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
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
April 23, 1999
Dear Fellow Shareholders:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of Resource Bankshares Corporation (the "Company") to be held on
Thursday, May 27, 1999, 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 seven incumbent directors, each of whom will serve
a one year term and until their successors are duly elected and qualify, (ii)
adoption and approval of the Company's Amended and Restated 1996 Long-Term
Incentive Plan and (iii) the ratification of the appointment of Goodman &
Company, L.L.P. as independent auditors for the 1999 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
Lawrence N. Smith
President and Chief Executive Officer
RESOURCE BANKSHARES CORPORATION
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 27, 1999
To Our Shareholders:
The 1999 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 27, 1999, at 9:30 a.m., for the
following purposes:
1. To consider and vote upon the election of seven directors to serve a
one year term and until their successors are duly elected and
qualify.
2. To consider and vote upon adoption and approval of the Company's
Amended and Restated 1996 Long-Term Incentive Plan.
3. To consider and vote upon the ratification of the appointment of
Goodman & Company, L.L.P. as independent auditors for the 1999
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 1, 1999, 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
__________________________________
Debra C. Dyckman
Secretary of the Board
April 23, 1999
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 27, 1999, 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 1, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. This
Proxy is being mailed on or about April 23, 1999.
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 2,476,123 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 approve the Company's Amended and Restated 1996 Long-Term 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, John Bernhardt, 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 seven nominees to serve as directors of the Company for a one year term and
until their successors are duly elected and qualified, (ii) FOR the Company's
Amended and Restated 1996 Long-Term Incentive Plan, and (iii) FOR the
ratification of the appointment of Goodman & Company, L.L.P. as independent
auditors for 1999. 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 1, 1999, relating
to the beneficial ownership of the Company's Common Stock by (i) each of the
Company's director-nominees and named executive officers who own Common Stock,
(ii) all of the Company's director-nominees and named executive officers as a
group, and (iii) any other person known by the Company to own beneficially 5% or
more of the Company's Common Stock. 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
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 69,846(1) 2.78
John B. Bernhardt 50,164(2) 1.99
Thomas W. Hunt 49,202(3) 1.99
Louis R. Jones 236,335(4) 9.47
A. Russell Kirk 109,096(5) 4.38
Lawrence N. Smith 130,291(6) 5.16
Elizabeth A. Twohy 40,340(7) 1.62
Directors and Executive
Officers as a Group
(8 Persons) 702,458 26.27
Alan M. Voorhees 128,880(8) 5.17
1308 Devil's Reach Road
Suite 302
Woodbridge, VA 22192
- ------------
* Less than 1% ownership
(1) Includes options to purchase 30,166 shares and warrants to purchase 2,666
shares that are currently exercisable.
(2) Includes options to purchase 46,832 shares that are currently
exercisable.
(3) 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 warrants to purchase 13,500 shares held by Mr.
Hunt's spouse and children, as to which Mr. Hunt disclaims beneficial
ownership. Also 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.
(4) Includes options to purchase 20,166 shares that are currently
exercisable.
(5) Includes options to purchase 13,500 shares that are currently
exercisable.
(6) Includes options to purchase 48,266 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.
(7) Includes options to purchase 20,166 shares that are currently exercisable.
Also includes 6,000 shares owned by Ms. Twohy's minor children.
(8) Includes 61,446 shares held by Mr. Voorhees' spouse as trustee for several
trusts, the beneficiaries of which are Mr. Voorhees' grandchildren, as to
which shares Mr. Voorhees disclaims beneficial ownership. Also includes
warrants to purchase 18,000 shares held by Mr. Voorhees and his spouse.
Does not include an aggregate of 134,358 shares held by Mr. Voorhees'
adult children and Mr. Hunt, Mr. Voorhees' son-in-law, for their own
benefit or for the benefit of Mr. Voorhees' grandchildren.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be between
5 and 15. All directors are elected for a one year term and until their
successors are duly executed and qualified. The Board of Directors recommends
that the following seven nominees be elected as directors: Alfred E. Abiouness,
John B. Bernhardt, Thomas W. Hunt, Louis R. Jones, A. Russell Kirk, Lawrence N.
Smith and Elizabeth A. Twohy. Proxies received will be voted for the election of
such nominees unless marked to the contrary. A shareholder who desires to
withhold voting of the Proxy for all or one or more of the nominees may so
indicate on the Proxy. All of the nominees are currently members of the Board of
Directors and all nominees have consented to be named and have indicated their
intent to serve if elected. If any 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 of Directors, 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 of Directors 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 2000 Annual Meeting"
elsewhere in this Proxy Statement.
Names of Nominees and Committee Memberships
The following table sets forth the names, ages and date of each nominee's
first election to the Board:
Name Age Director Since(1)
---- --- -----------------
Alfred E. Abiouness(A)(B)(C)(D) 67 1988
John B. Bernhardt(A)(B)(C)(D) 69 1992
Thomas W. Hunt(A)(B)(D) 43 1997
Louis R. Jones(A)(B)(D) 63 1993
A. Russell Kirk(A)(B)(D) 51 1992
Lawrence N. Smith(A)(C) 61 1992
Elizabeth A. Twohy(A)(B)(D) 46 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, the
director-nominees served on the Board of Directors of the Bank. Since the
effective date of the Plan of Reorganization, the director-nominees have served
on the Company's Board of Directors and have continued to serve on the Bank's
Board of Directors. The dates set forth above indicate the dates on which the
director-nominees first served 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
1998.
(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 one meeting in 1998.
(C) Member of the Proxy Committee, which collects and accounts for all proxies
and exercises the Company's proxy authority at all shareholder meetings.
The Proxy Committee held one meeting in 1998.
(D) Member of the Compensation Committee, which recommends to the Company's
Board of Directors the salaries for officers and the compensation to be
paid directors, and determines the persons to whom incentive stock options
are granted, the number of shares subject to option, and the appropriate
vesting schedule. The Compensation Committee held one meeting in 1998.
Background and Experience
The following information relates to the business background of the seven
director-nominees. There are no family relationships among any of the
director-nominees nor is there any arrangement or understanding between any
director-nominees and any other person pursuant to which the director-nominee
was selected.
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.
Mr. Bernhardt has over 30 years of commercial banking experience. Mr.
Bernhardt served as Executive Vice President of Virginia National Bank and
Virginia National Bankshares, Inc. from 1972 to 1979, and as President and
Director of those institutions from 1980 to 1983. From 1984 to 1988, Mr.
Bernhardt was the Vice Chairman of the Board of Directors of Sovran Financial
Corporation, Norfolk, Virginia, and Sovran Bank, N.A., Richmond, Virginia. He
was also the President and Chief Executive Officer of Sovran Services from 1986
to 1988. Mr. Bernhardt resigned from all of his Sovran positions in April of
1988. He is currently a Managing Director of Bernhardt/Gibson, Inc., a financial
services firm, with whom he has been employed since 1988. Mr. Bernhardt is also
a director of Dominion Resources, Inc.
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. 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.
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 savings and loan holding company, in May 1983 and still serves as
its Chairman. 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.
Ms. Twohy is President of Capital Concrete, Inc. of Norfolk, Virginia, a
ready-mixed concrete manufacturer, and has been employed by the firm 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.
