
Kimbrough reaching the age of 62, or the termination of the agreement. In
addition, Mr. Kimbrough has certain rights in connection with a "Change of
Control" as described below. Mr. Kimbrough and the Corporation are also parties
to a supplemental executive retirement plan dated June 30, 1999 pursuant to
which Mr. Kimbrough will be entitled to receive a sum of $1,980,000, if certain
conditions are satisfied, when he reaches the age of 65. Such benefit became 40%
vested on the date the supplemental agreement was entered into and is scheduled
to fully vest on June 30, 2004. The benefit is subject to forfeiture under
certain circumstances.
Robert O. Bratton. Effective July 21, 1999, the Corporation entered
into a three year employment agreement with Robert O. Bratton pursuant to which
Mr. Bratton is employed by the Corporation as Group Executive Vice President.
Under the terms of the agreement, Mr. Bratton will receive a base salary of
$175,000 per year, plus benefits, and may be entitled to receive annual bonus
compensation from one or more arrangements including but not limited to the
Incentive Plan.
At the end of the initial three year term of Mr. Bratton's agreement, and
at the end of each succeeding 12 month period, the agreement will be extended
for an additional 12 month period, until the earlier to occur of Mr. Bratton
reaching the age of 62, or the termination of the agreement. In addition, Mr.
Bratton has certain rights in connection with a "Change of Control" as described
below. Mr. Bratton and the Corporation are also parties to a supplemental
executive retirement plan dated June 30, 1999 pursuant to which Mr. Bratton will
be entitled to receive a sum of $560,000, if certain conditions are satisfied,
when he reaches the age of 65. Such benefit became 50% vested on the date the
supplemental agreement was entered into and is scheduled to fully vest on June
30, 2004. The benefit is subject to forfeiture under certain circumstances.
Robert E. James. Effective July 21, 1999, the Corporation entered into
a three year employment agreement with Robert E. James pursuant to which Mr.
James is employed by the Corporation as Group Executive Vice President. Under
the terms of the agreement, Mr. James will receive a base salary of $175,000 per
year, plus benefits, and may be entitled to receive annual bonus compensation
from one or more arrangements including but not limited to the Incentive Plan.
At the end of the initial three year term of Mr. James's agreement, and
at the end of each succeeding 12 month period, the agreement will be extended
for an additional 12 month period, until the earlier to occur of Mr. James
reaching the age of 62, or the termination of the agreement. In addition, Mr.
James has certain rights in connection with a "Change of Control" as described
below. Mr. James and the Corporation are also parties to a supplemental
executive retirement plan dated June 2, 1999 pursuant to which Mr. James will be
entitled to receive a sum of $785,000, if certain conditions are satisfied, when
he reaches the age of
14
<PAGE> 17
65. Such benefit will become 50% vested on January 1, 2004 and is scheduled to
fully vest on January 1, 2009. The benefit is subject to forfeiture under
certain circumstances.
C. Thomas McFarland. Effective December 15, 1999, the Corporation
entered into a three year employment agreement with C. Thomas McFarland pursuant
to which Mr. McFarland is employed by the Corporation as Group Executive Vice
President. Under the terms of the agreement, Mr. McFarland will receive a base
salary of $170,000 per year, plus benefits, and may be entitled to receive
annual bonus compensation from one or more arrangements including but not
limited to the Incentive Plan.
At the end of the initial three year term of Mr. McFarland's agreement,
and at the end of each succeeding 12 month period, the agreement will be
extended for an additional 12 month period, until the earlier to occur of Mr.
McFarland reaching the age of 62, or the termination of the agreement. In
addition, Mr. McFarland has certain rights in connection with a "Change of
Control" as described below.
Change in Control. The Corporation has entered into change in control
agreements with Messrs. Fox and McConnell and the employment agreements with
Messrs. Kimbrough, Bratton, James and McFarland containing provisions relating
to a change in control. These agreements provide for certain payments to such
officers in the event their employment is terminated following a "change in
control" of the Corporation. For purposes of the agreements, a "change in
control" generally includes a merger or similar transaction involving the
Corporation in which the Corporation's shareholders receive less than 50% of the
voting stock of the surviving corporation, the sale or transfer of substantially
all the Corporation's assets, certain acquisitions of more than 20% of the
Common Stock by any person or group other than a person or group who owned more
than 5% of the Common Stock as of the date of the agreements unless prior
approval of the Board is received, certain instances in which the composition of
the Corporation's Board of Directors changes by more than 50% during a two year
period, or any other transaction that would constitute a change in control
required to be reported by the Corporation in a proxy statement or the
acquisition of control of the Corporation under applicable federal banking laws.
To be entitled for payments upon such a change in control, (a) the officer's
employment must be terminated other than for cause, or (b) the officer must
terminate his employment for good reason, in either case within one year
following the change in control. "Cause" is defined generally as willful
misconduct, use of narcotics or alcohol in a manner that affects the officer's
duties, conviction of a felony or serious misdemeanor involving moral turpitude,
embezzlement or theft or gross inattention or dereliction of duty. "Good reason"
generally means a material reduction in the officer's duties or a change in
title resulting in reduction of the officer's duties, a material reduction in
salary or bonus, or the relocation of the officer to an area farther than a
specified distance from their primary employment location immediately preceding
a change in control. The respective agreements of the named executive officers
provide for continued payment of base salary and average bonus amounts, as well
as certain continued benefits provided to employees generally, for a period of
35 months (24 months in the case of Mr. Fox and Mr. McConnell) following an
event which would entitle such officer to payments under his agreement.
15
<PAGE> 18
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Recommendations regarding the compensation of our executive officers
generally are presented by the Compensation Committee to the entire Board of
Directors for approval. The Human Resources Strategies Committee comprised of
certain executive and senior officers of the Corporation, prepares
recommendations on salary grade ranges and merit increase guidelines for review
and approval by the Compensation Committee as well as the annual budget request
for salaries and benefits. The Senior Management Personnel Committee approves
salaries for all personnel, with the exception of executive officers, within the
parameters of the annual salary administration program. The Chief Executive
Officer ("CEO") presents recommendations to the Compensation Committee for the
annual salaries of all executive officers other than the CEO. The Compensation
Committee, in turn, reviews and analyzes all information submitted to it.
Thereafter the Compensation Committee determines its recommendations to the
Board of Directors regarding compensation of all executive officers of the
Corporation, including recommendations regarding the compensation of the CEO.
During 1999, the Board of Directors approved all recommendations of the
Compensation Committee.
Set forth below is a report of the Compensation Committee regarding
executive compensation for fiscal year 1999.
Executive Compensation Policies and Program. Our executive compensation
program is designed to
- Attract and retain qualified management;
- Enhance short-term financial gains; and
- Enhance long-term shareholder value.
The total compensation package for our executives includes cash and
equity-based compensation. Annual compensation may consist of a base salary, a
bonus, grants of stock options and grants of restricted stock. Our policy is
generally to provide base salary that might fall at or below the median base
salary paid to comparable executives, while focusing more on incentive
compensation that is linked to the performance of the Corporation. We strive,
however, to provide each executive officer with total annual cash compensation
(base salary and bonus) in an amount that would be paid on the open market for a
fully qualified officer of that position.
During 1998, the Corporation hired an independent consultant to review
the Corporation's annual compensation package for its executive officers. This
consultant generated a report (the "Report") that provided information regarding
the annual compensation (including base salaries and bonus), long-term
compensation (including stock options) and total compensation for the chief
executive officer, and other executive officers, compared to persons employed by
certain other financial institutions. The Report also set forth the threshold,
target and maximum amounts of each such component of compensation. In general,
the Compensation Committee used the information provided in the Report, adjusted
for inflation, to maintain levels of total annual cash compensation for 1999
(salary and potential bonus
16
<PAGE> 19
amounts, each as discussed below) that fell at or slightly below the targets as
set forth in the Report.
The peer financial institutions considered by the consultant represent
fifteen publicly-traded financial institutions with assets from $1.5 billion to
$4.5 billion. The institutions included in the Report are not necessarily the
same group of institutions that comprise the Independent Bank Index in the
Performance Graph contained elsewhere in this Proxy Statement.
Base Salaries. Generally, the Compensation Committee determines the
level of base salary for the CEO and the Corporation's other executive officers
and salary ranges for all other personnel, in each case based on competitive
norms derived from periodic reports of consultants, such as that described
above, as well as annual surveys published by several independent banking
institutes or private companies specializing in financial analysis of financial
institutions. The Compensation Committee also considers employment agreements,
if any, which entitle executives to certain salaries and other benefits. Actual
salary changes are based upon a written evaluation of each individual's
performance based on numerous criteria and the weighing of such criteria using a
previously established formula. In addition, with respect to each executive,
including the CEO, the Compensation Committee considers the individual's
performance, including that individual's total level of experience in the
banking industry, his record of performance and contribution to our success
relative to his job responsibilities and his overall service to us. During 1999,
the Compensation Committee used the information set forth in the Report to
maintain 1999 base salaries for our executive officers that were equal to or
below the target salaries reported in the surveys.
Bonuses. We also maintain the Incentive Plan for executive officers,
from which performance-oriented bonuses may be paid to certain key executive
officers in any given year. The Compensation Committee annually determines the
executive officers eligible to participate in the Incentive Plan. In general,
those executives that are considered to have major policy input with respect to
the Corporation, or who are in a position to generate a major impact on our
earnings, are selected to participate in the Incentive Plan. Actual bonuses paid
pursuant to the Incentive Plan are based on return on assets ("ROA") levels of
the Corporation at fiscal year end and pre-tax core earnings. No bonuses may be
paid unless we reach minimum performance goals, determined at the beginning of
each year.
Pursuant to the Incentive Plan, the Compensation Committee annually
establishes a bonus pool amount for each participating executive, which is equal
to a given percentage of the base salary of that executive. The percentages are
determined based on the executive's relative responsibilities and ability to
impact the financial and operating performance of the Corporation. At year-end,
the Compensation Committee reviews the Corporation's financial performance as it
relates to ROA and pre-tax core earnings, and determines the actual amounts
available to be awarded to participants. An executive's bonus is based 50% upon
the achievement of ROA goals and 50% upon achievement of pre-tax earnings goals.
The executive receives compensation based upon a comparison of actual ROA and
pre-tax core earnings as they relate to budgeted amounts. During 1999, we
achieved an ROA of 1.37% which resulted in a bonus payout equal to 119% of the
targeted bonus attributable to ROA
17
<PAGE> 20
targets. During the year, we had pre-tax core earnings of $33,763,000, which
resulted in a payout equal to 92% of the targeted bonus attributable to pretax
core earnings targets. An additional 25% of the executive's bonus may be paid to
the executive, in the discretion of the Compensation Committee, based on the
participant's individual performance. When evaluating the performance of a
participant, the Compensation Committee considers the Corporation's actual
operating performance (such as reduced levels of past due loans, reduced levels
of non-performing and restructured loans, improvements in asset quality and
corresponding reductions in provision amounts, increased noninterest income and
continued control of corporate expenses) in relation to its targeted long range
action plan and the executive's ability to impact the various components of that
plan. Other criteria considered include the executive's initiative, contribution
to overall corporate performance and managerial ability.
Equity Based Compensation. The final component of an executives' core
annual compensation consists of stock options. This equity-based compensation is
designed to be a long-term incentive for executives to enhance shareholder
value. We maintain the Stock Option Plan pursuant to which we may grant stock
options (both statutory and nonstatutory) to key employees. In addition, if the
2000 Plan is approved by you, that plan will be utilized for the same purpose.
The Compensation Committee administers the Stock Option Plan in its sole
discretion, including the determination of the individuals to whom options will
be granted, the terms on which those options are granted and the number of
shares subject to the options. In general, when determining the key employees to
whom options shall be granted, the Compensation Committee considers an
employees' relative job responsibilities and abilities to impact the financial
and operating performance of the Corporation.
When granting options, the Compensation Committee considers a formula
whereby the aggregate value of options granted is based on a multiple of base
salary. The multiples of base salaries, in turn, are determined based on the
relative positions of the executives with the Corporation. Through this process,
the Compensation Committee has made grants of stock options to executive
officers during 1999.
In addition to the Stock Option Plan, we maintain the 1999 ESPP pursuant
to which options are granted periodically to all employees of the Corporation,
including executive officers, at an exercise price equal to not less than 85% of
the fair market value of the stock at the date of grant. The number of shares
subject to options granted to each employee, including executive officers, is
determined automatically based on base salary levels of all employees.
We also maintain the Restricted Stock Award Program (the "Restricted
Stock Program") administered by a committee comprised of the Compensation
Committee and the other non-employee members of the Board of Directors (the
"Restricted Stock Committee"). The Restricted Stock Committee administers the
Restricted Stock Program in its sole discretion, including the determination of
the individuals to whom restricted shares shall be awarded, the number of shares
to be awarded, the restrictions to be applicable to such restricted shares, and
all other terms of the awards, which need be the same for all recipients.
Other. In addition to the above forms of compensation, we also provide
group term life insurance for our employees, including executive officers.
Executive officers generally also
18
<PAGE> 21
participate in the Retirement Savings Plan, pursuant to which (i) an eligible
employee may elect to defer between 1% and 10% of compensation and (ii) we
contribute annually a discretionary matching amount as determined by the Board
of Directors from time to time, allocated to participants' accounts in
proportion to their elective deferrals up to 6% for such year. In addition,
executive officers generally participate in the Money Purchase Pension Plan,
pursuant to which the Corporation contributes annually to each participant's
account 3% of the participant's base salary. Finally, certain of our executives,
including the CEO, are parties to change in control agreements that provide for
continued salary, bonus and benefits for a certain period of time upon
termination of employment following a change in control of the Corporation, and
certain executive officers may be a party to employment and/or salary
continuation agreements.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Board of Directors determines the compensation of the CEO based upon
recommendations of the Compensation Committee. The CEO's base salary is
determined by a review of salaries of top executives of comparable financial
institutions, using the process previously described. In keeping with our
general policy with respect to base salary and bonus, the CEO's base salary is
set at an amount which generally is lower than the base salaries for comparable
executives. The Compensation Committee instead places more emphasis on available
cash bonus, as a means of directly linking the CEO's total annual compensation
to the performance of the Corporation. Total annual compensation for the CEO in
1999 was below the median for comparable executives as set forth in the Report.
