SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 26, 1998
FIRST CHARTER CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 0-15829 56-1355866
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
22 Union Street, North, Concord, North Carolina 28026-0228
(Addresses, including zip codes, of principal executive offices)
(704)786-3300
(Registrant's telephone number, including area code)
Item 5 Other Events
1. On January 26, 1998, First Charter Corporation, the
registrant (the "Registrant"), announced financial results for
fiscal year 1997. A copy of the press release announcing these
financial results is filed as Exhibit 99.1 to this Current Report
on Form 8-K.
2. The following is an updated Description of Common Stock
of First Charter Corporation (the "Registrant"), which has been
previously filed with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and updated and amended from time to time. The
following description reflects changes in the Registrant's
Articles of Incorporation. To the extent this description is
inconsistent with prior filings, it modifies and supersedes such
filings.
DESCRIPTION OF REGISTRANT'S SECURITIES
Authorized Capital
The Registrant is authorized to issue 25,000,000 shares of
Common Stock, without par value (the "Common Stock"), of which
9,268,573 shares were issued and outstanding as of December 31,
1997. As of December 31, 1997, 1,316,556 shares had been reserved
for potential issuance in connection with certain employee
benefit plans and 63,999 shares were reserved for issuance
under the Dividend Reinvestment Plan. After taking account of
the shares so reserved, the number of authorized shares of Common
Stock available for other corporate purposes as of December 31,
1997 was 14,350,872. Under North Carolina law, any outstanding
shares of capital stock of the Registrant reacquired by it would
be considered authorized but unissued shares.
Voting and Other Rights
General. The holders of Common Stock are entitled to one
vote per share with respect to each matter voted on at a
shareholder's meeting. A majority of the shares entitled to
vote, represented at a meeting in person or by proxy, constitutes
a quorum, and, in general, a majority of votes cast with respect
to a matter is sufficient to take action upon routine matters.
Directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a
quorum is present, and each shareholder entitled to vote in such
an election is entitled to vote each share of Common Stock owned
by such shareholder for as many persons as there are directors to
be elected. The holders of Common Stock do not have the right to
cumulate their votes in the election of directors, so long as the
Registrant has a class of shares registered under Section 12 of
the Exchange Act (unless action is taken to provide otherwise by
amendment to the Registrant's Restated Articles of Incorporation,
which action management currently does not intend to propose).
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In general, (i) amendments to the Registrant's Restated
Articles of Incorporation must be approved by each voting group
entitled to vote separately thereon by a majority of the votes
cast by that voting group, unless the amendment creates
dissenters' rights for a particular voting group, in which case
such amendment must be approved by a majority of the votes
entitled to be cast by such voting group; and (ii) the
dissolution of the Registrant must be approved by a majority of
all votes entitled to be cast thereon.
Shares of Common Stock of the Registrant are not entitled to
vote if they are owned, directly or indirectly, by a subsidiary
of the Registrant. Shares of Common Stock held by the Registrant
or by any of its subsidiaries in a fiduciary capacity (whether as
sole fiduciary or co-fiduciary) may be voted in the election of
directors and in all other matters by the registered owners,
unless otherwise limited by the terms of the instrument or court
order establishing the fiduciary relationship.
Approval of Mergers and Takeovers. The Restated Articles of
Incorporation of the Registrant provide that a plan for the
Registrant to consolidate with, or merge with or into, any other
corporation or convey to any corporation or other person or
otherwise dispose of all or substantially all of its assets or to
dispose of by any means all or substantially all the stock or
assets of any major subsidiary will not be submitted to the
shareholders for approval unless such plan is approved by the
affirmative vote of 75% of the number of directors fixed in the
manner set forth in the Bylaws. The Articles of Incorporation
further provide that the Board of Directors, in its evaluation of
such a plan, shall consider all relevant factors, including the
social and economic effects on employees, customers, communities
and others. If submitted to the shareholders, such plan may be
approved only by (a) the affirmative vote of not less than 75% of
the aggregate voting power of the outstanding stock entitled to
vote thereon, and (b) by the affirmative vote of at least 50% of
the voting power of the outstanding stock of shareholders
entitled to vote thereon other than controlling shareholders, if
(i) any shareholder entitled to vote thereon is a person who,
including affiliates of such person, is the beneficial owner (as
the terms are defined in the Exchange Act and in the rules
thereunder) of more than 20% of the voting power of the
Registrant (a "controlling shareholder"), provided that shares
held, voted or otherwise controlled by a person as a trustee,
plan administrator, officer of the Registrant or otherwise
pursuant to an employee benefit plan of the Registrant or of an
affiliate of the Registrant shall not be deemed to be
beneficially owned by a person for the purpose of determining
whether any person is a controlling shareholder, and (ii) prior
to the acquisition of 20% of the voting power of the Registrant
by a shareholder, the Board of Directors of the Registrant had
not unanimously approved such consolidation, merger, conveyance
or disposition. This provision of the Restated Articles of
Incorporation can be amended only by the vote required to approve
such a transaction, if there is a controlling shareholder.
