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EXHIBIT 10.48
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
7909 Parklane Road
Columbia, SC 29223
July 29, 1997
Mr. Lee E. Shelton
109 Shallowbrook Drive
Columbia, SC 29223
Dear Lee:
Reference is made (i) to the Mutual Release and Settlement Agreement dated
as of January 31, 1997 among Resource Bancshares Mortgage Group, Inc. ("RBMG"),
Lee E. Shelton ("Shelton") and Constance P. Shelton (the "Agreement") and (ii)
to Montgomery Securities' ("Montgomery's") standard form of Notice of Option
Exercise and Payment Authorization referred to in Section 2.1(a)(3) of the
Agreement (the "Authorization"). The purpose of this letter is to streamline
the cashless exercise procedures contemplated by Section 2.1(a)(3) of the
Agreement by positioning Montgomery to execute Shelton's option exercise
instructions from time to time without obtaining an Authorization signed by
RBMG.
In consideration of the mutual promises set forth below, and for other
good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, RBMG and Shelton agree as follows:
1. The parties stipulate that Shelton currently holds options
(collectively, the "Options") to purchase 429,195 shares of RBMG common stock
("REMI"). Except for Options to purchase 85,839 REMI shares, which Options are
scheduled to vest on June 3, 1998, all of the options are currently vested.
All of the Options are "nonqualified" stock options. In each case the exercise
price per share is currently $6.12, and the expiration date is May 26, 2003.
Shelton represents and warrants to, and agrees with, RBMG, for the benefit of
RBMG and Montgomery, that until he gives written notice to RBMG and Montgomery
he will exercise Options and resell the underlying REMI shares only through
Montgomery.
2. RBMG agrees with Shelton, for the benefit of Shelton and Montgomery,
that compliance with the procedures specified in this paragraph 2 will be
entirely satisfactory to RBMG as regards any and all exercises of vested
Options and REMI share resale transactions contemplated and executed by or for
Shelton. Shelton may initiate an Option exercise by delivering to Montgomery,
by telecopier or otherwise, a properly completed and executed (by Shelton but
not necessarily by RBMG) Authorization or successor form. After satisfying
itself that Shelton's instructions are not inconsistent with the Option details
stipulated in paragraph 1 above (giving effect to other Option exercises and
resales that may have been effected from time to time), Montgomery will arrange
to pay RBMG by wire transfer as soon as possible, generally on the next trading
day, an amount (collectively, the "Advanced Funds") equal to (1) the aggregate
exercise price for such Options plus (2) 36.45%, subject to any change in
applicable
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law (currently consisting of 28.00% as the minimum federal personal income tax
withholding percentage, 7.00% as the South Carolina personal income tax
withholding percentage plus 1.45% as the Medicare tax withholding percentage),
of (A) the price, net of any discounts, commissions and other selling expenses,
at which the REMI shares underlying the Options so exercised by Shelton were
resold by Montgomery for Shelton's account less (B) the aggregate exercise
price for such Option plus (3) any unpaid Social Security tax (currently 6.2%
of the first $65,400 of Shelton's income from RBMG in any year after 1997).
Within two trading days of RBMG's receipt of the Advanced Funds and RBMG's
receipt, via facsimile or otherwise in its office of the Chief Financial
Officer or other person performing the duties thereof (with a copy delivered
via facsimile or otherwise, to the General Counsel of RBMG or other person
performing the duties thereof), of Montgomery's "Calculation of Advanced Funds"
in substantially the form attached hereto as Exhibit A, RBMG will instruct the
REMI share transfer agent(s) to issue a certificate or certificates (free of
"stop transfer" orders and other restrictions) representing the REMI shares
underlying the Options so exercised in the name or names, in the amount or
amounts and otherwise in accordance with instructions furnished by Montgomery.
3. The Agreement remaining in full force and effect. This letter, which
may be executed in counterparts, shall be construed in accordance with the laws
of the State of South Carolina.
If your understanding of our agreement is in accordance with this letter,
then please sign a copy of it and return the signed copy to our legal counsel,
John W. Currie, Esq., whereupon this letter will become a binding agreement
between us effective the date first written above.
Very truly yours,
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
By: /s/ Edward J. Sebastian
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Edward J. Sebastian, Chairman and Chief Executive Officer
Agreed:
/s/ Lee E. Shelton
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Lee E. Shelton
ACKNOWLEDGMENT
Montgomery understands the cashless exercise arrangements specified above
by RBMG and Shelton and, accordingly, is prepared to execute Shelton's Option
exercise instructions from time to time in accordance therewith, in each case
without obtaining an Authorization signed by RBMG, until informing RBMG and
Shelton that it will no longer so execute such instructions or until receiving
from RBMG or Shelton a written notice of revocation of such arrangements.
MONTGOMERY SECURITIES
By: /s/ Wilson T. Hileman
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Wilson T. Hileman, Managing Director
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EXHIBIT A
Calculation of Advanced Funds
No. REMI shares underlying exercised options:
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Gross sales price less any expenses $
Aggregate exercise price
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Gross margin $
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Withholding taxes on gross margin:
Federal (28.00% of gross margin) $
SC (7.00% of gross margin)
Medicare (1.45% of gross margin)
Social Security
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Total withholding taxes $
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Total withholding taxes $
Aggregate exercise price
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Total amount wired to RBMG $
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