In January, 2000, the CEO was granted a cash bonus of $131,250 under the
Incentive Plan in accordance with the previously described criteria.
Submitted by the Compensation Committee of the Board of Directors:
<TABLE>
<S> <C>
Michael R. Coltrane Jerry E. McGee
J. Roy Davis, Jr. Thomas R. Revels
Frank H. Hawfield, Jr.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Michael R. Coltrane, a member of the Compensation Committee, served as
Executive Vice President of the Corporation and FCNB until 1988.
19
<PAGE> 22
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on the Common Stock with a peer group index comprised of
similar banks located in the eastern United States with assets of between 1.7
billion and 9.7 billion, and the Standard & Poor's 500 Stock Index, a broad
equity market index, assuming in each case the investment of $100 on December
31, 1994 and the reinvestment of dividends.
FIRST CHARTER CORPORATION
FIVE-YEAR PERFORMANCE INDEX
<TABLE>
<CAPTION>
FIRST CHARTER CORPORATION S&P 500 FIRST CHARTER PEER GROUP
------------------------- ------- ------------------------
<S> <C> <C> <C>
12/31/94 100.00 100.00 100.00
12/31/95 156.36 137.58 126.72
12/31/96 159.39 169.03 163.93
12/31/97 231.63 225.44 254.91
12/31/98 158.47 289.79 217.91
12/31/99 141.70 350.78 158.68
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FCNB, Lincoln Bank of North Carolina, Cabarrus Bank of North Carolina and
Community Bank & Trust Co. have had, and expect to have in the future, banking
transactions in the ordinary course of business with directors, officers and
principal shareholders of the Corporation and its subsidiaries and their
associates. All loans and commitments included in these transactions were made
and are expected to be made on substantially the same terms, including interest
rate and collateral, as those prevailing at the time for comparable transactions
with other borrowers and did not and are not expected to involve more than the
normal risk of collectibility or present other unfavorable features.
20
<PAGE> 23
PROPOSED FIRST CHARTER CORPORATION 2000
OMNIBUS STOCK OPTION AND AWARD PLAN
As of April 15, 2000, there were 6,772 shares of Common Stock available
for future grants of options under the Comprehensive Stock Option Plan. The
Compensation Committee determined that it would be desirable to have an
additional 2,000,000 shares of Common Stock available for future grants of
options and other stock-based awards to our employees, directors and employees
of our subsidiaries. Therefore, upon recommendation of the Compensation
Committee, the Board of Directors has adopted the First Charter Corporation 2000
Omnibus Stock Option and Award Plan, which is subject to the approval of the
shareholders of the Corporation. The text of the 2000 Plan is set forth in its
entirety as Appendix A, and the following summary is qualified in its entirety
by reference thereto. The Proposal for approval of the 2000 Plan will require
the affirmative vote of the holders of a majority of the votes cast on this
matter at the annual meeting. Accordingly, while abstentions and broker
non-votes will count for purposes of establishing a quorum with respect to this
matter at the Annual Meeting, neither abstentions nor broker non-votes will have
the effect of a negative vote with respect to this matter. WE RECOMMEND THAT YOU
VOTE FOR THE ADOPTION OF THE 2000 PLAN.
GENERAL
The purpose of the 2000 Plan is to provide us with a means of providing
employees of the Corporation and its subsidiaries and directors of the
Corporation the benefits of ownership of Common Stock. The 2000 Plan is designed
to help us attract and retain personnel of superior ability for positions of
exceptional responsibility, to reward employees and directors for past services
and to motivate these individuals through added incentives to further contribute
to our future growth and success.
Under the 2000 Plan, stock options, stock appreciation rights, shares of
restricted stock, stock awards or performance shares, or a combination of any
such awards (collectively, "Awards"), may be granted from time to time to
Eligible Persons, all generally in the discretion of the Committee responsible
for administering the 2000 Plan. Each Award under the 2000 Plan will be
evidenced by a separate written agreement which sets forth the terms and
conditions of the Award. "Eligible Persons" generally include any employee of
the Corporation or its subsidiaries, members of the Board of Directors of the
Corporation or its subsidiaries and any other person whose participation the
committee determines is in our best interest. There is no maximum number of
persons eligible to receive Awards under the 2000 Plan, nor is there any limit
on the amount of Awards that may be granted to any person, except as described
below with respect to incentive stock options. We intend that stock options or
other grants of Awards under the 2000 Plan to persons subject to Section 16 of
the Exchange Act will satisfy the requirements of Rule 16b-3 under the Exchange
Act ("Rule 16b-3").
We have reserved 2,000,000 shares of Common Stock for issuance under the
2000 Plan, subject to adjustment to protect against dilution in the event of
certain changes in capitalization of the Corporation.
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<PAGE> 24
ADMINISTRATION
The 2000 Plan will be administered by a committee of our Board of
Directors that consists of two or more directors (the "Committee"). To the
extent necessary to comply with Rule 16b-3, the Committee will consist solely of
two or more "non-employee directors," as that term is defined in Rule 16b-3.
Under the 2000 Plan, generally the Committee will have complete authority to
determine the persons to whom Awards will be granted from time to time, as well
as the terms and conditions of such Awards. The Committee also will have
discretion to interpret the 2000 Plan and the Awards granted under the 2000 Plan
and to make other determinations necessary or advisable for the administration
of the 2000 Plan. Under the 2000 Plan, the full Board of Directors can act as
the Committee, if all of the members of the Board of Directors otherwise are
eligible to serve on the Committee. The full Board of Directors generally also
may grant Awards under the 2000 Plan from time to time. We anticipate that the
Compensation Committee of the Board of Directors will act as the Committee until
otherwise determined by the Board of Directors.
STOCK OPTIONS
General. The Committee may grant either incentive stock options (for
purposes of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) or nonqualified stock options under the 2000 Plan. Except as described
below for incentive stock options, the Committee generally has the discretion to
determine the persons to whom stock options will be granted, the number of
shares subject to such options, the exercise price of such options, the vesting
schedules with respect to such options, the terms of such options, as well as
the period, if any, following a participant's Termination of Service (as defined
in the 2000 Plan) during which such option may be exercised, and the
circumstances in which all or a portion of an option may become immediately
exercisable or be forfeited. The Committee also has the discretion, exercisable
either at the time an option is granted or at the time of a participant's
Termination of Service, to provide for accelerated vesting of the exercisability
of an option for a limited period following such Termination of Service. Such
terms may differ among the various persons to whom the options are granted and
among the various options granted to any such person. Notwithstanding the
foregoing, under the terms of the 2000 Plan, no options may be exercised
following the Termination of Service of a participant for cause.
In the discretion of the Committee, the price due upon exercise of an
option may be paid in cash or in shares of Common Stock valued at their then
current Fair Market Value (as defined in the 2000 Plan), or a combination of
both. Shares delivered in payment of such price may be shares acquired by prior
exercises of options or otherwise, in the Committee's discretion. Also in the
discretion of the Committee, a participant may exercise an option as to only a
part of the shares covered thereby and then, in an essentially simultaneous
transaction, use the shares so acquired in payment of the exercise price for
additional option shares.
Generally, options granted under the 2000 Plan may not be transferred by
a participant other than by will or by the laws of descent and distribution and
generally will be exercisable during the participant's lifetime only by such
participant or his or her guardian or legal representative. With respect to
nonqualified stock options, however, the Committee may
22
<PAGE> 25
permit a participant to transfer the option for no consideration to or for the
benefit of one or more members of the participant's Immediate Family (as defined
in the 2000 Plan) or in certain circumstances family trusts, partnerships or
limited liability companies.
The Committee may also, in its discretion, allow the voluntary surrender
of all or a portion of a stock option conditioned upon the granting to the
participant of a new stock option for the same or a different number of shares,
or may require the surrender as a condition precedent to the grant of a new
stock option. The Committee may also purchase a participant's outstanding
option, on such terms and conditions as the Committee in its discretion
determines.
Holders of options shall have no rights as shareholders of the
Corporation unless and until such options are exercised and shares are delivered
to such persons in accordance with the 2000 Plan.
Incentive Stock Options. Incentive stock options may be granted only to
persons who are employees of the Corporation or its subsidiaries (including
directors of the Corporation who are also employees of the Corporation or a
subsidiary but excluding non-employee directors of the Corporation). Generally,
incentive stock options must be granted within ten years of the date the 2000
Plan is adopted, and the term of any incentive stock option may not exceed ten
years. Furthermore, the aggregate Fair Market Value of shares of Common Stock
with respect to which any incentive stock options are exercisable for the first
time by a participant during any calendar year, whether such incentive stock
options are granted under the 2000 Plan or any other plans of the Corporation,
may not exceed $100,000. Under the 2000 Plan, however, if the aggregate Fair
Market Value of such incentive stock options exceeds this limit (whether due to
its original terms, or due to accelerated exercisability following a Termination
of Service due to death, Disability or Retirement (as such terms are defined in
the 2000 Plan), or following a Change of Control (hereinafter defined)), then to
the extent permitted by Section 422 of Code, the excess will be treated as a
nonqualified stock option. Furthermore, the exercise price of incentive stock
options must be at least 100% of the Fair Market Value of the Common Stock at
the time the incentive stock option is granted, and no incentive stock options
may be granted to any individual who owns more than 10% of the total combined
voting power of all classes of stock of the Corporation.
The 2000 Plan also provides that, with respect to incentive stock
options, the period during which an option may be exercisable following a
Termination of Service generally may not exceed three months, unless (i)
employment is terminated as a result of Disability, in which case in the
discretion of the Committee the incentive stock options may be exercised during
a period of one year following the date of such Disability, or (ii) employment
is terminated as the result of death, or if the employee dies following a
Termination of Service (other than as a result of Disability) and during the
period that the incentive stock option is still exercisable, in which case in
the discretion of the Committee the incentive stock option may be exercised
during a period of one year following the date of such death. In no event,
however, may an incentive stock option be exercised after the expiration of its
original term.
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<PAGE> 26
STOCK APPRECIATION RIGHTS, RESTRICTED STOCK, STOCK AWARDS AND PERFORMANCE SHARES
Under the 2000 Plan, the Committee has broad discretion to grant other
equity-based incentives and/or compensation in the form of stock appreciation
rights, restricted stock or other stock awards, as well as performance shares.
Stock Appreciation Rights. The Committee may award stock appreciation
rights to any Eligible Person either in connection with an option grant or
independent of a stock option grant. A stock appreciation right will generally
entitle the holder thereof to a payment equal to the amount the Fair Market
Value of Common Stock exceeds the exercise price of the stock appreciation
right, multiplied by the number of stock appreciation rights surrendered. The
Committee in its discretion will determine whether payment in connection with a
stock appreciation right will be in the form of cash or Common Stock or a
combination thereof, and the Committee will have discretion as to the timing of
any such payment. Payment may be made in a lump sum, annual installments or be
otherwise deferred.
If a stock appreciation right is granted in connection with a stock
option, such stock appreciation right will entitle the holder thereof, within
the period specified for exercise of the stock option, to surrender the
unexercised stock option (or portion thereof) and to receive in exchange
therefor a payment in cash or Common Stock having an aggregate value equal to
the amount by which the Fair Market Value of each share of Common Stock exceeds
the stock option price per share of Common Stock, multiplied by the number of
shares of Common Stock under the stock option which is surrendered. If a stock
appreciation right is granted in connection with an option grant, it must be
granted concurrently with an incentive stock option and, with respect to
non-qualified stock options, either concurrently with the grant or at any time
prior to the exercise or termination of such option grant. If a stock
appreciation right is granted in connection with a related stock option, such
stock appreciation right shall only be exercisable to the extent the related
option is exercisable and has not terminated.
Restricted Stock. The Committee may award shares of restricted stock
under the 2000 Plan to any Eligible Person, for such consideration, if any, as
may be determined by the Committee or required by law, as a reward for past
service and an incentive for the performance of future services that will
contribute materially to the successful operation of the Corporation or its
subsidiaries. Restricted stock generally consists of shares of Common Stock that
at the time of award are subject to restrictions or limitations as to the
participant's ability to sell, transfer, pledge or assign such shares. Shares of
restricted stock may vest (separately or in combination), and all or a portion
of the applicable restrictions may lapse, from time to time over one or more
restricted periods, based on such factors as continued employment, the passage
of time or other measures as the Committee determines. The Committee also may
determine the circumstances, if any, in which shares of restricted stock that
have not previously vested may be forfeited by the participant or may be
required to be resold to the Corporation, as well as the circumstances, if any,
in which the vesting of such shares might be accelerated or delayed. Generally,
in the discretion of the Committee, any shares of restricted stock that have not
vested in full will be forfeited upon the participant's Termination of Service
and shall be canceled by the Corporation. Unless otherwise provided
24
<PAGE> 27
in the applicable award agreement, however, the Committee may in its discretion
waive any remaining restrictions in the event of the death, Disability or
Retirement of the participant during the applicable restricted period or in
other cases of special circumstances. Notwithstanding the foregoing, under the
terms of the 2000 Plan all shares of restricted stock which have not vested in
full shall be forfeited and canceled if the participant is terminated for cause,
as determined by the Committee. In the discretion of the Committee, cash
dividends with respect to shares of restricted stock may be automatically
reinvested in additional shares of stock subject to the same restrictions, or
cash dividends (or other distributions) with respect to such shares may be
withheld by the Committee for the account of the participant, with or without
interest. Except as expressly provided otherwise, persons to whom shares of
restricted stock have been awarded will have all rights of a shareholder of the
Corporation with respect to such shares, unless and until such shares are
otherwise forfeited by such person.
