AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 1999
REGISTRATION NO. _____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
FIRSTSPARTAN FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 56-2015272
------------------------- ------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
380 E. Main Street
Spartanburg, South Carolina 29302
(864) 582-2391
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Paul M. Aguggia, Esq.
Victor L. Cangelosi, Esq.
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
(202) 362-0840
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [X]
If any securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED PER UNIT (2) OFFERING PRICE (2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
Common Stock, par value
$0.01 per share 250,000 $30.1875 $7,546,875 $2,099
- --------------------------------------------------------------------------------------------------------------
_________________
(1) Pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of shares of Common Stock that may be issued as a
result of stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee. Based
on the average of high and low prices reported on the Nasdaq National
Market as of January 5, 1999 pursuant to Rule 457(c).
[FIRSTSPARTAN LETTERHEAD]
January 11, 1999
Dear Shareholder:
The Board of Directors recently voted to establish the FirstSpartan
Financial Corp. Dividend Reinvestment Plan ("Plan") to provide shareholders of
record of at least 50 shares with a convenient and economical way to
automatically reinvest all or a portion of their cash dividends in additional
shares of common stock. You pay no service charges or brokerage commissions for
common stock purchased under the Plan.
The Plan is completely voluntary. You may terminate your participation at
any time. If you wish to participate in the Plan, complete and return the
enclosed Authorization Form. If you do not wish to participate in the Plan, you
will continue to receive your dividends, if and when declared, by check from the
Company or direct deposit.
All of the features, terms and conditions of the Plan are detailed in the
enclosed Prospectus, which you should read carefully. The Prospectus, in simple
question-and-answer format, should answer most questions you may have about the
Plan. If you have additional questions, please address them to Registrar and
Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016, Attention:
Dividend Reinvestment Department (telephone number 1-800-368-5948).
The Company values its shareholders and we hope that you find this new Plan
an attractive means for holding your shares and increasing your investment.
Sincerely,
/s/ Billy L. Painter
Billy L. Painter
President and Chief Executive Officer
PROSPECTUS
FIRSTSPARTAN FINANCIAL CORP
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan ("Plan") of FirstSpartan Financial Corp.
("Company") provides shareholders of record of the Company's common stock, par
value $0.01 per share ("Common Stock"), with a convenient and economical way to
reinvest, at no cost, all or a portion of their regular cash dividends in
additional shares of Common Stock. Any special cash dividends or any other cash
distributions that the Company may declare and pay on the Common Stock are
ineligible for reinvestment.
Any holder of record of 50 or more shares of Common Stock (including
shares held within the Plan) is eligible to participate in the Plan. Beneficial
owners whose shares are registered in names other than their own (e.g., held in
the name of a broker or bank nominee) and who wish to participate in the Plan
must become record holders of 50 or more shares by transferring at least 50
shares into their own names.
Plan participants may elect to have regular cash dividends paid on all or a
portion of their shares of Common Stock automatically reinvested in additional
shares of Common Stock. Holders of Common Stock who choose not to participate in
the Plan will continue to receive regular cash dividends on shares of Common
Stock registered in their name, when and if declared, by check from the Company
or direct deposit.
Shares of Common Stock purchased under the Plan will be purchased either
directly from the Company or in the open market. The purchase price for each
share of Common Stock purchased with reinvested dividends will be 100% of the
market price on the relevant date of investment. See Question 12.
This Prospectus relates to 250,000 shares of Common Stock registered for
sale under the Plan. These shares may be either authorized but unissued shares
or shares reacquired and held in the Company's treasury. This Prospectus also
covers an indeterminate number of shares of Common Stock that may be issued as a
result of stock splits, stock dividends or similar transactions. Participants
should retain this Prospectus for future reference.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PLAN PARTICIPANTS.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
The date of this Prospectus is January 11, 1999.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission ("SEC" or "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 and at the following regional offices of the
Commission: 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of such
material also can be obtained at prescribed rates from the Commission's Public
Reference Room at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Reports, proxy statements and
other information filed by the Company are also available on the Internet at the
Commission's World Wide Web site at http://www.sec.gov. In addition, materials
filed by the Company are available for inspection at the offices of The Nasdaq
Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended ("Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Common Stock. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
where a copy of such document has been filed as an exhibit to the Registration
Statement or otherwise has been filed with the Commission, reference is made to
the copy so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the SEC are hereby
incorporated by reference: (i) the Company's Annual Report on Form 10-K for its
fiscal year ended June 30, 1998, and (ii) the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of this offering shall be deemed to be incorporated by reference
from the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this material to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus has been delivered, upon the written or oral request, a copy of any
or all of the documents incorporated by reference herein (including exhibits
that are specifically incorporated by reference in such documents). Written or
oral request should be directed to R. Lamar Simpson, Corporate Secretary,
FirstSpartan Financial Corp, 380 E. Main Street, Spartanburg, South Carolina
29302 (telephone number is (864) 582-2391).
1
SUMMARY PLAN HIGHLIGHTS
The following summary explains the significant aspects of the Plan. For
additional information about the Plan, please refer to the more detailed
information in this Prospectus.
PURPOSE OF THE PLAN
The purpose of the Plan is to provide record owners of at least 50 shares
of common stock, par value $0.01 per share ("Common Stock"), of FirstSpartan
Financial Corp. ("Company") with a convenient and economical method of investing
regular cash dividends paid on shares of Common Stock. Any special cash
dividends or other cash distributions that the Company may declare and pay on
the Common Stock are ineligible for reinvestment. If you are eligible but do not
wish to participate in the Plan, you will continue to receive regular cash
dividends, when declared and paid by the Company, by check from the Company or
direct deposit.
AUTOMATIC DIVIDEND REINVESTMENT
The Plan is administered by Registrar and Transfer Company ("Plan
Administrator"). If you enroll in the Plan, your regular cash dividends will be
automatically invested in shares of Common Stock by the Plan Administrator at no
cost to you. Once enrolled, you do not need to take any further action.
If a particular cash dividend is not enough to buy a whole share of Common
Stock, your account will be credited by the Plan Administrator with a fractional
share computed to four decimal places. Fractional shares also earn cash
dividends that will be applied toward your next regular cash dividend payment.