Board Meetings
The business of the Company is managed under the direction of the Board of
Directors ("Board"). The Board meets at least monthly to review significant
developments affecting the Company and to act on matters requiring approval by
the Board. The Board held 12 meetings in 1998. During 1998, each member of the
Board participated in at least 75% of all meetings of the Board and at least 75%
of all applicable committee meetings.
EXECUTIVE COMPENSATION
Summary Executive Compensation Table
The following table presents an overview of executive compensation paid by
the Company and its subsidiaries during 1998, 1997 and 1996 to Lawrence N.
Smith, President and Chief Executive Officer. Because the Company did not
commence operations until the Plan of Reorganization became effective in July
1998, information presented for all periods includes compensation paid by the
Bank to Mr. Smith in his capacity as an executive officer of the Bank.
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying All Other
Name and principal position Year Salary($) Bonus($) Options(#) Compensation($)(1)
- --------------------------- ---- --------- -------- ---------- ------------------
Lawrence N. Smith, President 1998 $250,000 $200,000 -- $5,000
and CEO of the Company 1997 200,000 160,000 -- 4,744
1996 175,000 110,000 21,600 4,744
- -----------------
(1) Consists of Company contributions to 401(k) Plan.
Fiscal Year End Options Table
No stock options were granted to Mr. Smith during the fiscal year ended
December 31, 1998, nor were any stock options exercised in 1998 by Mr.
Smith. The table below sets forth information regarding exercisable and
unexercisable stock options held as of December 31, 1998, by Mr. Smith.
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-The-Money
at Fiscal Options at Fiscal
Year-End (#) Year-End ($)(1)
------------ --------------------
Shares
Acquired
Upon Value
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Lawrence N. Smith 0 0 48,266 -- $702,056(2) --
- ----------------
(1) The closing price of the Company's Common Stock on AMEX on December 31,
1998 was $19.00 per share.
(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.
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 either
directly from the Company or from third parties. 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
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 benefits, the
Bank paid premiums on applicable life insurance contracts in the amount of
approximately $371,445 during 1998, and may continue to pay, in its sole
discretion, the same annual amount of insurance premiums over the next three
years.
Stock Option Plans
The Company 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 (the "1993
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 ("1994 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, provides
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 permits the grant of
options to purchase up to 160,000 shares of Company Common Stock to key
employees of the Company, 158,428 of which options have been granted.
Shareholders are being asked to approve an Amended and Restated Incentive Plan
that, in addition to other amendments, would authorize the issuance to directors
and key employees of options to purchase an additional 150,000 shares of Common
Stock. See "Proposal 2. Proposed Amended and Restated 1996 Long-Term Incentive
Plan."
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 1998,
non-employee directors of the Bank received compensation for their service on
the Bank's Board of Directors in the amount of $1,250 per 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
Company Audit Committee and Compensation Committee meeting attended.
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. Mr.
Smith's current annual salary under the Smith Employment Agreement is $262,500.
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 Board of
Directors from time to time.
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 initial annual base salary
is $200,000.
The Bank has also entered into written employment agreements with its
other executive officers, including Eleanor J. Whitehurst, who serves as the
Company's Chief Financial Officer. 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. In addition, the employment agreements of
the Bank's retail mortgage division executive officers (i) have an initial term
of two years, (ii) provide for severance payments upon termination without cause
for only the remainder of the term of the agreements and (iii) provide for
change of control payments of two 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 1998. During 1998, 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, during 1998 John Bernhardt served on the
Compensation Committee of Dominion Resources, Inc., also a public company, but
no directors, officers or other employees of Dominion Resources other than Mr.
Bernhardt served (or currently serve) on the Company's or the Bank's Boards of
Directors or any committees thereof. During 1998, 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. Three members of the Compensation Committee, Alfred
Abiouness, Russell Kirk and Elizabeth Twohy, 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
1998 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 1998 were
(i) a base salary at a 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 to the Company's Executive Officers pursuant to the Company's 1996
Long-Term Incentive Plan. The Compensation Committee did not make any stock
option awards in 1998.
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 Bank. 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, 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.
The Compensation Committee did not grant any stock options pursuant to the
Incentive Plan in 1998, in part because only a limited number of shares remain
available for option awards to key employees. At the Annual Meeting,
shareholders will be asked to approve an Amended and Restated Incentive Plan
that would, among other amendments, increase the number of shares of Company
Common Stock available for awards of stock options to employees and directors.
See "Proposal 2. Proposed Amended and Restated 1996 Long-Term Incentive Plan."
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 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 1999 because it is not anticipated that compensation in
excess of $1 million will be paid to any employee of the Company.
o Alfred E. Abiouness
o John B. Bernhardt
o Thomas W. Hunt
o Louis R. Jones
o A. Russell Kirk
o 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.
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 April 21, 1994 and ending December
31, 1998. Prior to April 21, 1994, there was no public market for the Common
Stock. 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 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
Return Return Return Return Return
April 21, December December December December December
1994 1994 1995 1996 1997 1998
- ---Resource Bankshares Corporation 100.00 123.18 131.50 285.69 678.33 650.03
- ---S & P 500 Stock Index 100.00 104.52 143.80 176.67 235.63 302.96
- ---SNL Southeast Bank Index 100.00 95.52 143.27 196.66 298.13 317.38
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, 1998, the Bank had aggregate
direct and indirect loans to the directors and executive officers of the Company
and the Bank totaling approximately $1.84 million, which represented
approximately 10.4% 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 AMEX. 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 1998
were met in a timely manner by its directors, officers and greater than 10%
beneficial owners, except that two separate purchases of Common Stock by Mr.
Kirk in March and August of 1998 were not reported until February 1999 on a Form
5.
PROPOSAL 2. PROPOSED AMENDED AND RESTATED
1996 LONG-TERM INCENTIVE PLAN
The Company's shareholders are being asked to approve the Company's
Amended and Restated 1996 Long-Term Incentive Plan ("Incentive Plan"). If
approved, the terms of the amended Incentive Plan would differ from the current
terms of such Plan in several important respects. First, the amended Incentive
Plan would increase the aggregate shares of the Company's Common Stock available
for award of employee stock options and director stock options by 150,000
shares. The amended Incentive Plan would also modify the "change of control"
definition and related provisions in the Plan in a manner that would broaden the
circumstances under which option exercises could be accelerated. The Company's
Board of Directors has also approved certain additional amendments to the
Incentive Plan. Certain of these amendments generally eliminate or clarify
provisions of the Incentive Plan that were based on SEC regulations in effect
when the Incentive Plan was adopted, but that have since been repealed or
modified by the SEC. Additional amendments are described in the summary below.
Shareholders are being asked to approve the Amended and Restated Incentive
Plan in its entirety. A copy of the Incentive Plan, as proposed to be amended,
is attached to this Proxy Statement as Exhibit A. The following description is a
summary of the key features of the Incentive Plan.
Purpose and Eligible Participants
The Incentive Plan was initially implemented by the Bank in 1996 and was
adopted as the Company's plan when the Plan of Reorganization became effective.
The purpose of the Incentive Plan is to promote the interests of the Company and
its shareholders by enabling the Company and its subsidiaries to attract and
retain qualified directors ("Company Directors") and key employees ("Key
Employees") (Company Directors and Key Employees collectively "participants").