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Amendment of Bylaws. The shareholders of the Registrant may
act to amend or repeal any of the Registrant's Bylaws. Any Bylaw
adopted, amended or repealed by the shareholders generally may
not be readopted, amended or repealed by the Board of Directors
of the Registrant unless otherwise authorized by the
shareholders.
Dissenters' Rights. The shareholders of the Registrant
shall have dissenters' rights to appraisal with respect to their
shares of Common Stock as provided by statute in connection with
certain types of merger or share exchange transactions.
Dissenters' rights are also available with respect to certain
sales of all or substantially all of the property of the
Registrant and certain amendments to the Registrant's Restated
Articles of Incorporation that materially and adversely affect
certain enumerated rights of a dissenter's shares.
Directors and Classes of Directors
Under the Registrant's Bylaws, the number of directors shall
be not fewer than five nor more than twenty-five, as determined
from time to time by resolution of the shareholders or by the
vote of not less than 75% of the members of the Board of
Directors. Accordingly, either the directors or the shareholders
of the Registrant have the authority to increase or decrease the
number of directors within this range. Under state law, however,
only the shareholders of the Registrant have the right to change
the range for the size of the Board, by amendment to the
Registrant's Restated Articles of Incorporation or Bylaws.
The Board of Directors of the Registrant is divided into
three classes so that each director serves for a term ending on
the date of the third annual meeting following the annual meeting
at which such director was elected. In the event of any increase
in the authorized number of directors, the newly created
directorships resulting from such increase shall be apportioned
among the three classes of directors so as to maintain such
classes as nearly equal as possible. Because of the
classification of directors, unless the shareholders act under
North Carolina law to remove directors from office, two annual
meetings generally would be required to elect a majority of the
Board of Directors and three, rather than one, would be required
to replace the entire board.
Vacancies, whether arising from an increase in the number of
directors or from the failure by shareholders to elect the full
authorized number of directors, may be filled by the shareholders
or by the Board of Directors (by the affirmative vote of a
majority of the remaining directors if less than a quorum of
directors remains). Generally, directors may be removed by the
shareholders with or without cause by the affirmative vote of a
majority of the shares cast, unless the Registrant's Restated
Articles of Incorporation are amended to provide that directors
can be removed only for cause.
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Anti-Takeover Aspects of Certain Provisions
The provisions of the Registrant's Bylaws and Articles of
Incorporation regarding the staggered Board of Directors and
merger vote requirements may have certain anti-takeover effects
with respect to the Registrant. Such provisions could make the
Registrant a less attractive target for a hostile takeover bid or
render more difficult or discourage a merger proposal, the
assumption of control through the acquisition of a large block of
Common Stock or the removal of incumbent management. Such
provision may inhibit or impede fluctuations in the market price
of the Common Stock, which may result from actual or potential
takeover attempts. The Registrant is not aware of any pending or
threatened attempt to acquire control of the Registrant or change
in management.
Liquidation Rights
In the event of liquidation, the holders of Common Stock
would be entitled to receive pro rata any assets legally
available for distribution to shareholders with respect to shares
held by them.
Preemptive and Other Rights
The Common Stock does not have any preemptive rights,
redemption privileges, sinking fund privileges or conversion
rights. All the outstanding shares of Common Stock are validly
issued, fully paid and nonassessable. The Common Stock is
reported on The Nasdaq National Market. First Charter National
Bank acts as transfer agent and registrar for the Common Stock.
As of December 31, 1997, there were 3,223 shareholders of record
of the Registrant.