NO ADMINISTRATION FEES OR BROKER COMMISSIONS FOR STOCK PURCHASES
You will not pay any charges for brokerage commissions or administrative
fees on purchases of Common Stock made through the Plan. The Company pays all
costs associated with the Plan. However, you will have to pay brokerage
commissions for the sale of any shares held in the Plan plus a $10.00 service
fee. There is a $5.00 fee to issue a stock certificate for shares held in the
Plan.
SIMPLIFIED RECORD KEEPING
No stock certificates will be delivered except upon your written request.
The Plan Administrator will send you a report confirming each purchase of Common
Stock made for your account. The number of shares purchased will be based on
the amount of cash dividends reinvested and the purchase price for Common Stock.
HOW TO PARTICIPATE
If you wish to reinvest your regular cash dividends automatically towards
the purchase of Common Stock, simply complete the enclosed Authorization Form
and mail it to the Plan Administrator at the following address:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: Dividend Reinvestment Department
2
Questions regarding the Plan can be directed to either the Company or the
Plan Administrator at the above address (Toll Free: 1-800-368-5948). The address
of the Company's principal executive office is 380 E. Main Street, Spartanburg,
South Carolina 29302 (telephone number 864-582-2391).
TERMINATION OR WITHDRAWAL OF SHARES
You can terminate participation in the Plan or withdraw a portion of your
shares at any time by notifying the Plan Administrator in writing. If you
terminate your participation, certificates for full shares of Common Stock
credited to your account will be issued and a cash payment will be made for any
fractional shares. Upon request, the Plan Administrator will sell whole shares
credited to your account and pay you the proceeds after deducting any applicable
service charges and brokerage fees.
3
THE COMPANY
The Company, a Delaware corporation, is primarily engaged in the business
of planning, directing, and coordinating the business activities of its wholly
owned subsidiary, First Federal Bank ("Bank'). In July 1997, the Company
completed the sale of its common stock in connection with the conversion of the
Bank from the mutual to stock form of organization. The Bank is a federally
chartered savings bank that accepts savings and demand deposits and provides
mortgage, consumer and commercial loans to the general public through ten retail
banking offices. The Bank conducts business principally in Spartanburg County,
Greenville County and adjacent counties in South Carolina.
RISK FACTORS
An investment in the shares of common stock offered by this Prospectus
involves risk. In addition to the other information contained in this
Prospectus, the following risk factors should be considered carefully in
evaluating participation in the Plan. This Prospectus contains certain
"forward-looking statements" (as defined in the federal securities laws)
concerning the Company's proposed operations, performance and financial
condition. These statements are not historical facts and are based upon a
number of assumptions and estimates beyond the control of the Company. Actual
results may differ materially from those expressed or implied by the forward-
looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, those set forth below.
RESTRICTIONS ON ABILITY TO PAY DIVIDENDS
Future declarations and payments of dividends on the Common Stock, if any,
will depend upon the earnings and financial condition of the Company, liquidity
and capital requirements, the general economic and regulatory climate and other
factors deemed relevant by the Company's Board of Directors. The Company's
principal source of funds to pay dividends on the shares of Common Stock will be
cash dividends that the Company receives from the Bank. There are statutory and
regulatory requirements applicable to the payment of dividends by the Bank, as
well as by the Company to its shareholders.
Under the regulations of the Office of Thrift Supervision ("OTS"), the
Bank's primary federal regulator, the Bank, with prior notice to and the non-
objection of the OTS, could distribute up to 100% of its net income during the
calendar year plus 50% of its surplus capital ratio at the beginning of the
calendar year less any distributions previously paid during the year. This
qualitative limit applies so long as the Bank remains a well-capitalized and
well-managed institution as defined under applicable OTS regulations.
Otherwise, the Bank's ability to pay dividends would be further limited.
The federal banking statutes prohibit federally insured banks from making
any capital distributions (including a dividend payment) if, after making the
distribution, the institution would be "undercapitalized" as defined by statute.
In addition, the relevant federal regulatory agencies also have authority to
prohibit an insured bank from engaging in an unsafe or unsound practice, as
determined by the agency, which could include the payment of dividends.
Under Delaware law, the Company generally is limited to paying dividends in
an amount equal to the excess of its net assets (total assets minus total
liabilities) over its statutory capital or, if such excess does not exist, to
its net profits for the current and/or immediately preceding fiscal year.
4
POSSIBLE DILUTIVE EFFECT OF THE PLAN
The Plan allows for the issuance of authorized but unissued shares by the
Company. In the event that authorized but unissued shares are issued under the
Plan, the voting interests of existing shareholders will be diluted and net
income per share and stockholders' equity per share will decrease.
LOCAL ECONOMIC CONDITIONS
The Bank's success depends to a large extent upon general economic
conditions in the communities it serves. The Bank primarily operates in
Spartanburg County and Greenville County, South Carolina. A decline in the
economy of these counties could have a material adverse effect on the Bank's
business, including the demand for new loans, refinancing activity, the ability
of borrowers to repay outstanding loans and the value of loan collateral, and
could adversely affect the Bank's asset quality and net income.
GOVERNMENT REGULATION
The banking industry is regulated by and subject to regular examination by
federal and state regulatory authorities. Under federal and state banking law,
the Company and the Bank are subject to supervision and limitations with respect
to extending credit, purchasing securities, paying dividends, making
acquisitions, branching and many other aspects of the banking business. Banking
laws are designed primarily to protect depositors and customers, not investors,
and include, among other things, minimum capital requirements, limitations on
products and services offered, geographical limits, consumer credit regulations,
community investment requirements and restrictions on transactions with
affiliated parties. Financial institution regulation has been the subject of
significant legislation in recent years, and may be the subject of further
significant legislation in the future, none of which is within the control of
the Company. This regulation substantially affects the business and financial
results of all financial institutions and holding companies, including the
Company and the Bank, and the Company is not able to predict the impact of
changes in such regulations on the Bank's business and profitability, some or
all which may be materially adverse to the Bank.
COMPETITION
The banking business is highly competitive, and the Bank's profitability
depends principally upon the Bank's ability to compete in the market areas in
which it operates. The Bank competes with other commercial banks, savings
associations, credit unions, finance companies, mutual funds, insurance
companies, brokerage and investment banking firms, asset-based non-bank lenders
and certain other nonfinancial institutions, including retail stores which may
maintain their own credit programs, and certain governmental organizations which
may offer more favorable financing than the Bank. Many competitors may have
greater financial and other resources than the Bank.
