UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RESOURCE BANKSHARES CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LETTERHEAD RESOURCE BANKSHARES CORPORATION]
April 27, 2001
Dear Fellow Shareholders:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders of
Resource Bankshares Corporation (the "Company") to be held on Thursday, May 24,
2001, at 9:30 a.m., at the Clarion Hotel, 4453 Bonney Road, Virginia Beach,
Virginia 23462. The accompanying Notice and Proxy Statement describe the items
of business to be considered at the Annual Meeting. Please read these documents
carefully.
Specifically, you will be asked to consider and approve three items of
business: (i) the election of two incumbent directors, each of whom will serve
a three (3) year term and until his successors are elected and qualified, (ii)
the adoption of the Resource Bankshares Corporation 2001 Stock Incentive Plan,
and (iii) the ratification of the appointment of Goodman & Company, L.L.P. as
independent auditors for the 2001 fiscal year. The Board of Directors
encourages you to read carefully the enclosed Proxy Statement and to VOTE FOR
all the matters to be considered at the Annual Meeting.
We hope you can attend the Annual Meeting. Whether or not you plan to attend,
please complete, sign, and date the enclosed Proxy card and return it promptly
in the enclosed envelope. Your vote is important regardless of the number of
shares you own. We look forward to seeing you at the Annual Meeting, and we
appreciate your continued loyalty and support.
Sincerely,
RESOURCE BANKSHARES CORPORATION
/s/ LAWRENCE N. SMITH
Lawrence N. Smith
President and Chief Executive Officer
RESOURCE BANKSHARES CORPORATION
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 24, 2001
To Our Shareholders:
The 2001 Annual Meeting of Shareholders of Resource Bankshares Corporation
(the "Company") will be held at the Clarion Hotel, 4453 Bonney Road, Virginia
Beach, Virginia 23462, on Thursday, May 24, 2001, at 9:30 a.m., for the
following purposes:
1. To elect a total of two (2) incumbent directors, each of whom will
serve a term of three (3) years and until their successors are elected and
qualified.
2. To adopt the Resource Bankshares Corporation 2001 Stock Incentive
Plan.
3. To consider and vote upon the ratification of the appointment of
Goodman & Company, L.L.P. as independent auditors for the 2001 fiscal year.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 3, 2001 will be
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof. The Board of Directors of the Company unanimously recommends that
shareholders vote FOR approval of each of the items indicated in 1., 2., and 3.
above.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR THROUGH YOUR PROXY.
By Order of the Board of Directors
/s/ Debra C. Dyckman
------------------------------
Debra C. Dyckman
Secretary of the Board
April 27, 2001
PROXY STATEMENT
This Proxy Statement and the enclosed proxy card ("Proxy") are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Resource Bankshares Corporation (the "Company") to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Clarion Hotel,
4453 Bonney Road, Virginia Beach, Virginia 23462, at 9:30 a.m., Eastern Time, on
Thursday, May 24, 2001, and at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Meeting.
Only shareholders of record at the close of business on April 3, 2001 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. This
Proxy is being mailed on or about April 27, 2001.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person. If your Proxy is properly signed,
received by the Company and not revoked by you, the shares to which it pertains
will be voted at the Annual Meeting in accordance with your instructions. If a
shareholder does not return a signed Proxy, his or her shares cannot be voted by
proxy.
SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by the Company. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodians, nominees and fiduciaries to send proxy materials to the beneficial
owners and to secure their voting instructions if necessary. The Company, upon
request, will reimburse them for their expenses in so doing. Officers and
regular employees of the Company may solicit Proxies personally, by telephone or
by telegram from some shareholders if Proxies are not received promptly, for
which no additional compensation will be paid.
VOTING SHARES AND VOTE REQUIRED
On the Record Date, the Company had 2,610,214 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote on each matter
presented at the Annual Meeting. Directors are elected by a plurality of votes
cast by shareholders at the Annual Meeting. A majority of votes cast is required
to adopt the 2001 Stock Incentive Plan and to ratify the appointment of
auditors. Abstentions, broker non-votes, and withheld votes will be counted for
purposes of determining whether a quorum exists for the transaction of business
at the Annual Meeting, but such votes will not be considered "votes cast" based
on the Company's understanding of state law requirements and the Company's
Articles of Incorporation and Bylaws.
All shareholder meeting proxies, ballots and tabulations that identify
individual shareholders are kept secret and no such document shall be available
for examination, nor shall the identity or the vote of any shareholder be
disclosed except as may be necessary to meet legal requirements and the laws of
Virginia. Votes will be counted and certified by the Proxy Committee of the
Board of Directors, whose members are Alfred Abiouness, Thomas Hunt, and
Lawrence Smith. The members of the Proxy Committee will also act as the
inspectors of elections at the Annual Meeting as required under Virginia law.
Unless specified otherwise, Proxies will be voted (i) FOR the election of
the two nominees to serve as Class A directors of the Company until the 2004
Annual Meeting and until their successors are duly elected and qualified, (ii)
FOR the adoption of the 2001 Stock Incentive Plan, and (iii) FOR the
ratification of the appointment of Goodman & Company, L.L.P. as independent
auditors for 2001. In the discretion of the Proxy holders, the Proxies will also
be voted for or against such other matters as may properly come before the
Annual Meeting. Management is not aware of any other matters to be presented for
action at the Annual Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 3, 2001 relating to
the beneficial ownership of the Company's Common Stock by (i) each of the
Company's directors, director-nominees and named executive officers who own
Common Stock and (ii) all of the Company's directors, director-nominees and
executive officers as a group. The named executive officers consist of those
individuals for whom compensation information is provided in the "Summary
Executive Compensation Table" appearing elsewhere in this Proxy Statement.
Except as otherwise set forth below, the Company is not aware of any person or
group of affiliated persons who owns more than 5% of the Common Stock of the
Company. All of the Company's directors, director-nominees and named executive
officers receive mail at the Company's principal executive offices at 3720
Virginia Beach Blvd., Virginia Beach, Virginia 23452.
Number of Shares Percent of
Name Beneficially Owned Outstanding Shares
---- ------------------ ------------------
Alfred E. Abiouness 74,846/(1)/ 2.83
T. A. Grell, Jr. 2,066 *
Thomas W. Hunt 60,828/(2)/ 2.33
Louis R. Jones 248,617/(3)/ 9.45
A. Russell Kirk 99,696/(4)/ 3.80
Lawrence N. Smith 145,302/(5)/ 5.45
Elizabeth A. Twohy 40,340/(6)/ 1.53
Debra C. Dyckman 45,199/(7)/ 1.72
Harvard R. Birdsong, II 1,100 *
Eleanor J. Whitehurst 17,172/(8)/ *
Directors and Executive
Officers as a Group
(10 Persons) 735,166 26.37
- ---------------------------
* Less than 1% ownership
(1) Includes options to purchase 30,166 shares that are currently exercisable.
(2) Includes 30,414 shares owned by Mr. Hunt's wife and 13,860 shares owned by
Mr. Hunt's children, for which Mr. Hunt shares voting and investment power.
Does not include 40,964 shares held jointly by Mr. Hunt's spouse and Alan
M. Voorhees as trustees for the benefit of Mr. Voorhees' grandchildren, for
which Mr. Hunt does not share voting or investment power.
(3) Includes options to purchase 20,166 shares that are currently exercisable.
2
(4) Includes options to purchase 13,500 shares that are currently exercisable.
(5) Includes options to purchase 58,266 shares that are currently exercisable.
Also includes 52,202 shares owned by the Smith Family Partnership for which
Mr. Smith shares voting and investment power and 10,500 shares owned by the
Smith Family Trust for which Mr. Smith has sole voting and investment
power.
(6) Includes options to purchase 20,166 shares that are currently exercisable.
Also includes 6,000 shares owned by Ms. Twohy's minor children.
(7) Includes options to purchase 21,066 shares that are currently exercisable.
Also includes 1,000 shares that are held jointly by Ms. Dyckman and her
mother.
(8) Includes options to purchase 14,400 shares that are currently exercisable
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be between
5 and 15. There are currently 7 directors serving on the Board. At the Company's
2000 Annual Meeting of Shareholders, shareholders approved an amendment to the
Company's Articles of Incorporation to create a classified Board of Directors.
As a result, the Company's Board of Directors is divided into three (3) classes,
Class A, Class B and Class C. The initial terms of the Class A directors elected
at the 2000 Annual Meeting expire at the Company's 2001 Annual Meeting. The
initial terms of the Class B directors elected at the 2000 Annual Meeting will
expire at the Company's 2002 Annual Meeting and the initial terms of the Class C
directors elected at the 2000 Annual Meeting will expire at the Company's 2003
Annual Meeting. Commencing with the 2001 Annual Meeting, directors will be
elected to serve for three year terms and until their successors are duly
elected and qualified.
The Board of Directors recommends that the two nominees to serve as Class A
directors, Louis Jones and Russell Kirk, be re-elected to serve as the Class A
directors until the 2004 Annual Meeting. Proxies received by the Company will be
voted for the election of both nominees unless marked to the contrary. A
shareholder who desires to withhold voting of the Proxy for one or both of the
nominees may so indicate on the Proxy. Both nominees are currently members of
the Board and both have consented to be named and have indicated their intent to
serve, if elected. If either nominee becomes unable to serve, an event which is
not anticipated, the Proxy will be voted for a substitute nominee to be
designated by the Board or the number of directors will be reduced.
The Company does not have a separate nominating committee. The functions
customarily attributable to such a committee are performed by the Board as a
whole. For information regarding the Company's bylaw provisions that govern
shareholder nominations of director candidates, see "Submission of Proposals and
Other Matters Related to 2002 Annual Meeting" elsewhere in this Proxy Statement.
Names of Directors, Director-Nominees and Committee Memberships
The following table and accompanying footnotes set forth the names, ages
and date of each director's and director-nominee's first election to the Board
and also provide information on Board committees:
Name Age Director Since/(1)/
---- --- -------------------
Alfred E. Abiouness(A)(B)(C)(D) 69 1988
T. A. Grell, Jr. (A) 52 2000
Thomas W. Hunt(A)(B)(C)(D) 45 1997
Louis R. Jones(A)(B)(D) 65 1993
3
A. Russell Kirk(A)(B)(D) 53 1992
Lawrence N. Smith(A)(C) 63 1992
Elizabeth A. Twohy(A)(B)(D) 48 1993
____________________
(1) At the 1998 Annual Meeting of Resource Bank (the "Bank"), the shareholders
of the Bank approved a Plan of Reorganization pursuant to which each share
of Bank Common Stock was exchanged for two shares of the Company's Common
Stock and the Bank became a wholly owned banking subsidiary of the Company
("Plan of Reorganization"). The effective date of the Plan of
Reorganization was July 1, 1998. Prior to the effective date of the Plan of
Reorganization, all of the directors and director-nominees except Mr. Grell
served on the Board of Directors of the Bank. Since the effective date of
the Plan of Reorganization, the directors and director-nominees except Mr.
Grell have served on the Company's Board of Directors and have continued to
serve on the Bank's Board of Directors. All share figures in this Proxy
Statement give effect to the 2:1 share exchange effectuated pursuant to the
Plan of Reorganization.
