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S.E.C. Filing
ABIGAIL ADAMS NATIONAL BANCORP, INC.
SCHEDULE 14A
April 10, 1998
Filed: April 10, 1998
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy (Consent Solicitation) Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
Preliminary Proxy Statement [x]
Confidential for Use of the Commission Only (as permitted by
Rule 14a-6 (e) (2)) [ ]
Definitive Proxy Statement [ ]
Definitive Additional Materials [ ]
Soliciting Material pursuant to Rule 14a-11 (c) or Rule 14a-12 [ ]
ABIGAIL ADAMS NATIONAL BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
Marshall T. Reynolds
Shirley A. Reynolds
Robert L. Shell, Jr.
Jeanne D. Hubbard
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
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(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:
LETTER TO SHAREHOLDERS
April __, 1998
Dear Fellow Abigail Adams National Bancorp, Inc. Shareholder:
The undersigned, all shareholders of Abigail Adams National Bancorp,
Inc. (the "Company"), and three of whom are members of the Board of Directors
(the "Board") of the Company, are soliciting written consents of the other
shareholders of the Company to remove four current members of the Board and
elect four new nominees to serve in their place until the next regular annual
meeting of the shareholders, which has not yet been set. The four current
members of the Board whom we propose to replace are Barbara Davis Blum, Shireen
L. Dodson, Susan Hager, and Clarence L. James, Jr. (these individuals being
referred to herein as the "Incumbents"). The nominees to replace them (the
"Nominees") are George Cook, Marianne Steiner, Bonita A. Wilson and Joseph L.
Williams. The Board will continue to consist of ten (10) members.
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We believe that these steps (referred to herein as the "Proposal")
have been made necessary by the actions of the Incumbents. It is our belief that
the Incumbents have tolerated inadequate performance by management. We believe
that this inadequate performance has been reflected primarily by (1) the failure
of management to consummate any of the acquisitions targeted by it when over $6
million in capital was raised by the Company, (2) the failure of management to
increase either net income or grow its capital at levels consistent with its
marketplace and peers in that marketplace during a period of significant
prosperity, as reported by a third-party comparison of peer institutions, and
(3) a failure accurately to predict or effectively to control the expenses
associated with the proposed merger with Ballston National Bancorp ("Ballston"),
which merger was rejected by the shareholders of the Company. Management
initially estimated these expenses at $250,000, later revised its estimate to
$750,000 and, most recently, reported a write-off of $1,200,000 resulting from
the unsuccessful merger. We also believe that the Incumbents reacted
counterproductively to the decision of the Company's shareholders to reject the
proposed merger with Ballston, by wasting and continuing to waste significant
amounts of the Company's time, money and resources in litigation against the
undersigned and other individuals (who are not participating in this Consent
Solicitation), namely Barbara W. and Robert H. Beymer, Deborah P. and Thomas W.
Wright, Mr. Shell's wife, Lena Ji Shell, and Ferris Baker Watts, Incorporated,
rather than concentrate on increasing the value of the Company's business. This
litigation was initially filed after the Incumbents postponed the shareholder
meeting called to vote on the Ballston acquisition, seeking a court order
precluding the undersigned and many other unnamed shareholders from being able
to vote their shares on that transaction. Further information concerning this
litigation and our plans with respect to the litigation if the Proposal is
approved is contained in the Consent Solicitation Statement accompanying this
letter. We believe that this litigation is without merit and that the Company's
resources should no longer be wasted in pursuing it. We may be viewed as having
a conflict of interest in pursuing the Proposal inasmuch as this could
ultimately result in dismissal of the litigation against us and reimbursement of
our expenses. However, we believe the Proposal is also in the best interests of
the Company and its other shareholders.
We believe that if the Nominees are elected to replace the
Incumbents, they will join those of us who are already directors in securing
better management, honoring the decision of the Company's shareholders to move
on after the rejection of the merger with Ballston, and focus on efforts to grow
the Company's business. And, as noted, we also hope that the reconstituted Board
will terminate the current litigation against the undersigned and others.
It is unfortunate that we must seek to remove and replace these four
directors, but regrettably the Incumbents have been unwilling to resolve this
dispute in a reasonable manner that is consistent with what we believe are the
best interests of the Company and its shareholders. We therefore respectfully
ask you to join with us in supporting this Proposal. Details concerning the
Proposal and the consent solicitation process are included in the Consent
Solicitation Statement enclosed with this letter. If successful, the Proposal
will trigger the "change in control" clauses of certain severance agreements of
the Chairwoman and other persons, potentially entitling certain of these
individuals to severance payments and other benefits. The Proposal may also
cause certain stock options belonging to the Incumbents and other persons to
vest early. These potential events could result in significant costs to the
Company. Please see
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the section entitled "Potential Costs to the Company in Severance Payments and
Early Vesting as a Result of the Proposal" in the Consent Solicitation Statement
for more information. We urge you to read through the Consent Solicitation
Statement and to give this Proposal careful consideration.
If you support this agenda and are willing to consent to the
Proposal, please complete the BLUE Consent Card which is attached to the
enclosed Consent Solicitation Statement and return it to us in the enclosed
envelope. Once we have received a sufficient number of written consents to
ratify the Proposal, we will submit them to the Company and the Proposal will
take effect. Ideally, we would like to receive all consents no later than April
__, 1998. Although the final deadline for submitting the proposals to the
Company is May 31, 1998, we urge you to send us your written consents AS SOON AS
POSSIBLE, so that the Proposal can go into effect and we can go on with the
business of improving the value of our Company. On March 31, 1998, we delivered
our consents to the Company representing a total of 360,025 shares, or 21.8% of
the outstanding shares of the Company. The consents of an additional 465,589
shares will be required to effect the actions we seek.
If you have any questions regarding this matter please contact:
Marshall Reynolds
c/o Chapman Printing
2450 First Avenue
Huntington, WV 25703
(304) 528-2791
FAX: (304) 528-2765
Thank you very much for your consideration of this important action.
Mrs. Shirley A. Reynolds
Mr. Marshall T. Reynolds
Ms. Jeanne D. Hubbard
Mr. Robert L. Shell, Jr.
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CONSENT SOLICITATION STATEMENT
This Consent Solicitation Statement, the accompanying letter and the
enclosed form of written consent are being furnished by and on behalf of the
undersigned (the "Participants") on or about April __, 1998. Under the statutes
governing the affairs of Abigail Adams Bancorp, Inc. (hereinafter "AANB" or the
"Company"), shareholders owning a majority (over fifty percent (50%)) of AANB's
outstanding shares can, without a meeting, consent in writing to any action that
holders of a majority of AANB shares could approve at a meeting of shareholders.
One such action is the removal and replacement of directors, with or without
cause.
The undersigned shareholders of AANB who, in the aggregate, own of
record 21.8 percent of the outstanding shares, not including shares jointly held
with spouses or other family members, hereby solicit your consent to remove four
of the current members of the existing Board of Directors (the "Board") of AANB,
elect four new nominees to serve in their place until the next regular annual
meeting of the shareholders, which has not yet been set (said actions being
referred to herein as the "Proposal"). In 1997, the annual meeting of
shareholders was held on June 17, 1997. We have already delivered our consents
to the Proposal to the Company. The Participants are also members of an
eight-individual group filing a Schedule 13D that controls, in the aggregate,
536,087 fully diluted shares of the Company's common stock, representing 32.5%
of the total outstanding shares. The other four individuals in that Schedule 13D
group are not participating in this Consent Solicitation. Furthermore, none of
the non-participating members of that Schedule 13D group are obligated to vote
their shares for the Proposal.
The directors proposed to be removed are:
Barbara Davis Blum (who is also the Chairwoman, Chief Executive
Officer and President of the Company); Shireen L. Dodson; Susan Hager; and
Clarence L. James, Jr.