The Bank has been able to compete effectively with other financial
institutions by emphasizing customer service, by establishing long-term customer
relationships and building customer loyalty, and by providing products and
services designed to address the specific needs of its customers. Although the
Bank has been able to compete effectively in the past, no assurance may be given
that the Bank will be able to continue to do so. Further, changes in government
regulation of banking, particularly recent legislation which removes
restrictions on interstate banking and permits interstate branching, are likely
to increase competition by out-of-state banking organizations or by other
financial institutions in the Bank's market areas.
5
CONTROL BY MANAGEMENT
As of January 6, 1999, the directors and officers of the Company
beneficially owned approximately 6.1% of the outstanding shares of Common Stock
(including shares subject to outstanding stock options and shares that may be
issued under various stock benefit plans). Accordingly, these persons have
substantial influence over the business, policies and affairs of the Company,
including the ability potentially to control the election of directors and other
matters requiring shareholder approval by simple majority vote.
INVESTMENT RISK
The shares of Common Stock to be issued under the Plan are subject to
general investment risk. Periodically, the stock market experiences substantial
price and volume volatility. These market fluctuations may be unrelated to the
operating performance of particular companies whose shares are traded and may
adversely affect the market price of Common Stock. The Company cannot assure
you that the market price of Common Stock will not decline below the price at
which the shares are purchased under the Plan.
INTEREST RATE RISK
As the holding company for the Bank, the Company's financial condition and
performance depends primarily on the financial condition and performance of the
Bank which is greatly affected by changes in market interest rates. The market
value of the Bank's investment securities fluctuate based on the level of market
interest rates. In addition, the Bank's earnings depend primarily on "rate
differentials," which are the differences between interest income earned on
loans and investments and the interest expense paid on deposits and other
borrowings. These rates are highly sensitive to many factors that are beyond
the Bank's control, including general economic conditions and the policies of
various governmental and regulatory authorities. Increases in the federal funds
rate by the Federal Reserve Bank usually lead to rising interest rates, which
affect the Bank's interest income, interest expense and investment portfolio.
Also, governmental policies, such as the creation of a tax deduction for
individual retirement accounts, can increase savings and affect the cost of
funds. From time to time, maturities of assets and liabilities are not
balanced, and a rapid increase or decrease in interest rates could have an
adverse effect on the net interest margin and results of operations of the Bank.
The nature, timing and effect of any future changes in federal monetary and
fiscal policies on the Bank and its results of operations are not predictable.
POTENTIAL YEAR 2000 COMPUTER MALFUNCTIONS
The advent of the year 2000 presents significant issues regarding how a
Company's software and operating systems will deal with the numerical value
representing the year 2000. This issue extends beyond individual companies to
include the effect on other companies with which they do business, or by which
they may be affected. The Company and the Bank have responded proactively to
address this issue with respect to their systems and management believes that
all operations affected by year 2000 issues will be tested and compliant in
advance of the year 2000. In addition, the financial impact to the Company and
the Bank to complete systems projects and ensure year 2000 compliance is not
anticipated by management to be material to the financial position, results of
operations or cash flow of either entity. There can be no assurance, however,
that there will not be any year 2000 operating problems or expenses that will
arise with respect to the Company's and the Bank's computer systems and
software, or in connection with the Company's and the Bank's interface with the
computer systems and software of their suppliers, clients and other financial
institutions with which they interact. Because third-party systems or software
may not be year 2000 compliant, the Company or the Bank could be required to
incur unanticipated expenses to remedy any problems, which could have a material
adverse effect on their respective business, results of operations and financial
condition. The year 2000 issue may also have a material impact on the financial
condition of the Company and the Bank if borrowers of the Bank become insolvent
and are unable to repay loans made by the Bank as a result of year 2000
noncompliance.
6
FIRSTSPARTAN FINANCIAL CORP.
DIVIDEND REINVESTMENT PLAN
On December 16, 1998, the Board of Directors of the Company voted to adopt
this Plan under which authorized but unissued shares of the Company's common
stock, par value $0.01 per share ("Common Stock"), are available for issuance
and sale to the shareholders of the Company. The Plan also allows for the
purchase of the Company's Common Stock in the open market. The Plan will be in
effect until amended, altered or terminated. The Company has reserved 250,000
shares of its Common Stock for issuance and sale under the Plan pursuant to this
prospectus. The Plan is set forth below as a series of questions and answers
explaining its significant aspects.
PURPOSE AND ADVANTAGES
1. WHAT IS THE PURPOSE OF THE PLAN?
The purpose of the Plan is to provide holders of record of at least 50
shares of Common Stock (including shares held within the Plan) with a convenient
and economical method of investing regular cash dividends paid on the Common
Stock in additional shares of Common Stock without paying any brokerage
commissions, service charges or other fees. Any special cash dividends or other
cash distributions that the Company may declare and pay on the Common Stock are
ineligible for reinvestment. Participants who elected to have their cash
dividends reinvested will be deemed to have applied such cash dividends to the
purchase of additional shares of Common Stock pursuant to the Plan. To the
extent that those additional shares are purchased directly from the Company, the
Company will receive additional funds to be used for general corporate purposes,
including increased lending and investment.
2. WHAT ARE THE ADVANTAGES OF THE PLAN?
A Plan participant may (a) have cash dividends on all of his or her shares
of Common Stock automatically reinvested in Common Stock or (b) have cash
dividends on a portion of his or her shares of Common Stock automatically
reinvested in Common Stock.
. FULL INVESTMENT. Full investment of funds is possible under the Plan
because fractions of shares, as well as whole shares, will be credited
to a participant's account. Further, dividends on fractional shares,
as well as whole shares, will be reinvested in additional shares of
Common Stock and will be credited to a participant's account.
Participants pay no brokerage commissions, service charges or other
fees in connection with purchases under the Plan.
. SAFEKEEPING. A participant avoids the need for safekeeping of
certificates for shares of Common Stock credited to his or her account
under the Plan because they are held by the Plan. In addition,
participants may deposit for safekeeping in their Plan account any
stock certificates for Common Stock registered in their names through
the free custodial service described in Question 22. Dividends on
shares deposited for safekeeping under the Plan will also be
reinvested. (See Questions 22 and 23.) By depositing shares for
safekeeping, participants are relieved of the responsibility for loss,
theft or destruction of the certificates.