Distributions
General Requirements. The Registrant may issue share
dividends in Common Stock to the holders of shares of Common
Stock. In addition, the holders of shares of Common Stock will
be entitled to receive such other distributions as the Board of
Directors of the Registrant may declare, subject to any
restrictions contained in the Registrant's Restated Articles of
Incorporation (of which there currently are none), unless after
giving effect to such distribution, (i) the Registrant would not
be able to pay its debts as they become due in the usual course
of business or (ii) the Registrant's total assets would be less
than the sum of the Registrant's total liabilities plus the
amount that would be needed, if the Registrant were to be
dissolved at the time of the distribution, to satisfy claims of
shareholders which have preferential rights superior to the
rights of holders of Common Stock.
Restrictions on Subsidiary Dividends. Although the
Registrant is not subject to the restrictions on dividends
applicable to national or state banks, the ability of the
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Registrant to make distributions to holders of Common Stock is
dependent to a large extent upon the ability of its subsidiary
banks, First Charter National Bank and Bank of Union, to pay
dividends. First Charter National Bank is subject to
restrictions on dividends applicable to national banks. Under
current regulations, the amount of dividends that may be paid by
a national bank without approval of the Comptroller of the
Currency (the "Comptroller") is the sum of the bank's net profits
(as defined by statute) for that year in which it is making the
dividend payment plus its retained net profits (as defined by
statute) for the preceding two years. Bank of Union is subject
to restrictions on dividends applicable to a North Carolina-chartered
commercial bank. Generally, a North Carolina bank may
declare dividends in an amount that does not exceed its undivided
profits (determined as set forth in Chapter 53 of the North
Carolina statutes), so long as its surplus equals at least 50% of
its paid-in capital stock.
In addition, generally no dividend may be declared or paid
on the common stock of a bank until cumulative dividends on
outstanding preferred stock have been paid in full, and no
dividends may be paid if the bank is in default on the payment of
any assessment due the Federal Deposit Insurance Corporation
("FDIC"). The federal regulatory agencies also have authority
under the Financial Institutions Supervisory Act to prohibit a
bank under their jurisdiction from engaging in what, in such
agency's opinion, constitutes an unsafe or unsound practice in
conducting its business. Under certain circumstances relating to
the financial condition of a bank, as where the payment of
dividends would deplete a bank's capital base to an inadequate
level, the federal regulatory agencies may determine that the
payment of dividends would be an unsafe or unsound banking
practice.
Capital Guidelines. The ability of First Charter National
Bank and Bank of Union, as well as of the Registrant, to pay
dividends in the future is influenced by the various minimum
capital requirements and the capital and non-capital standards
established under the Federal Deposit Insurance Corporation
Improvement Act of 1991.
The Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), the Comptroller and the FDIC have
issued substantially similar risk-based and leverage capital
guidelines applicable to United States and state-chartered
banking organizations. In addition, those regulatory agencies
may from time to time require that a banking organization
maintain capital above the minimum levels, whether because of its
financial condition or actual or anticipated growth.
The risk-based guidelines define a two-tier capital
framework under which the Registrant and each of the subsidiary
banks is required to maintain a minimum ratio of Tier 1 Capital
(as defined) to total risk-weighted assets of 4.00% and a minimum
ratio of Total Capital (as defined) to risk-weighted assets of
8.00%. With respect to the Registrant, Tier 1 Capital generally
consists of total shareholders' equity, calculated in accordance
with generally accepted accounting principles, less certain
intangibles,
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and Total Capital generally consists of Tier 1
Capital plus certain adjustments, the largest of which for the
Registrant is the general allowance for loan losses (up to 1.25%
of risk-weighted assets). Total Capital must constitute at
least 50% of Tier 1 Capital. Risk-weighted assets refer to the
on- and off-balance sheet exposures of the Registrant as adjusted
for one of four categories of risk weights established in
applicable federal guidelines, based primarily on relative credit
risk.
The leverage ratio is determined by dividing Tier 1 Capital
by adjusted total assets. Although the stated minimum ratio is
3%, most banking organizations are required to maintain ratios of
at least 100 to 200 basis points above 3%.