(A) Member of the Credit Risk Committee of the Bank. The Credit Risk Committee
reviews all loan activity and policy of the Bank, acts upon large loan
requests presented to the Bank, and monitors outstanding loans and
collection efforts. Also member of the Market Risk and Liquidity Risk
Committees of the Bank. Each of these three committees held 12 meetings in
2000.
(B) Member of the Audit Committee. The Audit Committee is empowered by the
Board of Directors to, among other things, recommend the firm to be
employed by the Company as its independent auditor and to consult with such
auditor regarding audits and the adequacy of internal accounting controls.
The Audit Committee held two meetings in 2000. See "- Audit Committee
Report" below.
(C) Member of the Proxy Committee, which collects and accounts for all proxies
and exercises proxy authority at all shareholder meetings. The Proxy
Committee held one meeting in 2000.
(D) Member of the Compensation Committee, which recommends to the Board the
salaries for officers and the compensation to be paid directors, and
determines the persons to whom stock options are granted, the number of
shares subject to option, and the appropriate vesting schedule. The
Compensation Committee held one meeting in 2000.
Audit Committee Report
The Audit Committee of the Board of Directors is composed of five (5) non-
employee directors. Each of these directors is an "independent director" as that
term is defined under the NASDAQ Stock Market's listing standards. To be an
independent director under this definition, a director may not be an officer or
employee of the Company or have any other relationship with the Company that
interferes with the exercise of independent judgment. The Audit Committee held
two meetings during 2000. The responsibilities of the Audit Committee are set
forth in its Charter, which will be reviewed and amended periodically as
appropriate. A copy of the Company's Audit Committee Charter is attached to this
Proxy Statement as Exhibit A.
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility of
the financial statements and the reporting process, including the system of
internal controls. In this context, the Committee has met and held discussions
with management and the independent auditors. Management represented to the
Committee that the Company's financial statements were prepared in
4
accordance with generally accepted accounting principles, and the Committee has
reviewed and discussed the financial statements with management and the
independent auditors. The Committee discussed with the independent auditors
matters required to be discussed by Statement of Auditing Standards No. 61
(Communication with Audit Committees). In addition, the Committee has discussed
with the independent auditors the auditors' independence from the Company and
its management, including the matters in the written disclosures required by the
Independence Standards Board Standards No. 1 (Independence Discussions with
Audit Committees). The Committee discussed with the Company's internal and
independent auditors the overall scope and specific plans for their respective
audits.
The Audit Committee meets with the internal and independent auditors, with
and without management present, to discuss the results of their examinations,
the evaluations of the Company's internal controls, and the overall quality of
the Company's financial reporting. The meetings also are designed to facilitate
any private communications with the Committee desired by the internal auditors
or independent accountants. In reliance on the reviews and discussions referred
to above, the Committee recommended to the Board of Directors, and the Board has
approved, that the audited financial statements of the Company be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000, for filing with the Securities and Exchange Commission. The Committee and
the Board also have recommended, subject to shareholder approval, the selection
of the Company's independent auditors, Goodman & Company, L.L.P.
Background and Experience
The following information relates to the business background of the
Company's directors and director-nominees. There are no family relationships
among any of the directors or director-nominees nor is there any arrangement or
understanding between any directors or director-nominees and any other person
pursuant to which the director or director-nominee was selected.
Nominees for Class A Directors Whose Terms Will Expire in 2004
Mr. Jones has been President of Hollomon-Brown Funeral Home, Inc. since
1954. Mr. Jones is also Chairman of the Board of Snelling Funeral Homes, Inc.
and is President of Allstate Leasing Corporation, Memorial Services Planning
Corporation, Advance Charge Plan, Inc., Tidewater Cemetery Corporation and Lu-El
Realty, Inc. Mr. Jones has also been active in civic affairs and serves on the
City Council of Virginia Beach.
Mr. Kirk has been President of Armada/Hoffler Holding Company (a real
estate land development, construction and properties management firm) since 1983
and has been Co-CEO of Goodman Segar Hogan Hoffler since 1993. Mr. Kirk is also
Chairman and Commissioner of the Virginia Port Authority, Norfolk, Virginia.
Class B Directors Whose Terms Will Expire in 2002
Mr. Abiouness has been President of Abiouness, Cross & Bradshaw, Inc., a
Norfolk structural engineering and architectural consulting firm, since 1974.
Mr. Abiouness is a past Commissioner of the Norfolk Redevelopment and Housing
Authority.
5
Ms. Twohy is President of Capital Concrete, Inc. of Norfolk, Virginia, a
ready-mixed concrete manufacturer, and has been employed by the Company since
1975. Ms. Twohy is on the Board of Directors of Tidewater Builders Association
and is past president of the Virginia Ready-Mixed Concrete Association.
Class C Directors Whose Terms Will Expire in 2003
Mr. Grell has been President and Chief Operating Officer of the Bank and
Executive Vice President of the Company since December 19, 1998. Mr. Grell has
also served as a director of the Company since October 2000. From 1984 until
joining the Company, he was a senior officer at Central Fidelity Bank, which was
acquired by Wachovia Bank. Mr. Grell has 29 years experience in the banking
industry and is active in civic affairs.
Mr. Hunt is the Vice President of Summit Enterprises, Inc. of McLean,
Virginia, an investment management company focused primarily on venture capital
opportunities, and he has been employed by Summitt Enterprises since 1984. He is
the former Chairman of the Board of Directors of Eastern American Bank, FSB,
which the Bank acquired in 1997. Mr. Hunt is a director of Bryce Office Systems,
Inc., Intelisys Electronic Commerce and Digital Access Control. Mr. Hunt
currently serves as the Chairman of the Board of the Company and the Bank.
Mr. Smith joined the Bank in December 1992 and served as its President and
Chief Executive Officer until the implementation of the Plan of Reorganization,
after which he was appointed President and Chief Executive Officer of the
Company. Mr. Smith continues to serve as the Chief Executive Officer of the
Bank. Mr. Smith has over 19 years of experience with United Virginia
Bank/Seaboard National and United Virginia Bank - Eastern Region, predecessor of
Crestar Bank - Eastern Region ("Crestar"). From 1973 until May 1983, Mr. Smith
was President of Crestar and also served on major committees of the holding
company, United Virginia Bankshares, Inc., predecessor of Crestar Bankshares,
Inc. He retired from Crestar in May 1983. Mr. Smith formed Essex Financial
Group, Inc., a financial holding company, in May 1983. Mr. Smith serves on the
board of directors of Heilig-Meyers Corporation, a national furniture retailer,
Empire Machinery and Supply Corporation, a Norfolk based supplier of industrial
products, and he has been active in civic affairs for the past 30 years.
Board Meetings
The business of the Company is managed under the direction of the Board.
All of the members of the Company's Board also serve on the Bank's Board of
Directors. The Company's Board and the Bank's Board each held 12 meetings in
2000. During 2000, each member of the Company's and Bank's Board participated in
at least 75% of all meetings of the Boards and at least 75% of all applicable
committee meetings. Commencing in 2001, the Company's Board will meet quarterly
and the Bank's Board will continue to meet monthly.
EXECUTIVE COMPENSATION
Summary Executive Compensation Table
The following table presents an overview of executive compensation paid by
the Company and its subsidiaries during 2000, 1999 and 1998 to Lawrence N.
Smith, President and Chief Executive Officer, and to the other executive
officers of the Company whose combined
6
salary and bonus exceeded $100,000 in 2000 (collectively, the "Named Executive
Officers"). Compensation information includes compensation paid by the Bank to
the Named Executive Officers in their capacity as executive officers of the
Bank.
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying All Other
Name and principal position Year Salary($) Bonus($) Options(#) Compensation($)/(1)/
- --------------------------- ---- --------- -------- ---------- --------------------
Lawrence N. Smith, President and CEO 2000 $275,625 $220,000 20,000 $5,332
of Resource Bankshares; CEO of Resource 1999 262,500 -- -- 5,078
Bank 1998 250,000 200,000 -- 5,000
T. A. Grell, Jr., Executive Vice President of 2000 210,000 186,000 5,000 5,370
Resource Bankshares; President of 1999 200,000 46,900 15,000 5,100
Resource Bank/(2)/ 1998 12,179 -- -- 377
Harvard R. Birdsong, II, Senior Vice 2000 115,763 60,000 2,500 2,131
President, Chief Credit Officer - Resource 1999 110,250 20,000 -- 2,034
Bank 1998 90,000 45,000 -- 2,021
Debra C. Dyckman, Senior Vice President 2000 106,050 60,000 2,500 2,108
of Operations 1999 101,000 25,000 -- 2,014
1998 92,900 45,000 -- 2,053
Eleanor J. Whitehurst, Senior Vice President 2000 74,550 48,000 2,500 2,112
and Chief Financial Officer 1999 71,000 -- -- 2,029
1998 67,000 30,000 -- 2,070
_________________
/(1)/ Consists of Company contributions to 401(k) Plan.
/(2)/ Mr. Grell became employed by Resource Bank effective December 9, 1998.
Option Grants in Last Fiscal Year
The table below sets forth information regarding stock option grants to
Lawrence N. Smith and the other Named Executive Officers during the fiscal year
ended December 31, 2000.
Number of Percent of Total
Securities Options Granted to
Underlying Employees in Grant Date
Name Options Fiscal Year Exercise Price Expiration Date Present Value/(1)/
---- ------- ----------- -------------- --------------- ------------------
Lawrence N. Smith 10,000 12.16 $ 9.12 1/3/10 $32,000
10,000 12.16 $18.50 1/3/10 $18,700
T. A. Grell 5,000 6.08 $ 9.12 1/3/10 $16,000
Harvard R. Birdsong 2,500 3.04 $ 9.12 1/3/10 $ 8,000
Debra C. Dyckman 2,500 3.04 $ 9.12 1/3/10 $ 8,000
Eleanor J. Whitehurst 2,500 3.04 $ 9.12 1/3/10 $ 8,000
____________
/(1)/ The fair value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rate of 5.5%, dividend yield of 4%, volatility
factor of the expected market price of the Company's common stock of 0.43, and a
weighted-average expected life of the options of 7.0 years. The actual value, if
any, that may be realized will depend on the excess of the stock price over the
exercise price on the date the option is exercised, so there can be no assurance
that the value realized will be at or near the value estimated by the Black-
Scholes model.
7
Option Exercises and Fiscal Year-End Options Table
The table below sets forth information regarding (i) the exercise of
stock options by the Named Executive Officers in 2000 and (ii) exercisable and
unexercisable stock options held as of December 31, 2000 by the Named Executive
Officers.