7
. RECORDKEEPING. Regular statements of account will be mailed to each
participant in the Plan as soon as practicable after each purchase of
Common Stock under the Plan. The statements will show the date of the
investment, the amounts invested, the purchase price, the number and
the market value of shares of Common Stock purchased and the number of
shares of Common Stock in the participant's account, allowing for
simplified record-keeping.
ADMINISTRATION
3. WHO ADMINISTERS THE PLAN FOR PARTICIPANTS?
Registrar and Transfer Company, the transfer agent for the Common Stock
("Plan Administrator"), administers the Plan for participants, maintains
records, sends statements of account to participants and performs other duties
relating to the Plan. The Plan Administrator will hold for safekeeping shares
of Common Stock purchased for, or deposited for safekeeping by, each participant
until termination of participation in the Plan or receipt of a written request
from a participant for the issuance of a certificate for all or a portion of
such shares. Shares of Common Stock purchased under the Plan and held by the
Plan Administrator will be registered in its name or the name of one of its
nominees and will be credited to the account of each participant. As the record
holder of shares of Common Stock held for participants under the Plan, the Plan
Administrator will receive dividends on such shares of Common Stock, will credit
such dividends to each participant's account on the basis of full and fractional
shares held in each account, and will automatically reinvest such dividends in
additional shares of Common Stock. If the Plan Administrator should resign or
otherwise cease to act as agent, the Company will make such other arrangements
as it deems appropriate for the administration of the Plan.
The Plan Administrator may be contacted by mail at:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attention: Dividend Reinvestment Department
Telephone inquiries may be made to the Plan Administrator at 1-800-368-
5948. Please mention FirstSpartan Financial Corp. in all correspondence.
PARTICIPATION
4. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
All holders of record of 50 or more shares of Common Stock (including
shares held within the Plan) are eligible to participate in the Plan. Beneficial
owners whose shares are held beneficially (i.e., in the name of a broker or bank
nominee) and who wish to participate in the Plan must become owners of record of
50 or more shares by transferring at least 50 shares into their own names.
5. HOW DOES AN ELIGIBLE SHAREHOLDER ENROLL IN THE PLAN?
An eligible shareholder may enroll in the Plan by completing the enclosed
Authorization Form and returning it to the Plan Administrator in the postage-
paid envelope provided. Authorization Forms may be obtained at any time by
written request to the Plan Administrator at the address set forth in Question
3, or
8
to FirstSpartan Financial Corp, 380 E. Main Street, Spartanburg, South Carolina
29302, Attention: Shareholder Relations.
6. MUST A SHAREHOLDER SUBMIT HIS OR HER CERTIFICATE FOR COMMON STOCK TO THE
PLAN ADMINISTRATOR IN ORDER TO PARTICIPATE IN THE PLAN?
No. A participant should retain the stock certificates registered in his
or her name and indicate on the Authorization Form whether the dividends on all
or some number of such shares should be reinvested in shares of Common Stock.
Of course, if the participant wishes to take advantage of the Plan's safekeeping
feature, certificates for Common Stock may be sent to the Plan Administrator as
set forth in Question 22. All shares of Common Stock purchased under the Plan
will be held by the Plan for the account of the participant until withdrawn by
the participant.
7. WHEN MAY AN ELIGIBLE SHAREHOLDER JOIN THE PLAN?
An eligible shareholder may join the Plan at any time and investments will
be made on his or her behalf as follows:
If an Authorization Form requesting reinvestment of Common Stock
dividends is received by the Plan Administrator at least five (5) business
days before the record date established for a particular Common Stock
dividend, reinvestment will begin with that dividend payment date.
If an Authorization Form is received by the Plan Administrator less
than five (5) business days before the record date established for a
particular Common Stock dividend, reinvestment of dividends will begin with
the dividend payment date immediately following the next dividend record
date, if such shareholder is still a holder of record.
8. WHAT DOES THE AUTHORIZATION FORM PROVIDE?
The Authorization Form provides for the purchase of additional shares of
Common Stock through the following investment options:
A. "FULL DIVIDEND REINVESTMENT," which directs the Company to pay
the Plan Administrator for reinvestment in accordance with the Plan all of
the participant's regular cash dividends on all shares of Common Stock then
or subsequently registered in his or her name.
B. "PARTIAL DIVIDEND REINVESTMENT," which directs the Company to pay
the Plan Administrator for reinvestment in accordance with the Plan regular
cash dividends on less than all shares of Common Stock then registered in
the participant's name while continuing to pay the participant cash
dividends on the remaining shares of Common Stock by check.
Regardless of the option selected, all cash dividends on shares of Common
Stock credited to a participant's account as a result of reinvestment of
dividends and shares held under the safekeeping deposit feature will be
automatically reinvested in accordance with the Plan. A participant may change
his or her election by written notice to the Plan Administrator at the address
set forth in Question 3.
9
The Authorization Form also appoints the Plan Administrator agent for each
participant and directs the Plan Administrator to apply cash dividends in
accordance with the terms of the Plan.
COSTS
9. ARE THERE ANY COSTS TO PARTICIPANTS ASSOCIATED WITH PURCHASES UNDER THE
PLAN?
No. The Company pays all administration costs of the Plan. There are no
brokerage commissions, service charges or other fees charged to participants in
connection with the purchase of shares of Common Stock under the Plan. However,
if a participant asks the Plan Administrator to sell shares of Common stock held
in his or her account under the Plan, any brokerage commissions paid in
connection with such sale will be charged to such participant along with a
$10.00 service charge. (See Question 21).
PURCHASES
10. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED UNDER THE PLAN?
Shares of Common Stock will be purchased, at the Company's discretion,
either directly from the Company, in which event such shares will be either
authorized but unissued shares or shares held in the treasury of the Company, or
on the open market, or by combination of the foregoing.
11. WHEN WILL SHARES BE PURCHASED UNDER THE PLAN?
In a month in which a regular cash dividend is paid on the Common Stock,
the investment date for the regular dividend on the Common Stock is the dividend
payment date ("Investment Date"). In any case, if an Investment Date falls on a
day that is not a trading day, the investment date is deemed to be the prior
trading day.