The persons proposed to be elected in their stead are:
George Cook, age 64, is the Principal of George Cook & Co., and a
Distinguished Fellow of the Institute of Public Policy at George Mason
University. He is Chairman Emeritus and retired Chief Executive Officer of
Colonial Parking, Inc., a current member of the Greater Washington Board of
Trade, and a member of the Urban Land Institute. He is a former Chair of the
National Policy Council, and a Director and a past Executive Committee Member of
the Greater Washington Research Council. He is board member and past Chairman of
the Board of the Alexandria Health Services Corporation, and a board member of
Girl Scouts of the U.S.A. He is a member and past Chairman of the Board of the
National Parking Association as well as a past President and past Director of
the Washington Parking Association. He is a former Member of the City Council of
the City of Alexandria, and a former Chairman of the Commission on Local
Government for the Commonwealth of Virginia. He is a former member of the Board
of
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Visitors of George Mason University, and a former Vice Chairman of the Virginia
State Electoral Board.
Marianne Steiner, age 43, is the Principal of Larkspur Marketing ,
which she founded in 1991 after serving MCI Communications Corporation as
Director of Marketing. She holds a joint M.E. and M.S. degree from the Harvard
Business School and Graduate School of Arts and Sciences in Information Sciences
and Applied Mathematics, and a Bachelor of Science degree in Computer Science
from the University of Miami. She also serves as a Trustee and member of the
Governing Board of the Beauvoir School.
Joseph L. Williams, age 52, is the Chairman and Chief Executive
Officer of Basic Supply Company (1977 to Present). He was one of the organizers
and is a director of First Sentry Bank of Huntington, West Virginia (1996 to
Present). He is also a director of the Huntington Industrial Corporation,
Unlimited Future, Inc. (a small business incubator) and the West Virginia
Capital Corporation. He is a member of the National Advisory Counsel of the
United States Small Business Administration (since 1997) , the Huntington
Municipal Development Authority and is Treasurer of the Huntington Museum of
Arts. He is a graduate of Marshall University (B.Sc. in Finance) and a member of
the Executive Committee of its College of Business Advisory Board.
Bonita A. Wilson, age 56, who was for over 15 years a retailing
management executive with Garfinkles, TJ Maxx and Hecht Company, owns and
operates her own retail business and is a consultant to other retailers. She has
served as a director of Dart Group Corporation, Track Auto Corporation and Crown
Books Corporation (all 1993 to 1997), on the advisory Board of Wedgewood Capital
Management, and as the Honorary Chair of the John A. Wilson Memorial Community
Foundation.
Mr. Williams is one of the listed organizers of First Sentry Bank,
and together with Participants Mr. Shell and Ms. Hubbard, is on the board of
directors of First Sentry Bank.
BACKGROUND OF AND REASONS FOR THE SOLICITATION
The undersigned (the "Participants") believe that the directors
proposed to be removed (the "Incumbents") are not serving the Company well. The
Participants believe that the Incumbents have tolerated inadequate performance
by management. The Participants believe that this inadequate performance has
been reflected primarily by (1) the failure of management to consummate any of
the acquisitions targeted by it when over $6 million in capital was raised by
the Company, (2) the failure of management to increase either net income or grow
its capital at levels consistent with its marketplace and peers in that
marketplace during a period of significant prosperity, as reported by a
third-party comparison of peer institutions, and (3) a failure accurately to
predict or effectively to control the expenses associated with the proposed
merger with Ballston National Bancorp ("Ballston"), which merger was rejected by
the shareholders of the Company. Management initially estimated these expenses
at $250,000, later revised its estimate to $750,000 and, most recently, reported
a write-off of $1,200,000 resulting from the unsuccessful merger. The
Participants also believe that the Incumbents reacted counterproductively to the
decision of the Company's shareholders to reject the proposed
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merger with Ballston, by wasting and continuing to waste significant amounts of
the Company's time, money and resources in litigation against the undersigned
and other individuals (who are not participating in this Consent Solicitation)
rather than concentrate on increasing the value of the Company's business.
The proposed Ballston merger received the initial support of Ms.
Hubbard and Messrs. Reynolds and Shell as directors, when recommended by Company
management and a committee of the Board (on which none of the Participants sat).
The Participant directors, Messrs. Reynolds, Shell and Ms. Hubbard, voted to
approve the proposed merger with Ballston in July 1997 in reliance upon
management's recommendation which focused principally on management's
projections that the earnings dilution would be only $.03 per share and
recovered in five years or less. Thereafter, at the suggestion of an employee of
Ferris Baker Watts, Inc., with whom he had a business relationship, Mr. Reynolds
asked the former chief financial officer of a bank of which he had been the
Chairman to review the transaction and provide him his analysis of its likely
impact on AANB. Based upon that review and his own analysis of the published
financials of the institutions and the projected impact on the balance sheet and
income statements of the goodwill anticipated to be created, Mr. Reynolds and
the other Participant directors came to believe that the dilution per share
would be greater than management had projected, would not likely be earned back
as quickly as management had projected, given his belief, and that of others, as
to the ineffectiveness of management, and that the amount of goodwill that would
be created, in absolute and percentage terms (which was potentially as much as
one-third of total book value), would, based upon his experience as an investor
in banks and the securities of banks, severely impair the ability of AANB to
pursue management's business plan which was to grow largely through other
acquisitions. Accordingly, Mr. Reynolds decided that the merger was not in the
best interests of AANB, and so advised the other directors of the Company in
October 1997. Counsel for AANB then advised him and the other Participant
directors that given the terms of the contract between AANB and Ballston, it was
too late for the Board to reconsider the contract without giving rise to a claim
for breach of contract, but that as shareholders the Participant directors were
free to vote their shares against the merger, which is what they determined to
do. Mr. Reynolds, and later Ms. Hubbard and Mr. Shell, followed that advice and
restricted their opposition to voting against the transaction and informing
shareholders who inquired of them of that fact. Nonetheless, the management of
the Company and their supporters on the Board authorized and pursued a strategy
designed either (a) to preclude Mr. (and Mrs.) Reynolds, Ms. Hubbard, Mr. (and
Mrs.) Shell and others from voting their shares against the proposed merger and
to impose upon them the expense of defending that litigation or (b) to induce
their support of the merger by virtue of the foregoing litigation strategy.
The litigation sought a court order precluding the Participants and
many other unnamed AANB shareholders from being able to vote their shares on the
proposed merger with Ballston. It was alleged that the Participants and many
other AANB shareholders were together engaged in an undisclosed scheme to oppose
the Ballston merger, allegedly in order to pursue other acquisition targets
outside the D.C. metropolitan area with which they had some involvement and to
seize control of the Bank. The Court denied this extraordinary relief, and after
two additional delays, AANB management finally permitted the shareholders to
vote at a meeting. At the AANB shareholder meeting over two-thirds of the shares
voted against the Ballston merger. Thereafter, the litigation was amended to add
claims against the stock brokerage firm of Ferris Baker Watts, Inc. and
additional federal statutory claims.
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As of this date, Ms. Hubbard and Messrs. Reynolds and Shell have
incurred approximately $125,000 defending themselves from this litigation. In a
press release dated January 29, 1998, the Company reported a net operating gain
of $342,000 for the year ended December 31, 1997, compared to $1,127,000 for the
year ended December 31, 1996. In the Company's release of January 29, 1998, the
Company claimed a writeoff of "about $1.2 million stemming from unsuccessful
purchase of Ballston Bancorp Inc." Given the number of lawyers involved on
behalf of the Company, and their typical hourly charges, the Participants
believe that a significant part of this loss resulted from the Company's efforts
to pursue this litigation. The Participants believe that substantial additional
costs will be incurred by both sides in the event the litigation is not resolved
promptly.