Number of Securities
Underlying Unexercised Options Value of Unexercised In-The-Money
At Fiscal Year-End (#) Options at Fiscal Year-End ($)/(1)/
---------------------------- -----------------------------------
Shares
Acquired
Upon Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Lawrence N. Smith 0 0 58,266 10,000 294,691/(2)/ 14,400/(3)/
T. A. Grell, Jr. 0 0 -- 20,000 -- 7,200/(4)/
Harvard Birdsong 0 0 -- 17,500 -- 3,600/(5)/
Debra C. Dyckman 0 0 21,065 2,500 112,451/(6)/ 3,600/(7)/
Eleanor J. Whitehurst 2,000 16,000/(8)/ 14,400 2,500 62,064/(9)/ 3,600/(10)/
______
/(1)/ The closing price of the Company's Common Stock on Nasdaq ("Closing
Price") on December 31, 2000 was $10.56 per share. Under SEC rules, an
option was "in the money" on December 31, 2000 if the exercise price per
share was less than $10.56.
/(2)/ 26,666 of the options are exercisable at $3.00 per share and 21,600 of
the options are exercisable at $6.25 per share. 10,000 of the options are
exercisable at $18.50 per share and therefore were not in the money on
December 31, 2000.
/(3)/ These 10,000 options are exercisable at $9.12 per share
/(4)/ 5,000 of the options are exercisable at $9.12 per share. 14,571 of the
options are exercisable at $17.87 per share and 429 of the options are
exercisable at $21.75 per share and therefore were not in the money on
December 31, 2000.
/(5)/ 2,500 of the options are exercisable at $9.12 per share. 15,000 of these
options are exercisable at $15.75 per share, and therefore were not in
the money on December 31, 2000.
/(6)/ 6,665 of the options are exercisable at $3.00 per share and 14,400 of the
options are exercisable at $6.25 per share.
/(7)/ These options are exercisable at 9.12 per share.
/(8)/ The exercise price of these options was $3.00 per share and the Closing
Price on December 21, 2000, the date of exercise, was $11.00 per share.
/(9)/ The exercise price of these options is $6.25 per share.
/(10)/ The exercise price of these options is $9.12 per share.
Retirement Savings Plan
Mr. Smith and other eligible employees are eligible to participate in the
Bank's Retirement Savings Plan ("Plan"). The Plan is a combined 401(k) profit
sharing, stock bonus and employee stock ownership plan, which means that
contributions may be made by the Bank to the Plan in either cash or Company
Common Stock and are derived from current or accumulated profits. The Plan's
assets may be invested in shares of Company Common Stock purchased from third
parties on the open market. The Plan's 401(k) provisions permit employees to
contribute to the Plan through voluntary payroll savings on a pretax basis.
These contributions are matched by the Bank in an amount equal to 50% of payroll
savings contributions made by employees, up to 6% of an employee's total
compensation.
Retirement Benefits and Key Man Insurance Policies
During 1996, the Board of Directors of the Bank approved a plan for the
payment of retirement benefits to certain key employees and entered into limited
binding agreements with these key employees. Under the terms of the plan, the
Bank may fund the liabilities associated with this plan with life insurance
contracts. In connection with funding the projected retirement
8
benefits, the Bank paid premiums on applicable life insurance contracts in the
amount of approximately $646,445 during 2000, and may continue to pay, in its
sole discretion, the same annual amount of insurance premiums over the next
three years. The Bank owns the insurance polices and, under the plan, upon the
death of the individual officer the Bank will recoup all the premiums advanced.
Stock Option Plans
The Company currently has three stock option plans under which its
directors and officers have been granted options. These plans were initially
adopted by the Bank and were converted into plans of the Company when the Plan
of Reorganization became effective. The 1993 Long-Term Incentive Plan provided
for the issuance of options to purchase shares of Company Common Stock to key
employees of the Company. The 1994 Long-Term Director Incentive Plan provided
for the issuance of options to purchase shares of Company Common Stock to
directors as specified in the Plan.
The 1996 Long-Term Incentive Plan ("Incentive Plan"), as amended,
originally provided for the issuance of options to purchase 87,500 shares of
Company Common Stock to directors, 82,500 of which options have been granted,
and permitted the grant of options to purchase up to 160,000 shares of Company
Common Stock to key employees of the Company, all of which options have been
granted. At the Company's 1999 Annual Meeting, the Company's shareholders
approved an amended and restated Incentive Plan that, in addition to other
amendments, authorized the issuance to directors and key employees of options to
purchase an additional 150,000 shares of Common Stock. Under the terms of the
Incentive Plan, the Board has the discretion to allocate these 150,000 shares
among option awards to key employees and directors. Since the Incentive Plan was
amended to authorize the issuance of 150,000 additional option shares, a total
of 142,679 options have been granted to key employees pursuant to the Incentive
Plan.
At the Annual Meeting, shareholders will be asked to adopt the Company's
proposed 2001 Stock Incentive Plan, which would authorize the issuance of
additional options and other stock based awards to directors and key employees.
Compensation of Directors
Directors who are employees of the Company or the Bank do not receive any
extra compensation for attendance at Board or Committee meetings of the Company
or the Bank. The members of the Company's Board of Directors and Bank's Board
of Directors are currently the same and directors do not receive separate
compensation for serving on the Company's Board of Directors. During 2000, non-
employee directors of the Bank received compensation for their service on the
Bank's Board of Directors in the amount of $1,250 for each meeting attended. In
addition, an annual retainer of $12,000 was paid to the Chairman of the Bank's
Board and an annual retainer of $10,000 was paid to the Bank's other non-
employee directors. Non-employee directors also received $500 for each Audit
Committee and Compensation Committee meeting attended.
9
Executive Officer Employment Agreements
The Bank has entered into an Employment Agreement with Lawrence N. Smith
dated January 1, 1999, pursuant to which Mr. Smith serves as the President and
Chief Executive Officer of the Company and Chief Executive Officer of the Bank
("Smith Employment Agreement"). The initial term of the Smith Employment
Agreement is 5 years. Under the terms of the Smith Employment Agreement, Mr.
Smith's initial annual base salary was required to be at least $262,500. In
2000, Mr. Smith's annual salary was $275,625. Mr. Smith's current annual salary
under the Smith Employment Agreement is $325,000. On an ongoing basis, the
Bank's Board of Directors will determine Mr. Smith's annual salary in a manner
commensurate with his position and performance. Mr. Smith is also eligible to
participate in benefit, disability and retirement plans and in bonus programs as
determined by the Company's and Bank's Boards of Directors from time to time. In
January 2000, Mr. Smith was granted options to purchase 20,000 shares pursuant
to the Incentive Plan, 10,000 of which are exercisable at $9.12 per share and
10,000 of which are exercisable at $18.50 per share.
If the Bank terminates Mr. Smith's employment "without cause", the Bank is
required to pay Mr. Smith his regular base salary for the lesser of (i) the
remainder of the initial five year term or (ii) a three year period following
termination; provided, however, that no such payments would be payable after the
date Mr. Smith violated the non-competition covenants set forth in the Smith
Employment Agreement. Upon a "change of control" of the Company in which Mr.
Smith is not given reasonably equivalent duties, responsibilities and
compensation, Mr. Smith's employment with the Bank may be terminated or he may
resign and in either case Mr. Smith will be entitled to receive a one time
payment of 2.99 times the average of his regular base salary for the three year
period prior to the change of control (or, if he has been employed less than
three years at the time of the change of control, a one time payment of 2.99
times his regular base salary then in effect.)
In addition to the Smith Employment Agreement, the Bank has entered into an
Employment Agreement with T.A. Grell, Jr. dated January 1, 1999 ("Grell
Employment Agreement"), pursuant to which Mr. Grell serves as President of the
Bank. The Grell Employment Agreement has substantially the same terms as the
Smith Employment Agreement, except that Mr. Grell's annual base salary in 2000
was $210,000. Mr. Grell's current annual salary under the Grell Employment
Agreement is $220,500. Pursuant to the Incentive Plan, Mr. Grell was also
granted options in 2000 to purchase 5,000 shares exercisable at $9.12 per share.
The Bank has also entered into written employment agreements with its other
executive officers, including Debra C. Dyckman, Harvard Birdsong and Eleanor J.
Whitehurst. These employment agreements are substantially similar to the Grell
Employment Agreement, except that (i) initial annual base salaries differ from
employee to employee and (ii) severance payments upon termination of employment
without cause generally would be made for the lesser of the remainder of the
initial term of the agreements or eighteen months following termination of
employment. The current annual salary under Ms. Dyckman's employment agreement
is $111,500, the current annual salary under Mr. Birdsong's employment agreement
is $121,500 and the current annual salary under Ms. Whitehurst's employment
agreement is $78,500. Pursuant to the Incentive Plan, each of these executive
officers was also granted options in 2000 to purchase 2,500 shares exercisable
at $9.12 per share.
10
The employment agreements of the Bank's retail mortgage division executive
officers (i) have terms of five years, (ii) provide for certain severance
payments upon termination without cause, and (iii) provide for change of control
payments of 2.99 times base salary.
Compensation Committee Interlocks and Insider Participation
No member of the Company's Compensation Committee was an officer or
employee of the Company during 2000. During 2000, Lawrence Smith served on the
Compensation Committee of Heilig-Meyers Company, a public company, but no
directors, officers or other employees of Heilig-Meyers other than Mr. Smith
served (or currently serve) on the Company's or the Bank's Boards of Directors
or any committees thereof. In addition, prior to his death in October 2000, John
Bernhardt served on the Company's Board of Directors and also served on the
Compensation Committee of Dominion Resources, Inc., also a public company. No
directors, officers or other employees of Dominion Resources other than Mr.
Bernhardt served on the Company's or the Bank's Boards of Directors or any
committees thereof during 2000. During 2000, no executive officer of the Company
other than Mr. Smith served as a member of the Compensation Committee of another
entity, nor did any executive officer of the Company serve as a director of
another entity, one of whose executive officers served on the Company's
Compensation Committee. Two members of the Compensation Committee, Alfred
Abiouness and Russell Kirk, have outstanding loans with the Bank. Each of these
loans was made in the ordinary course of business on substantially the same
terms, including interest rates, collateral and repayment terms, as those
prevailing at the time for comparable transactions with unrelated parties and
did not involve more than the normal risk of collectibility or present other
unfavorable features. See " - Certain Relationships and Related Transactions"
below.
Compensation Committee Report Concerning Compensation of Certain Executive
Officers
This report describes the Company's executive officer compensation
strategy, the components of the compensation program and the manner in which the
2000 compensation determinations were made for the Company's President and Chief
Executive Officer, Lawrence N. Smith, and the Company's and Bank's other
executive officers (collectively "Executive Officers").
In addition to the information set forth above under "Executive
Compensation," the Compensation Committee is required to provide shareholders a
report explaining the rationale and considerations that led to the fundamental
executive compensation decisions affecting the Company's Executive Officers. In
fulfillment of this requirement, the Compensation Committee, at the direction of
the Company's Board of Directors, has prepared the following report for
inclusion in this Proxy Statement. None of the members of the Compensation
Committee are executive officers or employees of the Company.
Compensation Philosophy
The compensation of the Company's Executive Officers is designed to
attract, retain, motivate and reward qualified, dedicated executives, and to
directly link compensation with (i) the Executive Officer's previous and
anticipated performance, (ii) the contributions and responsibilities of the
Executive Officer to the Company and (iii) the Company's profitability. None of
these three factors is given more relative consideration than any other. The
principal components of an Executive Officer's compensation package in 2000 were
(i) a base salary at a
11
stated annual rate, together with certain other benefits as may be provided from
time to time and (ii) discretionary cash bonuses. See "-Bonus Program" below. In
addition, stock option awards have been made in the past, and will continue to
be made in the future, to the Company's Executive Officers pursuant to the
Company's various stock option and stock incentive plans. In 2000, the
Compensation Committee granted options to purchase an aggregate of 82,250 shares
of Common Stock to key employees pursuant to the Incentive Plan.