The Company believes that making awards under the Incentive Plan in the form of
stock options will further these objectives by providing participants with a
proprietary interest in the growth, performance and long term success of the
Company.
Shares Available
When the Incentive Plan was initially adopted in 1996, 100,000 shares of
Common Stock were reserved for option awards to Key Employees and 67,500 shares
were reserved for option awards to directors. The Incentive Plan was
subsequently amended in 1997 to provide that 160,000 shares of Common Stock
would be available for awards of stock options to Key Employees and 87,500
shares of Common Stock would be available for awards of stock options to
directors. As a result of prior option awards, however, there are currently only
1,572 shares of Common Stock available for option awards to Key Employees and
5,000 shares available for option awards to Company Directors. As amended, the
Incentive Plan would make available an additional 150,000 shares of Common Stock
for awards of options to Key Employees and Company Directors. Under the terms of
the amended Incentive Plan, the Board would retain the discretion to allocate
these additional shares among option awards to Key Employees and Company
Directors.
In the event of a change in the outstanding shares of the Company's 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 underlying
previous awards may be adjusted appropriately.
The Common Stock subject to the Incentive Plan will come from authorized
but unissued shares. If any option award expires, is canceled, or terminates for
any other reason, the shares of Common Stock available under that option award
will again be available for the granting of new option awards.
Administration of the Incentive Plan
Option awards to Company Directors ("Company Director Stock Options") are
administered by the Board. Under the original terms of the Incentive Plan, the
terms and conditions of option awards to directors were set forth in the
Incentive Plan and the Board had no meaningful discretion with respect to such
options. These "formula awards" were designed to comply with SEC Rule 16b-3 as
then in effect. Under current SEC Rule 16b-3, the Board may retain complete
discretion with respect to Company Director Stock Options. As such, the Board
now has the authority to construe and interpret the Incentive Plan with respect
to any Company Director Stock Options, to construe and interpret any conditions
or restrictions imposed on the Common Stock acquired pursuant to the exercise of
Company Director Stock Options, and to establish, amend and revoke rules and
regulations for the administration of Company Director Stock Options. The Board
also has the authority to determine the amount, price and timing of any Company
Director Stock Options granted under the Incentive Plan.
Option awards to key Employees ("Employee Stock Options") are administered
by the Board's Compensation Committee, which performs the functions of the
incentive stock option committee contemplated by the Incentive Plan. The
Compensation Committee determines (i) the Key Employees to whom Employee Stock
Options will be granted, (ii) the time at which Employee Stock Options will be
granted, (iii) the form and amount of Employee Stock Options, and (iv) the
limitations, restrictions and conditions applicable to Employee Stock Options,
as well as all other determinations necessary or advisable for the
administration of Employee Stock Options. The Compensation Committee's
determinations with respect to Employee Stock Options need not be uniform,
whether or not particular Key Employees are similarly situated.
Forms and Provisions of Awards
The Compensation Committee may grant awards under the Incentive Plan to
Key Employees in the form of non-qualified stock options ("NQSOs") or incentive
stock options ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code ("Code"). All option awards under the Incentive Plan to Company Directors
are in the form of NQSOs.
Exercise Price
Under the terms of the Incentive Plan, the exercise price ("Exercise
Price") under each stock option is 100% of the "fair market value" ("Fair Market
Value") of the Common Stock covered by the award on the date of grant; provided,
however, that the Code requires that the Exercise Price equal 110% of Fair
Market Value for any ISOs granted to individuals who own more than 10% of the
Company's Common Stock. Under the terms of the Incentive Plan, Fair Market Value
equals the closing price of the Common Stock on AMEX on the date that an option
is awarded. As amended, the Incentive Plan would generally allow participants to
pay the Exercise Price with cash or Company Common Stock and to effectuate
"cashless exercises" of options.
Vesting
The Incentive Plan originally provided that all stock options granted
under the Plan would become exercisable once the average price of a share of
Common Stock on any national exchange or over the counter automated quotation
system on which the Common Stock is actively traded was at least $12.50 for 30
consecutive trading days. This condition has been satisfied. Under the amended
Incentive Plan, the Compensation Committee (or the Board in the case of Company
Director Stock Options) would retain discretion to determine vesting schedules
for options.
Expiration and Termination
No option granted under the Incentive Plan may be exercised more than ten
years after its date of grant (or five years in the case of ISOs held by owners
of more than 10% of the Common Stock). If an optionee's service as a Company
Director terminates for "cause" (as such term is defined in the Incentive Plan),
the options granted to such optionee will immediately terminate and no rights
thereunder may be exercised. If any optionee's service as a Company Director
terminates for any reason other than cause (including death), the Company
Director (or any guardian, legal representative, heir or successor of the
Company Director) may exercise any option that was exercisable at the time of
termination of service in accordance with such option's terms.
Employee Stock Options expire on the date that the employment of a Key
Employee with the Company or any of the Company's subsidiaries terminates for
any reason other than death or disability; provided, however, that the
Compensation Committee in its sole discretion may by written notice to an
ex-employee permit the ex-employee to exercise Employee Stock Options for a
period of up to three months after termination of employment. In the event of a
Key Employee's death or disability (as defined in the Code), Employee Stock
Options expire on the first to occur of the expiration date set forth in any
award agreement evidencing such options or the first anniversary of termination
of employment.
Under the terms of the Incentive Plan, during a participant's lifetime,
only the participant may exercise an option award. 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 option award for the periods described above.
Change in Control
Under the former terms of the Incentive Plan, upon the dissolution or
liquidation of the Company, or upon a merger or consolidation of the Company in
which the Company was not the surviving corporation, each option granted
pursuant to the Incentive Plan would have expired as of the effective date of
such transaction; provided, however, that each participant would have been given
30 days' prior written notice of such an event. During this notice period, a
participant would have had the right to exercise any unexercised option granted
under the Incentive Plan and each option would have been exercisable prior to
the effective date of the transaction.
The amended Incentive Plan contains "change of control" provisions that
differ from the above provisions in several important respects. First, upon a
"change of control" (as defined below), all options awarded under the Incentive
Plan would become fully exercisable, unless otherwise determined by the Board at
or after the option grant but prior to the occurrence of such change of control.
A "change of control" for this purpose means the occurrence of any one or more
of the following events: (i) 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 of
Directors, (ii) the individuals (A) who, as of April 1, 1999, 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 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 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, (iii)
consummation of a merger or consolidation of the Company into any other entity
unless the holders of the Company's Common Stock 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 at least 50% of the combined
voting power of the outstanding voting securities of either the Company or the
other surviving entity or its parent, or (iv) the shareholders of the Company
approve a plan of complete liquidation or dissolution of the Company or an
agreement for the Company's sale or disposition of all or substantially all of
the Company's assets and such liquidation, dissolution, sale, or disposition is
consummated.