Stock Awards. The Committee may grant stock awards under the 2000 Plan
to any Eligible Person in payment of compensation that has been earned or as
compensation to be earned. All shares subject to a stock award shall be valued
at not less than 100% of the Fair Market Value of the shares of Common Stock on
the grant date of such stock award. Upon the issuance of shares subject to a
stock award and the delivery of certificate(s) representing such shares to the
participant, the participant will become a shareholder of the Corporation fully
entitled to receive dividends, to vote and to exercise all other rights of a
shareholder of the Corporation with respect to such shares.
Performance Shares. The Committee may award performance shares under
the 2000 Plan to any Eligible Person, for such consideration, if any, as may be
determined by the Committee or required by law, as an incentive for the
performance of future services that will contribute materially to the successful
operation of the Corporation and its subsidiaries. A performance share generally
consists of a unit valued by reference to the Common Stock; the value of one
performance share will be equal at any given time to the Fair Market Value of
one share of Common Stock. Performance shares generally may be earned by a
participant only if the participant achieves certain performance objectives that
are determined by the Committee at the time of the award. The performance
objectives generally will be measured over one or more performance periods
applicable to the Award of such shares as determined by the Committee at the
time of the award. The Committee also has the discretion to determine the number
of performance shares that will be paid to a participant if the applicable
performance objectives are exceeded or met in whole or in part and the form of
settlement of a performance share. Performance objectives may vary from
participant to participant and will be based on such performance criteria (for
example, minimum earnings per share or return on equity) as the Committee in its
sole discretion determines appropriate. The Committee also has the discretion to
revise the performance objectives during the duration of the performance period
if it determines that significant events that have a substantial effect on the
existing performance objectives have occurred. Generally, any performance shares
that have not been earned in full will be forfeited upon a participant's
Termination of Service. Unless otherwise provided in the applicable award
agreement, however, in the event of the death, Disability or Retirement of the
participant during the performance period or in other cases of special
circumstances, the Committee may in its discretion determine to make a
settlement of such performance shares based on the extent to which the
applicable
25
<PAGE> 28
performance objectives were satisfied and pro rated for the portion of the
period during which the Participant was employed. Notwithstanding the foregoing,
under the terms of the 2000 Plan all performance shares which have not been
earned in full shall be forfeited and canceled if the participant is terminated
for cause, as determined by the Committee.
The settlement of a performance share may be made in cash, in whole
shares of Common Stock or any combination thereof. Performance shares are not
transferable by a participant, and holders of performance shares shall have no
rights as shareholders of the Corporation unless and until shares of Common
Stock are issued and delivered to such persons upon settlement of performance
shares, as provided in the 2000 Plan. The Committee may also, in its discretion,
place restrictions on the transfer of any shares of Common Stock delivered to
the participant in payment of the performance shares.
CHANGE OF CONTROL OR OTHER FUNDAMENTAL CHANGES
The 2000 Plan provides that upon certain mergers or other reorganizations
to which the Corporation or any subsidiary is a party that involves an exchange
or conversion or other adjustment of the Corporation's outstanding Common Stock,
each participant generally shall be entitled upon the exercise of his or her
stock options to receive the number and class of securities or other property to
which such participant would have been entitled in the merger or reorganization
if such participant had exercised such stock option prior to such merger or
reorganization. The Committee, in its discretion, may provide for similar
adjustments upon the occurrence of such events with respect to other Awards
outstanding under the 2000 Plan.
The 2000 Plan also provides that, upon the occurrence of a Change of
Control: (i) outstanding stock options and stock appreciation rights will become
immediately exercisable in full (subject to any appropriate adjustments in the
number of shares subject to the option and the option price), regardless of
their terms, and shall remain exercisable for the remaining term of the option;
(ii) outstanding performance shares will be deemed 100% earned and a pro rata
portion of such performance shares (based on the portion of the applicable
performance period that has elapsed at such time) shall be paid to the
participant; and (iii) outstanding shares of restricted stock shall be deemed
vested and all restrictions thereon shall be deemed lapsed. A Change of Control
is defined under the 2000 Plan as (a) the adoption of a plan of merger or
consolidation of the Corporation with any other corporation or association as a
result of which the holders of the voting capital stock of the Corporation as a
group would receive less than 50% of the voting capital stock of the surviving
or resulting corporation, (b) the approval by the Board of Directors of the
Corporation of an agreement providing for the sale or transfer (other than as
security for obligations of the Corporation) of substantially all the assets of
the Corporation, or (c) in the absence of a prior expression of approval by the
Board of Directors of the Corporation, the acquisition of more than 20% of the
Corporation's voting capital stock by any person within the meaning of Section
13(d)(3) of the Exchange Act, other than a person, or group including a person,
who beneficially owned, at the date of adoption of the 2000 Plan by the Board of
Directors, more than 5% of the Corporation's voting capital stock. In addition,
the Committee generally has the discretion to take such actions and make such
adjustments with respect to outstanding
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<PAGE> 29
Awards as it deems necessary or advisable, and fair and equitable, in the event
of a Change of Control or other similar event.
Upon the dissolution or liquidation of the Corporation, all outstanding
Awards under the 2000 Plan shall terminate. Upon the adoption of a plan of such
dissolution or liquidation, however, all outstanding Awards shall be exercisable
in full and all restrictions shall lapse, to the extent described in the
previous paragraph.
MISCELLANEOUS
The Board of Directors generally may amend or terminate the 2000 Plan or
any provision of the 2000 Plan at any time. To the extent required by the
Exchange Act or the Code, however, absent approval by the Corporation's
shareholders, no amendment may (i) materially alter the group of persons
eligible to participate in the 2000 Plan; (ii) except as specifically provided
in Section 3.6 of the 2000 Plan, increase the number of shares available for
Awards under the 2000 Plan; (iii) extend the period during which incentive stock
options may be granted beyond April 19, 2010; or (iv) alter the class of
individuals eligible to receive an incentive stock option or increase the limit
on incentive stock options or the value of shares of Common Stock for which
eligible employees may be granted an incentive stock option. Furthermore,
without the consent of the participant, no amendment to or discontinuance of the
2000 Plan or any provision thereof shall adversely affect (in the sole
discretion of the Committee) any Award granted to the participant under the 2000
Plan, except that the Committee shall always have the right and power to annul
any Award if the participant is terminated for cause and to convert any
outstanding incentive stock option to a nonqualified stock option.
If a participant is required to pay to the Corporation any amount with
respect to income or employment tax withholding obligations in connection with
an Award, no Common Stock will be transferred to such participant until the
Committee in its sole discretion may allow a participant to satisfy any such
obligation by withholding shares of Common Stock that otherwise would be
delivered to such participant with a Fair Market Value equal to the amount of
the withholding obligations.
FEDERAL INCOME TAX CONSEQUENCES
General. The following is a brief description of the Federal income tax
consequences to the participants and the Corporation of the issuance and
exercise of stock options under the 2000 Plan, as well as the grant of
restricted stock, stock awards and performance shares. All ordinary income
recognized by a participant with respect to Awards under the 2000 Plan shall be
subject to both wage withholding and employment taxes. The deduction allowed to
the Corporation for the ordinary income recognized by a participant with respect
to an Award under the 2000 Plan will be limited to amounts that constitute
reasonable, ordinary and necessary business expenses of the Corporation.
Incentive Stock Options. In general, no income will result for Federal
income tax purposes upon either the granting or the exercise of any incentive
option issued under the 2000 Plan. If certain holding period requirements (at
least two years from the date of grant of the
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<PAGE> 30
option and at least one year from the date of exercise of the option) are
satisfied prior to a disposition of stock acquired upon exercise of an incentive
option, the excess of the sale price upon disposition over the option exercise
price generally will be recognized by the participant as a capital gain, and the
Corporation will not be allowed a business expense deduction.
If the holding period requirements with respect to incentive options are
not met, the participant generally will recognize, at the time of the
disposition of the stock, ordinary income in an amount equal to the difference
between the option price of such stock and the lower of the Fair Market Value of
the stock on the date of exercise and the amount realized on the sale or
exchange. The difference between the option price of such stock and the Fair
Market Value of the stock on the date of exercise is a tax preference item for
purposes of calculating the alternative minimum tax on a participant's federal
income tax return. If the amount realized on the sale or exchange exceeds the
Fair Market Value of the stock on the date of exercise, then such excess
generally will be recognized as a capital gain. In the case of a disposition
prior to satisfaction of the holding period requirements which results in the
recognition of ordinary income by the participant, the Corporation generally
will be entitled to a deduction in the amount of such ordinary income in the
year of the disposition.
If a participant delivers shares of Common Stock in payment of the option
price, the participant generally will be treated as having made a like-kind
exchange of such shares for an equal number of the shares so purchased, and no
gain or loss will be recognized with respect to the shares surrendered to the
Corporation in payment of said option price. In such a case, the participant
will have a tax basis in a number of shares received pursuant to the exercise of
the option equal to the number of shares of Common Stock used to exercise the
option and equal to such participant's tax basis in the shares of Common Stock
submitted in payment of the option price. The remaining shares of Common Stock
acquired pursuant to the exercise of the option will have a tax basis equal to
the gain, if any, recognized on the exercise of the option and any other
consideration paid for such shares on the exercise of the option.
Notwithstanding the foregoing, if a participant delivers any stock that
was previously acquired through the exercise of an incentive stock option in
payment of all or a portion of the option price of an option, and the holding
period requirements described above have not been satisfied with respect to the
shares of stock so delivered, the use of such stock to pay a portion of the
option price will be treated as a disqualifying disposition of such shares, and
the participant generally will recognize income.
Nonqualified Stock Options. The grant of nonqualified stock options
under the 2000 Plan will not result in any income being taxed to the participant
at the time of the grant or in any tax deduction for the Corporation at such
time. At the time a nonqualified stock option is exercised, the participant will
be treated as having received ordinary income equal to the excess of the Fair
Market Value of the shares of Common Stock acquired as of the date of exercise
over the price paid for such stock. At that time, the Corporation will be
allowed a deduction for Federal income tax purposes equal to the amount of
ordinary income attributable to the participant upon exercise. The participant's
holding period for the shares of Common Stock acquired will commence on the date
of exercise, and the tax basis of the shares will be the greater of their Fair
Market Value at the time or the exercise price.
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<PAGE> 31
Stock Appreciation Rights. At the time any part of the stock
appreciation rights are exercised, the Participant will be treated as having
received ordinary income equal to the Fair Market Value of the stock
appreciation rights that were exercised, whether such stock appreciation rights
are settled in cash or by delivery of shares of Common Stock. In the year a
Stock Appreciation Right is exercised, the Corporation would be allowed a
deduction for federal income tax purposes equal to the amount of ordinary income
which the Participant receives, and the Participant will report as ordinary
income the value of the stock appreciation right.
Restricted Stock. If a participant receiving a grant of restricted
stock under the 2000 Plan makes an election with respect to such shares under
Section 83(b) of the Code not later than 30 days after the date the shares are
transferred to the participant pursuant to such grant, the participant will
recognize ordinary income at the time of receipt of such restricted stock in an
amount equal to the excess of the Fair Market Value of the shares of Common
Stock as of the date of receipt (determined without regard to any vesting
conditions or other restrictions other than a restriction which by its terms
will never lapse) over the price paid (if any) for such restricted stock. In the
absence of such an election, the participant will recognize ordinary income at
the time the restrictions lapse in an amount equal to the excess of the Fair
Market Value of the shares of Common Stock as of the date the restrictions lapse
over the price paid (if any) for such stock. At the first to occur of the
election or the lapsing of the restrictions, the Corporation will be allowed a
deduction for Federal income tax purposes equal to the amount of ordinary income
attributable to the participant. The participant's holding period for the shares
of Common Stock acquired will commence upon the first to occur of the date the
participant makes an election under Section 83(b) of the Code or on the date
that the restrictions lapse, and the tax basis of the shares will be the greater
of their Fair Market Value on that date or the price paid for the shares (if
any).
If an election is made under Section 83(b) of the Code, dividends
received on shares of restricted stock will be treated as dividends. If a
participant does not make an election under Section 83(b) of the Code, dividends
received on the shares of restricted stock prior to the date that such
restrictions lapse will be treated as additional compensation and not as
dividend income for Federal income tax purposes.
If (i) an election is made under Section 83(b) of the Code and (ii)
before the restrictions on the shares lapse, the shares which are subject to
such election are forfeited to or reacquired by the Corporation then (A) no
deduction would be allowed to such participant for the amount included in the
income of such participant by reason of such election, and (B) the participant
would realize a loss in an amount equal to the excess, if any, of the ordinary
income previously recognized by the participant with respect to such shares over
the value of such shares at the time of forfeiture. Such loss would be a capital
loss if the shares are held as a capital asset at such time. In such event, the
Corporation would be required to include in its income the amount of any
deduction previously allowable to it in connection with the transfer of such
shares.
Stock Awards. At the time a stock award is granted, the participant
will be treated as having received ordinary income equal to the Fair Market
Value of the shares of Common
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<PAGE> 32
Stock acquired. At that time, the Corporation will be allowed a deduction for
federal income tax purposes equal to the amount of ordinary income which the
participant received. The participant's holding period for the shares of Common
Stock acquired will commence on the date of grant, and the tax basis of the
shares will be their Fair Market Value at that time.
Performance Shares. At the time performance shares are earned, the
participant will be treated as having received ordinary income equal to the Fair
Market Value of the shares of Common Stock subject to such performance shares,
whether such performance shares are settled in cash or by delivery of shares of
Common Stock. At that time, the Corporation will be allowed a deduction for
federal income tax purposes equal to the amount of ordinary income which the
participant receives. The participant's holding period for the shares of Common
Stock acquired (if any) will commence on the date of grant, and the tax basis of
such shares will be their Fair Market Value at that time.
NEW 2000 PLAN BENEFITS
Subject to the approval by the shareholders of the 2000 Plan, the
Committee has granted options to purchase shares pursuant to the 2000 Plan. The
table below sets forth benefits to be received by the persons listed therein in
the event the 2000 Plan is approved by the shareholders. It is expected that the
Committee will make other grants from time to time to the listed persons and
other employees should the 2000 Plan be approved. The closing price for the
Common Stock on April 25, 2000 was $13.50.