Employment Agreements
The Company and the Bank have entered into Employment Agreements with
certain Executive Officers. The Compensation Committee believes that written
employment agreements are necessary to attract and retain a quality management
team and are consistent with the Company's compensation philosophy. To
strengthen the Company's and Bank's ability to retain quality management,
numerous written employment agreements were entered into between the Bank and
certain Executive Officers effective January 1, 1999. The principal terms of
these employment agreements are described under "- Executive Officer Employment
Agreements" above.
Bonus Program
The Bank has historically awarded annual cash bonuses to Executive Officers
based upon individual performance and financial performance of the Company and
the Bank. 2000 bonus awards to Executive Officers are reflected in the "Summary
Executive Compensation Table" above. The Compensation Committee expects that
such bonuses will continue to be awarded in the future.
1996 Long-Term Incentive Plan
The Board and the Compensation Committee strive to compensate key employees
of the Company and the Bank in a manner that aligns closely the interests of
such key employees with the interests of the Company's shareholders. In
furtherance of this goal, in 1996 the Board adopted the 1996 Long-Term Incentive
Plan ("Incentive Plan"), which was approved by shareholders. The purpose of the
Incentive Plan is to support the business goals of the Company and to attract,
retain and motivate management officials of high caliber by providing incentives
that will, through the award of options to acquire the Company's Common Stock,
associate more closely the interests of Executive Officers and key employees of
the Company and the Bank with the interests of the Company's shareholders. In
2000, the Compensation Committee granted options to purchase an aggregate of
32,500 shares of Common Stock to Executive Officers pursuant to the Incentive
Plan.
As noted elsewhere in this Proxy Statement, shareholders will vote on the
Company's proposed 2001 Stock Incentive Plan at the Annual Meeting. If approved
by shareholders at the Annual Meeting, this Plan will govern future stock option
awards to Executive Officers and other key employees. See "Proposal 2.
Approval of 2001 Stock Incentive Plan" below.
Limitation on Deductibility of Certain Compensation for Federal Income Tax
Purposes
Section 162(m) of the Internal Revenue Code ("162(m)") precludes the
Company from taking a deduction for compensation in excess of $1 million for the
Chief Executive Officer or
12
certain of its other highest paid officers. Certain performance based
compensation, however, is specifically exempt from the deduction limit. The
Compensation Committee does not believe that 162(m) will impact the Company in
2001 because it is not anticipated that compensation in excess of $1 million
will be paid to any employee of the Company.
. Alfred E. Abiouness
. Thomas W. Hunt
. Louis R. Jones
. A. Russell Kirk
. Elizabeth A. Twohy
THE PRECEDING "COMPENSATION COMMITTEE REPORT CONCERNING COMPENSATION OF
CERTAIN EXECUTIVE OFFICERS," AND THE STOCK PERFORMANCE GRAPH BELOW, SHALL NOT BE
DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, OR INCORPORATED BY REFERENCE IN ANY DOCUMENTS
SO FILED.
13
Company Stock Price Performance
The following graph shows a comparison of cumulative total shareholder
returns for (i) the Company, (ii) the S & P 500 Stock Index, and (iii) the SNL
Southeast Bank Index for the period beginning December 31, 1995 and ending
December 31, 2000. The trading history of the Company's Common Stock set forth
below for periods prior to the implementation of the Plan of Reorganization
reflects performance of the Bank's Common Stock on NASDAQ. Effective July 23,
1998, the Company's Common Stock began trading on the American Stock Exchange
("AMEX") instead of the NASDAQ National Market System. The Company's Common
Stock again began trading on NASDAQ's National Market System on December 15,
2000. The total shareholder return assumes $100 invested at the beginning of the
period in the Company's Common Stock, the S & P 500 Stock Index, and the SNL
Southeast Bank Index, including reinvestment of dividends.
Comparison of Cumulative Total Return Among The Company,
S & P 500 Stock Index,
and SNL Southeast Bank Index
[GRAPH APPEARS HERE]
Return Return Return Return Return
December 31, 1995 December 1996 December 1997 December 1998 December 1999 December 2000
Resource Bankshares Corporation 100.00 167.24 397.07 380.50 176.29 225.68
S & P 500 Stock Index 100.00 122.86 163.86 210.64 254.97 231.74
SNL Southeast Bank Index 100.00 137.27 208.09 221.53 174.32 175.04
14
Certain Relationships and Related Transactions
The directors and executive officers of the Company and the Bank, and their
family members and certain business organizations and individuals associated
with each of them, have been customers of the Bank, have had normal banking
transactions, including loans, with the Bank, and are expected to continue to do
so in the future. As of December 31, 2000, the Bank had aggregate direct and
indirect loans to the directors and executive officers of the Company and the
Bank totaling approximately $7.97 million, which represented approximately 40.5%
of the Company's shareholders' equity as of that date. Each of these
transactions was made in the ordinary course of business on substantially the
same terms, including interest rates, collateral and repayment terms, as those
prevailing at the time for comparable transactions with unrelated parties and
did not involve more than the normal risk of collectibility or present other
unfavorable features.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, officers and persons who beneficially own more than 10% of a
registered class of equity securities of the Company to file initial reports of
ownership (Forms 3) and reports of changes in beneficial ownership (Forms 4 and
5) with the Securities and Exchange Commission ("SEC") and Nasdaq. Such persons
are also required under the rules and regulations promulgated by the SEC to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company, the
Company believes that all reporting requirements under Section 16(a) for 2000
were met in a timely manner by its directors, officers and greater than 10%
beneficial owners, except that Alfred Abiouness purchased 2,000 shares of the
Company's Common Stock in September 2000 and 3,000 shares in October 2000 and
did not file a Form 4 for either purchase. Mr. Abiouness reported both of these
transactions on a Form 5 filed in February 2001.
PROPOSAL 2. APPROVAL OF THE
RESOURCE BANKSHARES CORPORATION
2001 STOCK INCENTIVE PLAN
The Company's shareholders are being asked to approve the Resource
Bankshares Corporation 2001 Stock Incentive Plan (the "Incentive Plan") that was
adopted by the Board of Directors of the Company on April 26, 2001, subject to
ratification by the Company's shareholders at the Annual Meeting.
The following description is a summary of the key features of the Incentive
Plan and is qualified in its entirety by reference to the Incentive Plan, a copy
of which is attached to this Proxy Statement as Exhibit B.
---------
Purpose and Eligible Participants
The purpose of the Incentive Plan is to promote the interests of the
Company and its shareholders by enabling the Company to recruit, reward and
retain valued employees and directors. The Company believes that making awards
under the Incentive Plan in the form of stock options or direct grants of stock,
which may include stock appreciation rights, restricted stock, deferred stock
and other stock based awards, will further these objectives by providing the
15
participants in the Incentive Plan with a proprietary interest in the growth,
performance and long term success of the Company. All of the directors and
employees of the Company, the Bank and the Company's other direct and indirect
subsidiaries are eligible to receive awards under the Incentive Plan.
Shares Available
The number of shares of the Company's Common Stock that may be subject to
award under the Incentive Plan may not exceed 100,000 shares. In the event of a
change in the outstanding shares of the Common Stock by reason of any
recapitalization, reclassification, stock split, reverse stock split,
combination of shares, exchange of shares, stock dividend, or other distribution
payable in capital stock, or if some other increase or decrease in the Common
Stock occurs without the Company receiving consideration, the number of shares
subject to the Incentive Plan and the number of shares and exercise prices
underlying previous awards will be adjusted appropriately.
The Common Stock subject to the Incentive Plan will come from authorized
but unissued shares. If any award under the Incentive Plan expires, is
canceled, or terminates for any reason, the shares of Common Stock available
under that award will again be available for the granting of new awards.
Administration of the Incentive Plan
The Incentive Plan will be administered and interpreted by the Compensation
Committee ("Compensation Committee") of the Board of Directors of the Company
(the "Board"), unless the Board chooses to delegate administration duties to
another committee. Other than the granting of awards, the Compensation
Committee may delegate its administrative duties to officers or other employees
of the Company.
The Compensation Committee, as administrator of the Incentive Plan, will
have full and final authority in its discretion to: (i) operate and administer
the Incentive Plan, (ii) interpret the Incentive Plan, (iii) exercise such
powers and authority as it may find necessary or appropriate to carry out its
functions as administrator of the Incentive Plan, (iv) determine the
participants who will receive awards under the Incentive Plan, (v) determine the
terms and restrictions of any awards under the Incentive Plan, (vi) determine
the schedule for excercisability or nonforfietability of any award under the
Incentive Plan, (vii) determine the time and conditions for expiration of any
award under the Incentive Plan, (viii) determine the form of payment due upon
exercise of any award under the Incentive Plan, (ix) amend, waive, or extend any
provision or limitation of any award under the Incentive Plan and (x) grant
substitute awards under terms and conditions that vary from those the Incentive
Plan otherwise requires to individuals who become employees as a result of the
Company's acquiring or merging with the individual's employer or acquiring its
assets. The Compensation Committee's determinations as administrator of the
Incentive Plan need not be uniform and need not consider whether possible
participants are similarly situated.
Forms and Provisions of Awards
The Compensation Committee may grant awards under the Incentive Plan to
employees in the form of nonqualified stock options ("NQSOs") or "incentive
stock options" ("ISOs")
16
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. Stock options granted to directors that are not employees must be
NQSOs. The Compensation Committee may also make direct grants of stock under the
Incentive Plan, which may include stock appreciation rights, restricted stock,
deferred stock and other stock based awards. Payment for Common Stock acquired
through exercise of an award must be made by cash unless the Compensation
Committee consents to another form of payment (which could include Common Stock,
awards under the Incentive Plan or other property).
Exercise Price of Stock Options
The exercise price ("Exercise Price") under each stock option award will be
determined by the Compensation Committee, as administrator, but in no event can
the per share Exercise Price be less than 100% of the fair market value ("Fair
Market Value") of a share of Common Stock on the day of the award (110% in the
case of grants of ISOs to individuals who own more than 10% of the Company's
Common Stock).
Under the Incentive Plan, Fair Market Value on the day of any given award
shall be (i) the closing sale price if the Common Stock is traded on a national
securities exchange; (ii) the closing sale price as reported by Nasdaq if the
Common Stock is traded on the Nasdaq National Market or Small Cap Market (or the
average of the closing bid and asked prices as reported by Nasdaq if no closing
sale price information is available), (iii) the average of the closing bid and
asked prices as reported by any other commercial services if there is no closing
sale, bid or asked price information reported by Nasdaq; or (iv) if there is no
public market for the Common Stock, the value determined by the Company's Board
in good faith. The Company's Common Stock currently trades on the Nasdaq
National Market. The closing sale price of the Common Stock on April 18, 2001
was $14.40 per share
Vesting
The Compensation Committee, as administrator, will determine the times and
conditions for the exercise or purchase of awards granted pursuant to the
Incentive Plan and may accelerate the time at which a participant may exercise
any portion of an award or at which restrictions on stock grants lapse. For
stock grant awards, "exercise" refers to acceptance of an award or lapse of
restrictions, as appropriate in context.