In addition, upon a "substantial corporate change" (as defined below), the
Incentive Plan and any unexercised options will terminate unless provision is
made in writing in connection with such transaction for the assumption or
continuation of outstanding options or the substitution for such options of any
options 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 options
previously awarded under the Incentive Plan will continue in the manner and
under the terms so provided (any such assumption, continuation or substitution a
"Substitute Award"). If an option awarded under the Incentive Plan would
terminate because such option is not replaced with a Substitute Award,
participants will be given notice at least thirty days prior to the occurrence
of the transaction constituting the Substantial Corporate Change. During this
thirty day notice period, participants will have the right to exercise any
unexercised portion of an option awarded under the Incentive Plan that by its
terms is exercisable. In addition, if an option awarded under the Incentive Plan
would terminate because the option is not replaced with a Substitute Award, all
unexercisable options awarded under the Incentive Plan will accelerate and
become immediately exercisable during this thirty day notice period.
A substantial corporate change means the (i) 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 of 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 Company's Board that results in any
person or entity (other than any affiliate of the Company as defined under
federal securities laws) 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 initially approved by the Board on July 2, 1996.
Under the terms of the Incentive Plan, no options can be granted pursuant to the
Incentive Plan after July 1, 2006. In all events, the Incentive Plan will remain
in effect until all awards under the Incentive Plan have been satisfied. The
Compensation Committee (or the Board in the case of Company Director Stock
Options) 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
and Compensation Committee may not, without the participant's or beneficiary's
consent, modify the terms and conditions of an option 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
option awards.
In addition, the Incentive Plan specifically provides that the
Compensation Committee (or the Board in the case of Company Director Stock
Options) may not without the approval of the shareholders of the Company (i)
materially increase the total number of shares of Common Stock available for
grant under the Incentive Plan, (ii) materially modify the class of eligible
individuals under the Incentive Plan, or (iii) materially increase the benefits
to any participant who is subject to Section 16 of the Securities Exchange Act
of 1934 ("Exchange Act"). The original terms of the Incentive Plan also provided
that, with respect to Company Director Stock Options, provisions of the Plan
governing specific awards of Company Director Stock Options and other related
matters could not be amended more than once every six months. This six month
limitation was designed to comply with SEC Rule 16b-3 as in effect at the time
the Incentive Plan was adopted. Because Rule 16b-3 as now in effect does not
impose this six month limitation with respect to amendments of the Incentive
Plan, the Incentive Plan as amended does not contain any such limitations.
Federal Income Tax Consequences
Grants of Options. The grant of an ISO or NQSO 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 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.
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.
Summary of Benefits Previously Awarded under the Incentive Plan
Since the Incentive Plan was implemented in 1996, the director-nominees,
executive officers and employees of the Company have received awards of options
under the Incentive Plan in the following amounts:
Aggregate Number of
Name Options Awarded
---- ---------------
Alfred E. Abiouness 13,500
John B. Bernhardt 13,500
Thomas W. Hunt 15,000
Louis R. Jones 13,500
A. Russell Kirk 13,500
Lawrence N. Smith 21,600
Elizabeth A. Twohy 13,500
Current Executive Officers as a Group 36,000
Non-employee Directors as a Group 82,500
All director-nominees as a group 104,100
All employees as a group 158,428
The Board believes that stock options are a competitive necessity to
attract and retain key employees and directors with the skill, intelligence,
education and experience on whose success the Company is dependent. The Company
believes that stock options are appropriate and effective methods to compensate
key 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
AMENDED AND RESTATED 1996 LONG-TERM 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, 1999, 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 year ended December 31, 1998 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.
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 2000 ANNUAL MEETING
The next Annual Meeting of Shareholders will be held on or about May 22,
2000. 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 24, 1999. 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 9, 2000. 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 amended bylaws, March 9, 2000 is also the
deadline for shareholders to notify the Company of an intention to nominate
candidates for directors at the next Annual Meeting of Shareholders. Such
nominations must comply with the notice provisions recently adopted by the Board
of Directors and 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 Exchange Act, (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 on which the
Company first mailed its proxy materials for the prior year's annual meeting of
shareholders. The Company's bylaws state that a copy of any provision added to
the bylaws must be included with the Company's next notice of a shareholders
meeting if such provision regulates elections of directors. In compliance with
this bylaw requirement, a copy of the recently adopted bylaw provision that sets
forth the director nomination procedures described above is attached to this
Proxy Statement as Exhibit B.
GENERAL
The Company's 1998 Annual Report to Shareholders accompanies this Proxy
Statement. The 1998 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, 1998 (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 23, 1999
EXHIBIT A
AMENDED AND RESTATED
1996 LONG-TERM INCENTIVE PLAN
1. General.
1.1 Purpose. The purpose of the 1996 Long-Term Incentive Plan (the
"Plan") is to enable Resource Bankshares Corporation, a Virginia corporation
(the "Company"), and its subsidiaries to attract and retain qualified corporate
directors ("Company Directors") and key employees ("Key Employees"), and
increase the proprietary interest of such Company Directors and Key Employees in
the Company in order to provide them with additional motivation to continue
serving the Company and to further its profitable growth. The awards granted
under the Plan will consist of incentive stock options available to certain Key
Employees ("Incentive Stock Options"), and stock options available to Company
Directors ("Company Director Stock Options").
1.2 Incentive Stock Options. The purpose of Incentive Stock Options
granted under the Plan is (i) to give certain Key Employees of the Company and
its subsidiaries an opportunity to acquire shares of the common stock of the
Company ("Common Stock"), (ii) to provide an incentive for Key Employees to
continue to promote the best interests of the Company and enhance its long-term
performance, and (iii) to provide an incentive for Key Employees to join or
remain with the Company and its subsidiaries. The Company intends that the
Incentive Stock Options will qualify as "incentive stock options" for the
purposes of Section 422 of the Internal Revenue Code, as amended (the "Code");
provided, however, that the Company may issue some options that do not qualify
under Section 422 of the Code. The Company intends that awards of Incentive
Stock Options will constitute exempt transactions pursuant to Rule 16b-3
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Exchange Act of 1934, as amended (the "Act").
1.3 Company Director Stock Options. The purpose of Company Director
Stock Options granted under the Plan is to provide a means by which the Company
Directors may be given an opportunity to acquire shares of Common Stock, so that
the Company may secure and retain the services of persons best qualified to
serve as directors of the Company and so that the Company may provide incentives
for such persons to exert maximum efforts for the success of the Company. The
Company does not intend that the Company Director Stock Options will qualify as
"incentive stock options" for the purposes of Section 422 of the Code.
Accordingly, the Company Director Stock Options will be subject to taxation
under Section 83 of the Code. The Company intends that the Company Director
Stock Options granted prior to November 1, 1996, will constitute a formula award
plan as described in Rule 16b-3(c)(2)(ii) promulgated by the Commission under
the Act in effect on the date of grant. The Company intends that grants of
Company Director Stock Options after November 1, 1996 will constitute exempt
transactions pursuant to Rule 16b-3 in effect on the date of grant.
2. Administration.
2.1 Incentive Stock Options.
(a) Incentive Stock Option Committee. Incentive Stock Options shall
be administered by an incentive stock option committee (the "Committee")
appointed by the Board and composed of not less than two. Unless otherwise
designated by the Board, the Compensation Committee of the Board shall serve as
the Committee under the Plan. No members of the Board who are employees of the
Company and who are eligible to receive Incentive Stock Options shall be
eligible for appointment to the Committee. After November 1, 1996, each member
of the Committee shall be a "Non-Employee Director" as that term is defined in
Rule 16b-3(d) under the Act.