<TABLE>
<CAPTION>
Common Stock Grant Date
Underlying Exercise Expiration Present
Name and Position Option Grant Price Date Value
----------------- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C>
L. M. Kimbrough, 35,340 $14.50 1/20/10 $164,244
President and Chief
Executive Officer
R. O. Bratton, 19,791 $14.50 1/20/10 $ 91,978
Executive Vice
President, Chief Operating Officer and
Chief Financial Officer
R. G. Fox, Jr., 11,309 $14.50 1/20/10 $ 52,559
Executive Vice President
R. E. James, Jr. 19,791 $14.50 1/20/10 $ 91,978
Group Executive Vice
President
C. T. McFarland, Jr., 19,225 $14.50 1/20/10 $ 89,349
Group Executive Vice
President
Executive Group (1) 115,456 $14.50 1/20/10 $531,889
Non-Executive Officers and 114,544 $14.50 1/20/10 $531,295
Employee Group
</TABLE>
- ---------------------
(1) All such options have an exercise price of $14.50 and expire on January
20, 2010, except 10,000 of such options were granted on February 28, 2000
at an exercise price of $13.4375 (the then Fair Market Value) and such
options expire on February 28, 2010.
(2) For calculating the grant date present value we utilized the assumptions
described in Footnote 4 under the Option/SAR Grants in Last Fiscal Year
Table.
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<PAGE> 33
AMENDMENT OF THE CORPORATION'S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK FROM
50,000,000 SHARES TO 100,000,000 SHARES
Our Board of Directors has approved an amendment to our Amended and
Restated Articles of Incorporation to increase the number of authorized shares
of Common Stock from 50,000,000 to 100,000,000. Our Board of Directors has also
approved a further amendment to our Amended and Restated Articles of
Incorporation to authorize 2,000,000 shares of Preferred Stock. You are also
being asked to vote on that amendment.
If both the Articles of Incorporation Common Stock Amendment and the
Articles of Incorporation Preferred Stock Amendment are adopted, Article 4 of
the Amended and Restated Articles of Incorporation will be amended and restated
to read as shown on Appendix B attached hereto.
We are currently authorized to issue up to 50,000,000 shares of Common
Stock. As of the Record Date, 31,074,511 of such authorized shares were
outstanding and 4,353,106 of such authorized shares were reserved for issuance,
leaving 14,572,383 shares of Common Stock available for issuance for other
corporate purposes as of that date. We believe that the increase in the number
of authorized shares of Common Stock will provide us with increased flexibility
to meet various corporate objectives and is in the best interest of the
Corporation and our shareholders. If this proposal is approved by the requisite
shareholder vote, we will make the appropriate filings in the State of North
Carolina and take any other action necessary to implement the Articles of
Incorporation Common Stock Amendment.
It is our intention to finance our operations through, among other
things, the issuance from time to time of various equity securities, to consider
the acquisition of financial service businesses (possibly using Common Stock as
consideration in some instances) and to consider the issuance of additional
shares of Common Stock through stock splits and stock dividends in appropriate
circumstances. Accordingly, the continued availability of shares of Common Stock
is necessary to provide us with the flexibility to take advantage of
opportunities in such situations. There are, at present, no plans,
understandings, agreements or arrangements concerning the issuance of additional
shares of Common Stock, except for shares currently reserved for issuance under
employee and director benefit plans and our Dividend Reinvestment Plan and
shares to be reserved for issuance under the 2000 Plan if approved by the
shareholders.
Pursuant to North Carolina law, authorized and unissued shares of Common
Stock (other than those shares reserved for certain purposes) are available for
issuance by us to such persons and for such consideration as our Board of
Directors may determine from time to time. You may not be given the opportunity
to vote on such matters, unless shareholder approval is required by applicable
law or the rules and policies of the Nasdaq National Market System or unless our
Board of Directors in its judgment recommends shareholder approval. You
generally will not have preemptive rights to subscribe for newly issued shares.
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<PAGE> 34
If you approve the Articles of Incorporation Common Stock Amendment, the
increase in the amount of authorized Common Stock could have anti-takeover
effects with respect to the Corporation. As noted above, we will have the
authority to issue shares of authorized but unissued and unreserved shares of
Common Stock in our discretion, which could dilute the stock ownership of
persons seeking to acquire control of us through the purchase of a large block
of stock.
In addition, our Amended and Restated Articles of Incorporation currently
contain other provisions which may have anti-takeover effects. For example, our
Board of Directors is composed of three classes with the directors in each such
class serving staggered terms. The staggered terms may make it more difficult to
obtain control of us by changing the composition of the Board of Directors. The
Amended and Restated Articles of Incorporation also impose certain super
majority voting requirements in connection with certain business combinations or
sales of all or substantially all of our assets or the stock of our
subsidiaries, and also requires the vote of 75% of our Board of Directors for
the approval of a plan of merger or plan of consolidation, or similar plan, with
any other corporation or entity in which we are the acquired corporation or for
adopting a resolution recommending a sale, lease or exchange of all or
substantially all of our property.
All of the above-described provisions could have certain anti-takeover
effects. These provisions could make us a less attractive target for a hostile
takeover bid or render more difficult or discourage a merger proposal, the
assumption of control through the acquisition of a large block of Common Stock
or the removal of incumbent management, even if the consummation of a given
transaction might be favorable to you. In addition, these provisions may inhibit
or impede fluctuations in the market price of Common Stock that might otherwise
result from actual or potential takeover attempts.
We believe that the Articles of Incorporation Common Stock Amendment will
provide flexibility needed to meet corporate objectives and is in our best
interests and your best interest. If this proposal is approved, our officers
will promptly make appropriate filings in the State of North Carolina and take
any other action necessary to implement the amendment. WE RECOMMEND THAT YOU
APPROVE THE PROPOSAL TO APPROVE THE ARTICLES OF INCORPORATION COMMON STOCK
AMENDMENT.
AMENDMENT TO THE CORPORATION'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO AUTHORIZE PREFERRED STOCK
Our Board has proposed and recommends that the Amended and Restated
Articles of Incorporation be amended to authorize 2,000,000 shares of "blank
check" preferred stock, no par value per share. These shares are commonly
referred to as "blank check," because they would have such voting powers,
designations, preferences, and relative, participating, optional and conversion
or other special rights, and such qualifications, limitations or restrictions,
as our Board may designate for each class or series issued from time to time.
These rights would include, but not be limited to (A) the designation of each
class or series and the number of shares that will constitute each such class or
series; (B) the dividend rate for each class or series; (C) the price at which,
and the terms and conditions on which, the shares of each class
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or series may be redeemed, if such shares are redeemable; (D) the voting rights,
if any, of shares of each class or series; and (E) the terms and conditions, if
any, upon which shares of each class or series may be converted into shares of
other classes or series of shares of the Corporation, or other securities. The
Corporation currently does not have any authorized shares of Preferred Stock.
If this proposal is adopted, any Preferred Stock issued would have
priority over the Common Stock upon liquidation and might have priority rights
as to dividends, voting and other rights and preferences. Accordingly, the
issuance of Preferred Stock could decrease the amount of earnings and assets
allocable to or available for distribution to holders of Common Stock and
adversely affect other rights and preferences, including voting rights, of the
Common Stock.
All 2,000,000 shares of Preferred Stock would be available for issuance
without further action by the shareholders of the Corporation, and the
Corporation does not intend to seek shareholder approval prior to any issuance
of Preferred Stock, unless otherwise required by law or by the rules and
policies of the Nasdaq National Market System. If this proposal is approved, we
will make the appropriate filings in the State of North Carolina and take any
other action necessary to implement the Articles of Incorporation Preferred
Stock Amendment.
The proposed authorization of Preferred Stock is deemed desirable in that
it would enhance the Corporation's flexibility in connection with possible
future actions, such as stock dividends, financings, mergers, acquisitions, or
other purposes. Having the authorized Preferred Stock available for issuance in
the future would allow shares to be issued without the expense and delay of a
special shareholders' meeting. The authorized but unissued shares of Preferred
Stock could also have anti-takeover effects.
Under certain circumstances, any or all of the Preferred Stock could be
used to deter persons seeking to effect a hostile takeover or to otherwise gain
control of the Corporation. The Preferred Stock may also be used in connection
with the issuance of a shareholder rights plan, sometimes referred to as a
"poison pill". For example, a class or series of Preferred Stock could be
designated that would be convertible into Common Stock upon the acquisition by a
third party of a specified percentage of the Corporation's voting stock.
Typically, under most shareholder rights plans, if a third party acquires 15% of
a corporation's voting stock, the stockholders of that corporation (other than
the stockholder who purchased the more than 15% interest in the corporation)
have the right to purchase shares of the common stock of the corporation at a
discount to the market price. This results in dilution to a third party, both
economically and in terms of its percentage ownership of the corporation's
shares. While no official action has been taken by the Board of Directors of the
Corporation, management has considered from time to time the benefits of
implementing a shareholder rights plan and has discussed, with counsel, the
legal and practical aspects of a shareholder rights plan with the Board of
Directors. Accordingly, if the Articles of Incorporation Common Stock Amendment
and the Articles of Incorporation Preferred Stock Amendment are adopted, the
Board of Directors may implement a shareholder rights plan.
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Use of the Preferred Stock in the foregoing manner may be disadvantageous
to shareholders who would deem the attempted takeover efforts as desirable.
Further, this proposal may be disadvantageous to shareholders in that
Preferred Stock with disproportionate voting rights may be used to entrench
management, making it more difficult to remove directors at a time when the
shareholders would prefer to do so. Preferred Stock may also be used to prevent
or discourage offers to purchase blocks of Common Stock, the results of these
purchases may cause uncharacteristic or artificial changes in the market price
of the Common Stock.
We believe that the Articles of Incorporation Preferred Stock Amendment
will provide flexibility needed to meet corporate objectives and is in our best
interests and your best interest. If this proposal is approved, our officers
will promptly make appropriate filings in the State of North Carolina and take
any other action necessary to implement the amendment. WE RECOMMEND THAT YOU
APPROVE THE PROPOSAL TO APPROVE THE ARTICLES OF INCORPORATION PREFERRED STOCK
AMENDMENT.
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have appointed KPMG LLP, independent certified public accountants, as
our auditors for 2000. KPMG LLP has acted in this capacity since 1983. We have
been advised by KPMG LLP that neither the firm nor any of its members or
associates has any direct financial interest or material indirect financial
interest in the Corporation or our subsidiaries other than as its auditors.
Although the selection and appointment of the independent auditors is not
required to be submitted to a vote, we deem it advisable to obtain your
ratification of this appointment. We understand that a representative from KPMG
LLP will be present at the shareholders' meeting, will have the opportunity to
make a statement if he or she desires to do so and will be available to respond
to appropriate questions. WE RECOMMEND A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF THIS FIRM AS INDEPENDENT AUDITORS OF THE CORPORATION FOR 2000. If
you do not ratify the appointment of KPMG LLP, we will consider a change in
auditors for the next fiscal year.
ANNUAL REPORT
Our 1999 Annual Report, including financial statements, accompanies this
Proxy Statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon our records, we believe that all Section 16 filing
requirements of our directors and officers have been complied with on a timely
basis for 1999 except that (i) Mr. McFarland filed in an untimely fashion his
Form 3 indicating that he became a reporting person; (ii) Mr. McFarland filed in
an untimely manner a Form 4 relating to a restructured stock award grant; and
(iii) Mr. Revels filed in an untimely manner a Form 4 reporting purchases of an
aggregate of 1,199 shares of Common Stock.
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SHAREHOLDER PROPOSALS
We anticipate that our 2001 Annual Meeting of Shareholders will be held
on April 24, 2001. The deadline for submission of shareholder proposals for
inclusion in our proxy statement for the 2001 annual meeting of shareholders
would be November 21, 2000. Additionally, we will require notice of any
shareholder proposal to be submitted at the 2001 annual meeting of shareholders
(but not required to be included in our proxy statement) by February 2, 2001, or
such proposal will be considered untimely pursuant to Rules 14a-4 and 14a-5(e)
under the Exchange Act and the persons named in the proxies solicited by us may
exercise discretionary voting authority with respect to such proposal.
FORM 10-K
COPIES OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
EXCLUDING EXHIBITS, ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO FIRST
CHARTER CORPORATION, POST OFFICE BOX 228, CONCORD, NORTH CAROLINA 28026-0228,
ATTENTION: ROBERT O. BRATTON, CHIEF FINANCIAL OFFICER. COPIES OF EXHIBITS ARE
AVAILABLE UPON PAYMENT OF $25.00 TO COVER THE COSTS OF REPRODUCTION.
OTHER BUSINESS
We know of no other matter to come before the meeting. However, if any
other matter requiring a vote of the shareholders should arise, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with their best judgment.
By Order of the Board of Directors,
James W. Townsend, Jr.
Secretary
DATED: April 28, 2000
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APPENDIX A
FIRST CHARTER CORPORATION 2000
OMNIBUS STOCK OPTION AND AWARD PLAN
ARTICLE I -- PREAMBLE
1.1. The First Charter Corporation 2000 Omnibus Stock Option and Award
Plan is intended to secure for the Corporation, its Subsidiaries and its
shareholders the benefits arising from ownership of the Corporation's Common
Stock by the employees of the Corporation and its Subsidiaries and by the
directors of the Corporation, all of whom are and will be responsible for the
Corporation's future growth. The Plan is designed to (i) help attract and retain
for the Corporation and its Subsidiaries personnel of superior ability for
positions of exceptional responsibility, (ii) closely associate the interest of
Participants with the shareholders by reinforcing the relationship between
Participants' rewards and shareholder gains, (iii) provide Eligible Persons with
an equity interest in the Corporation, and (iv) to reward employees and
directors for past services and motivate such individuals through added
incentives to further contribute to the success of the Corporation. With respect
to persons subject to Section 16 of the Act, transactions under this Plan are
intended to satisfy the requirements of Rule 16b-3 of the Act.