Purchases of Common Stock from the Company will be made on the Investment
Date. Purchases on the open market will begin on the Investment Date and will
be completed no later than 30 days from that date except where completion at a
later date is necessary or advisable under any applicable federal securities
laws. If open market purchases cannot be completed within thirty (30) days, any
uninvested dividends will be paid in cash. Open market purchases may be made in
the over-the-counter market on the Nasdaq National Market, or by negotiated
transactions and may be subject to such terms with respect to price, delivery,
and other terms as to which the Plan Administrator may agree. Neither the
Company nor any participant shall have any authority or power to direct the time
or price at which shares may be purchased, or the selection of the broker or
dealer through or from whom purchases are to be made.
12. AT WHAT PRICE WILL SHARES OF COMMON STOCK BE PURCHASED UNDER THE PLAN?
The purchase price of each share of Common Stock purchased by a participant
in the Plan with reinvested dividends will be 100% of the market price. In the
case of shares of Common Stock purchased from the Company, the "market price" is
the average of the high and low sales prices of a share of Common Stock on the
Nasdaq National Market on the Investment Date. If there is no trading in the
shares of Common Stock on the Nasdaq National Market for a substantial amount of
time at the time of any Investment Date, the Company will determine the market
price on the basis of such market quotations as it shall deem appropriate. In
the case of purchases of Common Stock on the open market, the "market price"
will be the weighted average purchase price of shares purchased for the relevant
Investment Date.
10
13. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED FOR PARTICIPANTS?
The number of shares of Common Stock to be purchased depends on the amount
of a participant's reinvested dividends and the applicable purchase price as
determined in the manner described in Question 12. Each participant's account
will be credited with that number of shares, including fractions computed to
four decimal places, equal to each participant's total amount to be invested
divided by the Purchase Price.
REPORTS TO PARTICIPANTS
14. WHAT KINDS OF REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
As soon as practicable after each Investment Date on which shares of Common
Stock have been purchased for a participant's Plan account, the Plan
Administrator will mail a statement of account to the participant. Each
statement of account will be cumulative for each calendar year. The statement
is a participant's continuing record of the cost of his or her purchases and
should be retained for income tax purposes. In addition, each participant will
receive copies of communications sent to holders of the Common Stock generally,
including the Company's Annual Reports to Shareholders, Notice of Annual Meeting
and Proxy Statement, and any Internal Revenue Service information for reporting
dividend income.
DIVIDENDS ON FRACTIONS OF SHARES
15. WILL PARTICIPANTS BE CREDITED WITH DIVIDENDS ON FRACTIONS OF SHARES?
Yes. Dividends paid on fractions of shares of Common Stock held under the
Plan, as well as on whole shares of Common Stock, will be credited to the
participant's account and will be reinvested in additional shares.
ISSUANCE OF CERTIFICATES FOR COMMON STOCK
16. WILL CERTIFICATES BE ISSUED FOR SHARES OF COMMON STOCK PURCHASED?
No. Certificates will not be issued to a participant for shares of Common
Stock credited to his or her account unless he or she so requests of the Plan
Administrator in writing, or until his or her account is terminated. The number
of shares of Common Stock credited to an account under the plan will be shown on
the participant's statement of account. This safekeeping service protects
against loss, theft or destruction of stock certificates.
At any time, a participant may request in writing that the Plan
Administrator send him or her a certificate for all or a portion of the whole
shares of Common Stock credited to his or her account as described in Question
17. There is a $5.00 service fee to issue a certificate. Any remaining whole
shares and any fractions of a share will continue to be credited to the
participant's account. (See Question 18.)
Shares of Common Stock credited to the account of a participant under the
Plan may not be pledged or assigned. A participant who wishes to pledge or
assign any such shares must request that a certificate for such shares be issued
in his or her name.
Certificates for fractions of a share will not be issued to participants
under any circumstances. (See Questions 17 and 21.)
11
An institution that is required by law to maintain physical possession of
certificates may request the issuance of certificates for whole shares purchased
under the Plan. This request must be made for each payment date and mailed to
the Plan Administrator at the address set forth in Question 3.
17. CAN A PARTICIPANT WITHDRAW SHARES OF COMMON STOCK HELD UNDER THE PLAN?
Yes. Certificates for any number of whole shares held in the participant's
account under the Plan will be issued upon receipt by the Plan Administrator of
a written request signed by the participant, specifying the number of whole
shares to be withdrawn. This request should be sent to the Plan Administrator
at the address set forth in Question 3 and should contain a reference to
FirstSpartan Financial Corp. Depending on the participant's authorization, the
dividends on these withdrawn shares may continue to be reinvested pursuant to
the Plan. (See Question 18.)
18. WILL DIVIDENDS ON SHARES OF COMMON STOCK WITHDRAWN FROM THE PLAN CONTINUE
TO BE REINVESTED?
If the participant has authorized "Full Dividend Reinvestment," cash
dividends with respect to shares of Common Stock withdrawn from a participant's
account will continue to be reinvested. However, if cash dividends with respect
to only part of the shares of Common Stock registered in a participant's name
are being reinvested, the Plan Administrator will continue to reinvest dividends
on only the number of shares specified by the participant on the Authorization
Form unless a new Authorization Form specifying a different number of shares is
delivered to the Plan Administrator.
19. WHAT HAPPENS WHEN A PARTICIPANT SELLS OR TRANSFERS ALL OR A PORTION OF THE
SHARES OF COMMON STOCK REGISTERED IN HIS OR HER NAME?
If a participant who is reinvesting the cash dividends on part of the
shares of Common Stock registered in his or her name disposes of a portion of
such shares, the Plan Administrator will continue to reinvest the dividends on
the remainder of the shares up to the number of shares of Common Stock
originally specified on the Authorization Form, provided the participant
continues to hold at least 50 shares in his or her name, in the Plan, or in
street name (i.e., in the name of a broker or bank nominee).
If a participant disposes of his or her shares of Common Stock (including
shares credited to his or her account under the Plan) so that the total balance
of his or her shares is less than 50 shares, the Plan Administrator will
discontinue the investment of regular cash dividends on the shares credited to
the participant's account under the Plan, or otherwise, until the participant's
share ownership increases to at least 50 shares in the aggregate. All
applicable dividends will be paid in cash until such participant's stock
ownership increases to at least 50 shares. If following a disposition of stock,
a participant's aggregate record ownership of the Common Stock is less than 50
shares of Common Stock, the Plan Administer will notify the participant that he
or she is no longer eligible to participate in the Plan. If the participant
does not increase his or her stock ownership to at least 50 shares within 30
days of such notice, a certificate will be issued for the full number of shares
in the account, a cash payment will be made for any fractional shares and the
account will be terminated. There will be a $5.00 service fee to issue a
certificate.