(b) Powers of the Committee. Within the limits of the express
provisions of the Plan, the Committee shall determine: (i) the Key Employees to
whom Incentive Stock Options hereunder shall be granted, (ii) the time or times
at which such Incentive Stock Options shall be granted, (iii) the form and
amount of the Incentive Stock Options and (iv) the limitations, restrictions and
conditions applicable to any such Incentive Stock Options. In making such
determinations, the Committee may take into account the nature of the services
rendered by such Key Employees, their present and potential contributions to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant.
(c) Interpretations. Subject to the express provisions of the Plan,
the Committee may prescribe, amend and rescind rules and regulations relating to
Incentive Stock Options, determine the terms and provisions of the Incentive
Stock Options and make all other determinations it deems necessary or advisable
for the administration of the Incentive Stock Options.
(d) Determinations. The determinations of the Committee on all
matters regarding the Incentive Stock Options shall be conclusive. A member of
the Committee shall only be liable for any action taken or determination made in
bad faith.
(e) Nonuniform Determinations. The Committee's determinations with
respect to Incentive Stock Options, including without limitation, determinations
as to the Key Employees to receive Incentive Stock Options, the terms and
provisions of such Incentive Stock Options and the agreements evidencing the
same, need not be uniform and may be made by it selectively among the Key
Employees who receive or are eligible to receive Incentive Stock Options,
whether or not such Key Employees are similarly situated.
2.2 Company Director Stock Options.
(a) Administration by Board. The Company Director Stock Options
shall be administered by the Board of Directors of the Company (the "Board").
Prior to November 1, 1996, the Board had no authority, discretion or power to
select the individuals who were eligible to receive the Company Director Stock
Options under the Plan, nor did it have any discretion to determine the amount,
price or timing of any Company Director Stock Option granted hereunder, as the
specific grants were set forth in the Plan. With respect to grants made after
November 1, 1996, the Board shall have authority to select the individuals who
are or will be eligible to receive the Company Director Stock Options under the
Plan. The Board shall determine the amount, price and timing of any Company
Director Stock Options granted or to be granted hereunder, and shall administer
the Company Director Stock Options pursuant to the terms of the Plan.
(b) Powers of Board. The Board shall have the power, subject to,
and within the limitations of, the express provisions of the Plan:
(i) to determine the Company Directors to receive Company
Director Stock Options, and set the amounts, place, timing, and terms of any
Company Director Stock Options granted hereunder;
(ii) to construe and interpret the Plan with respect to any
Company Director Stock Options, to construe and interpret any conditions or
restrictions imposed on the Common Stock acquired pursuant to the exercise of
Company Director Stock Options, to define the terms used herein (to the extent
not already defined) and to establish, amend, and revoke rules and regulations
for administration of the Company Director Stock Options. The Board, in the
exercise of this power, may correct any defect, omission, or inconsistency in
the Company Director Stock Options in a manner and to the extent it shall deem
necessary or expedient to make the Company Director Stock Options fully
effective;
(iii) to amend, modify, suspend, or terminate the Company
Director Stock Options in accordance with Section 13; and
(iv) generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company in connection with the Company Director Stock Options.
3. Maximum Limitations; Option Shares.
3.1 Maximum Limitations with Respect to Incentive Stock Options. The
aggregate number of shares of Common Stock for which Incentive Stock Options may
be granted under the Plan is 160,000, subject to Section 3.3 below and subject
to adjustment pursuant to Section 8. If, prior to the end of the period during
which Incentive Stock Options may be granted under the Plan, any Incentive Stock
Option expires unexercised or is terminated, surrendered or canceled without
being exercised, in whole or in part, for any reason, the number of shares
subject to such Incentive Stock Option, or the unexercised, terminated,
surrendered or canceled portion thereof, shall be added to the remaining number
of shares of Common Stock available for issuance pursuant to exercise of
Incentive Stock Options under the Plan, including a grant to a former holder of
such Incentive Stock Option, upon such terms and conditions as the Committee
shall determine, which terms may be more or less favorable than those applicable
to the holder of such former Incentive Stock Option.
3.2 Maximum Limitations with Respect to Company Director Stock Options.
The aggregate number of shares of Common Stock for which Company Director Stock
Options may be granted under the Plan is 87,500, subject to Section 3.3 below
and subject to adjustment pursuant to Section 8. If, prior to the end of the
period during which Company Director Stock Options may be granted under the
Plan, any Company Director Stock Option expires unexercised or is terminated,
surrendered or cancelled without being exercised, in whole or in part, for any
reason, the number of shares subject to such Company Director Stock Option, or
the unexercised, terminated, surrendered or cancelled portion thereof, shall be
added to the remaining number of shares of Common Stock available for issuance
pursuant to exercise of Company Director Stock Options under the Plan, including
a grant to a former holder of such Company Director Stock Option, upon such
terms and conditions as the Board shall determine, which terms may be more or
less favorable than those applicable to the holder of such former Company
Director Stock Option.
3.3 Additional Shares. In addition to the shares of Common Stock
specifically available for awards of Incentive Stock Options and Company
Director Stock Options as described above, an additional 150,000 shares of
Common Stock shall be available for awards of options pursuant to this Plan
(such shares the "Additional Shares"). Awards of options with respect to the
Additional Shares shall be allocated between Incentive Stock Options and Company
Director Options in such proportions as the Board shall determine in its sole
and absolute discretion (it being understood that, for purposes of the Code, the
maximum shares available for awards of Incentive Stock Options under this Plan
shall be 310,000, which equals the sum of the shares authorized under Section
3.1 and the Additional Shares).
3.4 Option Shares. Shares of Common Stock issued pursuant to the Plan
shall be authorized but unissued shares.
4. Incentive Stock Options.
4.1 Taxation of Incentive Stock Options; Nonqualified Stock Options.
The Company intends that Incentive Stock Options granted under the Plan shall
constitute "incentive stock options" within the meaning of, and be taxed under,
Section 422 of the Code. However, the Committee may in its discretion choose to
issue "nonqualified options" to Key Employees, within the aggregate number of
shares of Common Stock available under the Plan, which violate one or more of
the requirements of this Section 4 ("Nonqualified Options"), (i) as long as the
Key Employees to whom such Nonqualified Options are granted are advised that
such options will be taxable under Section 83 of the Code, rather than Section
422, and (ii) as long as Nonqualified Options are not issued in tandem with
Incentive Stock Options as described in Internal Revenue Service Treas. Reg. ss.
14a.422A-1 (Q&A-39).
4.2 Provisions Applicable to Incentive Stock Options. Incentive Stock
Options granted under the Plan for the purchase of shares of Common Stock shall
be in such form and upon such conditions as the Committee shall from time to
time determine, subject to the following:
(a) Option Price. The option price for each share of Common Stock
issuable under each Incentive Stock Option shall be at least 100% of the fair
market value of the Common Stock (as defined in Section 16.7 herein) subject to
such Incentive Stock Option on the date of grant.
(b) Condition Precedent to Exercise; Duration. Each Option
Agreement (as defined in Section 6) pursuant to which Incentive Stock Options
are granted shall state the period or periods of time within which the Incentive
Stock Options may be exercised by the Key Employee, in whole or in part, which
shall be such period or periods of time as may be determined by the Committee.