1.2. Awards under the Plan may be made to Eligible Persons in the form
of (i) Incentive Stock Options (to Eligible Employees only); (ii) Nonqualified
Stock Options; (iii) Stock Appreciation Rights; (iv) Restricted Stock; (v) Stock
Awards; (vi) Performance Shares; or (vii) any combination of the foregoing.
1.3. The Plan shall be effective April 19, 2000 (the "Effective
Date"), subject to approval by the shareholders of the Corporation to the extent
necessary to satisfy the requirements of the Code, the New York Stock Exchange,
Inc., or other applicable federal or state law.
ARTICLE II -- DEFINITIONS
Definitions. Except where the context otherwise indicates, the
following definitions apply:
2.1. "Act" means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.
2.2. "Award" means an award granted to a Participant in accordance
with the provisions of the Plan, including, but not limited to, Stock Options,
Stock Appreciation Rights, Restricted Stock, Stock Awards, Performance Shares,
or any combination of the foregoing.
2.3. "Award Agreement" means the separate written agreement evidencing
each Award granted to a Participant under the Plan. In the event a Participant
fails to sign or return
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an Award Agreement to the Committee or its designee within the lesser or (i) the
time specified by the Committee or (ii) sixty (60) days from the Grant Date, the
Award shall be void and of no affect ab initio.
2.4. "Board of Directors" means the Board of Directors of the
Corporation.
2.5. "Change of Control" means (i) the effective date of the adoption
of a plan of merger or consolidation of the Corporation with any other
corporation or association as a result of which the holders of the voting
capital stock of the Corporation as a group would receive less than 50% of the
voting capital stock of the surviving or resulting corporation; (ii) the
effective date of the approval by the Board of Directors of an agreement
providing for the sale or transfer (other than as security for obligations of
the Corporation) of substantially all the assets of the Corporation; or (iii) in
the absence of a prior expression of approval by the Board of Directors, the
acquisition of more than 20% of the Corporation's voting capital stock by any
person within the meaning of Section 13(d)(3) of the Act, other than a person,
or group including a person, who beneficially owned, as of the Effective Date,
more than 5.0% of the Corporation's voting capital stock.
2.6. "Code" means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended. (All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.)
2.7. "Committee" means a committee of the Board of Directors
established for the administration of the Plan pursuant to Article III and
consisting of two or more Directors. To the extent necessary to comply with Rule
16b-3 under the Act, the Committee shall consist solely of two or more
Non-Employee Directors.
2.8. "Common Stock" means the common stock of the Corporation to be
issued pursuant to the Plan.
2.9. "Corporation" means First Carter Corporation, a North Carolina
corporation, and its successors and assigns.
2.10. "Director" means a member of the Board of Directors of the
Corporation, or of any Subsidiary.
2.11. "Disability" means the inability of a Participant to engage in
his or her profession by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which is to last or can
be expected to last for a continuous period of not less than twelve months, as
determined by the Committee in its sole discretion upon certification thereof by
qualified physicians selected by the Committee after such physician examines the
Participant.
2.12. "Effective Date" shall be the date set forth in Section 1.3 of
the Plan.
2.13. "Eligible Employee" means an Eligible Person who is an employee
of the Corporation or any Subsidiary.
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2.14. "Eligible Person" means any employee of the Corporation or any
Subsidiary or any Director, as well as any other person whose participation the
Committee determines is in the best interest of the Corporation, subject to
limitations as may be provided by the Code, the Act or the Committee.
2.15. "ERISA" means the Employee Retirement Income Security Act of
1974, as now in effect or as hereafter amended.
2.16. "Fair Market Value" means the average of the closing bid and
asked prices for the Common Stock in the over-the-counter market as reported by
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
System if the Common Stock is not listed on a national securities exchange or
the NASDAQ National Market System; or the closing price of the Common Stock if
the Common Stock is listed on a national securities exchange or traded on the
NASDAQ National Market System; or the fair value thereof determined in good
faith by the Board of Directors if the Common Stock is not listed on a national
securities exchange or quoted on the NASDAQ National Market System or the over-
the-counter market.
2.17. "Grant Date" means, as to any Award, the latest of:
(a) the date on which the Committee authorizes the grant of the
Award; or
(b) the date the Participant receiving the Award becomes an
employee or a director of the Corporation or its Subsidiaries, to the
extent employment status is a condition of the grant or a requirement of
the Code or the Act; or
(c) such other date (later than the dates described in (a) and
(b) above) as the Committee may designate and as set forth in the
Participant's Award Agreement.
2.18. "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include
adoptive relationships.
2.19. "Incentive Stock Option" means a Stock Option that meets the
requirements of Section 422 of the Code and is granted under Article IV of the
Plan and designated as an Incentive Stock Option in a Participant's Award
Agreement.
2.20. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 under the Act.
2.21. "Nonqualified Stock Option" means a Stock Option that does not
meet the requirements of Section 422 of the Code and is granted under Article V
of the Plan, or, even if meeting the requirements of Section 422 of the Code, is
not intended to be an Incentive Stock Option and is not so designated in the
Participant's Award Agreement.
2.22. "Option Period" means the period during which a Stock Option may
be exercised from time to time, as established by the Committee and set forth in
the Award Agreement for each Participant who is granted a Stock Option.
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2.23. "Option Price" means the purchase price for a share of Common
Stock subject to purchase pursuant to a Stock Option, as established by the
Committee and set forth in the Award Agreement for each Participant who is
granted a Stock Option.
2.24. "Participant" means an Eligible Person to whom an Award has been
granted and who has entered into an Award Agreement evidencing the Award. Under
circumstances where the provision should be construed to apply to the estate,
personal representative or beneficiary to whom an Award may be transferred by
will or by the laws of descent and distribution, it shall be deemed to include
such person.
2.25. "Performance Objectives" shall have the meaning set forth in
Article X of the Plan.
2.26. "Performance Period" shall have the meaning set forth in Article
X of the Plan.
2.27. "Performance Share" means an Award under Article X of the Plan of
a unit valued by reference to the Common Stock, the payout of which is subject
to achievement of such Performance Objectives, measured during one or more
Performance Periods, as the Committee, in its sole discretion, shall establish
at the time of such Award and set forth in a Participant's Award Agreement.
2.28. "Plan" means the First Charter Corporation 2000 Omnibus Stock
Option and Award Plan, as amended from time to time.
2.29. "Restricted Stock" means an Award under Article VIII of the Plan
of shares of Common Stock that are at the time of the Award subject to
restrictions or limitations as to the Participant's ability to sell, transfer,
pledge or assign such shares, which restrictions or limitations may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee, in its sole discretion, shall determine at the time
of such Award and set forth in a Participant's Award Agreement.
2.30. "Restriction Period" means the period commencing on the Grant
Date with respect to such shares of Restricted Stock and ending on such date as
the Committee, in its sole discretion, shall establish and set forth in a
Participant's Award Agreement.
2.31. "Retirement" means retirement as determined under procedures
established by the Committee or in any Award, as set forth in a Participant's
Award Agreement.
2.32 "Stock Appreciation Right" means an Award under Article VI of the
Plan which provides for an amount payable in Common Stock and/or cash, as
determined by the Committee, equal to the excess of the Fair Market Value of a
share of Common Stock on the day the Stock Appreciation Right is exercised over
the price at which a Participant could exercise a related Stock Option to
purchase the share of Common Stock.
2.33. "Stock Award" means an Award of shares of Common Stock under
Article IX of the Plan.
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2.34. "Stock Option" means an Award under Article IV or Article V of
the Plan of an option to purchase Common Stock. A Stock Option may be either an
Incentive Stock Option or a Nonqualified Stock Option.
2.35. "Subsidiary" means a subsidiary corporation of the Corporation as
that term is defined in Code section 424(f). "Subsidiaries" means more than one
Subsidiary.
2.36. "Termination of Service" means (i) in the case of an Eligible
Employee, the discontinuance of employment of such Participant with the
Corporation or its Subsidiaries for any reason other than a transfer to another
member of the group consisting of the Corporation and its Subsidiaries and (ii)
in the case of a Director or other Eligible Person who is not an employee of the
Corporation or any Subsidiary, the date such Participant ceases to serve as a
Director or otherwise ceases to provide valuable service to the Corporation. The
determination of whether a Participant has discontinued service shall be made by
the Committee in its sole discretion. In determining whether a Termination of
Service has occurred, the Committee may, in its sole discretion, provide that
service as a consultant or service with a business enterprise in which the
Corporation has a significant ownership interest shall be treated as employment
with the Corporation.
ARTICLE III -- ADMINISTRATION
3.1. The Committee shall administer the Plan. Except as otherwise
required by Rule 16b-3 under the Act, the Committee, in its discretion, may
delegate to one or more of its members such of its powers as it deems
appropriate. The Committee also may limit the power of any member to the extent
necessary to comply with Rule 16b-3 under the Act or any other law, rule or
regulation. The Board of Directors may serve as the Committee, if by the terms
of the Plan all members of the Board of Directors are otherwise eligible to
serve on the Committee.
3.2. The Committee shall meet at such times and places as it
determines. The Committee shall at all times operate and be governed, and
Committee meetings shall be conducted and action taken, in accordance with the
provisions of the Corporation's Bylaws or resolutions or policies adopted by the
Board of Directors from time to time regarding the operation of committees of
the Corporation.
3.3. Except as set forth in Section 3.15 regarding grants of Awards by
the Board of Directors, the Committee shall have the exclusive right (i) to
construe and interpret the Plan, (ii) to define the terms used herein, (iii) to
prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to
determine the Eligible Persons to whom Awards shall be granted, (v) to determine
the time or times when Awards shall be granted, (vi) to determine the price or
prices of which Options shall be granted, (vii) to determine the Option Period
and/or Restriction Period for each Award, (viii) to determine the number of
shares subject to each Award, and the forms, terms and conditions of each Award,
and any amendment thereof, and the provisions of the related Award Agreement
evidencing the Award, (ix) to determine whether any Option or other Award
granted shall be vested over a period of time and when such Option or Award
shall be fully vested, (x) to determine
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whether an Option to an Eligible Employee shall be an Incentive Stock Options,
(xii) to determine whether an Eligible Person has a Disability, and (xiii) to
make any other determinations necessary or advisable for the administration of
the Plan and to do everything necessary or appropriate to administer the Plan.
The Committee's determinations under this Section 3.3 need not be uniform and
may be made by the Committee selectively among the persons who receive or
eligible to receive, any Award under the Plan, whether or not such persons are
similarly situated. The records of the Corporation or Subsidiary as to a
Participant's employment (or other provision of services), termination of
employment (or cessation of the provision of services), leave of absence,
compensation and related information shall be conclusive on all persons unless
determined to be incorrect. All acts, determinations and decisions of the
Committee made or taken pursuant to the Plan or with respect to any questions
arising in connection with the administration and interpretation of the Plan or
any Award Agreement, including the severability of any and all of the provisions
thereof, shall be conclusive, final and binding upon all Participants, Eligible
Persons and their beneficiaries.
3.4. The Committee may adopt and change such rules, regulations and
procedures of general application for the administration of this Plan, as it
deems appropriate.
3.5. Without limiting the provisions of this Article III, and subject
to the provisions of Article XI, the Committee is authorized to take such action
as it determines to be necessary or advisable, and fair and equitable to
Participants and to the Corporation, with respect to an outstanding Award in the
event of a Change of Control as described in Article XI or other similar event.
Such action may include, but shall not be limited to, establishing, amending or
waiving the form, terms, conditions and duration of an Award and the related
Award Agreement, so as to provide for earlier, later, extended or additional
times for exercise or payments, differing methods for calculating payments,
alternate forms and amounts of payment, an accelerated release of restrictions
or other modifications. The Committee may take such actions pursuant to this
Section 3.5 by adopting rules and regulations of general applicability to all
Participants or to certain categories of Participants, by including, amending or
waiving terms and conditions in an Award and the related Award Agreement, or by
taking action with respect to individual Participants from time to time.
3.6. Subject to the provisions of Section 3.11, the aggregate number
of shares of Common Stock that may be issued pursuant to Awards under the Plan
shall be Two Million (2,000,000) shares. Such shares of Common Stock shall be
made available from authorized and unissued shares of the Corporation.
(a) For all purposes under the Plan, each Performance Share
awarded shall be counted as one share of Common Stock subject to an
Award.
(b) If, for any reason, any shares of Common Stock (including
shares of Common Stock subject to Performance Shares) that have been
awarded or are subject to issuance or purchase pursuant to Awards
outstanding under the Plan are not delivered or purchased, or are
reacquired by the Corporation, for any reason, including but not limited
to a forfeiture of Restricted Stock or failure to earn Performance Shares
or the termination, expiration or cancellation of a Stock Option, or any
other termination of an Award without payment being made in the form of
shares of
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Common Stock (whether or not Restricted Stock), such shares of Common
Stock shall not be charged against the aggregate number of shares of
Common Stock available for Award under the Plan and shall again be
available for Awards under the Plan. In no event, however, may Common
Stock that is surrendered or withheld to pay the exercise price of a
Stock Option or to satisfy tax withholding requirements be available for
future grants under the Plan.
(c) To the extent a Stock Appreciation Right granted in
connection with a Stock Option is exercised without payment being made in
the form of Common Stock (whether or not Restricted Stock) the shares of
Common Stock which otherwise would have been issued upon the exercise of
the related Stock Option shall not be charged against the aggregate
number of shares of Common Stock subject to an Award under the Plan, and
shall again be available for Awards under the Plan.
(d) The foregoing subsections (a) and (b) of this Section 3.6
shall be subject to any limitations provided by the Code or by Rule 16b-3
under the Act or by any other applicable law, rule or regulation.
