SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Sec. 240.14a-12
INTERVEST BANCSHARES CORPORATION
--------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------
(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)(1) 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 O-11:
_____________________________________________
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: ________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 25, 2006
NOTICE IS HEREBY GIVEN that the 2006 Annual Meeting of Stockholders (the
"Annual Meeting") of Intervest Bancshares Corporation (the "Company") will be
held on Thursday, May 25, 2006, at 9:30 a.m., New York time, at the offices of
the Company, One Rockefeller Plaza (Suite 400) New York, New York, 10020 for the
following purposes:
1. To elect directors;
2. To consider and approve an amendment to the Company's Restated
Certificate of Incorporation to increase the number of authorized
shares of Class A common stock from 9,500,000 to 12,000,000;
3. To consider and approve the 2006 Long Term Incentive Plan;
4. To consider and approve amendments to outstanding common stock
warrants held by the Chairman; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Pursuant to the Company's Bylaws, the Board of Directors of the Company has
fixed the close of business on March 31, 2006 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. Only holders of Class A or Class B common stock of record at the close
of business on that date will be entitled to notice of and to vote at the Annual
Meeting or any adjournment or postponement thereof.
By Order of the Board of Directors,
/S/ Jerome Dansker
---------------------
Jerome Dansker
Chairman of the Board
April 15, 2006
New York, New York
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
2006 ANNUAL MEETING OF STOCKHOLDERS
INTERVEST BANCSHARES CORPORATION
ONE ROCKEFELLER PLAZA (SUITE 400)
NEW YORK, NEW YORK 10020-2002 (212) 218-2800
This proxy statement is furnished in connection with the solicitation by
the Board of Directors (sometimes referred to herein as the "Board") of
Intervest Bancshares Corporation, a Delaware corporation (the "Company") of
proxies for use at the Annual Meeting of Stockholders (the "Annual Meeting"), to
be held on Thursday, May 25, 2006, or on the date of any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
This proxy statement and the accompanying proxy card are being mailed to
stockholders commencing on or about April 15, 2006. The Annual Report for the
year ended December 31, 2005, including financial statements, is being mailed to
stockholders concurrently with this mailing.
You will find a form of proxy in the envelope in which you received this
proxy statement. PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. A stockholder giving a proxy may revoke it at any time prior to the
commencement of the Annual Meeting by: filing a written notice of revocation
with the Secretary of the Company prior to the meeting; or delivering to the
Secretary of the Company a duly executed proxy bearing a later date; or
attending the Annual Meeting, filing a written notice of revocation with the
Secretary of the meeting and voting in person.
If the enclosed form of proxy is properly signed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon. SIGNED
PROXIES WITH NO INSTRUCTIONS THEREON WITH RESPECT TO THE PROPOSALS SET FORTH IN
THE ACCOMPANYING NOTICE OF ANNUAL MEETING WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR AND FOR THE APPROVAL OF ALL OF THE OTHER PROPOSALS SET
FORTH IN THE ACCOMPANYING NOTICE. If any other matters are properly brought
before the Annual Meeting, the persons named in the accompanying proxy will vote
the shares represented by such proxy on such matters as shall be determined by a
majority of the Board of Directors or its Executive Committee.
The voting securities of the Company entitled to vote at the Annual Meeting
consist of shares of Class A and Class B common stock. Only stockholders of
record at the close of business on March 31, 2006 are entitled to notice of and
to vote at the Annual Meeting. As of March 31, 2006, there were 7,452,642 shares
of the Company's Class A common stock and 385,000 shares of the Company's Class
B common stock issued and outstanding.
The holders of the outstanding shares of Class B common stock are entitled
to vote for the election of two-thirds of the directors of the Company rounded
up to the nearest whole number, or seven directors. The holders of the
outstanding shares of Class A common stock are entitled to vote for the election
of the remaining directors of the Company, or three directors. The holders of
both Class A and Class B common stock as of the record date are entitled to vote
on all other matters to come before the meeting, and each is entitled to one
vote for each share held on the record date.
A majority of the outstanding shares of common stock entitled to vote,
represented in person or by proxy, will constitute a quorum for the transaction
of business at the Annual Meeting. Abstentions and broker non-votes will be
counted as present for purposes of determining whether a quorum is present, but
will have no effect on the vote. If a quorum is present, the three nominees for
election by the holders of Class A common stock and the seven nominees for
election by the holders of Class B common stock who receive the highest number
of votes cast by holders of shares of Class A common stock and Class B common
stock, respectively, will be elected as directors of the Company.