12
20. IN WHOSE NAME WILL CERTIFICATES BE REGISTERED WHEN ISSUED TO PARTICIPANTS?
Shareholder accounts under the Plan are maintained in the names in which
certificates of participants were registered at the time they enrolled in the
Plan. Accordingly, certificates for whole shares of Common Stock will be
similarly registered when issued. Should a participant want such shares
registered in any name other than that of the holder of record participant in
the Plan, he or she must indicate such name in his or her request. In the event
of such re-registration, a participant would be responsible for any possible
transfer taxes and for compliance with any applicable transfer requirements. In
addition, federal backup withholding of 31% may apply to dividends subsequently
paid on such re-registered shares unless the taxpayer identification number of
the person in whose name such shares are registered is provided to the Plan
Administrator. (See Question 30.)
TERMINATION OF PARTICIPATION
21. HOW MAY A PARTICIPANT WITHDRAW FROM AND CEASE PARTICIPATION IN THE PLAN?
A participant may withdraw from participation in the Plan entirely at any
time. To do so, a participant must notify the Plan Administrator in writing
that he or she wishes to withdraw. Such notice should be forwarded to the Plan
Administrator at the address set forth in Question 3. When a participant
withdraws from the Plan or upon termination of the Plan by the Company, a
certificate for the number of whole shares of Common Stock credited to his or
her account under the Plan will be issued and a cash payment will be made for
any fractions of a share. Such cash payment will be based on the actual market
price of a share of Common Stock less any brokerage fees or commissions, any
other costs of sale and any transfer tax. Federal backup withholding of 31% may
apply to any such cash payments from the Plan. (See Question 30.)
If the Plan Administrator receives the request to withdraw and cease
participation prior to the record date for a dividend, the withdrawal will be
processed promptly following receipt of the request. If the request to withdraw
and cease participation is received on or after the record date for a dividend
payment, the request may not become effective until any cash dividend paid on
the dividend payment date has been reinvested and the shares of Common Stock
purchased are credited to the participant's account under the Plan. The Plan
Administrator, in its sole discretion, may either pay any such dividend in cash
or reinvest it in Common Stock on behalf of the terminating participant. The
request for withdrawal will then be processed as promptly as possible following
such Investment Date.
After a participant ceases to participate in the Plan, all subsequent
dividends will be paid to the participant in cash unless he or she re-enrolls in
the Plan, which he or she may do at any time by requesting an Authorization Form
from the Plan Administrator or from the Company.
In his or her written request for withdrawal of shares from the Plan, a
participant may also request that all or a portion of the whole shares of Common
Stock credited to his or her account be sold. If he or she requests such sale,
the sale will be made by the Plan Administrator as promptly as possible after
processing the request for withdrawal. Subject to the applicability of federal
backup withholding, the participant will receive the proceeds from such sale,
less any brokerage fees or commissions, a $10.00 service fee, any other costs of
sale and any applicable transfer tax.
13
SAFEKEEPING
22. HOW DOES A PARTICIPANT DEPOSIT SHARES OF COMMON STOCK FOR SAFEKEEPING UNDER
THE PLAN?
A participant may deposit with the Plan Administrator any Common Stock
certificates registered in his or her name for safekeeping under the Plan. There
is no charge for this custodial service. By having the Plan Administrator hold
such certificates, a participant is relieved of the responsibility for loss,
theft or destruction of any such certificates. Dividends paid on shares of
Common Stock held for safekeeping by the Plan Administrator will be reinvested
in shares of Common Stock pursuant to the Plan.
Participants who wish to deposit their Common Stock certificates with the
Plan Administrator for safekeeping under the Plan should send their certificates
(which need not be endorsed) to the Plan Administrator at the address set forth
in Question 3. Because the participant bears the risk of loss in sending Common
Stock certificates to the Plan Administrator, it is recommended that
certificates be sent by registered mail, return receipt requested and properly
insured. Whenever certificates are issued to a participant either upon request
for withdrawal or termination of participation, new, differently numbered
certificates will be issued.
23. MAY A PARTICIPANT REQUEST THAT HIS OR HER SHARES OF COMMON STOCK BE
DEPOSITED FOR SAFEKEEPING UNDER THE PLAN WITHOUT HAVING THE DIVIDENDS
THEREON REINVESTED?
No. All dividends paid on Common Stock held by the Plan Administrator for
safekeeping under the Plan will be reinvested in additional shares of Common
Stock until such Common Stock is withdrawn from participation in the Plan.
OTHER INFORMATION
24. IF THE COMPANY DECLARES AND PAYS A SPECIAL CASH DIVIDEND OR ANY OTHER CASH
DISTRIBUTION ON THE SHARES OF COMMON STOCK, ARE THEY ELIGIBLE FOR
REINVESTMENT UNDER THE PLAN?
No. Only regular cash dividends declared and paid by the Company are
eligible for reinvestment.
25. IF THE COMPANY CONDUCTS A RIGHTS OFFERING, HOW WILL THE RIGHTS ON THE
SHARES OF COMMON STOCK HELD UNDER THE PLAN BE HANDLED?
If a participant is entitled to participate in a rights offering, he or she
will receive rights certificates for only the number of whole shares of Common
Stock held for his or her account under the Plan.
26. WHAT HAPPENS IF THE COMPANY SPLITS ITS STOCK OR DECLARES A DIVIDEND OR
OTHER DISTRIBUTION PAYABLE IN STOCK OR OTHER NONCASH ASSETS?
Any dividend payable in Common Stock or split shares of Common Stock
distributed by the Company on shares of Common Stock credited to the account of
a participant under the Plan will be added to the participant's account. Any
dividend or other distribution payable in stock other than Common Stock and all
other noncash dividends distributed by the Company on shares of Common Stock
credited to the account of a participant under the Plan will be mailed directly
to such participants in the same manner as to shareholders who are not
participating in the Plan. Of course, all stock dividends, split shares and
other
14
noncash distributions made on shares of Common Stock registered in the name of
the participant and not held by the Plan will also be mailed directly to the
participant.