Notwithstanding the foregoing, except as otherwise set forth in Section 4.2(d)
below, no Incentive Stock Option shall be exercisable after the date ten (10)
years from the date such Incentive Stock Option is granted.
(c) Limitation on Amounts. The aggregate fair market value
(determined with respect to each Incentive Stock Option as of the time such
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by a Key Employee
during any calendar year shall not exceed $100,000. This limitation (i) does not
limit the right to exercise Incentive Stock Options cumulatively in excess of
$100,000 once the $100,000 limitation has been met, and (ii) does not apply to
any Nonqualified Options granted by the Committee, if any.
(d) Ten percent Shareholder. Notwithstanding any other provision
contained in the Plan, if, at the time an Incentive Stock Option is granted, a
Key Employee "owns" (as defined in Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company, the option price for such Incentive Stock Option shall be at least 110%
of the fair market value of the Common Stock (as defined in Section 16.7 herein)
subject to such Incentive Stock Option on the date of grant and such Incentive
Stock Option shall not be exercisable after the date five years from the date
such Incentive Stock Option is granted.
5. Company Director Stock Options
5.1 Taxation of Company Director Stock Options. The Company does not
intend that Company Director Stock Options granted under the Plan shall
constitute "incentive stock options" within the meaning of Section 422 of the
Code. Accordingly, the Company Director Stock Options shall be subject to
taxation under Section 83 of the Code.
5.2 Option Grant; Number of Shares. The Board of Directors may issue
Company Director Stock Options available for grant under the Plan to such
Company Directors as the Board deems reasonable and appropriate.
5.3 Option Price. The option price for each share of Common Stock
issuable under each Company Director Stock Option shall be equal to 100% of the
fair market value of the Common Stock (as defined in Section 16.7 herein) on the
date the Company Director Stock Option is granted, but in no event can the
exercise price be less than the per share book value.
5.4 Condition Precedent to Exercise; Duration. Each Option Agreement
(as defined in Section 6) pursuant to which Company Director Stock Options are
granted shall state the period or periods of time within which the Company
Director Stock Options may be exercised by the Company Directors, in whole or in
part, which shall be such period or periods of time as may be determined by the
Board. Notwithstanding the foregoing, no Company Director Stock Option shall be
exercisable after the date ten (10) years from the date such Company Director
Stock Option is granted.
6. Option Agreement. Incentive Stock Options and Company Director Stock
Options (sometimes collectively referred to hereinafter as the "Options") shall
be evidenced by such form of written option agreement (the "Option Agreement")
between a Plan participant (a Plan participant who is granted an Option is
sometimes hereinafter referred to as the "optionee") and the Company as the
Committee (or the Board in the case of Company Director Stock Options) shall
determine, provided that such Option Agreements are not inconsistent with the
other provisions of the Plan, or in the case of Incentive Stock Options, with
Section 422 of the Code or the regulations thereunder.
7. Transferability. No Option may be transferred, assigned, pledged or
hypothecated (whether by operation of law or otherwise), except as provided by
will or the applicable laws of descent or distribution, and no Option shall be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of an Option, or levy of
attachment or similar process upon the Option not specifically permitted herein
shall be null and void and without effect. An Option may be exercised only by an
optionee during his or her lifetime or, pursuant to Sections 11 and 12, by his
or her estate or the person who acquires the right to exercise such Option upon
his or her death by bequest or inheritance.
8. Adjustment Provisions. The aggregate number of shares of Common Stock
with respect to which Options may be granted, the aggregate number of shares of
Common Stock subject to each outstanding Option, and the option price per share
of each such Option, may all be appropriately adjusted as the Committee (or the
Board in the case of Company Director Stock Options) may determine for any
increase or decrease in the number of shares of issued Common Stock resulting
from a subdivision or consolidation of shares, whether through reorganization,
recapitalization, stock split, stock distribution or combination of shares, or
the payment of a share dividend or other increase or decrease in the number of
such shares outstanding effected without receipt of consideration by the Company
("Change in Capitalization"). If, by reason of a Change in Capitalization, an
optionee shall be entitled to exercise an Option with respect to new, additional
or different shares of stock or securities, such new, additional or different
shares shall thereupon be subject to all of the conditions which were applicable
to the Common Stock subject to the Option prior to such Change in
Capitalization. Any adjustment in the Common Stock subject to an outstanding
Option shall be made only to the extent necessary to maintain the proportionate
interest of the optionee and preserve, without exceeding, the value of such
Option. Adjustments under this Section 8 shall be made according to the sole
discretion of the Committee (or the Board in the case of Company Director Stock
Options), and its decisions shall be binding and conclusive.
9. Dissolution, Merger and Consolidation.
9.1 Change of Control. Upon a Change of Control (as defined below), all
Options will become fully exercisable. A Change of Control for this purpose
means the occurrence of any one or more of the following events, unless
otherwise determined by the Board at or after the grant of Options but prior to
the occurrence of such Change of Control:
(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 April 1, 1999, 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 at least 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 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.
9.2 Substantial Corporate Change. Upon a Substantial Corporate Change
(as defined below), the Plan and any unexercised Options will terminate unless
provision is made in writing in connection with such transaction for the
assumption or continuation of outstanding Options, or the substitution for such
Options of options 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 Options will continue in the manner and under the terms so provided
(any such assumption, continuation or substitution a "Substitute Award"). If an
Option would terminate because the Option is not replaced with a Substitute
Award, participants will be given notice at least 30 days prior to the
occurrence of the transaction constituting the Substantial Corporate Change.
During this 30 day notice period, participants will have the right to exercise
any unexercised portion of an Option that by its terms is exercisable. In
addition, if an Option would terminate because the Option is not replaced with a
Substitute Award, all unexercisable Options will accelerate and become
immediately exercisable during this 30 day notice period.
A Substantial Corporate Change means the (i) 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 of 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) owning 100% of the combined
voting power of all classes of stock of the Company.
10. Effective Date; Limitations on Grants of Options.
10.1 Effective Date. The original Plan became effective on July 2, 1996
("Effective Date"). This Amended and Restated Plan shall become effective on the
date of its approval by the holders of a majority of the shares of Common Stock
of the Company voting on such matter.
10.2 Grants of Options. No Option shall be granted under the Plan more
than ten (10) years after the Effective Date.
10.3 Intentionally Omitted.
10.4 Existing Options. The Plan and all Options that are actually
granted under the Plan shall remain in effect and be subject to adjustment and
amendment as herein provided until they have been satisfied or terminated in
accordance with the terms of the grants and the applicable Option Agreement.
11. Termination of Service of Key Employee. Each Incentive Stock Option
shall, unless sooner expired pursuant to Sections 11.1 or 11.2 below, expire on
the first to occur of (i) the tenth (10th) anniversary of the date of grant
thereof or (ii) the expiration date set forth in the applicable Option Agreement
(the "Expiration Date").