Indemnification of Officers and Directors
The Registrant has adopted a bylaw, as permitted by the
North Carolina Business Corporation Act (the "NCBCA"), which
provides that, in addition to the indemnification of directors
and officers otherwise provided by the NCBCA, the Registrant
shall, under certain circumstances, indemnify its directors,
executive officers and certain other designated officers against
any and all liability and expenses, including reasonable
attorneys' fees, in any proceeding (including without limitation
a proceeding brought by or on behalf of the Registrant itself)
arising out of their status or activities as directors or
officers, except for liability or litigation expense incurred on
account of activities of such person which at the time were known
or believed by such person to be clearly in conflict with the
best interests of the Registrant. The Registrant's Bylaws
further provide that the Registrant shall also indemnify such
person for reasonable costs, expenses and attorneys' fees
incurred in connection with the enforcement of the rights to
indemnification granted in the Bylaws, if it is determined in
accordance with the procedures set forth in the Bylaws that such
person is entitled to indemnification thereunder. Pursuant to
such bylaw, and as authorized by statute, the Registrant
maintains insurance on behalf of its directors and officers
against liability asserted against such persons in such capacity
whether or not such directors or officers have the right to
indemnification pursuant to the bylaw or otherwise.
In addition to the above-described indemnification
provisions, Sections 55-8-50 through 55-8-58 of the NCBCA contain
provisions prescribing the extent to which directors and officers
shall or may be indemnified. Section 55-8-51 of the NCBCA
permits a corporation, with certain exceptions, to indemnify a
current or former director against liability if (i) he conducted
himself in good faith, (ii) he reasonably believed (x) in the
case of conduct in his official capacity with the corporation,
that his conduct was in the best interests of the corporation and
(y) in all other cases his conduct was at least not opposed to
the corporation's best interests, and (iii) in the case of any
criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a
director in connection with a proceeding by or in the right of
the corporation in which such director was adjudged liable to the
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corporation or in connection with a proceeding charging improper
personal benefit to him, whether or not involving action in his
official capacity in which he was adjudged liable on the basis
that personal benefit was improperly received by him. The above
standard of conduct is determined by the Board of Directors, or a
committee or special legal counsel or the shareholders as
prescribed in Section 55-8-55.
Sections 55-8-52 and 55-8-56 of the NCBCA require a
corporation to indemnify a director or officer in the defense of
any proceeding to which he was a party because of his capacity as
a director or officer against reasonable expenses when he is
wholly successful, on the merits or otherwise, in his defense,
unless the articles of incorporation provide otherwise. Upon
application, the court may order indemnification of the director
or officer if the court determines that he is entitled to
mandatory indemnification under Section 55-8-52, in which case
the court shall also order the corporation to pay the reasonable
expenses incurred to obtain court-ordered indemnification or if
he is adjudged fairly and reasonably so entitled in view of all
relevant circumstances under Section 55-8-54.
Section 55-8-56 allows a corporation to indemnify and
advance expenses to an officer, employee or agent who is not a
director to the same extent, consistent with public policy, as a
director or as otherwise set forth in the corporation's articles
of incorporation or bylaws or by resolution of the board of
directors or contract.
Limitation of Director Liability
The Restated Articles of Incorporation of the Registrant
provide that, to the fullest extent permitted by the NCBCA, a
director of the Registrant shall not be personally liable to the
Registrant, its shareholders or otherwise for monetary damages
for breach of his duty as a director. This provision precludes
any claim by the shareholders of the Registrant for monetary
damages based on a breach of duty of directors, with the
following exceptions under the NCBCA: (i) acts or omissions that
such director at the time of such breach knew or believed were
clearly in conflict with the best interests of the corporation,
(ii) certain unlawful distributions, including unlawful
redemptions of shares, (iii) any transaction from which such
director derived an improper personal benefit or (iv) acts or
omissions occurring prior to the effectiveness of the provision
on April 27, 1988.
Effective Law
The rights of holders of the Common Stock of the Registrant
are dependent, directly or indirectly, on applicable state and
federal statutes and regulations which are subject to change from
time to time. The Registrant has not undertaken to update the
foregoing description in each case where such a change may affect
the rights of shareholders.
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Item 7 Financial Statements and Exhibits.
(c) The following exhibits are filed herewith:
Exhibit No. Description
99.1 News release disseminated on January 26, 1998 by First Charter
Corporation
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CHARTER CORPORATION
By: /S/ LAWRENCE M. KIMBROUGH
Lawrence M. Kimbrough
President and Chief Executive Officer
Dated: January 28, 1998
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EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
99.1 News release disseminated on January 26,
1998 by First Charter Corporation