27. HOW WILL A PARTICIPANT'S SHARES OF COMMON STOCK HELD IN THE PLAN BE VOTED
AT SHAREHOLDERS' MEETINGS?
Shares of Common Stock held by the Plan Administrator under the Plan for a
participant will be voted as the participant directs in a proxy card provided
for that purpose. A proxy card will be sent to each participant in connection
with any annual or special meeting of shareholders, as in the case of
shareholders not participating in the Plan. This proxy will apply to all whole
shares of Common Stock registered in the participant's own name, if any, as well
as to all shares credited to the participant's account under the Plan. The Plan
Administrator will aggregate the participant's shares voting in a certain way on
each matter presented to the shareholders and, after completing such
aggregation, any fractions of a share will not be voted.
28. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND THE PLAN ADMINISTRATOR
UNDER THE PLAN?
The Company and the Plan Administrator will not be liable under the Plan
for any act done in good faith or for any good faith omission to act including,
without limitation, any claim of liability arising out of failure to terminate a
participant's account upon such participant's death or with respect to the
prices at which shares of Common Stock are purchased or sold for the
participant's account, the times when such purchases or sales are made, or with
respect to any fluctuation in market value of the Common Stock.
The participant should recognize that neither the Company nor the Plan
Administrator can assure him or her of a profit or protect the participant
against a loss on the Common Stock purchased by him or her under the Plan.
29. MAY THE PLAN BE CHANGED OR DISCONTINUED?
Notwithstanding any other provision of the Plan, the Board of Directors of
the Company or any designated committee thereof may amend, suspend, modify or
terminate the Plan at any time (including the period between a record date and a
dividend payment date). Notice of any such amendment, suspension, modification
or termination will be sent to all participants. Upon a termination of the
Plan, certificates for whole shares of Common Stock credited to a participant's
account under the Plan will be issued, and a cash payment will be made for any
fractions of a share credited to a participant's account. Such cash payment may
be subject to backup withholding and will be based on the actual market price of
a share of Common Stock less any brokerage fees or commissions, any other costs
of sale and any transfer tax.
TAXES
30. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
REINVESTED DIVIDENDS. In the case of shares of Common Stock purchased
directly from the Company with reinvested dividends, a participant will be
subject to federal income tax on a taxable dividend in an amount equal to the
number of shares of Common Stock so purchased multiplied by the fair market
value (as defined below) on the Investment Date of the shares so acquired. The
participant's basis in such shares will also equal the fair market value of the
shares on the relevant Investment Date.
15
Alternatively, when the Plan Administrator purchases shares of Common Stock
on the open market with reinvested dividends, a participant will be subject to
federal income tax on a taxable dividend in an amount equal to the actual
purchase price to the Plan Administrator of the shares so acquired plus that
portion of any brokerage commissions paid by the Company which is attributable
to the purchase of the participant's shares. The participant's basis in such
shares will equal their actual purchase price to the Plan Administrator plus
allocable brokerage commissions.
For purposes of this Question 30, the "fair market value" of shares on the
Investment Date will be determined under applicable Internal Revenue Service
regulations. Under those regulations, if the Common Stock trades on the
Investment Date, the fair market value is the average of the high and low sales
prices as reported on the Nasdaq National Market for that date; if the Common
Stock does not trade on that date, the fair market value is the weighted average
of the mean of the high and low sales prices on the nearest trading dates before
and after the Investment Date.
RECEIPT OR DISPOSITION OF SHARES. A participant will not realize any
taxable income when he or she receives a certificate for whole shares of Common
Stock credited to his or her account, either upon his or her request for a
certificate for certain of such shares or upon withdrawal from or termination of
the Plan.
A participant will realize gain or loss when shares of Common Stock are
sold or exchanged, whether such sale or exchange is pursuant to his or her
request upon his or her withdrawal from the Plan or takes place after withdrawal
from or termination of the Plan. In the case of fractions of a share, a
participant will realize gain or loss when he or she receives a cash payment for
such fractions of a share credited to his or her account. The amount of such
gain or loss will be the difference between the amount which the participant
receives for such whole shares or fractions of a share and the tax basis
thereof.
ADDITIONAL INFORMATION. An information statement (on Form 1099) will be
sent to each participant and to the Internal Revenue Service at year-end showing
the amounts taxable to the participant during the year.
ALL PARTICIPANTS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES, INCLUDING CONSEQUENCES UNDER STATE AND LOCAL
LAWS, WHICH MAY RESULT FROM THEIR PARTICIPATION IN THE PLAN AND THE SUBSEQUENT
DISPOSAL BY THEM OF SHARES OF COMMON STOCK PURCHASED PURSUANT TO THE PLAN. THE
INCOME TAX CONSEQUENCES FOR PARTICIPANTS WHO DO NOT RESIDE IN THE UNITED STATES
WILL VARY BETWEEN JURISDICTIONS.
31. HOW ARE FEDERAL BACKUP WITHHOLDING PROVISIONS APPLIED TO PARTICIPANTS IN
THE PLAN?
Under the federal income tax law, each participant in the Plan is required
to provide his or her correct taxpayer identification number to the Plan
Administrator. For an individual, the taxpayer identification number is his or
her social security number. If the correct number is not provided, dividends
paid on shares of Common Stock held for a participant under the Plan and
dividends paid on shares of Common Stock held by a participant (including
dividends paid into the Plan and including any deemed dividends resulting from
the payment of brokerage fees by the Company) may be subject to backup
withholding. In addition, cash distributions from the plan as described in
Question 21 and 29 may be subject to backup withholding.
If backup withholding applies, 31% of any such dividends or payments is
required to be withheld. Exempt participants (including, among others, all
corporations and certain foreign individuals) are not
16
subject to backup withholding and reporting requirements. In order to qualify as
exempt, a foreign individual must submit a statement attesting to that
individual's exempt status.
Forms for certifying a participant's taxpayer identification number and for
establishing the exemption of a foreign participant as well as additional
information concerning the requirements for certification may be obtained by
writing the Plan Administrator at the address set forth in Question 3 or by
calling the Plan Administrator at 1-800-368-5948.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 12,000,000 shares of Common Stock and
250,000 shares of preferred stock, par value $0.01 per share. Each share of
Common Stock has the same relative rights and is identical in all respects with
every other share of Common Stock. The following summary does not purport to be
a complete description of the applicable provisions of the Company's Certificate
of Incorporation and Bylaws or of applicable statutory or other law, and is
qualified in its entirety by reference thereto. See "AVAILABLE INFORMATION."