The Participants believe that if the Nominees are elected to replace
the Incumbents, they will join those of the Participants who are themselves
directors (Ms. Hubbard and Messrs. Reynolds and Shell) in securing better
management, honoring the decision of the shareholders to move on after two
thirds of the AANB shares voted against the proposed Ballston merger, and
supporting efforts to grow the business of AANB both internally and through
acquisitions that are economically accretive wherever located and on attractive
terms. The Participants also hope that the reconstituted Board of AANB will
terminate the above described litigation that the present Board (excluding Ms.
Hubbard and Messrs. Reynolds and Shell) initiated against Ms. Hubbard and
Messrs. Reynolds and Shell and others.
The Participants will, if this slate of Nominees is elected to
replace the Incumbents, seek Board action that will dismiss that litigation and
reimburse the Participants for their expenses in that litigation (estimated at
$125,000 to date). In addition they will seek to terminate the employment of Ms.
Blum, the current Chairwoman, Chief Executive Officer and President of the
Company, and to develop plans to improve the operations and increase the size
and number of banks owned by AANB. The Participants have not, however, elicited
any agreements or commitments regarding any of the foregoing issues from the
Nominees. The Participants may be viewed as having a conflict of interest in
pursuing the Proposal inasmuch as this could ultimately result in dismissal of
the litigation against them and reimbursement of their expenses. However, the
Participants believe that the Proposal is also in the best interests of the
Company and its other shareholders.
If successful, the Proposal will trigger the "change in control"
clauses of certain severance agreements of the Chairwoman and other persons,
potentially entitling certain of these individuals to severance payments and
other benefits. The Company has put aside $1,132,000 in a "rabbi trust" to fund
these possible severance costs. The Proposal may also cause certain stock
options belonging to the Incumbents and other persons to vest early. These
potential events could result in significant costs to the Company. Please see
the section entitled "Potential Costs to the Company in Severance Payments and
Early Vesting as a Result of the Proposal" in this Consent Solicitation
Statement for more information.
Mr. Reynolds has agreed to indemnify each of the Nominees from any
liability or expenses they might incur by reason of their candidacy relating to
the pending litigation. Neither
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he nor the other Participants have any other agreement or understanding with any
of the Nominees.
The formal Proposal is as follows:
"I hereby consent to the following actions, as set forth in the
Consent Solicitation Statement dated April __, 1998 in the section entitled,
"THE PROPOSAL":
1. Removal of the following as directors of Abigail Adams National
Bancorp, Inc.: Barbara Davis Blum, Shireen L. Dodson, Susan Hager and Clarence
L. James, Jr.
2. Election of the following to replace the aforementioned directors
of Abigail Adams National Bancorp, Inc.: A. George Cook, III, Marianne Steiner,
Bonita A. Wilson and Joseph L. Williams."
Stockholders of the Company are being asked to express their consent
to the Proposals by MARKING, SIGNING, and DATING the enclosed BLUE Consent Card
and returning it in the postage paid envelope in accordance with the
instructions set forth below. If you hold your Company shares in the name of a
brokerage firm, then, in addition to completing the BLUE Consent Card, you
should contact the party at the brokerage firm responsible for your account to
make sure that a BLUE Consent Card is executed for your Common Stock on the BLUE
Consent Card.
All percentages shown herein assume that the number of shares
outstanding on March 31, 1998 (the "Record Date") is 1,651,226 shares of Common
Stock, based on the Company's Proxy Statement on Schedule 14A filed on November
10, 1997.
THE PARTICIPANTS RECOMMEND THAT YOU CONSENT TO THE PROPOSAL. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD
AND RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE PROMPTLY. FAILURE TO RETURN
YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSAL.
IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE BLUE CONSENT
CARD HAS FAILED TO CHECK A BOX MARKED "CONSENT", "CONSENT WITHHELD" OR "ABSTAIN"
FOR THE PROPOSAL, SUCH STOCKHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE
PROPOSAL.
If you have any questions about executing your consent or require
assistance, please contact:
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Marshall Reynolds
c/o Chapman Printing
2450 First Avenue
Huntington, WV 25703
(304) 528-2791
FAX: (304) 528-2765
If you support this agenda and are willing to consent to the
Proposal, please complete the attached form of consent and mail it in the
enclosed envelope to the Participants at the address indicated above and on the
envelope.
Thank you for your consideration of this important action.
Mrs. Shirley A. Reynolds
Mr. Marshall Reynolds
Ms. Jeanne Hubbard
Mr. Robert Shell
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SUMMARY OF CONSENT PROCEDURE
The Participants believe that the Proposal will become effective on
the date when the written consent of holders of a majority of the shares of the
Company's Common Stock outstanding on the Record Date is delivered to the
Company, so long as such consent is obtained within sixty days after the Record
Date. The Participants established the record date as March 31, 1998 by
delivering to the Company, on that day, an executed form of consent. The last
possible day to deliver consents to the Company will be May 31, 1998. However,
in order to facilitate prompt adoption of the Proposal, the Participants request
that you mail your consent no later than April ___, 1998.
A consent executed by a stockholder may be revoked in writing at any
time prior to the time that the action authorized by the executed consent is
taken. The Participants intend to deliver executed consents to the Company once
the Participants have obtained valid and unrevoked consents representing a
majority of the issued and outstanding shares of Common Stock of the Company as
of the Record Date. Since the Participants cannot predict the date on which they
will receive a majority of the consents, the period within which a consent may
be revoked is uncertain.
THE PARTICIPANTS RECOMMEND THAT YOU CONSENT TO THE PROPOSAL. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD
AND RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE PROMPTLY. FAILURE TO RETURN
YOUR CONSENT WILL HAVE THE SAME EFFECT AS VOTING AGAINST THE PROPOSAL.
You will be able to express your consent to the Proposal if you are
a stockholder of record on the Record Date, even if you sell your shares of
Common Stock after the Record Date. Even if you are not sure as to your
eligibility to execute a consent, we urge you to complete and return the
enclosed BLUE consent card so that your shares will be voted if eligible.
If your shares are held in your name, please mark, sign, and date
the enclosed BLUE Consent Card and return it in the postage-paid envelope
provided. If your shares are held in the name of a brokerage firm, bank nominee
or other institution, you should receive a BLUE Consent Card and envelope which
should be used to give your instructions to the person responsible for your
account. Only that institution can execute a BLUE Consent Card with respect to
your shares and only upon receipt of specific instructions from you. The
Participants urge you to confirm in writing your instructions to the person
responsible for your account and to provide a copy of those instructions to the
Participants at the address set forth below so that the Participants will be
aware of all instructions given and can attempt to ensure that such instructions
are followed.
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Marshall Reynolds
c/o Chapman Printing
2450 First Avenue
Huntington, WV 25703
(304) 528-2791
FAX: (304) 528-2765
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REVOCABILITY OF CONSENTS
Any stockholder consenting to the Proposal has the power to revoke
such consent any time before holders of a majority of the outstanding shares
have consented to the Proposal, have delivered consents to the Proposal to the
Participants, and the Participants have delivered consents of a majority of the
outstanding shares to the Company. Consents may be revoked by filing with the
Company written notice of revocation bearing a later date than the consent card
or by duly executing a subsequently dated consent card relating to the same
shares and delivering it to the Company at its principal executive offices at
1627 K Street, N.W., Washington, D.C. 20006. Although a revocation delivered
only to the Company will be effective to revoke a previously executed consent,
the Participants request that if a revocation is delivered to the Company, a
photocopy of the revocation also be delivered to the Participants, at the
address set forth above, so that the Participants will be aware of such
revocation.
THE PROPOSAL
This Consent Solicitation Statement and the accompanying form of
written consent are first being furnished by the Participants on or about April
__, 1998, in connection with the solicitation by the Participants from the
holders of shares of Common Stock of the Company of written consents to take the
following actions without a stockholders meeting, as permitted by Delaware law:
(1) Remove the following directors of the Board of Directors (the
"Incumbents"):
"RESOLVED, that the following members of the Board of
Directors of the Company, such members being Barbara Davis Blum, Shireen L.