3.7. Each Award granted under the Plan shall be evidenced by a written
Award Agreement, which shall be subject to and shall incorporate (by reference
or otherwise) the applicable terms and conditions of the Plan and shall include
any other terms and conditions (not inconsistent with the Plan) required by the
Committee.
3.8. The Corporation shall not be required to issue or deliver any
certificates for shares of Common Stock under the Plan prior to:
(a) any required approval of the Plan by the shareholders of the
Corporation; and
(b) the completion of any registration or qualification of such
shares of Common Stock under any state or federal law, or the consent or
approval of any governmental regulatory body that the Corporation shall,
its sole discretion, determine to be necessary or desirable as a
condition of, or in connection with, the Award. In such circumstances,
the Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected
or obtained free of any conditions that are not acceptable to the
Corporation.
3.9. The Committee may require any Participant acquiring shares of
Common Stock pursuant to any Award under the Plan to represent to and agree with
the Corporation in writing that such person is acquiring the shares of Common
Stock for investment purposes and without a view to resale or distribution
thereof. Shares of Common Stock issued and delivered under the Plan shall also
be subject to such stop-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed and any applicable federal or state laws, and the Committee
may cause a legend or legends to be placed on the certificate or certificates
representing any such shares to make appropriate reference to any such
restrictions. In making such determination, the Committee may rely upon an
opinion of counsel for the Corporation.
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3.10. Except as otherwise expressly provided in the Plan or in an Award
Agreement with respect to an Award, no Participant shall have any right as a
shareholder of the Corporation with respect to any shares of Common Stock
subject to such Participant's Award except to the extent that, and until, one or
more certificates representing such shares of Common Stock shall have been
delivered to the Participant. No shares shall be required to be issued, and no
certificates shall be required to be delivered, under the Plan unless and until
all of the terms and conditions applicable to such Award shall have, in the sole
discretion of the Committee, been satisfied in full and any restrictions shall
have lapsed in full, and unless and until all of the requirements of law and of
all regulatory bodies having jurisdiction over the offer and sale, or issuance
and delivery, of the shares shall have been fully complied with.
3.11. The total amount of shares with respect to which Awards may be
granted under the Plan and rights of outstanding Awards (both as to the number
of shares subject to the outstanding Awards and the Option Price(s) or other
purchase price(s) of such shares, as applicable) shall be appropriately adjusted
for any increase or decrease in the number of outstanding shares of Common Stock
of the Corporation resulting from payment of a stock dividend on the Common
Stock, a stock split or subdivision or combination of shares of the Common
Stock, or a reorganization or reclassification of the Common Stock, or any other
change in the structure of shares of the Common Stock. The Committee in its sole
discretion shall determine the foregoing adjustments and the manner of
application of the foregoing provisions. Any such adjustment may provide for the
elimination of any fractional shares that might otherwise become subject to an
Award. All adjustments made as the result of the foregoing in respect of each
Incentive Stock Option shall be made so that such Incentive Stock Option shall
continue to be an Incentive Stock Option, as defined in Section 422 of the Code.
3.12. The members of the Committee shall be entitled to indemnification
by the Corporation in the manner and to the extent set forth in the
Corporation's Bylaws or as otherwise provided from time to time regarding
indemnification of Directors.
3.13. The Committee shall be authorized to make adjustments in any
performance based criterium or in the other terms and conditions of outstanding
Awards in recognition of unusual or nonrecurring events affecting the
Corporation (or any Subsidiary, if applicable) or its financial statements or
changes in applicable laws, regulations or accounting principles. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement in the manner and to the extent it shall deem
necessary or desirable to reflect any such adjustment. In the event the
Corporation (or any Subsidiary, if applicable) shall assume outstanding employee
benefit awards or the right or obligation to make future such awards in
connection with the acquisition of another corporation or business entity, the
Committee may, in its sole discretion, make such adjustments in the terms of
outstanding Awards under the Plan as it shall deem appropriate.
3.14. Subject to the express provisions of the Plan, the Committee
shall have full power and authority to determine whether, to what extent and
under what circumstances any outstanding Award shall be terminated, canceled,
forfeited or suspended. Notwithstanding the foregoing or any other provision of
the Plan or an Award Agreement, all Awards to any
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Participant that are subject to any restriction or have not been earned or
exercised in full by the Participant shall be terminated and canceled if the
Participant is terminated for cause, as determined by the Committee in its sole
discretion.
3.15. In addition to, and not in limitation of, the right of the
Committee to grant Awards to Eligible Persons under this Plan, the full Board of
Directors may from time to time grant Awards to Eligible Persons pursuant to the
terms and conditions of this Plan, subject to the requirements of the Code, Rule
16b-3 under the Act or any other applicable law, rule or regulation. In
connection with any such grants, the Board of Directors shall have all of the
power and authority of the Committee to determine the Eligible Persons to whom
such Awards shall be granted and the other terms and conditions of such Awards.
ARTICLE IV -- INCENTIVE STOCK OPTIONS
4.1. The Committee, in its sole discretion, may from time to time on
or after the Effective Date grant Incentive Stock Options to Eligible Employees,
subject to the provisions of this Article IV and Articles III and VII and
subject to the following conditions:
(a) Incentive Stock Options shall be granted only to Eligible
Employees, each of whom may be granted one or more of such Incentive
Stock Options at such time or times determined by the Committee;
provided, however, that Incentive Stock Options shall be granted only to
an Eligible Employee who, at the time of the Grant Date, does not own
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Corporation.
(b) The Option Price per share of Common Stock for an Incentive
Stock Option shall be set in the Award Agreement, but shall not be less
than one hundred percent (100%) of the Fair Market Value and its related
Stock Appreciation Right, if any, of the Common Stock at the Grant Date.
(c) An Incentive Stock Option and its related Stock Appreciation
Right, if any, may be exercised in full or in part from time to time
within ten (10) years from the Grant Date, or such shorter period as may
be specified by the Committee as the Option Period and set forth in the
Award Agreement; provided, however, that, in any event, the Incentive
Stock Option and its related Stock Appreciation Right, if any, shall
lapse and cease to be exercisable upon a Termination of Service or within
such period following a Termination of Service as shall have been
determined by the Committee and set forth in the related Award Agreement;
and provided, further, that such period following a Termination of
Service, unless otherwise approved by the Committee, shall not exceed
three (3) months unless employment shall have terminated:
(i) as a result of Disability, in which event such
period shall not exceed one year after the date of Disability; or
(ii) as a result of death, or if death shall have
occurred within three (3) months following a Termination of Service
(other than as a result of
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Disability, and providing that such Termination of Service was with
the consent of the Corporation), and during the period that the
Incentive Stock Option was still exercisable, in which event such
period may not exceed one year after the date of death; and
provided, further, that such period following a Termination of Service
shall in no event extend beyond the original Option Period of the
Incentive Stock Option or any related Stock Appreciation Right.
(d) The aggregate Fair Market Value of the shares of Common
Stock with respect to which any incentive stock options (whether under
this Plan or any other plan established by the Corporation) are first
exercisable during any calendar year by any Eligible Employee shall not
exceed one hundred thousand dollars ($100,000), determined based on the
Fair Market Value(s) of such shares as of their respective grant dates;
provided, however, that to the extent permitted under Section 422 of the
Code:
(i) if the aggregate Fair Market Values of the shares of
Common Stock with respect to which incentive stock options are
first exercisable during any calendar year (whether such Incentive
Stock Options are granted under this Plan or any other plan
established by the Corporation) exceeds one hundred thousand
dollars ($100,000), such excess shall be treated as a Nonqualified
Stock Option;
(ii) if a Participant's employment is terminated by
reason of death, Disability or Retirement and the portion of any
incentive stock option that is otherwise exercisable during the
post-termination period applied without regard to the one hundred
thousand dollar ($100,000) limitation contained in Section 422 of
the Code is greater than the portion of such option that is
immediately exercisable as an Incentive Stock Option during such
post-termination period under Section 422, such excess shall be
treated as a Nonqualified Stock Option; and
(iii) if the exercise of an Incentive Stock Option is
accelerated by reason of a Change of Control, any portion of such
Award that is not exercisable as an incentive stock option by
reason of the one hundred thousand dollar ($100,000) limitation
contained in Section 422 of the Code shall be treated as a
Nonqualified Stock Option.
(e) No Incentive Stock Options may be granted more than ten (10)
years from the Effective Date.
(f) The Award Agreement for each Incentive Stock Option shall
provide that the Participant shall notify the Corporation if such
Participant sells or otherwise transfers any shares of Common Stock
acquired upon exercise of the Incentive Stock Option within two (2) years
of the Grant Date of such Incentive Stock Option or within one (1) year
of the date such shares were acquired upon the exercise of such Incentive
Stock Option.
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4.2. Subject to the limitations of Section 3.6, the maximum number of
shares of Common Stock subject to Awards in the form of Incentive Stock Options
shall be the maximum number of shares available for Awards under the Plan.
4.3. The Committee may provide for any other terms and conditions
which it determines should be imposed for an Incentive Stock Option to qualify
under Section 422 of the Code, as well as any other terms and conditions not
inconsistent with this Article IV or Articles III or VII, as determined in its
sole discretion and set forth in the Award Agreement for such Incentive Stock
Option.
4.4. Each provision of this Article IV and of each Incentive Stock
Option granted hereunder shall be construed in accordance with the provisions of
Section 422 of the Code, and any provision hereof that cannot be so construed
shall be disregarded.
ARTICLE V -- NONQUALIFIED STOCK OPTIONS
5.1. The Committee, in its sole discretion, may from time to time on
or after the Effective Date grant Nonqualified Stock Options to Eligible
Persons, subject to the provisions of this Article V and Articles III and VII
and subject to the following conditions:
(a) Nonqualified Stock Options may be granted to any Eligible
Persons, each of whom may be granted one or more of such Nonqualified
Stock Options, at such time or times determined by the Committee.
(b) The Option Price per share of Common Stock for a
Nonqualified Stock Option shall be set in the Award Agreement and may be
less than one hundred percent (100%) of the Fair Market Value of the
Common Stock at the Grant Date.
(c) A Nonqualified Stock Option and its related Stock
Appreciation Right, if any, may be exercised in full or in part from time
to time within the Option Period specified by the Committee and set forth
in the Award Agreement; provided, however, that, in any event, the
Nonqualified Stock Option and its related Stock Appreciation Right, if
any, shall lapse and cease to be exercisable upon a Termination of
Service or within such period following a Termination of Service as shall
have been determined by the Committee and set forth in the related Award
Agreement.
5.2. The Committee may provide for any other terms and conditions for
a Nonqualified Stock Option not inconsistent with this Article V or Articles III
or VII, as determined in its sole discretion and set forth in the Award
Agreement for such Nonqualified Stock Option.
ARTICLE VI -- STOCK APPRECIATION RIGHTS
6.1. A Stock Appreciation Right may be granted to an Eligible Person
in connection with an Incentive Stock Option or a Nonqualified Stock option
granted under Article IV or Article V of this Plan, or may be granted
independent of any related Stock Option.
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6.2. A related Stock Appreciation Right shall entitle a holder of a
Stock Option, within the period specified for the exercise of the Stock Option,
to surrender the unexercised Stock Option (or a portion thereof) and to receive
in exchange therefor a payment in cash or shares of Common Stock having an
aggregate value equal to the amount by which the Fair Market Value of each share
of Common Stock exceeds the Stock Option price per share of Common Stock, times
the number of shares of Common Stock under the Stock Option, or portion thereof,
which is surrendered.
6.3. Each related Stock Appreciation Right granted hereunder shall be
subject to the same terms and conditions as the related Stock Option, including
limitations on transferability, and shall be exercisable only to the extent such
Stock Option is exercisable and shall terminate or lapse and cease to be
exercisable when the related Stock Option terminates or lapses. The grant of a
Stock Appreciation Right related to an Incentive Stock Option must be concurrent
with the grant of the Incentive Stock Option. With respect to Nonqualified Stock
Options, the grant either may be concurrent with the grant of the Nonqualified
Stock Options, or in connection with Nonqualified Stock Options previously
granted under Article V, which are unexercised and have not terminated or
lapsed.
6.4. The Committee shall have sole discretion to determine in each
case whether the payment with respect to the exercise of a Stock Appreciation
Right will be in the form of all cash, all Common Stock, or any combination
thereof. If payment is to be made in Common Stock, the number of shares of Stock
shall be determined based on the Fair Market Value of the Common Stock on the
date of exercise. If the Committee elects to make full payment in Common Stock,
no fractional shares of Common Stock shall be issued and cash payments shall be
made in lieu of fractional shares.
6.5. The Committee shall have sole discretion as to the timing of any
payment made in cash, Common Stock, or a combination thereof, upon exercise of
Stock Appreciation Rights. Payment may be made in a lump sum, in annual
installments or may be otherwise deferred; and the Committee shall have sole
discretion to determine whether any deferred payments may bear amounts
equivalent to interest or cash dividends.
6.6. Upon exercise of a Stock Appreciation Right, the number of shares
of Common Stock subject to exercise under any related Stock Option shall
automatically be reduced by the number of shares of Stock represented by the
Stock Option or portion thereof which is surrendered.
6.7. Notwithstanding any other provision of the Plan, the exercise of
a Stock Appreciation Right is required to satisfy the applicable requirements
under Rule 16b-3 of the Act.
6.8. The Committee, in its sole discretion, may also provide that, in
the event of a Change of Control, the amount to be paid upon the exercise of a
Stock Appreciation Right or shall be based on the highest price paid for a share
of Common Stock on the effective date of a Change of Control, or paid or offered
in any bona fide transaction related to the Change of Control, subject to such
terms and conditions as the Committee may specify at grant.
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ARTICLE VII -- INCIDENTS OF STOCK OPTIONS
7.1. Each Stock Option shall be granted subject to such terms and
conditions, if any, not inconsistent with this Plan, as shall be determined by
the Committee and set forth in the related Award Agreement, including any
provisions as to continued employment as consideration for the grant or exercise
of such Stock Option and any provisions which may be advisable to comply with
applicable laws, regulations or rulings of any governmental authority.