COMMON STOCK
VOTING RIGHTS. The holders of Common Stock possess exclusive voting rights
in the Company. Each holder of Common Stock is entitled to one vote for each
share held of record on all matters submitted to a vote of holders of Common
Stock. Holders of shares of Common Stock are not entitled to cumulate votes for
the election of directors.
DIVIDENDS. The holders of Common Stock are entitled to such dividends as
the Board of Directors may declare from time to time out of funds legally
available therefor. Dividends from the Company depend upon the receipt by the
Company of dividends from its subsidiaries because the Company has no source of
income other than dividends from its subsidiaries.
LIQUIDATION. In the event of liquidation, dissolution or winding up of the
Company, the holders of shares of Common Stock are entitled to share ratably in
all assets remaining after payment of all debts and other liabilities of the
Company.
OTHER CHARACTERISTICS. Holders of Common Stock do not have any preemptive,
conversion or other subscription rights with respect to any additional shares of
Common Stock which may be issued. Therefore, the Board of Directors may
authorize the issuance and sale of shares of capital stock of the Company
without first offering them to existing shareholders of the Company. The Common
Stock is not subject to any redemption or sinking fund provisions.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the Board of
Directors to issue from time to time one or more series of preferred stock with
such designations and preferences, relative, participating, optional and other
special rights and qualifications, limitations and restrictions thereon, as
permitted by law and as fixed from time to time by resolution of the Board of
Directors. Because of its broad discretion with respect to the creation and
issuance of any series of preferred stock without shareholder approval, the
Board of Directors could adversely affect the voting power of the holders of
common stock, and by issuing shares
17
of preferred stock with certain voting, conversion and/or redemption rights,
could discourage any attempt to obtain control of the Company in any transaction
not approved by the Board of Directors.
USE OF PROCEEDS
The Company does not know the number of shares of Common Stock that
ultimately will be sold under the Plan, or the prices thereof, but the Company
intends to use the net proceeds from the sale of Common stock offered pursuant
to the Plan for general corporate purposes, including increased lending and
investment.
LEGAL OPINIONS
The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Muldoon, Murphy & Faucette LLP, Washington, D.C.,
special securities counsel for the Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended June
30, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
INDEMNIFICATION
The Company's Certificate of Incorporation requires indemnification of
directors, officers, employees and agents of the Company to the fullest extent
permitted by Delaware law. Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended, may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in such Act and is therefore unenforceable.
18
PLAN PARTICIPANTS SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE COMPANY AND THE
BANK HAVE NOT AUTHORIZED ANYONE TO PROVIDE PLAN PARTICIPANTS WITH DIFFERENT
INFORMATION.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THE BANK SINCE ANY OF THE DATES AS OF WHICH
INFORMATION IS FURNISHED IN THIS PROSPECTUS OR SINCE THE DATE OF THIS
PROSPECTUS.
TABLE OF CONTENTS
Page
----
Available Information............................................. 1
Incorporation of Certain Information by Reference................. 1
Summary Plan Highlights........................................... 2
The Company....................................................... 4
Risk Factors...................................................... 4
FirstSpartan Financial Corp. Dividend Reinvestment Plan........... 7
Description of Capital Stock...................................... 17
Use of Proceeds................................................... 18
Legal Opinions.................................................... 18
Experts........................................................... 18
Indemnification................................................... 18
FIRSTSPARTAN FINANCIAL CORP.
COMMON STOCK
($0.01 PAR VALUE PER SHARE)
DIVIDEND REINVESTMENT PLAN
PROSPECTUS
JANUARY 11, 1999
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses are expected to be minimal and will be paid by the
Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XVI of the Certificate of Incorporation of FirstSpartan Financial
Corp. requires indemnification of directors, officers and employees to the
fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities:
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
II-1
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in subsections (a) and (b) of
this section. Such determination shall be made (1) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the shareholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her or incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a
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director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner he or she reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ITEM 16. EXHIBITS
5. Opinion of Muldoon, Murphy & Faucette LLP
23.1 Consent of Muldoon, Murphy & Faucette LLP (contained in its opinion)
23.2 Consent of Deloitte & Touche LLP
24. Power of attorney (contained in signature page)
99. Authorization form
ITEM 17. UNDERTAKINGS.
The undersigned hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Spartanburg, State of South Carolina, on the 31/st/
day of December, 1998.
FIRSTSPARTAN FINANCIAL CORP.
/s/ Billy L. Painter
----------------------------------------
Billy L. Painter
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of FirstSpartan Financial
Corp.("Corporation") do hereby severally constitute and appoint Billy L. Painter
true and lawful attorney and agent to do any and all things and acts in our
names in the capacities indicated below and to execute any and all instruments
for us and in our names in the capacities indicated below which said Billy L.
Painter may deem necessary or advisable to enable the Corporation to comply with
the Securities Act of 1933 in connection with the Registration Statement on Form
S-3 relating to the offering of the Corporation's Common Stock, including
specifically, but not limited to, power and authority to sign for us or any of
us in our names in the capacities indicated below the Registration Statement and
any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Billy L. Painter shall do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
By: /s/ Billy L. Painter Date: December 31, 1998
---------------------------------------
Billy L. Painter
President, Chief Executive Officer
and Director (Principal Executive Officer)
By: /s/ R. Lamar Simpson Date: December 31, 1998
---------------------------------------
R. Lamar Simpson
Treasurer, Secretary and Chief
Financial Officer (Principal Financial and
Accounting Officer)
By: /s/ Robert E. Odom Date: December 31, 1998
--------------------------------------
Robert E. Odom
Chairman of the Board
By: /s/ E. Lea Salter Date: December 31, 1998
-------------------------------------
E. Lea Salter
Director
By: /s/ David E. Tate Date: December 31, 1998
-------------------------------------
David E. Tate
Director
By: /s/ Robert L. Handell Date: December 31, 1998
-------------------------------------
Robert L. Handell
Director
By: /s/ E. L. Sanders Date: December 31, 1998
-------------------------------------
E. L. Sanders
Director
By: /s/ R. Wesley Hammond Date: December 31, 1998
-------------------------------------
R. Wesley Hammond
Director