Expiration and Termination
No award granted under the Incentive Plan may be exercised more than ten
years after its date of grant (five years in the case of ISOs held by owners of
more than 10% of the Common Stock). Unless the award agreement covering an
award provides otherwise, awards shall terminate and become non-exercisable upon
a participant's termination of employment, except in the event of death,
------
disability or retirement. In the event the participant's employment with the
Company ceases because of the participant's death, the award shall terminate and
become non-exercisable twelve months after the participant's death. In the
event the participant becomes disabled (as such term is defined in the Incentive
Plan), the option award shall terminate and become non-exercisable on the
earlier of one year from the participant's termination of employment or 30 days
after the participant no longer has a disability. In the event of a
participant's retirement (as the term retirement is defined in the Incentive
Plan), the award shall terminate and become non-exercisable 90 days after the
participant's retirement.
17
With respect to directors, if the Compensation Committee determines that a
director's service on the Board terminates for cause (as such term is defined in
the Incentive Plan), any unexercised awards held by the director shall
immediately terminate.
Unless the Compensation Committee otherwise approves in advance in writing
in connection with any permitted transfer or assignment of an award, during a
participant's lifetime only the participant or his duly appointed guardian or
personal representative may exercise an award under the Incentive Plan. After a
participant's death, his personal representative or any other person authorized
under a will or under the law of descent and distribution may exercise any then
exercisable portion of an award.
Change in Control or Substantial Corporate Change
If there is a "change of control" of the Company, all option awards under
the Incentive Plan will become fully exercisable and all restrictions on stock
grants will lapse.
A "change of control" shall be deemed to have occurred upon the happening
of one or more of the following events:
(i) a person, entity, or group (other than the Company, any of the
Company's subsidiaries, any of the Company's benefit plans, or any underwriter
temporarily holding securities for any offering of such securities) acquires
ownership of more than 50% of the undiluted total voting power of the Company's
then-outstanding securities eligible to vote to elect members of the Board
("Company Voting Securities");
(ii) the individuals (A) who constitute the Board of Directors of
the Company on the day the Incentive Plan becomes effective (the "Original
Directors") or (B) who thereafter are elected to the Board and whose election,
or nomination for election, to the Board was approved by a vote of at least 2/3
of the Original Directors then still in office (such directors becoming
"Additional Original Directors" immediately following their election) or (C) who
are elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least 2/3 of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election) cease for
any reason to constitute a majority of the Board;
(iii) consummation of a merger or consolidation of the Company into
any other entity, unless the holders of the Company Voting Securities
outstanding immediately before such consummation, together with any trustee or
other fiduciary holding securities under a benefit plan of the Company, hold
securities that represent immediately after such merger or consolidation more
than 50% of the combined voting power of the then outstanding voting securities
of either the Company or the other surviving entity or its parent; or
(iv) the shareholders of the Company approve (A) a plan of complete
liquidation or dissolution of the Company or (B) an agreement for the Company's
sale or disposition of all or substantially all of the Company's assets (i.e.,
50% or more of the total assets of the Company) and such liquidation,
dissolution, sale, or disposition is consummated.
If there is a "substantial corporate change" of the Company, the Incentive
Plan and any
18
unexercised awards will immediately terminate unless provision is made in
writing in connection with such transaction for (i) the assumption or
continuation of outstanding awards, or (ii) the substitution for such awards of
awards covering the stock or securities of a successor employer corporation or a
parent or subsidiary of such successor (any such award "Substitute Awards"). If
an award would otherwise terminate because no Substitute Awards are granted in
connection with the substantial corporate change, then participants will have
the right to exercise any unexercised portions of any awards, whether or not
they had previously become exercisable.
A "substantial corporate change" shall be deemed to have occurred upon the
happening of any of the following events: (i) the dissolution or liquidation of
the Company, (ii) merger, consolidation, or reorganization of the Company with
one or more corporations in which the Company is not the surviving corporation,
(iii) the sale of substantially all the assets of the Company to another
corporation or (iv) any transaction (including a merger or reorganization in
which the Company survives) approved by the Board that results in any person or
entity (other than any affiliate of the Company as defined in Rule 144(a)(1)
under the Securities Act of 1933 promulgated by the Securities and Exchange
Commission) owning 100% of the combined voting power of all classes of stock of
the Company.
Term of Incentive Plan; Amendments; Termination
The Incentive Plan was approved by the Board on April 26, 2001, subject to
ratification of the Incentive Plan by the Company's shareholders at the Annual
Meeting. Unless the Board extends the Incentive Plan's term, the Incentive Plan
shall remain in effect until all awards under the Incentive Plan have been
satisfied, but no award may be granted under the Incentive Plan after May 24,
2011. The Board may amend, suspend or terminate the Incentive Plan at any time,
without the consent of the participants or their beneficiaries, provided that no
such amendment will deprive any participant or beneficiary of any previously
declared award. Except as required by law or the terms of the Incentive Plan,
the Board may not, without the participant's or beneficiary's consent, modify
the terms and conditions of an award so as to adversely affect the participant,
and no amendment, suspension or termination of the Incentive Plan will, without
the participant's or beneficiary's consent, terminate or adversely affect any
right or obligation under any outstanding awards.
Federal Income Tax Consequences
Grants of Awards. The grant of an NQSO, ISO or stock appreciation right, or
the grant of restricted or deferred stock that is subject to a substantial risk
of forfeiture, does not result in income for the grantee or in a deduction for
the Company.
Exercise of Options. The exercise of an NQSO results in ordinary income for
the participant and a deduction for the Company measured by the difference
between the option price and the fair market value of the shares received at the
time of exercise.
The exercise of an ISO does not result in income for the participant or a
deduction for the Company. However, the excess of the fair market value on the
exercise date over the option price of the shares is an "item of adjustment" for
alternative minimum tax purposes. When a participant sells shares acquired by
exercise of an ISO, the participant's gain (the excess of sales proceeds over
option price) upon the sale will be taxed as capital gain, provided the
participant (i) exercises the option while an employee of the Company or a
subsidiary or within three
19
months after termination of such employment for reason other than death or
disability and (ii) the sale is not within two years after the date of grant nor
within one year after the transfer of shares upon exercise. If exercise is after
such three month period, or the subsequent sales before the expiration of either
the two year or the one year holding period, a participant generally will
realize ordinary income in the year of exercise or the disqualifying sale.
Stock Appreciation Rights. A participant that is granted an award in the
form of a stock appreciation right will not realize any compensation income at
the time of the grant. However, a participant will realize compensation income
equal to the fair market value of the stock or cash delivered to a participant
upon exercise of a stock appreciation right and the Company will be entitled to
a corresponding deduction equal to the amount of the compensation income
realized by the participant.
Restricted Stock Awards. At such time as a restricted stock award is no
longer subject to a substantial risk of forfeiture (unless a special tax
election has been made by a participant under the Internal Revenue Code), a
participant will realize compensation income in an amount equal to the
difference between the fair market value of the stock and any amount paid for
the stock by the participant. The Company will be entitled to a corresponding
tax deduction in an amount equal to the compensation income realized by a
participant.
Subsequent Sales. A sale of shares of the Company's Common Stock more than
one year after their receipt will result in long-term gain or loss to the
holder.
The Board believes that stock incentive awards are a competitive necessity
to attract and retain employees and directors with the skill, intelligence,
education and experience on whose success the Company is dependent. The Company
believes that stock incentive awards are appropriate and effective methods to
compensate employees and directors because they foster proprietary
identification with the Company and encourage them to exert maximum efforts for
its success.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY'S
---
PROPOSED 2001 STOCK INCENTIVE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected and approved Goodman & Company, L.L.P.
("Goodman & Company") as the firm of independent certified public accountants to
audit the financial statements of the Company for the fiscal year ending
December 31, 2001, and the Board of Directors desires that such appointment be
ratified by the Company's shareholders. Goodman & Company audited the Company's
financial statements for the fiscal years ended December 31, 1998 through
December 31, 2000, and audited the Bank's financial statements from 1992 through
1997. A representative of Goodman & Company will be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires, and
will be available to respond to appropriate questions.
Audit Fees. Goodman & Company billed the Company an aggregate of $48,915
for the audit of the Company's consolidated financial statements for 2000 and
reviews of the financial statements included in the Company's Forms 10-Q for
2000.
20
All Other Fees. Goodman & Company billed the Company an aggregate of
$23,228 during 2000 for services not related to the financial statements
referenced above. These fees consisted of fees for assisting the Company with
the preparation of tax returns, an audit of the Company's 401(k) plan and
miscellaneous consulting services.
OTHER MATTERS
The Board of Directors does not know of any matters that will be presented
for action at the Annual Meeting other than those described above or matters
incident to the conduct of the Annual Meeting. If, however, any other matters
not presently known to management should come before the Annual Meeting, it is
intended that the shares represented by the Proxy will be voted on such matters
in accordance with the discretion of the holders of such Proxy.
SUBMISSION OF PROPOSALS AND OTHER MATTERS RELATED TO 2002 ANNUAL MEETING
The next Annual Meeting will be held on or about May 23, 2002. Any
shareholder who wishes to submit a proposal for consideration at that meeting,
and who wishes to have such proposal included in the Company's proxy statement,
must comply with SEC Rule 14a-8 and must submit the proposal in writing no later
than December 29, 2001. The deadline for shareholders to notify the Company of
non-Rule 14a-8 matters that may be raised for consideration at the next Annual
Meeting is March 14, 2002. All such proposals and notifications should be sent
to Lawrence N. Smith, President and Chief Executive Officer, at 3720 Virginia
Beach Boulevard, Virginia Beach, Virginia 23452.
Under the terms of the Company's bylaws, March 14, 2002 is also the
deadline for shareholders to notify the Company of an intention to nominate
candidates for directors at the next Annual Meeting. Such nominations must
comply with the notice provisions included in the Company's bylaws. These notice
provisions require that nominations by shareholders of director candidates set
forth the following information: (1) as to each individual nominated (i) the
name, date of birth, business address and residence address of such individual,
(ii) the business experience during the past five years of such nominee, (iii)
whether the nominee is or has ever been at any time a director, officer or owner
of 5% or more of any class of capital stock or other equity interest of any
corporation or other entity, (iv) any directorships held by such nominee in any
company with a class of securities registered under the Securities Exchange Act
of 1934, (v) whether in the last five years such nominee has been convicted in a
criminal proceeding or been subject to certain other legal proceedings,
including bankruptcies, and (vi) such other information regarding the nominee as
would be required to be included in a proxy statement filed pursuant to the
Exchange Act had the nominee been nominated by the Board of Directors; and (2)
as to the person submitting the nomination notice and any person acting in
concert with such person, (i) the name and business address of such person, (ii)
the name and address of such person as they appear on the Company's books, (iii)
the class and number of shares of the Company that are beneficially owned by
such person, (iv) a representation that the shareholder (A) is a holder of
record of Common Stock of the Company entitled to vote at the meeting at which
directors will be elected and (B) intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice and (v) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons pursuant to which the nomination or
nominations are to be made by the shareholder. Generally, nominations are
required to be delivered to the Company not later than 45 days before the date
21
on which the Company first mailed its proxy materials for the prior year's
annual meeting of shareholders.