Dodson, Susan Hager and Clarence L. James, Jr., and any person or persons (other
than the persons elected pursuant to this consent) elected or appointed to the
Board of Directors of the Company prior to the effective date of this resolution
in addition to or in lieu of any of the aforenamed individuals to fill any newly
created directorships or vacancy on the Board of Directors of the Company, or
otherwise, is hereby removed and the offices of these members of the Board of
Directors are hereby declared vacant."
(2) Elect the following persons to fill the vacant directorships
(the "Nominees"):
"RESOLVED, that the following persons are hereby elected as
directors of the Company to fill vacant directorships on the Board of Directors,
and to serve until their respective successors are duly elected and qualified:
A. George Cook, III, Bonita A. Wilson, Marianne Steiner and Joseph L. Williams."
You may consent to, withhold consent from or abstain from voting on
the Proposal to remove all of the Incumbents by marking the appropriate box on
the enclosed BLUE
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consent card. You may also withhold your consent from the removal of one or more
of the Incumbents individually by writing the name(s) of such director(s) in the
space provided on the BLUE consent card. If no marking at all is made or a
marking is made with respect to only one of the proposals for which the
Participants are seeking your consent, you will be deemed to have CONSENTED TO
each proposal for which a contrary indication has not been marked.
THE PARTICIPANTS RECOMMEND THAT YOU CONSENT TO THE REMOVAL OF ALL
FOUR OF THE NAMED CURRENT MEMBERS OF THE COMPANY'S BOARD OF DIRECTORS.
You may consent to the election of the Participants' slate of
nominees for director, withhold consent to the election of such nominees or
abstain from voting thereon by marking the appropriate box on the enclosed BLUE
consent card. You may also withhold your consent to the election of one or more
of the Nominees individually by writing the name(s) of such nominee(s) in the
space provided on the BLUE consent card. If no marking at all is made or a
marking is made with respect to only one of the proposals for which the
Participants are seeking your consent, you will be deemed to have CONSENTED TO
each proposal for which a contrary indication has not been marked.
THE PARTICIPANTS RECOMMEND THAT YOU CONSENT TO THE ELECTION OF EACH
OF THE NOMINEES AS DIRECTORS OF THE COMPANY.
See "REMOVAL AND ELECTION OF DIRECTORS" for more information
about the Nominees. The Participants propose that the Nominees, once elected,
serve until the next annual meeting of the stockholders and until their
successors have been duly elected and qualified. Each of the Nominees has
consented to serve as a director of the Company if elected.
Of the four Nominees, none is employed or otherwise affiliated with
the Company. All of the Nominees are citizens of the United States.
The accompanying BLUE Consent Card will be voted in accordance with
the stockholder's instruction on such BLUE Consent Card. If the enclosed BLUE
Consent Card is signed and returned and no direction is given, the stockholder
will be deemed to have consented to the Proposal.
The Participants seek the consent of an absolute majority of the
Company's issued and outstanding stock in order to act on the Proposal set forth
in this Consent Solicitation Statement.
BROKER NON-VOTES, ABSTENTIONS AND THE FAILURE TO RETURN A SIGNED
CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSAL.
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The written consent of an absolute majority of the outstanding
Common Stock is required to adopt and approve the Proposal. According to the
Company's Proxy Statement on Schedule 14A filed November 10, 1997 there were
1,651,226 shares of Common Stock outstanding as of that date. Each share of
Common Stock entitles the holder on the Record Date to one vote on the Proposal.
Accordingly, based upon the information known to the Participants, written
consents by holders representing 825,614 shares of Common Stock will be required
to adopt and approve the Proposal. On March 31, 1998 the Participants delivered
their consents representing 360,025 shares to the Company. Each abstention and
broker non-vote with respect to the Proposal will have the same effect as
withholding consent to the adoption of the Proposal.
If you were a record holder as of the close of business on the
Record Date, you may elect to consent to, withhold consent or abstain with
respect to the Proposal by marking the "CONSENT", "CONSENT WITHHELD" OR
"ABSTAIN" box, as applicable, on the accompanying BLUE Consent Card and signing,
dating and returning it promptly in the enclosed postage-paid envelope.
IF THE STOCKHOLDER WHO HAS EXECUTED AND RETURNED THE CONSENT CARD
HAS FAILED TO CHECK A BOX MARKED "CONSENT", "CONSENT WITHHELD" OR "ABSTAIN",
SUCH STOCKHOLDER WILL BE DEEMED TO HAVE CONSENTED TO THE PROPOSAL.
THE PARTICIPANTS RECOMMEND THAT YOU CONSENT TO THE PROPOSAL. YOUR
CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED BLUE CONSENT CARD
AND RETURN IT IN THE POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. FAILURE TO
RETURN YOUR CONSENT WILL HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE
PROPOSAL.
If your shares are held in the name of a brokerage firm, bank
nominee or other institution, you should contact the person responsible for your
account and give instructions for the BLUE Consent Card representing your shares
to be marked, signed, dated and mailed. Only that institution can execute a BLUE
Consent Card with respect to your shares and only upon receipt of specific
instructions from you. The Participants urge you to confirm in writing your
instructions to the person responsible for your account and to provide a copy of
those instructions to the Participants at the address set forth below so that
the Participants will be aware of all instructions given and can attempt to
ensure that such instructions are followed.
Marshall Reynolds
c/o Chapman Printing
2450 First Avenue
Huntington, WV 25703
(304) 528-2791
FAX: (304) 528-2765
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THE CONSENT PROCEDURE
Section 228 of the Delaware General Corporation Law (the "DGCL")
states that, unless otherwise provided in the certificate of incorporation, any
action that may be taken at any annual or special meeting may be taken without a
meeting, without prior notice and without a vote, if consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted, and those consents are delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. In the
case of this Consent Solicitation, written, unrevoked consents of the holders of
a majority of the outstanding shares of Common Stock as of the Record Date must
be delivered to the Company as described above to effect the actions to which
consents are being solicited hereunder. Section 228 of the DGCL further provides
that no written consent shall be effective to take the corporate action referred
to therein unless, within 60 days of the earliest dated consent delivered in the
manner required by Section 228, written consents signed by a sufficient number
of holders to take such action are delivered to the corporation in the manner
required by Section 228. In order to facilitate prompt adoption of the Proposal
the Participants request that you give your consent by April ___, 1998. The date
on which the earliest consent expires is May 31, 1998.
The Participants intend to tender consents received through this
solicitation to the Company after they receive the consent of a majority of the
outstanding shares of Common Stock of the Company. Following such delivery, in
the event the Company disputes the validity of the consents, the Participants
intend to file a complaint in the Delaware Court of Chancery seeking relief
pursuant to Section 225 ("Section 225") of the DGCL for, among other things, a
declaration that the Incumbents are no longer members of the board of the
Company and that the Nominees have been duly elected to the board of the
Company. Once sufficient unrevoked and unexpired consents are delivered to the
Company to take the actions set forth herein, such consents will not expire,
even if a Section 225 proceeding extends beyond the expiration date of any such
consents.
THE PARTICIPANTS CURRENTLY INTEND TO DELIVER CONSENTS RECEIVED
THROUGH THIS SOLICITATION TO THE COMPANY IN THE MANNER REQUIRED BY SECTION 228
OF THE DGCL ONCE THE PARTICIPANTS HAVE DETERMINED THAT VALID AND UNREVOKED
CONSENTS REPRESENTING A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF THE
COMMON STOCK AS OF THE RECORD DATE HAVE BEEN OBTAINED. WHEN CONSENTS FOR A
MAJORITY OF THE COMPANY'S COMMON STOCK HAVE BEEN OBTAINED AND DELIVERED TO THE
COMPANY, A STOCKHOLDER WILL BE UNABLE TO REVOKE HIS OR HER CONSENT.