11.1 Termination other than for Death or Disability. Notwithstanding
any provision in the Plan to the contrary, an Incentive Stock Option shall
expire on the date that the employment of the Key Employee with the Company or
any of its subsidiaries terminates for any reason other than death or
disability; provided, however, that the Committee in its sole discretion may, by
written notice given to an ex-employee, permit the ex-employee to exercise
Incentive Stock Options during a period following his or her termination of
employment, which period shall not exceed three months. In no event, however,
may the Committee permit an ex-employee to exercise an Incentive Stock Option
after the Expiration Date. If the Committee permits an ex-employee to exercise
an Incentive Stock Option during a period following his or her termination of
employment pursuant to this Section 11.1, such Incentive Stock Option shall, to
the extent unexercised, expire on the date that such ex-employee violates (as
determined by the Committee in its sole and absolute discretion) any covenant
not to compete in effect between the Company or its subsidiaries and the
ex-employee.
11.2 Termination for Death or Disability. Notwithstanding any
provision in the Plan to the contrary, if the employment of a Key Employee with
the Company or any of its subsidiaries terminates by reason of the Key
Employee's disability (as defined in Section 422(c)(9) of the Code and as
determined by the Committee in its sole and absolute discretion) or death, his
or her Incentive Stock Option shall expire on the first to occur of the
Expiration Date or the first anniversary of such termination of employment.
11.3 Terms of Incentive Stock Options Not Extended. Sections 11.1
and 11.2 shall not be construed to extend the term of any Incentive Stock Option
or to permit anyone to exercise any Incentive Stock Option after the expiration
of its term, nor shall it be construed to increase the number of shares of
Common Stock as to which any Incentive Stock Option is exercisable from the
amount exercisable on the date of termination of the Key Employee's service to
the Company.
12. Termination of Service of Company Director. Each Company Director Stock
Option shall, unless sooner expired pursuant to Sections 12.1 or 12.2 below,
expire on the first to occur of (i) the tenth (10th) anniversary of the date of
grant thereof or (ii) the Expiration Date.
12.1 Termination for Cause. If an optionee's service as a Company
Director terminates for cause (as defined in Section 16.6 herein), the Company
Director Stock Options granted to the optionee hereunder shall immediately
terminate in full and no rights thereunder may be exercised.
12.2 Termination Not for Cause. If an optionee's service as a
Company Director terminates for any reason other than cause, the optionee (or
any guardian, legal representative, heir or successor of the optionee) may
exercise his Company Director Stock Options in accordance with their terms to
the extent, and only to the extent, that such Company Director Stock Options or
portions thereof were vested as of the date the optionee's service as a Company
Director terminated, after which time the Company Director Stock Options that
are not vested shall automatically terminate.
12.3 Terms of Company Director Options Not Extended. Sections 12.1
and 12.2 shall not be construed to extend the term of any Company Director Stock
Option or to permit anyone to exercise any Company Director Stock Option after
the expiration of its term, nor shall it be construed to increase the number of
shares of Common Stock as to which any Company Director Stock Option is
exercisable from the amount exercisable on the date of termination of the
optionee's service to the Company.
13. Termination and Amendment of the Plan. The Committee (or the Board in
the case of Company Director Stock Options) may from time to time amend, modify,
terminate or suspend the Plan; provided, however, that:
13.1 Except as provided in Sections 8 and 9, no such amendment,
modification, suspension, or termination shall impair or adversely alter any
Options or rights theretofore granted under the Plan, except with the consent of
the optionee, nor shall any amendment, modification, suspension, or termination
deprive any optionee of any Common Stock which he may have acquired through or
as a result of the Plan;
13.2 No amendment to the Plan shall be effective unless approved by
the shareholders of the Company in accordance with applicable law and the
regulations of any automated quotation system or national stock exchange on
which the Common Stock is listed or trades (if shareholder approval is so
required under such law or regulations). In addition, the Committee (or the
Board in the case of Company Director Stock Options) may not without the
approval of the shareholders of the Company:
(i) materially increase the total number of shares of Common
Stock available for grant under the Plan;
(ii) materially modify the class of eligible individuals
under the Plan; or
(iii) materially increase the benefits to any Plan participant
who is subject to the restrictions of Section 16 of the Act.
14. Non-Exclusivity of the Plan. Nothing contained in the Plan prohibits a
Company Director from being appointed as an officer or employee of the Company
at any time, nor does anything contained in the Plan specifically require a
Company Director to surrender or forfeit a Company Director Stock Option solely
because he accepts an appointment as an officer or employee of the Company at
any time after being granted a Company Director Stock Option hereunder.
15. Limitation of Liability. Nothing in the Plan shall be construed to:
15.1 give any Key Employee or Company Director any right to be granted
an Option other than as specifically provided by the Plan;
15.2 give any Key Employee or Company Director any rights whatsoever
with respect to Common Stock except as specifically provided in the Plan;
15.3 limit in any way the right of the Company to terminate the service
of any Company Director as a member of the Board pursuant to the Company's
bylaws and articles of incorporation;
15.4 be evidence of any agreement or understanding, express or implied,
that the Company will nominate or appoint any person as a member of the Board;
or
15.5 confer upon any Key Employee or optionee the right to continue
in the employment of the Company or its subsidiaries or affect any right which
the Company may have to terminate the employment of each Key Employee or
optionee.
16. Miscellaneous.
16.1 Legal Requirements. The obligation of the Company to sell and
deliver Common Stock under the Plan shall be subject to all applicable laws,
regulations, rules and approvals. Certificates for shares of Common Stock issued
hereunder may be legended as the Committee (or the Board in the case of Company
Director Stock Options) shall deem appropriate.
16.2 No Obligation To Exercise Options. The granting of an Option shall
impose no obligation upon an optionee to exercise such Option.
16.3 Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Options issued hereunder will be used for
general corporate purposes.
16.4 Withholding Taxes. The Company is authorized to withhold from
any Option, any payment relating to an Option under the Plan, including from a
distribution of Common Stock, or any payroll or other payment to an optionee,
amounts of withholding and other taxes due with respect thereto, the exercise
thereof, or any payment thereunder, and to take such other action as the
Committee (or the Board in the case of Company Director Stock Options) may deem
necessary or advisable to enable the Company and any optionee to satisfy
obligations for the payment of withholding taxes and other tax liabilities
relating to any Option. The authority shall include authority to withhold Common
Stock and to make cash payments in respect thereof in satisfaction of an
optionee's tax obligations. The Company may also require, as a condition to
delivery of Common Stock upon exercise of an Option, that all taxes required to
be withheld (if any) in connection with such exercise be paid to the Company.
16.5 Leaves of Absence and Disability. The Committee shall be
entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by, or
disability of, any Key Employee. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (i) whether or not any
such leave of absence shall constitute a termination of employment within the
meaning of the Plan, and (ii) the impact, if any, of any such leave of absence
on Incentive Stock Options granted under the Plan to any Key Employee who takes
such leave of absence.
16.6 Cause. For the purposes of Section 12.1, "cause" shall mean the
commission of an act of fraud or intentional misrepresentation or an act of
embezzlement, misappropriation or conversion of the assets or opportunities of
the Company.