GENERAL
The Company's 2000 Annual Report to Shareholders accompanies this Proxy
Statement. The 2000 Annual Report to Shareholders does not form any part of the
material for the solicitation of proxies. Upon written request, the Company
will provide shareholders with a copy of its Annual Report on Form 10-K for the
year ended December 31, 2000 (the "Form 10-K"), as filed with the SEC, without
charge. Please direct written requests for a copy of the Form 10-K to: Lu Ann
Klevecz, Assistant Vice President-Corporate Communications, Resource Bank, 3720
Virginia Beach Boulevard, Virginia Beach, Virginia 23452.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
By Order of the Board of Directors
April 27, 2001
22
EXHIBIT A
---------
Resource Bankshares Corporation
Audit Committee Charter
(As Amended March 22, 2001)
The Audit Committee's primary functions are to monitor and to review on
behalf of the Board of Directors the Company's financial reports and financial
reporting structure, including internal control structure regarding finance,
accounting and financial reporting. The Audit Committee reports to the full
Board of Directors on all matters within the Committees' responsibilities.
The Committee shall be composed of at least three directors, each of whom
shall have no relationship with the Company that may interfere with the exercise
of their independence from management and the Company. In addition, the members
of the Committee shall satisfy the applicable requirements for audit committee
membership imposed by the NASDAQ and any applicable eligibility requirements of
the Securities and Exchange Commission. The Board of Directors shall interpret
these requirements and determine the qualifications of Committee members in its
business judgment. Subject to Board approval, the Committee shall adopt, and at
least annually review and reassess, an audit committee charter meeting the
requirements from time to time of the NASDAQ.
The independent auditors shall be responsible to the Board of Directors and
shall report directly to the Committee, as the Board's representative, on all
matters pertaining to their engagement. The Committee shall encourage open
communications among the Committee, independent auditors (including private
executive sessions at least annually), internal auditors and employee management
regarding matters within the Committee's responsibilities. The Committee shall
establish a calendar incorporating regular reporting items which it requires
from independent auditors and employee management during the year.
In carrying out its responsibilities:
1. The Committee annually will review the independent auditors and shall
recommend to the Board of Directors the firm of independent auditors to be
employed to conduct the annual financial audit. The Committee will require the
independent auditors to review with the Committee any non-audit assignments and
fees incurred, and will assess any impact on the objectivity and independence of
such auditors as a result of non-audit assignments, making any appropriate
recommendations to the Board of Directors. The independent auditors shall
submit periodically to the Committee a formal written statement delineating all
relationships between the independent auditors and the Company. The Board of
Directors and the Committee will have the ultimate authority and responsibility
to select, evaluate and where appropriate replace the independent auditors or to
nominate the independent auditors to be proposed for shareholder ratification in
the proxy statement.
2. The Committee will (i) discuss the nature and rigor of the audit
process, receive and review all reports and will provide to the independent
auditors full access to the Committee (and the Board) to report on any and all
appropriate matters, and (ii) review the internal audit function of the Company,
including the organization, plans and results of such activity.
3. Employee management and the independent auditors shall review with the
Committee the Company's annual financial statements, and will review interim
financial statements prior to filing with the Securities and Exchange Commission
of the Company's Quarterly Reports on Form 10-Q. Periodically during the year,
the independent auditors shall review with the Committee their assessment as to
the adequacy of the Company's structure of internal controls over financial
accounting and reporting, and their qualitative judgments as to accounting
principles employed and related disclosures by the Company and the conclusions
expressed in the Company's financial reports. The independent auditors shall
review with the Committee significant judgments made by employee management in
the preparation of the financial statements.
4. The Committee will discuss with management the status of pending
litigation, taxation matters and other areas of oversight of the legal and
compliance area as may be appropriate.
5. Employee management shall report all related party transactions to the
Committee, and the Committee shall be responsible for the review and oversight
contemplated by the NASDAQ with respect to any such reported transactions.
6. The Committee shall have available to it such support personnel,
including management staff, independent auditors, attorneys and consultants, as
it deems necessary to discharge its responsibilities.
EXHIBIT B
---------
Proposed Resource Bankshares Corporation
2001 Stock Incentive Plan
THIS PAGE INTENTIONALLY LEFT BLANK
RESOURCE BANKSHARES CORPORATION
2001 STOCK INCENTIVE PLAN
1. PURPOSE Resource Bankshares Corporation, a Virginia corporation (the
"Company"), wishes to recruit, reward, and retain employees
(including employee-directors) and outside directors. To
further these objectives, the Company hereby sets forth the
Resource Bankshares Corporation 2001 Stock Incentive Plan
(the "Plan") to provide options ("Options") or direct grants
of stock, which may include stock appreciation rights,
restricted stock, deferred stock and other stock-based
awards (collectively, all stock-based awards other than
Options are referred to herein as "Stock Grants" and, Stock
Grants together with the Options are referred to as
"Awards") to employees (including employee-directors) and
outside directors with respect to shares of the Company's
common stock (the "Common Stock"). The Plan will become
effective on May 24, 2001, provided the Company's
shareholders approve the Plan on that date at the Company's
2001 Annual Meeting of Shareholders ("Effective Date").
2. PARTICIPANTS All employees of the Company and any Eligible Subsidiaries
(as defined in Section 16) are eligible for Options and
Stock Grants under this Plan, as are the directors of the
Company and the Eligible Subsidiaries who are not employees
("Eligible Directors"). Eligible employees and directors
become "optionees" when the Administrator grants them an
option under this Plan or "recipients" when they receive a
direct grant of Common Stock. (Optionees and recipients are
referred to collectively as "participants." The term
participant also includes, where appropriate, a person
authorized to exercise an Award in place of the original
optionee.) The Administrator may also grant Options or make
Stock Grants to certain other service providers.
Employee as such term is used in this Plan means any person
employed as a common law employee of the Company or an
Eligible Subsidiary.
3. ADMINISTRATOR The Administrator will be the Compensation Committee of the
Board of Directors of the Company (the "Compensation
Committee"), unless the Board specifies another committee.
The Board may also act under the Plan as though it were the
Administrator.
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 1 of 16
The Administrator is responsible for the general operation
and administration of the Plan and for carrying out its
provisions and has full discretion in interpreting and
administering the provisions of the Plan. Subject to the
express provisions of the Plan, the Administrator may
exercise such powers and authority of the Board as the
Administrator may find necessary or appropriate to carry out
its functions. The Administrator may delegate its functions
(other than those described in Section 4) to officers or
other employees of the Company.
The Administrator's powers will include, but not be limited
to, the power to amend, waive, or extend any provision or
limitation of any Award. The Administrator may act through
meetings of a majority of its members or by unanimous
written consent.
4. GRANTING OF Subject to the terms of the Plan, the Administrator will, in
AWARDS its sole discretion, determine
the participants who receive Awards,
the terms and restrictions, if any, of such Awards,
the schedule for exercisability or nonforfeitability
(including any requirements that the participant or the
Company satisfy performance criteria),
the time and conditions for expiration of the Award,
and
the form of payment due upon exercise of the Award, if
any.
The Administrator's determinations under the Plan need not
be uniform and need not consider whether possible
participants are similarly situated.
Options granted to employees may be nonqualified stock
options ("NQSOs") or "incentive stock options" ("ISOs")
within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or
the corresponding provision of any subsequently enacted tax
statute. Options satisfying all the conditions for ISOs
under the Code may, if the Administrator so elects, be
designated and treated as NQSOs. Options granted to Eligible
Directors must be NQSOs.
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 2 of 16
The Administrator may impose such conditions on or charge
such price for the Stock Grants as it deems appropriate.
SUBSTITUTIONS The Administrator may also grant Awards in substitution for
options or other equity interests held by individuals who
become employees of the Company or of an Eligible Subsidiary
as a result of the Company's acquiring or merging with the
individual's employer or acquiring its assets. If necessary
to conform the Awards to the interests for which they are
substitutes, the Administrator may grant substitute Awards
under terms and conditions that vary from those the Plan
otherwise requires.
5. ELIGIBLE Eligible Directors will not automatically receive an Award
DIRECTOR as of the date they are first elected or subsequently
OPTIONS re-elected to the Board. Any Awards to Eligible Directors
will be made at the discretion of the Administrator.
6. DATE OF GRANT The Date of Grant will be the date as of which the
Administrator grants an Award to a participant, as specified
in the Award Agreement between the Company and a Participant
pursuant to which an Award is granted.
7. EXERCISE PRICE The Exercise Price is the value of the consideration that a
participant must provide in exchange for one share of Common
Stock. The Administrator will determine the Exercise Price
under each Award and may set the Exercise Price without
regard to the Exercise Price of any other Awards granted at
the same or any other time. The Company may use the
consideration it receives from the participant for general
corporate purposes.
The Exercise Price per share for NQSOs may not be less than
100% of the Fair Market Value of a share on the Date of
Grant. If an Option is intended to be an ISO, the Exercise
Price per share may not be less than 100% of the Fair Market
Value (on the Date of Grant) of a share of Common Stock
covered by the Option; provided, however, that if the
-------- -------
Administrator decides to grant an ISO to someone covered by
Sections 422(b)(6) and 424(d) of the Code (more-than-10%
stock owner), the Exercise Price of the Option must be at
least 110% of the Fair Market Value (on the Date of Grant).
FAIR MARKET Fair Market Value of a share of Common Stock for purposes of
VALUE the Plan will be determined as follows:
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 3 of 16
if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;
if the Common Stock is not traded on any such exchange,
the closing sale price as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") for such date;
if no such closing sale price information is available,
the average of the closing bid and asked prices as
reported by Nasdaq for such date;
if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as reported
by any other commercial service for such date; or
if on the Date of Grant there is no public market for
the Common Stock, then Fair Market Value shall be
determined by the Board in good faith in such manner as
is established by the Board from time to time.
For any date that is not a trading day, the Fair Market
Value of a share of Common Stock for such date shall be
determined by using the closing sale price or the average of
the closing bid and asked prices, as appropriate, for the
immediately preceding trading day.
8. EXERCISABILITY The Administrator will determine the times and conditions
for exercise of or purchase under each Award but may not
extend the period for exercise beyond the tenth anniversary
of its Date of Grant (or five years for ISOs granted to 10%
owners covered by Code Sections 422(b)(6) and 424(d)).
Awards will become exercisable at such times and in such
manner as the Administrator determines and the Award
Agreement indicates; provided, however, that the
-------- -------
Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the
participant may exercise any portion of an Award or at which
restrictions on Stock Grants lapse. For Stock Grants,
"exercise" refers to acceptance of the Award or lapse of
restrictions, as appropriate in context.