7.2. Except as hereinafter described, a Stock Option shall not be
transferable by the Participant other than by will or by the laws of descent and
distribution of the state of the Participant's domicile at the time of death. No
Stock Option shall be subject to attachment, execution or other similar process.
In the event of (a) any attempt by the Participant to alienate, assign, pledge,
hypothecate or otherwise dispose of the Stock Option, accept as otherwise
provided herein, or (b) a levy of any attachment, execution or similar process
upon the rights or interest hereby conferred, the Corporation may terminate the
Stock Option by notice to the Participant and such Stock Option shall thereupon
become null and void. Stock Options shall be exercisable during the lifetime of
the Participant only by the Participant or the Participant's guardian or legal
representative. In the event of the death of a Participant, any unexercised
Stock Options may be exercised to the extent otherwise provided herein or in
such Participant's Award Agreement by the executor or personal representative of
such Participant's estate or by any person who acquired the right to exercise
such Stock Options by bequest under the Participant's will or by inheritance.
The Committee, in its sole discretion, may at any time permit a Participant to
transfer a Nonqualified Stock Option for no consideration to or for the benefit
of one or more members of the Participant's Immediate Family (including, without
limitation, to a trust for the benefit of the Participant and/or one or more
members of such Participant's Immediate Family or a corporation, partnership or
limited liability company established and controlled by the Participant and/or
one or more members of such Participant's Immediate Family), subject to such
limits as the Committee may establish. The transferee of such Nonqualified Stock
Option shall remain subject to all terms and conditions applicable to such
Nonqualified Stock Option prior to such transfer. The foregoing right to
transfer the Nonqualified Stock Option, if granted by the Committee, shall apply
to the right to consent to amendments to the Award Agreement.
7.3. Shares of Common Stock purchased upon exercise of a Stock Option
shall be paid for in such amounts, at such times and upon such terms as shall be
determined by the Committee, subject to limitations set forth in the Stock
Option Award Agreement. The Committee may, in its sole discretion, permit the
exercise of a Stock Option by payment in cash or by tendering shares of Common
Stock (either by actual delivery of such shares or by attestation), or any
combination thereof, as determined by the Committee. In the sole discretion of
the Committee, payment in shares of Common Stock also may be made with shares
received upon the exercise or partial exercise of the Stock Option, whether or
not involving a series of exercises or partial exercises and whether or not
share certificates for such shares surrendered have been delivered to the
Participant. The Committee also may, in its sole discretion, permit the payment
of the exercise price of a Stock Option by the voluntary surrender of all or a
portion of the Stock Option. Shares of Common Stock previously held by
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the Participant and surrendered in payment of the Option Price of a Stock Option
shall be valued for such purpose at the Fair Market Value thereof on the date
the Stock Option is exercised.
7.4. No cash dividends shall be paid on shares of Common Stock subject
to unexercised Stock Options.
7.5. The Committee may permit the voluntary surrender of all or a
portion of any Stock Option granted under the Plan to be conditioned upon the
granting to the Participant of a new Stock Option for the same or a different
number of shares of Common Stock as the Stock Option surrendered, or may require
such voluntary surrender as a condition precedent to a grant of a new Stock
Option to such Participant. Subject to the provisions of the Plan, such new
Stock Option shall be exercisable at such Option Price, during such Option
Period and on such other terms and the Committee specifies conditions at the
time the new Stock Option is granted. Upon surrender, the Stock Options
surrendered shall be canceled and the shares of Common Stock previously subject
to them shall be available for the grant of other Stock Options.
7.6. The Committee may at any time offer to purchase a Participant's
outstanding Stock Option for a payment equal to the value of such Stock Option
payable in cash, shares of Common Stock or Restricted Stock or other property
upon surrender of the Participant's Stock Option, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made.
7.7. The Committee shall have the discretion, exercisable either at
the time the Award is granted or at the time the Participant discontinues
employment, to establish as a provision applicable to the exercise of one or
more Stock Options that, during a limited period of exercisability following a
Termination of Service, the Stock Option may be exercised not only with respect
to the number of shares of Common Stock for which it is exercisable at the time
of the Termination of Service but also with respect to one or more subsequent
installments for which the Stock Option would have become exercisable had the
Termination of Service not occurred.
ARTICLE VIII -- RESTRICTED STOCK
8.1. The Committee, in its sole discretion, may from time to time on
or after the Effective Date award shares of Restricted Stock to Eligible Persons
as a reward for past service and an incentive for the performance of future
services that will contribute materially to the successful operation of the
Corporation and its Subsidiaries, subject to the terms and conditions set forth
in this Article VIII.
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8.2. The Committee shall determine the terms and conditions of any
Award of Restricted Stock, which shall be set forth in the related Award
Agreement, including without limitation:
(a) the purchase price, if any, to be paid for such Restricted
Stock, which may be zero, subject to such minimum consideration as may be
required by applicable law;
(b) the duration of the Restriction Period or Restriction
Periods with respect to such Restricted Stock and whether any events may
accelerate or delay the end of such Restriction Period(s);
(c) the circumstances upon which the restrictions or limitations
shall lapse, and whether such restrictions or limitations shall lapse as
to all shares of Restricted Stock at the end of the Restriction Period or
as to a portion of the shares of Restricted Stock in installments during
the Restriction Period by means of one or more vesting schedules;
(d) whether such Restricted Stock is subject to repurchase by
the Corporation or to a right of first refusal at a predetermined price
or if the Restricted Stock may be forfeited entirely under certain
conditions;
(e) whether any performance goals may apply to a Restriction
Period to shorten or lengthen such period; and
(f) whether dividends and other distributions with respect to
such Restricted Stock are to be paid currently to the Participant or
withheld by the Corporation for the account of the Participant.
8.3. Awards of Restricted Stock must be accepted within a period of
thirty (30) days after the Grant Date (or such shorter or longer period as the
Committee may specify at such time) by executing an Award Agreement with respect
to such Restricted Stock and tendering the purchase price, if any. A prospective
recipient of an Award of Restricted Stock shall not have any rights with respect
to such Award, unless such recipient has executed an Award Agreement with
respect to such Restricted Stock, has delivered a fully executed copy thereof to
the Committee and has otherwise complied with the applicable terms and
conditions of such Award.
8.4. In the sole discretion of the Committee and as set forth in the
Award Agreement for an Award of Restricted Stock, all shares of Restricted Stock
held by a Participant and still subject to restrictions shall be forfeited by
the Participant upon the Participant's Termination of Service and shall be
reacquired, cancelled and retired by the Corporation. Notwithstanding the
foregoing, unless otherwise provided in an Award Agreement with respect to an
Award of Restricted Stock, in the event of the death, Disability or Retirement
of a Participant during the Restriction Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Committee may
elect to waive in whole or in
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part any remaining restrictions with respect to all or any part of such
Participant's Restricted Stock, if it finds that a waiver would be appropriate.
8.5. Except as otherwise provided in this Article VIII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
8.6. Upon an Award of Restricted Stock to a Participant, a certificate
or certificates representing the shares of such Restricted Stock will be issued
to and registered in the name of the Participant. Unless otherwise determined by
the Committee, such certificate or certificates will be held in custody by the
Corporation until (i) the Restriction Period expires and the restrictions or
limitations lapse, in which case one or more certificates representing such
shares of Restricted Stock that do not bear a restrictive legend (other than any
legend as required under applicable federal or state securities laws) shall be
delivered to the Participant, or (ii) a prior forfeiture by the Participant of
the shares of Restricted Stock subject to such Restriction Period, in which case
the Corporation shall cause such certificate or certificates to be cancelled and
the shares represented thereby to be retired, all as set forth in the
Participant's Award Agreement. It shall be a condition of an Award of Restricted
Stock that the Participant deliver to the Corporation a stock power endorsed in
blank relating to the shares of Restricted Stock to be held in custody by the
Corporation.
8.7. Except as provided in this Article VIII or in the related Award
Agreement, a Participant receiving an Award of shares of Restricted Stock Award
shall have, with respect to such shares, all rights of a shareholder of the
Corporation, including the right to vote the shares and the right to receive any
distributions, unless and until such shares are otherwise forfeited by such
Participant; provided, however, the Committee may require that any cash
dividends with respect to such shares of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock subject to the same
restrictions as the underlying Award, or may require that cash dividends and
other distributions on Restricted Stock be withheld by the Corporation or its
Subsidiaries for the account of the Participant. The Committee shall determine
whether interest shall be paid on amounts withheld, the rate of any such
interest, and the other terms applicable to such withheld amounts.
ARTICLE IX -- STOCK AWARDS
9.1. The Committee, in its sole discretion, may from time to time on
or after the Effective Date grant Stock Awards to Eligible Persons in payment of
compensation that has been earned or as compensation to be earned, including
without limitation compensation awarded or earned concurrently with or prior to
the grant of the Stock Award, subject to the terms and conditions set forth in
this Article IX.
9.2. For the purposes of this Plan, in determining the value of a
Stock Award, all shares of Common Stock subject to such Stock Award shall be
valued at not less than one hundred percent (100%) of the Fair Market Value of
such shares of Common Stock on the Grant Date of such Stock Award, regardless of
when such shares of Common Stock are issued and certificates representing such
shares are delivered to the Participant.
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9.3. Unless otherwise determined by the Committee and set forth in the
related Award Agreement, shares of Common Stock subject to a Stock Award will be
issued, and one or more certificates representing such shares will be delivered,
to the Participant as soon as practicable following the Grant Date of such Stock
Award. Upon the issuance of such shares and the delivery of one or more
certificates representing such shares to the Participant, such Participant shall
be and become a shareholder of the Corporation fully entitled to receive
dividends, to vote and to exercise all other rights of a shareholder of the
Corporation. Notwithstanding any other provision of this Plan, unless the
Committee expressly provides otherwise with respect to a Stock Award, as set
forth in the related Award Agreement, no Stock Award shall be deemed to be an
outstanding Award for purposes of the Plan.
ARTICLE X -- PERFORMANCE SHARES
10.1. The Committee, in its sole discretion, may from time to time on
or after the Effective Date award Performance Shares to Eligible Persons as an
incentive for the performance of future services that will contribute materially
to the successful operation of the Corporation and its Subsidiaries, subject to
the terms and conditions set forth in this Article X.
10.2. The Committee shall determine the terms and conditions of any
Award of Performance Shares, which shall be set forth in the related Award
Agreement, including without limitation:
(a) the purchase price, if any, to be paid for such Performance
Shares, which may be zero, subject to such minimum consideration as may
be required by applicable law;
(b) the performance period (the "Performance Period") and/or
performance objectives (the "Performance Objectives") applicable to such
Awards;
(c) the number of Performance Shares that shall be paid to the
Participant if the applicable Performance Objectives are exceeded or met
in whole or in part; and
(d) the form of settlement of a Performance Share.
10.3. At any date, each Performance Share shall have a value equal to
the Fair Market Value of a share of Common Stock.
10.4. Performance Periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.
10.5. Performance Objectives may vary from Participant to Participant
and between Awards and shall be based upon such performance criteria or
combination of factors as the Committee may deem appropriate, including, but not
limited to, minimum earnings per share or return on equity. If significant
events occur during the course of a Performance Period which the Committee
expects to have a substantial effect on the applicable Performance Objectives
during such period, the Committee may revise such Performance Objectives.
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10.6. In the sole discretion of the Committee and as set forth in the
Award Agreement for an Award of Performance Shares, all Performance Shares held
by a Participant and not earned shall be forfeited by the Participant upon the
Participant's Termination of Service. Notwithstanding the foregoing, unless
otherwise provided in an Award Agreement with respect to an Award of Performance
Shares, in the event of the death, Disability or Retirement of a Participant
during the applicable Performance Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Committee may
determine to make a payment in settlement of such Performance Shares at the end
of the Performance Period, based upon the extent to which the Performance
Objectives were satisfied at the end of such period and pro rated for the
portion of the Performance Period during which the Participant was employed by
the Corporation or a Subsidiary; provided, however, that the Committee may
provide for an earlier payment in settlement of such Performance Shares in such
amount and under such terms and conditions as the Committee deems appropriate or
desirable.
10.7. The settlement of a Performance Share shall be made in cash,
whole shares of Common Stock or a combination thereof and shall be made as soon
as practicable after the end of the applicable Performance Period.
Notwithstanding the foregoing, the Committee in its sole discretion may allow a
Participant to defer payment in settlement of Performance Shares on terms and
conditions approved by the Committee and set forth in the related Award
Agreement entered into in advance of the time of receipt or constructive receipt
of payment by the Participant.
10.8. Performance Shares shall not be transferable by the Participant.
The Committee shall have the authority to place additional restrictions on the
Performance Shares including, but not limited to, restrictions on transfer of
any shares of Common Stock that are delivered to a Participant in settlement of
any Performance Shares.
ARTICLE XI -- CHANGES OF CONTROL OR OTHER
FUNDAMENTAL CHANGES
11.1. Upon the occurrence of a Change of Control and unless otherwise
provided in the Award Agreement with respect to a particular Award:
(a) all outstanding Stock Options and any related Stock
Appreciation Rights, if any, shall become immediately exercisable in
full, subject to any appropriate adjustments in the number of shares
subject to the Stock Option and the Option Price, and shall remain
exercisable for the remaining term of such Stock Option, regardless of
any provision in the related Award Agreement limiting the exercisability
of such Stock Option or any portion thereof for any shorter length of
time, subject at all times to the terms hereof and the Award Agreement
with respect thereto not inconsistent with this Section 11.1;
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(b) all outstanding Performance Shares with respect to which the
applicable Performance Period has not been completed shall be paid out as
soon as practicable as follows:
(i) all Performance Objectives applicable to the Award
of Performance Shares shall be deemed to have been satisfied to the
extent necessary to earn one hundred percent (100%) of the
Performance Shares covered by the Award;
(ii) the applicable Performance Period shall be deemed to
have been completed upon occurrence of the Change of Control;
(iii) the payment to the Participant in settlement of the
Performance Shares shall be the amount determined by the Committee,
in its sole discretion, or in the manner stated in the Award
Agreement, as multiplied by a fraction, the numerator of which is
the number of full calendar months of the applicable Performance
Period that have elapsed prior to occurrence of the Change of
Control, and the denominator of which is the total number of months
in the original Performance Period; and
(iv) upon the making of any such payment, the Award
Agreement as to which it relates shall be deemed terminated and of
no further force and effect.