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Section 213(b) of the DGCL provides that the record date for a
consent solicitation shall be established by the board of directors of the
corporation or, if no record date is so established, shall be the first date on
which a signed written consent is delivered to the corporation. On March 31,
1998 the Participants delivered their signed written consents to the Company
thereby establishing the Record Date.
If actions described herein are taken, the Company will promptly
notify the stockholders who have not consented to the actions taken as required
by the DGCL.
Consents may only be executed by stockholders of record at the close
of business on the Record Date. The Participants believe that there were
1,651,226 shares outstanding on the Record Date. Therefore, the number of votes
necessary to effect the Proposals is 825,614 (an absolute majority of
1,651,226). The Participants delivered consents representing 360,025 shares to
the Company on March 31, 1998. Therefore, consents representing an additional
465,589 shares are required to approve the Proposal. Each share of Common Stock
entitles the record holder thereof to cast one vote. The Company's Certificate
of Incorporation and By-laws do not provide for cumulative voting.
Since the Participants must receive consents from a majority of the
Company's outstanding shares in order for the Proposal to be adopted, a broker
non-vote or direction to withhold authority to vote on the Consent Card will
have the same effect as a "no" vote with respect to the Participants'
solicitation.
BROKER NON-VOTES, ABSTAINING OR NOT RETURNING A SIGNED CONSENT WILL
HAVE THE SAME EFFECT AS WITHHOLDING CONSENT TO THE PROPOSAL. THE PARTICIPANTS
URGE EACH STOCKHOLDER TO ENSURE THAT THE RECORD HOLDER OF HIS OR HER SHARES
MARKS, SIGNS, DATES AND RETURNS THE ENCLOSED CONSENT AS SOON AS POSSIBLE.
SOLICITATION
Consents will be solicited by mail, telephone, telegram and/or
personal solicitation by the Participants. The Participants anticipate that a
total of approximately $55,000 will be spent in connection with the
solicitation. Actual expenditures may vary materially from the estimate,
however, as many of the expenditures cannot be readily predicted. As of March
31, 1998, expenses of approximately $47,000 had been incurred in connection with
the solicitation. The entire expense of preparing, assembling, printing and
mailing this Consent Solicitation Statement and any other consent materials and
the cost of soliciting consents will initially be borne by the Participants. If
the Nominees are elected, the Participants intend to request reimbursement from
the Company for these expenses. This request will not be submitted to a vote of
the Company's stockholders. Banks, brokerage houses and other custodians,
nominees and fiduciaries may be requested to forward the Participants'
solicitation material to the
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beneficial owners of the shares they hold of record, and the Participants will
reimburse them for their reasonable out-of-pocket expenses.
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REMOVAL AND ELECTION OF DIRECTORS
Pursuant to the Proposal, four current members of the Board of
Directors (the "Incumbents") are to be removed, and replaced with four nominees
(the "Nominees"). The Nominees would be elected to hold office and serve on the
Board of Directors until the next Annual Meeting of Stockholders or until their
respective successors have been elected and qualified. It is not contemplated
that any of the Nominees will become unavailable to serve, but if that should
occur before the Proposal becomes effective, consents that approve the Proposal
or do not withhold approval for the Proposal will be voted for another nominee,
or nominees, selected by the Participants. If the Proposal is consented to by a
majority of the shares entitled to vote, the removal of the Incumbents from the
Board of Directors and the election of the four Nominees to the Board of
Directors will become effective immediately upon delivery by the Participants of
sufficient signed written consents to the Company. The Participants recommend
that stockholders vote FOR the Proposal.
Directors to be Removed
The directors to be removed are as follows:
Name Age Position with the Company Director Since
- ---- --- ------------------------- --------------
Barbara Davis Blum 57 Chairwoman of the Board, President 1986
and Chief Executive Officer
Shireen L. Dodson 45 Director 1993
Susan Hager 52 Director 1992
Clarence L. James, Jr. 63 Director 1993
Nominees for Director
The nominees are as follows:
Name Age Position with the Company
- ---- --- -------------------------
George Cook 64 None
Bonita A. Wilson 56 None
Marianne Steiner 43 None
Joseph L. Williams 52 None
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Biographical information on the Nominees is provided in the
introduction to this Consent Solicitation Statement.
BIOGRAPHICAL INFORMATION ON THE PARTICIPANT DIRECTORS
The following provides information about the directors participating
in this Consent Solicitation:
Jeanne D. Hubbard, age 49, has been Executive Vice President and
Senior Lending Officer of First Sentry Bank, Huntington, West Virginia since
1996. She served as a consultant to First Guaranty Bank, Hammond, Louisiana
since 1993 and previously served as an executive officer of First Guaranty Bank
during 1996. From 1980 to 1993, Ms. Hubbard held a variety of officer positions,
including Vice President and Senior Commercial Lender and Chairwoman of the Loan
Committee and Asset/Liability Committee, with First Bank of Ceredo, Ceredo, West
Virginia. She served as President of the C-K Rotary Club and Chairwoman of the
Citizens Advisory Committee of the United Way in Huntington, West Virginia. She
has been a director of the Company and the Bank since October 1995.
Marshall T. Reynolds, age 60, is the Chairman of the Board,
President and Chief Executive Officer of Champion Industries, Inc., a holding
company for commercial printing and office products companies, a position he has
held since 1992. He became Chairman of the Board of Premier Financial Bancorp,
Georgetown, Kentucky in the first quarter of 1996 and Chairman of the Board of
First Guaranty Bank, Hammond, Louisiana during the second quarter. He became
Chairman of the Board of Broughton Dairy during the fourth quarter of 1996. From
1964 to 1993, Mr. Reynolds was President and Manager of The Harrah and Reynolds
Corporation (predecessor to Champion Industries, Inc.). From 1983 to 1993, he
was Chairman of the Board of Bank One, West Virginia Corporation (formerly Key
Centurion Bankshares, Inc.). He has served as Chairman of United Way of the
River Cities, Inc. and Boys and Girls Clubs of Huntington. He has been a
Director of the Company and the Bank since November 1995.
Robert L. Shell, Jr., age 53, is the Chairman and Chief Executive
Officer of Guyan International, a privately held holding company for
manufacturing and service companies, a position he has held since 1985. Mr.
Shell is also the Chairman of Standard Leasing Co. and Permco Hydraulik AG. He
was formerly the Chairman of Carolina Hose and Hydraulics. He has been a
director of First Guaranty Bank, Hammond, Louisiana since 1993 and a director of
First State Bank of Sarasota since February 1994. He was formerly the Chairman
of the Marshall Artists Series and a member of the Huntington Boys and Girls
Club, the Cabell Huntington Hospital Foundation and the West Virginia Foundation
for Independent Colleges. He has been a Director of the Company and the Bank
since October 1995.
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Directors' Compensation
During 1997, each director of the Company received $250 for each
meeting of the Board of Directors. In addition, each director is eligible to
participate in the nonqualified 1996 Directors Stock Option Plan based upon
their total months of 1996 Board service. During 1996, each director was granted
options to purchase 792 shares of the Company's Common Stock at an exercise
price of 85% of the fair market value on the date of grant, or $9.13.
Information regarding options granted for 1997 Board service is not yet
available. See DIRECTORS COMPENSATION, 1996 Directors Stock Option Plan.
Executive Officers
None of the Participants or the Nominees is an executive officer of
the Company.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth information as of the Record Date,
relating to the beneficial ownership of Common Stock by the Participants and the
Nominees.
Amount and Nature of
Name and Address Beneficial Ownership Percent of Class
- ---------------- -------------------- ----------------
Marshall T. Reynolds 225,526 (1) (2) (6) 13.7%
Shirley A. Reynolds 345,556 (1) (2) (6) 20.9%
Robert L. Shell, Jr. 66,046 (3) (4) (5) 4.0%
Jeanne D. Hubbard 4,546 (4) 0.03%
(1) 225,526 shares held jointly between Marshall T. Reynolds and Shirley
A. Reynolds, with shared voting/dispositive power.
(2) Includes 30,000 shares held by dependent child.