No portion of an Award that is unexercisable at a
participant's termination of employment will thereafter
become exercisable,
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 4 of 16
unless the Award Agreement provides otherwise, either
initially or by amendment.
CHANGE OF Upon a Change of Control (as defined below), all Options
CONTROL will become fully exercisable and all restrictions on Stock
Grants will lapse. A Change of Control for this purpose
means the occurrence of any one or more of the following
events:
a) a person, entity, or group (other than the Company, any
Company subsidiary, any Company benefit plan, or any
underwriter temporarily holding securities for an
offering of such securities) acquires ownership of more
than 50% of the undiluted total voting power of the
Company's then-outstanding securities eligible to vote
to elect members of the Board ("Company Voting
Securities");
b) the individuals (A) who, as of the Effective Date,
constitute the Board of Directors of the Company (the
"Original Directors") or (B) who thereafter are elected
to the Board and whose election, or nomination for
election, to the Board was approved by a vote of at
least two-thirds (2/3) of the Original Directors then
still in office (such directors becoming "Additional
Original Directors" immediately following their
election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors
then still in office (such directors also becoming
"Additional Original Directors" immediately following
their election) cease for any reason to constitute a
majority of the members of the Board;
c) consummation of a merger or consolidation of the
Company into any other entity unless the holders of the
Company Voting Securities outstanding immediately
before such consummation, together with any trustee or
other fiduciary holding securities under a Company
benefit plan, hold securities that represent
immediately after such merger or consolidation more
than 50% of the combined voting power of the then
outstanding voting securities of either the Company or
the other surviving entity or its parent; or
d) the shareholders of the Company approve (i) a plan of
complete liquidation or dissolution of the Company or
(ii) an agreement for the Company's sale or disposition
of all or
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 5 of 16
substantially all the Company's assets, (i.e., 50% or
more of the total assets of the Company) and such
liquidation, dissolution, sale, or disposition is
consummated.
Even if other tests are met, a Change of Control has
not occurred under any circumstance in which the
Company files for bankruptcy protection or is
reorganized following a bankruptcy filing.
The provisions of Section 15 of the Plan will also apply if
the Change of Control is a Substantial Corporate Change (as
defined in Section 15).
9. LIMITATION ON An Option granted to an employee will be an ISO only to the
ISOs extent that the aggregate Fair Market Value (determined at
the Date of Grant) of the stock with respect to which ISOs
are exercisable for the first time by the optionee during
any calendar year (under the Plan and all other plans of the
Company and its subsidiary corporations, within the meaning
of Code Section 422(d)), does not exceed $100,000. This
limitation will be applied by taking Options into account in
the order in which such Options were granted. If, by design
or operation, the Option exceeds this limit, the excess will
be treated as an NQSO.
10. METHOD OF To exercise any exercisable portion of an Award, the
EXERCISE participant must:
Deliver a written notice of exercise to the Secretary
of the Company (or to whomever the Administrator
designates), in a form complying with any rules the
Administrator may issue, signed by the participant, and
specifying the number of shares of Common Stock
underlying the portion of the Award the participant is
exercising;
Pay the full Exercise Price, if any, by cashier's or
certified check for the shares of Common Stock with
respect to which the Award is being exercised, unless
the Administrator consents to another form of payment
(which could include Common Stock, Stock Grants, other
Awards or other property); and
Deliver to the Administrator such representations and
documents as the Administrator, in its sole discretion,
may consider necessary or advisable.
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 6 of 16
Payment in full of the Exercise Price need not accompany the
written notice of exercise provided the notice directs that
the stock certificates for the shares issued upon the
exercise be delivered to a licensed broker acceptable to the
Company as the agent for the individual exercising the
option and at the time the stock certificates are delivered
to the broker, the broker will tender to the Company cash or
cash equivalents acceptable to the Company and equal to the
Exercise Price.
If the Administrator agrees to payment through the tender to
the Company of shares of Common Stock, the individual must
have held the stock being tendered for at least six months
at the time of surrender. Shares of stock offered as
payment will be valued, for purposes of determining the
extent to which the participant has paid the Exercise Price,
at their Fair Market Value on the date of exercise. The
Administrator may also, in its discretion, accept
attestation of ownership of Common Stock and issue a net
number of shares upon Option exercise.
11. AWARD No one may exercise an Award more than ten years after its
EXPIRATION Date of Grant (or five years, for an ISO granted to a more-
than-10% shareholder). Unless the Award Agreement provides
otherwise, either initially or by amendment, no one may
exercise an Award after the first to occur of:
EMPLOYMENT The date of termination of employment (other than for death,
TERMINATION disability or retirement), where termination of employment
means the time when the employer-employee or other service-
providing relationship between the employee and the Company
ends for any reason, including retirement. Unless the Award
Agreement provides otherwise, termination of employment does
not include instances in which the Company immediately
rehires a common law employee as an independent contractor.
The Administrator, in its sole discretion, will determine
all questions of whether particular terminations or leaves
of absence are terminations of employment. Notwithstanding
the foregoing, if the Administrator determines that the
participant's termination of employment was for cause, all
unexercised Awards held by the participant shall immediately
terminate. If a participant is a party to an employment
agreement with the Company or an Eligible Subsidiary and the
employment agreement defines the term cause, then the term
cause for purposes of this Section 11 shall have the same
meaning given to such term in the employment agreement. If
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 7 of 16
the preceding sentence does not apply, then the term cause
for purposes of this Section 11 shall mean (i) personal
dishonesty; (ii) gross neglect related to employment; (iii)
incompetence; (iv) willful misconduct; (v) breach of loyalty
or fiduciary duty to the Company or any Eligible Subsidiary;
(vi) intentional failure to perform assigned or agreed upon
duties; or (vii) willful violation of any law, rule or
regulation (other than traffic violations or similar
offenses).
DISABILITY For disability, the earlier of (i) the first anniversary of
the participant's termination of employment for disability
and (ii) thirty (30) days after the participant no longer
has a disability, where "disability" means the inability to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that
can be expected to result in death or that has lasted or can
be expected to last for a continuous period of not less than
twelve months; or
DEATH The date twelve months after the participant's death.
RETIREMENT The 90/th/ day after the participant's retirement from
employment with the Company and any Eligible Subsidiary. For
purposes of this Plan, the term retirement shall mean,
exclusively, a voluntary termination of employment initiated
by the participant at or after the age of 59 and 1/2 years.
If exercise is permitted after termination of employment,
the Award will nevertheless expire as of the date that the
former service provider violates any covenant not to compete
in effect between the Company and the former employee. In
addition, an optionee who exercises an Option more than 90
days after termination of employment with the Company and/or
the Eligible Subsidiaries will only receive ISO treatment to
the extent permitted by law, and becoming or remaining an
employee of another related company (that is not an Eligible
Subsidiary) or an independent contractor to the Company will
not prevent loss of ISO status as a result of the formal
termination of employment.
TERMINATION With respect to Eligible Directors, if the Administrator
OF SERVICE OF determines that an Eligible Director's service on the
DIRECTOR Company's Board of Directors terminates for cause, any
unexercised Awards held by such Eligible Director shall
immediately terminate. With respect to Awards to Eligible
Directors, the term cause for purposes of this Section 11
shall mean (i) removal of the Eligible Director by
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Resource Bankshares Corporation
2001 Stock Incentive Plan
Page 8 of 16
shareholders of the Company at a shareholder meeting held in
part for such purpose prior to the end of the Eligible
Director's term of office or (ii) a breach of any fiduciary
duties owed by an Eligible Director to the Company and its
shareholders under applicable law. If an Eligible Director's
service does not terminate for cause (i.e. the Eligible
Director voluntarily resigns or the Company and the Eligible
Director mutually agree that the Eligible Director will not
stand for re-election, in either case in the absence of
circumstances that would constitute cause under the
preceding sentence), then any unexercised Awards held by an
Eligible Director will expire under the terms and conditions
set forth in the Award Agreement evidencing such Awards.
Nothing in this Plan extends the term of an Award beyond the
tenth anniversary of its Date of Grant, nor does anything in
this Section 11 make an Award exercisable that has not
otherwise become exercisable.
12. AWARD Option Agreements will set forth the terms of each Option
AGREEMENT and will include such terms and conditions, consistent with
the Plan, as the Administrator may determine are necessary
or advisable. To the extent an Option Agreement is
inconsistent with the Plan, the Plan will govern. The Option
Agreements may contain special rules. The Administrator may,
but is not required to, issue agreements for Stock Grants.
13. STOCK SUBJECT Except as adjusted pursuant to Section 15,
TO PLAN
the aggregate number of shares of Common Stock that may
be issued under Awards may not exceed 100,000 shares of
Common Stock; and
the maximum number of shares that may be granted under
Awards for a single individual in a calendar year may
not exceed 50,000 shares. (The individual maximum
applies only to Awards first made under this Plan and
not to Awards made in substitution of a prior
employer's options or other incentives, except as Code
Section 162(m) otherwise requires.)
The Common Stock will come from authorized but unissued
shares. If any Award expires, is canceled, is surrendered
by a participant, or terminates for any other reason, the
shares of Common Stock available under that Award will again
be available
________________________________________________________________________________
Resources Bankshares Corporation
2001 Stock Incentive Plan
Page 9 of 16
for the granting of new Awards (but will be counted against
that calendar year's limit for a given individual).
No adjustment will be made for a dividend or other right for
which the record date precedes the date of exercise.
The participant will have no rights of a shareholder with
respect to the shares of stock subject to an Award except to
the extent that the Company has issued certificates for, or
otherwise confirmed ownership of, such shares upon the
exercise of the Award.
The Company will not issue fractional shares pursuant to the
exercise of an Award, but the Administrator may, in its
discretion, direct the Company to make a cash payment in
lieu of fractional shares.
14. PERSON WHO Unless the Administrator otherwise approves in writing in
MAY EXERCISE connection with any permitted transfer or assignment of an
Award pursuant to Section 20, during the participant's
lifetime only the participant or his duly appointed guardian
or personal representative may exercise the Awards. After
his death, his personal representative or any other person
authorized under a will or under the laws of descent and
distribution may exercise any then exercisable portion of an
Award. If someone other than the original recipient seeks to
exercise any portion of an Award, the Administrator may
request such proof as it may consider necessary or
appropriate of the person's right to exercise the Award.
15. ADJUSTMENTS Subject to any required action by the Company (which it
UPON CHANGES shall promptly take) or its shareholders, and subject to the
IN CAPITAL provisions of applicable corporate law, if, after the Date
STOCK of Grant of an Award,
the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a
different number or kind of security by reason of any
recapitalization, reclassification, stock split,
reverse stock split, combination of shares, exchange of
shares, stock dividend, or other distribution payable
in capital stock, or
some other increase or decrease in such Common Stock
occurs without the Company receiving consideration,
the Administrator may make a proportionate and appropriate
adjustment in the number of shares of Common Stock
underlying
________________________________________________________________________________
Resources Bankshares Corporation
2001 Stock Incentive Plan
Page 10 of 16
each Award, so that the proportionate interest of the
participant immediately following such event will, to the
extent practicable, be the same as immediately before such
event. (This adjustment does not apply to Common Stock that
the optionee has already purchased nor to Stock Grants that
are already nonforfeitable, except to the extent of similar
treatment for all shareholders.) Unless the Administrator
determines another method would be appropriate, or except as
otherwise set forth in the Award Agreement, any such
adjustment to an Award will not change the total price with
respect to shares of Common Stock underlying the unexercised
portion of the Award but will include a corresponding
proportionate adjustment in the Award's Exercise Price.