(c) all outstanding shares of Restricted Stock with respect to
which the restrictions have not lapsed shall be deemed vested, and all
such restrictions shall be deemed lapsed and the Restriction Period
ended.
11.2. Anything contained herein to the contrary notwithstanding, upon
the dissolution or liquidation of the Corporation, each Award granted under the
Plan and then outstanding shall terminate; provided, however, that following the
adoption of a plan of dissolution or liquidation, and in any event prior to the
effective date of such dissolution or liquidation, each such outstanding Award
granted hereunder shall be exercisable in full and all restrictions shall lapse,
to the extent set forth in Section 11.1(a), (b) and (c) above, and subject to
all the terms hereof and the Award Agreement with respect thereto, not
inconsistent with this Section 11.2.
11.3. After the merger of one or more corporations into the Corporation
or any Subsidiary, any merger of the Corporation into another corporation, any
consolidation of the Corporation or any Subsidiary of the Corporation and one or
more corporations, or any other corporate reorganization of any form involving
the Corporation as a party thereto and involving any exchange, conversion,
adjustment or other modification of the outstanding shares of the Common Stock,
each Participant shall, at no additional cost, be entitled, upon any exercise of
such Participant's Stock Option, to receive, in lieu of the number of shares as
to which such Stock Option shall then be so exercised, the number and class of
shares of stock or other securities or such other property to which such
Participant would have been entitled to pursuant to the terms of the agreement
of merger or consolidation or reorganization, if at the time of such merger or
consolidation or reorganization, such Participant had
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<PAGE> 57
been a holder of record of a number of shares of Common Stock equal to the
number of shares as to which such Stock Option shall then be so exercised.
Comparable rights shall accrue to each Participant in the event of successive
mergers, consolidations or reorganizations of the character described above. The
Committee may, in its sole discretion, provide for similar adjustments upon the
occurrence of such events with regard to other outstanding Awards under this
Plan. The Committee in its sole discretion shall determine the foregoing
adjustments and the manner of application of the foregoing provisions. Any such
adjustment may provide for the elimination of any fractional shares that might
otherwise become subject to an Award. All adjustments made as the result of the
foregoing in respect of each Incentive Stock Option shall be made so that such
Incentive Stock Option shall continue to be an Incentive Stock Option, as
defined in Section 422 of the Code.
ARTICLE XII -- AMENDMENT AND TERMINATION
12.1. Subject to the provisions of Section 12.2, the Board of
Directors, upon recommendation of the Committee or otherwise, at any time and
from time to time may amend or terminate the Plan as may be necessary or
desirable to implement or discontinue the Plan or any provision hereof. To the
extent required by the Act or the Code, however, no amendment, without approval
by the Corporation's shareholders, shall:
(a) materially alter the group of persons eligible to
participate in the Plan;
(b) except as provided in Section 3.6, increase the maximum
number of shares of Common Stock that are available for Awards under the
Plan;
(c) extend the period during which Incentive Stock Option Awards
may be granted beyond April 19, 2010; or
(d) alter the class of individuals eligible to receive an
Incentive Stock Option or increase the limit on Incentive Stock Options
set forth in Section 4.1(d) or the value of shares of Common Stock for
which an Eligible Employee may be granted an Incentive Stock Option.
12.2. No amendment to or discontinuance of the Plan or any provision
hereof by the Board of Directors or the shareholders of the Corporation shall,
without the written consent of the Participant, adversely affect (in the sole
discretion of the Committee) any Award theretofore granted to such Participant
under this Plan; provided, however, that the Committee retains the right and
power to:
(a) annul any Award if the Participant is terminated for cause
as determined by the Committee; and
(b) convert any outstanding Incentive Stock Option to a
Nonqualified Stock Option.
12.3. If a Change of Control has occurred, no amendment or termination
shall impair the rights of any person with respect to an outstanding Award as
provided in Article XI.
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<PAGE> 58
ARTICLE XIII -- MISCELLANEOUS PROVISIONS
13.1. Nothing in the Plan or any Award granted hereunder shall confer
upon any Participant any right to continue in the employ of the Corporation or
its Subsidiaries or to serve as a Director or shall interfere in any way with
the right of the Corporation or its Subsidiaries or the shareholders of the
Corporation, as applicable, to terminate the employment of a Participant or to
release or remove a Director at any time. Unless specifically provided
otherwise, no Award granted under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan or other arrangement of the Corporation or its Subsidiaries for the benefit
of their respective employees unless the Corporation shall determine otherwise.
No Participant shall have any claim to an Award until it is actually granted
under the Plan and an Award Agreement has been executed and delivered to the
Corporation. To the extent that any person acquires a right to receive payments
from the Corporation under the Plan, such right shall, except as otherwise
provided by the Committee, be no greater than the right of an unsecured general
creditor of the Corporation. All payments to be made hereunder shall be paid
from the general funds of the Corporation, and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment of
such amounts, except as provided in Article VIII with respect to Restricted
Stock and except as otherwise provided by the Committee.
13.2. The Plan and the grant of Awards shall be subject to all
applicable federal and state laws, rules, and regulations and to such approvals
by any government or regulatory agency as may be required. Any provision herein
relating to compliance with Rule 16b-3 under the Act shall not be applicable
with respect to participation in the Plan by Participants who are not subject to
Section 16 of the Act.
13.3. The terms of the Plan shall be binding upon the Corporation, its
successors and assigns.
13.4. Neither a Stock Option nor any other type of equity-based
compensation provided for hereunder shall be transferable except as provided for
in Section 7.2. In addition to the transfer restrictions otherwise contained
herein, additional transfer restrictions shall apply to the extent required by
federal or state securities laws. If any Participant makes such a transfer in
violation hereof, any obligation hereunder of the Corporation to such
Participant shall terminate immediately.
13.5. This Plan and all actions taken hereunder shall be governed by
the laws of the State of North Carolina.
13.6. Each Participant exercising an Award hereunder agrees to give the
Committee prompt written notice of any election made by such Participant under
Section 83(b) of the Code, or any similar provision thereof.
13.7. If any provision of this Plan or an Award Agreement is or becomes
or is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award Agreement under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the
A-21
<PAGE> 59
intent of the Plan or the Award Agreement, it shall be stricken, and the
remainder of the Plan or the Award Agreement shall remain in full force and
effect.
13.8. The grant of an Award pursuant to this Plan shall not affect in
any way the right or power of the Corporation or any of its Subsidiaries to make
adjustments, reclassification, reorganizations, or changes of its capital or
business structure, or to merge or consolidate, or to dissolve, liquidate or
sell, or to transfer all or part of its business or assets.
13.9. The Plan is not subject to the provisions of ERISA or qualified
under Section 401(a) of the Code.
13.10. If a Participant is required to pay to the Corporation an amount
with respect to income and employment tax withholding obligations in connection
with (i) the exercise of a Nonqualified Stock Option, (ii) certain dispositions
of Common Stock acquired upon the exercise of an Incentive Stock Option, (iii)
the exercise of a Stock Appreciation Right, or (iv) the receipt of Common Stock
pursuant to any other Award, then the issuance of Common Stock to such
Participant shall not be made (or the transfer of shares by such Participant
shall not be required to be effected, as applicable) unless such withholding tax
or other withholding liabilities shall have been satisfied in a manner
acceptable to the Corporation. The Committee, in its sole discretion and subject
to such rules as it may adopt, may permit the Participant to satisfy such
obligation, in whole or in part, by making an irrevocable election that a
portion of the total Fair Market Value of the shares of Common Stock be paid in
the form of cash in lieu of the issuance of Common Stock and that such cash
payment be applied to the satisfaction of the withholding obligations. The
amount to be withheld shall not exceed the statutory minimum federal and state
income and employment tax liability arising from the transfer of the Common
Stock to the Participant. Notwithstanding any other provision of the Plan, any
election under this Section 13.10 is required to satisfy the applicable
requirements of Rule 16b-3 under the Act.
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<PAGE> 60
APPENDIX B
ARTICLE 4
The aggregate number of shares the Corporation is authorized to issue is
One Hundred Two Million (102,000,000), divided into the following classes:
<TABLE>
<CAPTION>
Class Number of Shares
- ----- ----------------
<S> <C>
Common Stock 100,000,000
Preferred Stock 2,000,000
</TABLE>
A. COMMON STOCK
The class of common stock has unlimited voting rights and, after
satisfaction of claims, if any, of the holders of preference or preferred
shares, is entitled to receive the net assets of the Corporation upon
distribution.
B. PREFERRED STOCK
Shares of Preferred Stock may be issued as one or more classes and in
series within a class all with such preferences, limitations and relative rights
as and when determined by resolution of the Board of Directors of the
Corporation or any other manner authorized by law.
B-1
<PAGE> 61
REVOCABLE PROXY
FIRST CHARTER CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 6, 2000
The undersigned hereby appoints Robert O. Bratton, David E. Keul and
Anne C. Forrest, and each of them, with full power of substitution, proxies and
agents of the undersigned to vote at the annual meeting of shareholders of First
Charter Corporation (the "Corporation") to be held at The Oasis Auditorium at
University Place, 604 Daniel Burnham Way, Charlotte, North Carolina, on June 6,
2000 at 5:00 PM, and at any adjournment thereof, all shares of common stock of
the Corporation which the undersigned would be entitled to vote if personally
present for the following matters.
PLEASE COMPLETE, DATE SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
VOTE VIA THE INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
- FOLD AND DETACH HERE -
- -------------------------------------------------------------------------------
FIRST CHARTER CORPORATION -- ANNUAL MEETING, JUNE 6, 2000
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Call toll free 1-877-482-6150 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
2. Via the Internet at www.proxyvoting.com/FirstCharter and follow the
instructions.
or
--
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
-- Printed on recycled paper
<PAGE> 62
Please mark your
votes as indicated [X]
in this example
The Board of Directors recommends a vote FOR each of the following:
1. ELECTION of the following eleven With- For All
nominees as Directors for the terms For hold Except
indicated in the Proxy Statement. [ ] [ ] [ ]
(01) Harold D. Alexander (02) James E. Burt, III (03) Michael R. Coltrane
(04) J. Roy Davis, Jr. (05) Charles F. Harry, III (06) Charles A. James
(07) Walter H. Jones, Jr. (08) Samuel C. King, Jr. (09) Hugh H. Morrison
(10) L.D. Warlick (11) William W. Waters
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"For All Except" and write that (those) nominee('s) name(s) in the space
provided below.
_____________________________________________________________________________
2. APPROVAL OF THE ADOPTION OF THE FIRST CHARTER CORPORATION 2000 OMNIBUS STOCK
OPTION AND AWARD PLAN
For Against Abstain
[ ] [ ] [ ]
3. APPROVAL OF THE ADOPTION OF THE AMENDMENT TO THE CORPORATION'S AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 50,000,000 TO 100,000,000
For Against Abstain
[ ] [ ] [ ]
4. APPROVAL OF THE ADOPTION OF THE AMENDMENT TO THE CORPORATION'S AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO AUTHORIZE 2,000,000 SHARES OF PREFERRED
STOCK
For Against Abstain
[ ] [ ] [ ]
5. TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent public accountants
to audit the books and affairs of the Corporation for the calendar Year 2000.
For Against Abstain
[ ] [ ] [ ]
6. To transact such other business as properly may come before the meeting.
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2, 3, 4 and 5. The undersigned acknowledges receipt of
the Notice of Annual Meeting of Shareholders and the related Proxy Statement.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
Please be sure to sign and date this Proxy in the box below.
-----------------------------------
Date
- -----------------------------------------------------------------------------
- ----------Stockholder sign above-----------Co-holder (if any) sign above-----
----------------------------------------------------
* * * IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET,
PLEASE READ THE INSTRUCTIONS BELOW * * *
----------------------------------------------------
- -----------------------------------------------------------------------------
- - Detach above card, sign, date and mail in postage paid envelope provided. -
FIRST CHARTER CORPORATION
PLEASE ACT PROMPTLY -- SIGN, DATE & MAIL YOUR PROXY CARD TODAY
---------------------------------------------------------------
[Telephone Logo] VOTE BY TELEPHONE/INTERNET [Computer Logo]
QUICK * * * EASY * * * IMMEDIATE
---------------------------------------------------------------
Your telephone/Internet vote authorizes the named proxies to vote your shares in
the same manner as if you marked, signed and returned your proxy card.
Please have this card handy when you call. You'll need it in front
of you in order to complete the voting process.
VOTE BY PHONE: You will be asked to enter the CONTROL NUMBER
(look below at right).
- ---------
OPTION A: To vote as the Board of Directors recommends on ALL proposals,
- --------- press 1. Your vote will be confirmed.
- ---------
OPTION B: If you choose to vote on each proposal separately, press 0. You will
- --------- hear these instructions.
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9.
To vote FOR ALL NOMINEES EXCEPT for certain of the
nominees, press 0 and listen to the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same to vote for Items 3, 4, and 5.
When asked, you must confirm your vote by pressing 1.
VOTE BY INTERNET: The web address is www.proxyvoting.com/FirstCharter
You will be asked to enter the Control Number (look below at right).
If you vote by telephone or Internet, DO NOT mail back your proxy.
THANK YOU FOR VOTING
FOR TELEPHONE\
INTERNET VOTING:
CONTROL NUMBER
Call * * * Toll Free * * * On a Touch Tone Telephone
1-877-482-6150 - ANYTIME
There is NO CHARGE to you for this call
TELEPHONE/INTERNET VOTING DEADLINE: 12 midnight - June 6, 2000