(3) Includes 6,000 shares which were transferred by gift to Lena Ji
Shell, Mr. Shell's wife, and which are now held by Lena Ji Shell.
(4) Includes options to purchase 46 shares granted to Ms. Hubbard and
Mr. Shell under Bancorp's Directors Stock Option Plan.
(5) Robert L. Shell, Jr. shares voting and dispositive power with
respect to 20,000 shares owned jointly with his wife, Lena Ji Shell.
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(6) Includes options to purchase 31 shares granted to Mr. Reynolds under
Bancorp's Directors Stock Option Plan.
COMPENSATION OF PARTICIPANT DIRECTORS
The following information is based upon information provided in the
Company's Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on November 10, 1997:
Directors Stock Option Plan
On January 23, 1996, the Board of Directors of the Company approved
a nonqualified Directors Stock Option Plan (the "Directors Plan"). A total of
6,429 shares of the Company's Common Stock are authorized for issuance under the
Directors Plan, in which all directors of the Company and the Bank in 1995 are
eligible to participate based upon the total months of 1995 Board service. On
January 23, 1996, all such options were granted at an exercise price of 85% of
fair market value at the date of grant, or $6.74. Options granted under the
Directors Plan vest beginning in 1996 at an annual rate of 20% at the end of
each year and expire at the earlier of ten years following the date of grant or
two years after leaving the Board. However, in the event of death or disability,
options expire one year after leaving the Board. The options shall become fully
vested in the event of a "Change in Control" (as defined in the Directors Plan)
or in the event the director leaves the Board.
1996 Directors Stock Option Plan
On November 19, 1996, the Board of Directors of the Company approved
a nonqualified Directors Stock Option Plan (the "1996 Directors Plan"). A total
of 7,920 shares of the Company's Common Stock are authorized for issuance under
the Employee Plan, in which all directors of the Company and the Bank are
eligible to participate based upon the total months of 1996 Board service. On
November 19, 1996, all such options were granted at an exercise price of 85% of
fair market value, or $9.13. Options granted under the 1996 Directors Plan vest
beginning in 1997 at an annual rate of 33.33% at the end of each year and expire
at the earlier of ten years following the date of grant or immediately upon
leaving the Board. However, in the event of death or disability, options expire
two years after leaving the Board. The options shall become fully vested in the
event of a "Change in Control" (as defined in the 1996 Directors Plan).
Information regarding options awarded for 1997 Board service are not yet
available.
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POTENTIAL COSTS TO THE COMPANY IN SEVERANCE
PAYMENTS AND EARLY VESTING AS A RESULT OF THE PROPOSAL
Set forth below is a description of potential costs associated with
implementation of the Proposal. It is based on information provided in the
Company's Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on November 10, 1997, except that information regarding the events
that constitute "Changes in Control" under these agreements was taken from the
agreements themselves.
Vesting of Options
1. Directors Stock Option Plan
See "Compensation of Participant Directors" for a description of the
Directors Stock Option Plan (the "Directors Plan"). The removal of the
Incumbents pursuant to the Proposal could cause the options granted under the
Directors Plan to the Incumbents to fully vest. The Directors Plan defines as
one potential "Change in Control" the following event: "one or more new
directors of [AANB] are elected and at such time five or more directors (or, if
less, a majority of the directors) then holding office were not nominated as
candidates by [a] majority of the directors in office immediately before such
election." Because only four current members of the Board would be removed
pursuant to the Proposal, leaving six original members on the Board, the
Participants do not believe that the Proposal will constitute a "Change of
Control" under the Directors Plan. However, if the remaining three directors who
are neither Incumbents to be removed nor Participants chose to resign before the
election of the Nominees became effective, an issue could arise as to whether a
Change of Control had taken place, which issue would likely be decided by
litigation. In the event that it was determined that a Change of Control had
taken place, the Company could experience losses, depending on and to the extent
that the market price of the Company's stock exceeded the exercise price of the
options.
Based upon information contained in the Company's Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on November 10,
1997, it appears that a options for a total of 918 shares have been granted
under the Directors Plan to each director, and that of those options, options
covering 368 shares have already vested in 1996 and 1997, leaving options for
550 shares as yet unvested for each director. The exercise price of each option
is $6.74 per share. Using the market price of the Company's Common Stock at the
close of business on March 26, 1998, which was $14.375 per share, the total
unrealized gain per director of early vesting of these options would be
$4,199.25 (options for 550 shares multiplied by the price differential between
$14.375 and $6.74). Thus, the total unrealized gain for all four Incumbents
would be $16,797.00.
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2. 1996 Directors Stock Option Plan
See "Compensation of Participant Directors" for a description of the
1996 Directors Stock Option Plan (the "1996 Directors Plan"). The removal of the
Incumbents pursuant to the Proposal could cause the options granted under the
1996 Directors Plan to the Incumbents to fully vest. The 1996 Directors Plan
defines as one potential "Change in Control" the following event: "one or more
new directors of [AANB] are elected and at such time five or more directors (or,
if less, a majority of the directors) then holding office were not nominated as
candidates by [a] majority of the directors in office immediately before such
election." Because only four current members of the Board would be removed
pursuant to the Proposal, leaving six original members on the Board, the
Participants do not believe that the Proposal will constitute a "Change of
Control" under the 1996 Directors Plan. However, if the remaining three
directors who are neither Incumbents to be removed nor Participants chose to
resign before the election of the Nominees became effective, an issue could
arise as to whether a Change of Control had taken place, which issue would
likely be decided by litigation. In the event that it was determined that a
Change of Control had taken place, the Company could experience losses,
depending on and to the extent that the market price of the Company's stock
exceeded the exercise price of the options.
Based upon information contained in the Company's Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on November 10,
1997, it appears that options for a total of 792 shares have been granted under
the 1996 Directors Plan to each director, and that of those options, options for
264 shares have already vested, leaving options for 528 shares as yet unvested
for each director. The exercise price of each option is $9.13. Using the market
price of the Company's Common Stock at the close of business on March 26, 1998,
which was $14.375 per share, the total unrealized gain per director of early
vesting of these options would be $2,769.36 (options for 528 shares multiplied
by the price differential between $14.375 and $9.13). Thus, the total unrealized
gain for all four Incumbents would be $11,077.44.
3. 1996 Employee Incentive Stock Option Plan
On November 19, 1996, the Board of AANB approved a qualified 1996
Employee Incentive Stock Option Plan covering key employees (the "1996 Employee
Plan"). A total of 14,193 shares of AANB's Common Stock are authorized for
issuance under the 1996 Employee Plan, in which key employees of AANB and the
Bank are eligible to participate. On November 19, 1996, options for 12,688
shares were granted at an exercise price of 100% of fair market value, or
$10.74. On January 21, 1997, options for 1,000 shares were granted at an
exercise price of 100% of fair market value, or $11.71. On February 18, 1997,
options for 505 shares were granted at an exercise price of 100% of fair market
value, or $11.83. Options granted under the 1996 Employee Plan vest beginning in
1997 at an annual rate ranging from 33.33% to 100% at the end of each year and
become fully vested in the event of a Change in Control, as defined in
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the 1996 Employee Plan. Options under the 1996 Employee Plan expire not later
than ten years after the date of grant.
It is possible that the changes in the Board which would result from
the Proposal, and the potential restructuring and restaffing of the Company's
and the Bank's senior management contemplated by the Participants, could cause
the options of certain beneficiaries of the 1996 Employee Plan to fully vest.
