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:
[X ] Preliminary Proxy Statement [] Confidential, for Use of
the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST CHARTER CORPORATION
(Name of Registrant as Specified In Its Charter)
(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>
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 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");
<PAGE>
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");
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
Over 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, __________ 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 vote by phone or on the
Internet in accordance with the instructions on the proxy card,
<PAGE> 2
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 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 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 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
<PAGE> 3
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.
<PAGE> 4
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 James E. Burt, III, Samuel
C. King, Harold D. Alexander and L. D. Warlick 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 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.
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.
<PAGE> 5
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, 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.
<PAGE> 6
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.
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.
No director has a family relationship as close as first
cousin with any other director, nominee for director or executive
officer of the Corporation.
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,
Inc., 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.
Compensation of Directors
<PAGE> 7
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 this capacity, the
Executive Committee determines the nominees for director in a
given year and may
<PAGE> 8
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. On an annual basis, 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 Stock
Option Plan for Non-Employee Directors 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.
<PAGE> 9
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.
<PAGE> 10
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.
Shares Beneficially Owned (1)
Name Number(2) Percent of Class
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 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%
_______________
* 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.
<PAGE> 11
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>
Long Term
Annual Compensation Compensation
------------------------------------------------------
<CAPTION>
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(5) 1999 $130,000 $ 40,170(1) $ 507 $ - 8,973 $16,236(4)
Executive
Vice 1998 125,000 37,500 - - - 19,374
President 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
<FN>_______________
(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 ($67,310);
Bratton 1,951 ($33,655); Robert James 10,000 ($148,750) and
McFarland 5,000 ($74,375).
(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 $495.
(5) Mr. McConnell ceased to be an officer of the Company
effective March 31, 2000.
</FN>
</TABLE>
Stock Option Plans
We have in effect the Comprehensive Stock Option Plan
pursuant to which the Compensation Committee may grant stock
options to officers and other key employees of the Corporation
and its subsidiaries. In addition, if shareholders vote to
approve the 2000 Plan, we may grant stock options to officers and
other key employees pursuant to that plan. We also have in
effect the 1998 Employee Stock Purchase Plan and the 1999 ESPP.
The following table indicates option grants pursuant to our
plans during our last fiscal year.
Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise Grant Date
Options/SARs to Employees or Base Present
Granted in Fiscal Price Expiration Value(3)
Name (#) Year ($/Sh) Date
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 $ 3,315 (5)
R.G.Fox, Jr.
10,247 (1) 3.86% $18.125 1/21/09 $ 63,035 (4)
625 (1) .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 (1) .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 (5)
C.T. McFarland, Jr.
8,000 (1) 3.01% $19.5 11/1/09 $ 61,664 (4)
(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.
(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 coveredby the options. The number 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
Number of
Securities
Underlying Value of Unexercised
Shares Unexercised In-the-money
Acquired Options/SARs Options/SARs (1)
on Value at 12/31/99(1) at 12/31/99 (1)
------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------- --------- -------- ----------- ------------- ----------- -------------
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
____________
(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 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 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.
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
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 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 Corporation's achievement of ROA goals and 50% upon
achievement of pre-tax core 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 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 Comprehensive 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
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:
Michael R. Coltrane Frank H. Hawfield, Jr.
J. Roy Davis, Jr. Jerry E. McGee
Thomas R. Revels
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.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative
total shareholder return on the Common Stock with the Independent
Bank Index, a published banking industry index, and the Standard
& Poor's 500 Stock Index, a broad equity market index, assuming
in each case the investment of $100 on December 31, 1994 and the
reinvestment of dividends.
Period Ending
----------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------------------------------------------------------------
First Charter
Corporation 100.00 156.36 159.39 231.63 158.47 141.70
S&P 500 100.00 137.58 169.03 225.44 289.79 350.78
First Charter
Peer Group 100.00 126.72 163.93 254.97 217.91 158.68
First Charter Corporation
Five-Year Performance Index
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.
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 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.
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 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.
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 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 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 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 __________; 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 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.
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 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 Sharehodlers.
It is expected that the Committee will make other grants from time to time
that the listed persons and other employees should the 2000 Plan be approved.
The closing priced for the Common Stock on April __, 2000 was $__________.
Common Stock Grant Date
Underlying Exercise Expiration Present
Name and Position Option Grant Price Date Value
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 Employee Group 114,544 $14.50 1/20/10 $531,295
(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 (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.
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, _____ of such authorized
shares were outstanding and _____ of such authorized shares were
reserved for issuance, leaving _____ 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 our best interest
and the best interest of 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.
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 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 acquired 15% of a corporation's voting stock,
the stockholders of the 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.
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, independent certified public
accountants, as our auditors for 2000. KPMG has acted in this
capacity since 1983. We have been advised by KPMG 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 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, 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.
SHAREHOLDER PROPOSALS
The deadline for submission of shareholder proposals
pursuant to Rule 14a-8 under the Exchange Act for inclusion in
our proxy statement for the 2001 annual meeting of shareholders
is __________________. Additionally, we must receive 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 ________________, 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 __, 2000
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 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.
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.
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.
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 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
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.
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 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
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.
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.
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.
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
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.
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 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.
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.
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;
(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 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.
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 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.
APPENDIX B
ARTICLE 4 -- The aggregate number of shares the Corporation
is authorized to issue is One Hundred and Two Million
(102,000,000), divided into the following classes:
Class Number of Shares
Common Stock.....................100,000,000
Preferred Stock....................2,000,000
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.
<PAGE>
REVOCABLE PROXY
FIRST CHARTER CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
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 Ann 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.
The Board of Directors recommends a vote FOR each of the following:
For All
For Withhold Except
1. ELECTION of the following [ ] [ ] [ ]
eleven nominees as Directors
for the terms indicated in
the Proxy Statement.
Harold D. Alexander, James E. Burt, III, Michael R. Coltrane, J. Roy Davis,
Jr., Charles F. Harry, III, Charles A. James, Walter H. Jones, Jr., Samuel C.
King, Jr., Hugh H. Morrison, L.D. Warlick and 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 be sure to sign and date this Proxy in the box below.
- ---------------------------------
Date
- -----------------------------------------------------------
Shareholder sign above
- ------------------------------------------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST CHARTER CORPORATION
--------------------------------
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 ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY
----------------------------------
VOTE BY TELEPHONE OR INTERNET
Your telephone or Internet vote authorizes the named proxies to vote your
shares in the same manner as if you marked, dated, signed and mailed your
proxy card.
TO VOTE BY PHONE: You will be asked to enter a CONTROL NUMBER located
in the box in the lower right corner of this form.
OPTION A: To vote as the Board of Directors recommends on ALL proposals:
press 1.
OPTION B: If you choose to vote on each item 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 WITHHOLD FOR AN INDIVIDUAL nominee,
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 for all remaining
items to be voted.
When asked, you must confirm your vote by pressing 1.
TO VOTE BY INTERNET: THE WEB ADDRESS IS: http//www.____________________.
IF YOU VOTE BY PHONE OR INTERNET - DO NOT MAIL THE PROXY CARD
THANK YOU FOR VOTING
Call **Toll Free** On A Touch Tone Phone
1-888-XXX-XXXX - ANYTIME
There is NO CHARGE to you for this call
_____________________________
CONTROL NUMBER
for Telephone/Internet Voting