16.7 Fair Market Value. Whenever the fair market value of Common
Stock is to be determined under the Plan as of a given date, such fair market
value shall be:
(a) If the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or other comparable quotation system and has been designated as a National
Market System ("NMS") security, the last sale price reported for the Common
Stock on such system on such given date;
(b) If the Common Stock is admitted to quotation on NASDAQ and
has not been designated a NMS security, the closing bid price for the Common
Stock at the close of trading on such given date;
(c) If the Common Stock is listed on a national securities
exchange, the closing price of the Common Stock of the Composite Tape on such
given date; and
(d) If the Common Stock is neither admitted to quotation on
NASDAQ (or other comparable quotation system) nor listed on a national
securities exchange, such value as the Committee (or the Board in the case of
Company Director Stock Options) shall attribute to the Common Stock.
(e) Notwithstanding any provision in this Section 16.7 to the
contrary, the fair market value of Common Stock for the purposes of this Plan
shall in no event be less than $1.925 per share.
16.8 Payment Upon Exercise. Common Stock purchased pursuant to an
Option shall be paid for in full in cash or, unless the Committee (or the Board
in the case of Company Director Stock Options) determines otherwise at or prior
to the time of exercise, in Common Stock of the Company at fair market value (as
defined in Section 16.7 above) or a combination of such cash and Common Stock,
in an amount or having a combined value equal to the aggregate purchase price
for the shares subject to the Option or portion thereof being exercised. To the
extent permitted under the applicable laws and regulations under Section 16 of
the Act and the rules and regulations promulgated thereunder, and with the
consent of the Committee (or the Board in the case of Company Director Stock
Options), the Company agrees to cooperate in a "cashless exercise" of an Option.
The cashless exercise shall be effected by the Company Director or Key Employee
delivering to a registered securities broker acceptable to the Company
instructions to sell a sufficient number of shares of Common Stock to cover the
costs and expenses associated therewith.
16.9 Notices. Every direction, revocation or notice authorized or
required by the Plan shall be deemed delivered to the Company (1) on the date it
is personally delivered to the Secretary of the Company at its principal
executive offices, or (2) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to the Secretary at such offices, and
shall be deemed delivered to an optionee (1) on the date it is personally
delivered to him or her, or (2) three business days after it is sent by
registered or certified mail, postage prepaid, addressed to him or her at the
last address shown for him or her on the records of the Company.
16.10 Applicable Law. All questions pertaining to the validity,
construction and administration of the Plan and Options granted hereunder shall
be determined in conformity with the laws of the Commonwealth of Virginia, to
the extent not inconsistent with the Act and Sections 83 and 422 of the Code and
regulations thereunder.
16.11 Elimination of Fractional Shares. If, under any provision of
the Plan which requires a computation of the number of shares of Common Stock
subject to an Option, the number so computed is not a whole number of shares of
Common Stock, such number of shares of Common Stock shall be rounded down to the
next whole number.
16.12 Applicability of Plan Provisions to Nonqualified Options. Other
than the provisions of the Plan that are explicitly required by Section 422 of
the Code, all of the provisions of the Plan that apply to Incentive Stock
Options shall also apply to any Nonqualified Options granted under the Plan to
Key Employees.
16.13 Compliance with Rule 16b-3. It is the intent of the Company
that this Plan and awards under the Plan comply in all respects with Rule 16b-3
under the Act in connection with any Option granted to a person who is subject
to Section 16 of the Act. Accordingly, if any provision of this Plan, any
Option, or any Option Agreement does not comply with the requirements of Rule
16b-3 as then applicable to any such person, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements with
respect to such person.
EXHIBIT B
BYLAW PROVISION GOVERNING
SHAREHOLDER NOMINATIONS OF DIRECTORS
Section 2.5 Nomination of Directors.
a. Eligibility. Only persons who are selected and recommended by the Board
of Directors or the committee of the Board of Directors designated to make
nominations, or who are nominated by shareholders in accordance with the
procedures set forth in this Section 2.5, shall be eligible for election, or
qualified to serve, as directors. Nominations of individuals for election to the
Board of Directors of the Corporation at any annual meeting or any special
meeting of shareholders at which directors are to be elected may be made by any
shareholder of the Corporation entitled to vote for the election of directors at
that meeting by compliance with the procedures set forth in this Section 2.5.
Nominations by shareholders shall be made by written notice (a "Nomination
Notice"), which shall 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, including his or her principal occupations and
employment during such period, the name and principal business of any
corporation or other organization in which such occupations and employment were
carried on, and such other information as to the nature of his or her
responsibilities and level of professional competence as may be sufficient to
permit assessment of his or her prior business experience, (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, partnership interests or other equity
interest of any corporation, partnership or other entity, (iv) any directorships
held by such nominee in any company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or subject to the requirements of Section 15(d) of the Exchange
Act or any Company registered as a investment company under the Investment
Company Act of 1940, as amended, (v) whether, in the last five years, such
nominee has been convicted in a criminal proceeding or has been subject to a
judgment, order, finding or decree of any federal, state or other governmental
entity, concerning any violation of federal, state or other law, or any
proceeding in bankruptcy, which conviction, order, finding, decree or proceeding
may be material to an evaluation of the ability or integrity of the nominee and
(vi) such other information regarding each 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 Corporation's books (if they so appear), (iii) the
class and number of shares of the Corporation that are beneficially owned by
such person, (iv) a representation that the shareholder (A) is a holder of
record of common stock of the Corporation 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 (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder. A written consent to being named in a proxy statement as a nominee,
and to serve as a director if elected, signed by the nominee, shall be filed
with any Nomination Notice. If the presiding officer at any shareholders'
meeting determines that a nomination was not made in accordance with the
procedures prescribed by these Bylaws, he shall so declare to the meeting and
the defective nomination shall be disregarded.
b. Shareholder Nomination Notice. Nomination Notices shall be delivered to
the Secretary at the principal executive office of the Corporation not later
than (i) 45 days before the date on which the Corporation first mailed its proxy
materials for the prior year's annual meeting of shareholders (or, if the date
of the annual meeting has changed more than 30 days from the prior year, then
notice must be received a reasonable time before the Corporation mails its proxy
materials for the current year) or, (ii) in the case of special meetings, at the
close of business on the seventh day following the date on which notice of such
meeting is first given to shareholders.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
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RESOURCE BANKSHARES CORPORATION
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Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
Shareholder sign here Co-owner sign here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS.
For All With- For All
Nominees hold Except
Alfred E. Abiouness Thomas W. Hunt [ ] [ ] [ ]
John B. Bernhardt Lawrence N. Smith [ ] [ ] [ ]
Louis R. Jones Elizabeth A. Twohy [ ] [ ] [ ]
A. Russell Kirk
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and write the nominee's name on the line provided
below).
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For Against Abstain
2. APPROVAL of the Company's Amended and [ ] [ ] [ ]
Restated 1996 Long-Term Incentive Plan.
3. RATIFICATION of 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, 1999.
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.
RESOURCE BANKSHARES CORPORATION
Proxy Solicited on Behalf of the
Board of Directors for
Annual Meeting of Shareholders
to be held May 27, 1999
The undersigned, having received the Annual Report to Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement dated
April 23, 1999, hereby appoints Alfred E. Abiouness, John B. Bernhardt and
Lawrence N. Smith (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 1, 1999, at the Annual Meeting of
Shareholders to be held on May 27, 1999, and any adjournment thereof.
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 VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
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 any 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.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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