The 1996 Employee Plan defines as one potential "Change in Control" the
following event: "one or more new directors of [AANB] are elected and at such
time five or more directors (or, if less, a majority of the directors) then
holding office were not nominated as candidates by [a] majority of the directors
in office immediately before such election." Because only four current members
of the Board would be removed pursuant to the Proposal, leaving six original
members on the Board, the Participants do not believe that the Proposal will
constitute a "Change of Control" under the 1996 Employee Plan. However, if the
remaining three directors who are neither Incumbents to be removed nor
Participants chose to resign before the election of the Nominees became
effective, an issue could arise as to whether a Change of Control had taken
place, which issue would likely be decided by litigation. In the event that it
was determined that a Change of Control had taken place, the Company could
experience losses, depending on and to the extent that the market price of the
Company's stock exceeded the exercise price of the options.
Information provided in the Company's Proxy Statement on Schedule
14A filed with the Securities and Exchange Commission on November 10, 1997 is
not clear enough to determine with any certainty how many of the options granted
under the 1996 Employee Plan have already vested. The options granted under the
1996 Employee Plan are accompanied by stock appreciation rights. Assuming that
no such options had vested, the total potential cost to the Company from early
vesting would be $50,071.11 (the difference between the total exercise price of
the options for 14,193 shares granted at the varying exercise prices of $10.74,
$11.71 and $10.83, and the market price of the Company's Common Stock at the
close of business on March 26, 1998, which was $14.375). However, the actual
potential cost would be smaller, depending on how many of these options have
already vested.
Severance Benefits
1. Employment Agreement of Barbara Davis Blum
On February 20, 1996, AANB and The Adams National Bank (the "Bank")
entered into an employment agreement with Barbara Davis Blum providing for the
employment by AANB and the Bank of Ms. Blum as Chairwoman, President and Chief
Executive Officer of AANB and the Bank through February 20, 1998. The agreement
is automatically extended for an additional two-year period unless, six months
prior to the expiration date, the Boards of Directors of AANB and the Bank
determine in a duly adopted resolution that the agreement should not be extended
and so notify Ms. Blum. To the best of the Participants' knowledge, this has not
taken place. Under the terms of the employment agreement, which was amended on
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March 29, 1996, Ms. Blum is entitled to receive a base salary for 1997 of
$194,413, all benefits provided by any plan made available by the Bank to its
employees, certain executive fringe benefits and annual or other bonuses at the
sole discretion of AANB's and the Bank's Boards. As of November 10, 1997 no
annual increases or bonuses had been granted to Ms. Blum.
Ms. Blum was granted a nonqualified stock option (the "Option") to
purchase 75,000 shares of AANB's Common Stock which vests beginning in 1996 at
an annual rate of 20% at the end of each year and is exercisable for a period of
10 years from the date of grant at an exercise price equal to $6.74 per share,
which is 85% of the fair market value of AANB's Common Stock on the date of
grant. The Option shall become fully vested in the event of a "Change in
Control" (as defined in the employment agreement) or in the event Ms. Blum's
employment should terminate for any reason, and remain exercisable for a period
of two years. Ms. Blum was granted certain registration rights in connection
with the shares subject to the Option, including "piggyback" rights for
registration at AANB's expense, and one "demand" right for registration at
AANB's expense, each subject to certain limitations.
The employment agreement provides that, in the event Ms. Blum shall
resign with 60 days notification, she shall be entitled to receive a cash
payment equal to the current year's salary then in effect. In addition, the
agreement provides that in the event of Ms. Blum's death, disability,
termination without just cause or termination without her written consent and
for a reason other than just cause in connection with or within 12 months after
any Change in Control, or upon the occurrence of certain other events in
connection with a Change in Control, she (or her estate) shall be entitled to
receive a cash payment equal to two times her base salary (in semi-monthly
payments in the event of disability) and the acceleration of the invested
portion of any stock options. In addition, she shall be included to the full
extent eligible in all plans providing benefits, including group life insurance,
disability insurance and pension programs for executive employees of AANB during
the term of the employment agreement and for two years following her disability
or termination without just cause or one year following her voluntary
termination. According to information provided by the Company in its Schedule
14A filed with the Securities and Exchange Commission on November 10, 1997, the
change in control benefits are estimated to have an aggregate value of
approximately $830,000 at June 30, 1997. Ms. Blum has agreed not to engage in
the banking business elsewhere in the Washington or Baltimore, Maryland
metropolitan areas or to solicit the Adams National Bank's customers or
employees for a period of one year following the voluntary termination of her
employment.
One of the events constituting a "Change of Control" under Ms.
Blum's contract is defined as follows: "during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of either [AANB] or the Bank . . . cease for any reason to constitute
at least two-thirds thereof." Thus, the removal of Ms. Blum as a director
pursuant to this Proposal will entitle Ms. Blum to the severance benefits
described above. Furthermore, if the Proposal is approved by the Company's
shareholders, the Participants intend to seek Board action to terminate Ms.
Blum's position as President of the Company. This also would entitle Ms. Blum to
the severance benefits described above.
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2. Severance Agreements
On April 7, 1994, the Board of Directors of the Bank approved
severance arrangements for seven management officers, namely, Kimberly Levine,
Alexander Beltran, Devin Blum, Thomas O. Griel, Joyce R. Hertz, Melrose Nathan
and Bijan Partovi. These arrangements were incorporated into Severance
Agreements, dated as of April 7, 1994. On January 21, 1997, the Board of the
Bank approved an additional severance arrangement for a management officer,
Kathleen Walsh Carr (collectively, the "Severance Agreements") effective
February 10, 1997.
The Severance Agreements provide that, in the event of a "Change in
Control" (as defined in the Severance Agreements), the officers will be entitled
to resign from the Bank within the one year period following a Change in Control
and receive a lump sum payment equal to one year's full base salary at the rate
applicable to the officer in effect at that time. The term Change in Control
does not include a transaction approved by a majority of the "Continuing
Directors" (as defined in the Severance Agreements) then in office. In addition,
an officer will be entitled to receive such severance payment in the event the
officer's employment with the Bank is "Terminated" (as defined in the Severance
Agreements) within the one year period following a Change in Control, prior to
the resignation of the officer. According to information provided by the Company
in its Schedule 14A filed with the Securities and Exchange Commission on
November 10, 1997, these benefits are estimated to have an aggregate value of
approximately $633,000 as of June 30, 1997 based on current salary levels. Any
severance payment payable under the Severance Agreements will be reduced to the
extent that any such payment constitutes an "Excess Parachute Payment" as such
term is defined in the Internal Revenue Code of 1986, as amended. The Severance
Agreements are binding on the Bank and its successors.
All of the Severance Agreements include, as one potential "Change in
Control," the following: "during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of either [AANB] or the Bank . . . cease for any reason to constitute
at least two-thirds thereof." The actions contemplated by the Proposal will
therefore entitle these employees to the severance benefits described above.
However, the Participants have no reason to know whether any of the officers
described above will choose to leave the employment of the Company if the
Proposal succeeds.
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ITEM 5(B) INFORMATION
(Other than as stated below, the Participants have not bought or
sold any securities of the Company or its subsidiaries in the last two years.)
(1) Marshall Reynolds
Please see the sections of this Consent Solicitation Statement
entitled "Biographical Information on the Participant Directors," "Background of
and Reasons for the Solicitation," "Beneficial Ownership of Shares," "Certain
Relationships and Related Transactions," and "Compensation of Participant
Directors" for information concerning Mr. Reynolds' interest in this Consent
Solicitation, his beneficial ownership of shares of the Company, and other
information required by Item 5(b) of Schedule 14A. In addition, of the 225,526
shares of the Company's stock which Mr. Reynolds lists on his Schedule 13D as
being jointly owned with fellow Participant Shirley Reynolds, 30,000 such shares
are held by their son Douglas V. Reynolds, whose address is 1130 13th Avenue,
Huntington, WV 25701.