The Administrator will make a commensurate change to the
maximum number and kind of shares provided in Section 13 of
the Plan.
Any issue by the Company of any class of preferred stock, or
securities convertible into shares of common or preferred
stock of any class, will not affect, and no adjustment by
reason thereof will be made with respect to, the number of
shares of Common Stock subject to any Award or the Exercise
Price except as this Section 15 specifically provides. The
grant of an Award under the Plan will not affect in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital
or business structure, or to merge or to consolidate, or to
dissolve, liquidate, sell, or transfer all or any part of
its business or assets.
SUBSTANTIAL Upon a Substantial Corporate Change, the Plan and any
CORPORATE unexercised Awards will terminate unless provision is made
CHANGE in writing in connection with such transaction for
the assumption or continuation of outstanding Awards,
or
the substitution for such options or grants of any
options or grants covering the stock or securities of a
successor employer corporation, or a parent or
subsidiary of such successor, with appropriate
adjustments as to the number and kind of shares of
stock and prices, in which event the Awards will
continue in the manner and under the terms so provided.
________________________________________________________________________________
Resources Bankshares Corporation
2001 Stock Incentive Plan
Page 11 of 16
If an Award would otherwise terminate pursuant to the
preceding sentence, participants will have the right, at
such time before the consummation of the transaction causing
such termination as the Board reasonably designates, to
exercise any unexercised portions of the Award, whether or
not they had previously become exercisable.
A Substantial Corporate Change means the
dissolution or liquidation of the Company,
merger, consolidation, or reorganization of the Company
with one or more corporations in which the Company is
not the surviving corporation,
the sale of substantially all of the assets of the
Company to another corporation, or
any transaction (including a merger or reorganization
in which the Company survives) approved by the Board
that results in any person or entity (other than any
affiliate of the Company as defined in Rule 144(a)(1)
under the Securities Act) owning 100% of the combined
voting power of all classes of stock of the Company.
16. SUBSIDIARY Employees of Company Subsidiaries will be entitled to
EMPLOYEES participate in the Plan, except as otherwise designated by
the Board of Directors or the Administrator.
Eligible Subsidiary means each of the Company's
Subsidiaries, except as the Board otherwise specifies. For
ISO grants, Subsidiary means any corporation (other than the
Company) in an unbroken chain of corporations beginning with
the Company if, at the time an ISO is granted to a
Participant under the Plan, each of the corporations (other
than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in
such chain. For ISO purposes, Subsidiary also includes a
single member limited liability company included within the
chain described in the preceding sentence. For NQSOs, the
Board or the Administrator can use a different definition of
Subsidiary in its discretion.
17. LEGAL The Company will not issue any shares of Common Stock under
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2001 Stock Incentive Plan
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COMPLIANCE an Award until all applicable requirements imposed by
Federal and state securities and other laws, rules, and
regulations, and by any applicable regulatory agencies or
stock exchanges, have been fully met. To that end, the
Company may require the participant to take any reasonable
action to comply with such requirements before issuing such
shares. No provision in the Plan or action taken under it
authorizes any action that is otherwise prohibited by
Federal or state laws.
The Plan is intended to conform to the extent necessary with
all provisions of the Securities Act of 1933 ("Securities
Act") and the Securities Exchange Act of 1934 and all
regulations and rules the Securities and Exchange Commission
issues under those laws. Notwithstanding anything in the
Plan to the contrary, the Administrator must administer the
Plan, and Awards must be granted and exercised, only in a
way that conforms to such laws, rules, and regulations. To
the extent permitted by applicable law, the Plan and any
Awards will be deemed amended to the extent necessary to
conform to such laws, rules, and regulations.
18. PURCHASE FOR Unless a registration statement under the Securities Act
INVESTMENT covers the shares of Common Stock a participant receives
AND OTHER upon exercise of his Award, the Administrator may require,
RESTRICTIONS at the time of such exercise or receipt of a grant, that the
participant agree in writing to acquire such shares for
investment and not for public resale or distribution, unless
and until the shares subject to the Award are registered
under the Securities Act. Unless the shares are registered
under the Securities Act, the participant must acknowledge:
that the shares purchased on exercise of the Award are
not so registered,
that the participant may not sell or otherwise transfer
the shares unless
the shares have been registered under the
Securities Act in connection with the sale or
transfer thereof, or
counsel satisfactory to the Company has issued an
opinion satisfactory to the Company that the sale
or other transfer of such shares is exempt from
registration under the Securities Act, and
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2001 Stock Incentive Plan
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such sale or transfer complies with all other
applicable laws, rules, and regulations, including
all applicable Federal and state securities laws,
rules, and regulations.
Additionally, the Common Stock, when issued upon the
exercise of an Award, will be subject to any other transfer
restrictions, rights of first refusal, and rights of
repurchase set forth in or incorporated by reference into
other applicable documents, including the Company's articles
of incorporation, by-laws, or generally applicable
shareholders' agreements.
The Administrator may, in its sole discretion, take whatever
additional actions it deems appropriate to comply with such
restrictions and applicable laws, including placing legends
on certificates and issuing stop-transfer orders to transfer
agents and registrars.
19. TAX The participant must satisfy all applicable Federal, state,
WITHHOLDING and local income and employment tax withholding
requirements, if any, before the Company will deliver stock
certificates upon the exercise of an Award. The Company may
decide to satisfy any applicable withholding obligations
through additional withholding on salary or wages. If the
Company does not or cannot withhold from other compensation,
the participant must pay the Company, with a cashier's check
or certified check, the full amounts required by any
applicable withholding. Payment of any applicable
withholding obligations is due before the Company issues
shares with respect to the Award. If the Administrator so
determines, the participant may instead satisfy any
applicable withholding obligations by directing the Company
to retain shares from the Award exercise, by tendering
previously owned shares, or by attesting to his ownership of
shares (with the distribution of net shares).
20. TRANSFERS, Unless the Administrator otherwise approves in writing, an
ASSIGNMENTS, Award may not be assigned, pledged, or otherwise transferred
AND PLEDGES in any way, whether by operation of law or otherwise or
through any legal or equitable proceedings (including
bankruptcy), by the participant to any person, except by
will or by operation of applicable laws of descent and
distribution.
21. AMENDMENT OR The Board may amend, suspend, or terminate the Plan at any
time,
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2001 Stock Incentive Plan
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TERMINATION OF without the consent of the participants or their
PLAN AND beneficiaries; provided, however, that no amendment will
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OWNERSHIP deprive any participant or beneficiary of any previously
declared Award. Except as required by law or by Section 15,
the Administrator may not, without the participant's or
beneficiary's consent, modify the terms and conditions of an
Award so as to adversely affect the participant. No
amendment, suspension, or termination of the Plan will,
without the participant's or beneficiary's consent,
terminate or adversely affect any right or obligations under
any outstanding Awards.
22. PRIVILEGES OF No participant and no beneficiary or other person claiming
STOCK under or through such participant will have any right,
OWNERSHIP title, or interest in or to any shares of Common Stock
allocated or reserved under the Plan or subject to any Award
except as to such shares of Common Stock, if any, that have
been issued to such participant.
23. EFFECT ON Whether exercising or receiving an Award causes the
OTHER PLANS participant to accrue or receive additional benefits under
any pension or other plan is governed solely by the terms of
such other plan.
24. LIMITATIONS ON Notwithstanding any other provisions of the Plan, no
LIABILITY individual acting as a director, employee, or agent of the
Company shall be liable to any participant, former
participant, spouse, beneficiary, or any other person for
any claim, loss, liability, or expense incurred in
connection with the Plan, nor shall such individual be
personally liable because of any contract or other
instrument he executes in such other capacity. The Company
will indemnify and hold harmless each director, employee, or
agent of the Company to whom any duty or power relating to
the administration or interpretation of the Plan has been or
will be delegated, against any cost or expense (including
attorneys' fees) or liability (including any sum paid in
settlement of a claim with the Board's approval) arising out
of any act or omission to act concerning this Plan unless
arising out of such person's own fraud or bad faith.
25. NO EMPLOYMENT Nothing contained in this Plan constitutes an employment
CONTRACT contract between the Company and the participants. The Plan
does not give any participant any right to be retained in
the Company's employ, nor does it enlarge or diminish the
Company's right to terminate the participant's employment.
26. APPLICABLE LAW The laws of the Commonwealth of Virginia (other than its
choice
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2001 Stock Incentive Plan
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of law provisions) and applicable federal law govern this
Plan and its interpretation.
27. DURATION Unless the Board extends the Plan's term, the Administrator
OF PLAN may not grant Awards after May 24, 2011. The Plan will then
terminate but will continue to govern unexercised and
unexpired Awards.
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Resources Bankshares Corporation
2001 Stock Incentive Plan
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RESOURCE BANKSHARES CORPORATION
Proxy Solicited on Behalf of the
Board of Directors for
Annual Meeting of Shareholders
to be Held May 24, 2001
The undersigned, having received the Annual Report to Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement dated
April 27, 2001, hereby appoints Lawrence N. Smith and Thomas W. Hunt (each with
power to act alone) as proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as directed below, all the shares of the
Common Stock of Resource Bankshares Corporation held of record by the
undersigned on April 3, 2001, at the Annual Meeting of Shareholders to be held
on May 24, 2001 and any adjournment thereof.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR"
PROPOSALS 1, 2 and 3
1. ELECTION OF DIRECTORS
To elect the following Class A directors to hold office for a term of three
years.
Louis R. Jones
A. Russell Kirk
FOR all nominees listed (except as indicated below to the contrary) [_]
WITHHOLD AUTHORITY to vote for all nominees listed [_]
(INSTRUCTIONS: To withhold authority to vote for any individual nominee
write the nominee's name on the line provided below.)
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2. Adoption of the Resource Bankshares Corporation 2001 Stock Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. TO RATIFY the appointment by the Board of Directors of Goodman & Company,
L.L.P. as the Company's independent auditors for the year ending December
31, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
4. IN THEIR DISCRETION, on such other matters as may properly come before the
meeting, or, if any nominee listed in Proposal 1 above is unable to serve
for any reason, to vote or refrain from voting for a substitute nominee or
nominees.
This proxy is revocable at any time prior to its exercise. This proxy, when
properly executed, will be voted as directed. Where no direction is given,
this proxy will be voted for Proposals 1, 2 and 3.
Please sign your name(s) exactly as they
appear hereon. If signer is a corporation, please
sign the full corporate name by duly authorized
officer. If an attorney, guardian, administrator,
executor, or trustee, please give full title as
such. If a limited liability company or
partnership, sign in limited liability company or
partnership name by authorized person.
Date: __________________, 2001
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Please complete, date, sign and return this proxy
promptly in the accompanying envelope.