(2) Shirley Reynolds
Please see the sections of this Consent Solicitation Statement
entitled "Background of and Reasons for the Solicitation," "Certain
Relationships and Related Transactions," and "Beneficial Ownership of Shares"for
information concerning Mrs. Reynolds' interest in this Consent Solicitation, her
beneficial ownership of shares of the Company, and other information required by
Item 5(b) of Schedule 14A. In addition, of the 225,526 shares of the Company's
stock which Mrs. Reynolds lists on her Schedule 13D as being jointly owned with
fellow Participant Marshall Reynolds, 30,000 such shares are held by their son
Douglas V. Reynolds, whose address is 1130 13th Avenue, Huntington, WV 25701.
Mrs. Reynolds is a homemaker. Her home address is:
Shirley Reynolds
1130 13th Avenue
Huntington, WV 25701
(3) Jeanne D. Hubbard
Please see the sections of this Consent Solicitation Statement
entitled "Biographical Information on the Participant Directors," "Background of
and Reasons for the Solicitation," "Beneficial Ownership of Shares," "Certain
Relationships and Related Transactions," and "Compensation of Participant
Directors" for information concerning Ms. Hubbard's interest in this Consent
Solicitation, her beneficial ownership of shares of the Company, and other
information required by Item 5(b) of Schedule 14A.
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Ms. Hubbard's principal business address is:
Jeanne D. Hubbard
Executive Vice President
First Sentry Bank
823 8th Street
Huntington, WV 25701
Ms. Hubbard is also a director of First Southwest Bank, whose
address is 500 North Cary Avenue, Jennings, LA 70546.
(4) Robert L. Shell, Jr.
Please see the sections of this Consent Solicitation Statement
entitled "Biographical Information on the Participant Directors," "Background of
and Reasons for the Solicitation," "Beneficial Ownership of Shares," "Certain
Relationships and Related Transactions," and "Compensation of Participant
Directors" for information concerning Mr. Shell's interest in this Consent
Solicitation, his beneficial ownership of shares of the Company, and other
information required by Item 5(b) of Schedule 14A.
Mr. Shell's principal business address is:
Robert L. Shell, Jr.
Guyan Machinery Company
#5 Nichols Drive
Barboursville, WV 25504
Lena Shell, Mr. Shell's wife, whose home address is #5 Nichols
Drive, Barboursville, WV 25504, beneficially owns 26,000 shares of the Company's
common stock, of which 20,000 are jointly owned with Mr. Shell.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Banking Transactions
In 1997 Mr. Reynolds maintained a personal money market account at
The Adams National Bank (the "Bank"), a subsidiary of the Company. Otherwise,
none of the Participants or Nominees has had any banking transactions with the
Bank.
None of the Participants or Nominees is indebted to the Bank.
Other Transactions
None of the Participants or Nominees or their affiliates has engaged
in any other transactions with the Company.
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Submitted by:
/s/ Marshall T. Reynolds
------------------------
Marshall T. Reynolds
/s/ Shirley A. Reynolds
------------------------
Shirley A. Reynolds
/s/ Robert L. Shell, Jr.
------------------------
Robert L. Shell, Jr.
/s/ Jeanne D. Hubbard
------------------------
Jeanne D. Hubbard
April 10, 1998
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[BLUE]
WRITTEN CONSENT BY STOCKHOLDERS OF
ABIGAIL ADAMS NATIONAL BANCORP, INC.
TO ACTION WITHOUT A MEETING SOLICITED BY
SHIRLEY A. REYNOLDS, MARSHALL T. REYNOLDS,
JEANNE D. HUBBARD AND ROBERT L. SHELL, JR.
The undersigned, a stockholder of record of Abigail Adams National
Bancorp, Inc., a Delaware corporation (the "Company"), on March 31, 1998 (the
"Consent Record Date"), hereby consents, pursuant to Section 228(a) of the
Delaware General Corporation Law, with respect to all shares of common stock,
par value $.0001 per share ("Common Stock"), of the Company held by the
undersigned to the taking of each of the following actions without a meeting:
SHIRLEY A. REYNOLDS, MARSHALL T. REYNOLDS, JEANNE D. HUBBARD AND ROBERT L.
SHELL, JR. (THE "PARTICIPANTS") RECOMMEND THAT THE STOCKHOLDERS OF THE COMPANY
CONSENT TO EACH OF THE FOLLOWING PROPOSALS. APPROVAL OF EACH OF THE PROPOSALS
REQUIRES THE CONSENT OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
OUTSTANDING ON THE CONSENT RECORD DATE.
PLEASE MARK AND SIGN AND DATE THIS CONSENT CARD ON THE REVERSE SIDE
BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE.
(A) REMOVAL OF FOUR CURRENT MEMBERS OF THE EXISTING BOARD OF DIRECTORS
OF THE COMPANY.
RESOLVED, that the following directors of the Company, and any other
person(s) elected or appointed to the Company's Board of Directors to fill any
vacancy or newly created directorship, are hereby removed from such
directorships:
Barbara Davis Blum
Shireen L. Dodson
Susan Hager
Clarence L. James, Jr.
/___/ CONSENTS /___/ CONSENT WITHHELD /___/ ABSTAINS
INSTRUCTION:
To consent, abstain or withhold consent to the removal of all the
above-named directors, and to any other person(s) who is a director of the
Company at the time the action
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taken by this written consent shall become effective, check the appropriate box
above. IF YOU WISH TO CONSENT TO THE REMOVAL OF CERTAIN OF THE ABOVE-NAMED
DIRECTORS, BUT NOT ALL OF THEM, CHECK THE "CONSENTS" BOX ABOVE AND WRITE THE
NAME OF EACH SUCH DIRECTOR YOU DO NOT WISH TO BE REMOVED IN THE FOLLOWING SPACE:
- ------------------------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO "CONSENT" TO SUCH PROPOSAL, EXCEPT THAT THE
UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE REMOVAL OF ANY DIRECTOR WHOSE
NAME IS WRITTEN IN THE SPACE PROVIDED ABOVE.
(B) ELECTION OF FOUR NEW DIRECTORS TO THE BOARD.
RESOLVED, that the following persons are hereby elected as directors
of the Company to serve until the next annual meeting of stockholders or until
their successors are duly elected and qualified:
A. George Cook, III
Bonita A. Wilson
Marianne Steiner
Joseph L. Williams
/___/ CONSENTS /___/ CONSENT WITHHELD /___/ ABSTAINS
INSTRUCTION:
To consent, abstain or withhold consent to the election of all the
above-named persons, check the appropriate box above. IF YOU WISH TO CONSENT TO
THE ELECTION OF CERTAIN OF THE ABOVE-NAMED PERSONS, BUT NOT ALL OF THEM, CHECK
THE "CONSENTS" BOX ABOVE AND WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT WISH
TO BE ELECTED IN THE FOLLOWING SPACE:
- ------------------------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS PROPOSAL, THE
UNDERSIGNED WILL BE DEEMED TO "CONSENT" TO SUCH PROPOSAL, EXCEPT THAT THE
UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO THE
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ELECTION OF ANY PERSON WHOSE NAME IS WRITTEN IN THE SPACE PROVIDED
ABOVE.
Please sign exactly as name appears on stock
certificate(s) or on label affixed hereto.
When shares are registered in more than one
name, all such persons should sign. When
signing as attorney, executor,
administrator, trustee, guardian, corporate
officer, partner, etc., sign in official
capacity, giving full title as such. If a
corporation, please sign in the full
corporate name by president or other
authorized officer. If a partnership, please
sign in the partnership name by authorized
person.
Dated: ___________________________, 199__
------------------------------------------
(Signature)
------------------------------------------
(Print Name)
------------------------------------------
(Signature, if held jointly)
------------------------------------------
(Title or authority (if applicable))
IN ORDER FOR YOUR CONSENT TO BE
VALID, IT MUST BE DATED. PLEASE
COMPLETE, SIGN AND DATE YOUR
CONSENT AND MAIL IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
FAILURE TO EXECUTE A CONSENT WILL
HAVE THE SAME EFFECT AS WITHHOLDING
A CONSENT.
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