The affirmative vote of a majority of the outstanding shares of Class A and
Class B common stock entitled to vote, voting as a single class, and the
affirmative vote of a majority of the outstanding shares of Class A common stock
entitled to vote, voting as a separate class, is required for the adoption of
the amendment to the Company's Restated Certificate of Incorporation increasing
the number of
1
authorized shares of the Company's Class A common stock to 12,000,000. For
purposes of determining adoption of the amendment, shares represented by proxies
or ballots marked "ABSTAIN" on this Item 2 will have the same effect as a vote
"AGAINST" this proposal. The affirmative vote of a majority of the shares of
Class A and Class B common stock voting on the proposals to approve the 2006
Long Term Incentive Plan and to approve the amendments to the warrants, voting
as a single class, are required for approval of those proposals. Shares
represented by proxies or ballots marked "ABSTAIN" on Item 3 and Item 4 will not
have any direct effect on these proposals.
Shares held in "street name" by brokers (meaning shares held in the name of
brokers or their nominees but actually owned by the brokers' customers) must be
voted by the broker in accordance with the instructions received from the
customer. Proxies submitted by brokers that do not indicate a vote for some or
all of the proposals because they do not have discretionary voting authority and
have not received instructions as to how to vote on those proposals (so-called
"broker non-votes") will be deemed present at the meeting for purposes of a
quorum. However, broker non-votes will not be deemed entitled to vote for
purposes of voting on any particular matter for which such brokers have not
received instructions as to how to vote. With respect to any such matters
requiring the affirmative vote of a designated percentage of all outstanding
shares entitled to vote, such as Item 2, broker non-votes will be the equivalent
of a vote "AGAINST" such matters.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the amount and
nature of beneficial ownership of the Company's Class A and Class B common stock
as of March 31, 2006 by (i) each person who is known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding Class A or Class B
common stock, (ii) each of the Company's current directors, (iii) each of the
Company's named executive officers and (iv) all the Company's current directors
and executive officers as a group.
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------- --------------------
NAME AND ADRESS OF BENEFICIAL HOLDER SHARES % CLASS(1) SHARES % CLASS(1)
- ------------------------------------ ----------------- ----------- ------------ -----------
HELENE D. BERGMAN . . . . . . . . . . 427,300 (2) (3) 5.73% 75,000 19.48%
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
LAWRENCE G. BERGMAN . . . . . . . . . 389,450 5.23% - -
Director, Vice President
MICHAEL A. CALLEN . . . . . . . . . . 25,000 0.34% - -
Director
LOWELL S. DANSKER . . . . . . . . . . 928,500 (2) (4) 12.46% 150,000 38.96%
Vice Chairman and President
JEROME DANSKER. . . . . . . . . . . . 1,005,965 (2) (5) 12.65% 355,000 (5) 61.21%
Chairman and Chief Executive Officer
PAUL R. DEROSA. . . . . . . . . . . . 5,000 0.07% - -
Director
STEPHEN A. HELMAN . . . . . . . . . . 48,800 0.65% - -
Director, Vice President
WAYNE F. HOLLY. . . . . . . . . . . . 18,700 (6) 0.25% - -
Director
LAWTON SWAN, III. . . . . . . . . . . 500 0.01% - -
Director
THOMAS E. WILLETT . . . . . . . . . . 6,000 0.08% - -
Director
DAVID J. WILLMOTT . . . . . . . . . . 99,047 1.33% - -
Director
WESLEY T. WOOD. . . . . . . . . . . . 82,500 1.11% - -
Director
KEITH A. OLSEN. . . . . . . . . . . . 2,250 0.03% - -
President, Florida Division -
Intervest National Bank
JOHN J. ARVONIO . . . . . . . . . . . - - - -
Chief Accounting Officer
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (13 PERSONS) . . . . . . 2,611,712 32.83% 505,000 87.07%
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(1) Percentages have been computed based upon 7,452,642 shares of Class A
common stock and 385,000 shares of Class B common stock outstanding as of
March 31, 2006, plus, for each person and the group, shares that person or
the group has the right to acquire pursuant to warrants or convertible
debentures, if any, within 60 days of such date. The address of all persons
listed is: care of Intervest Bancshares Corporation, One Rockefeller Plaza
(Suite 400) New York, New York 10020.
(2) Does not include shares of Class A common stock issuable upon conversion of
the shares of Class B common stock beneficially owned by such person. Each
share of Class B common stock is convertible into one share of Class A
common stock at the option of the holder.
(3) Includes 128,571 shares held by a family limited liability company and
10,350 shares held by an adult child.
(4) Includes 207,336 shares held by a family limited liability company, 10,500
shares held by adult children and 200 shares held by his spouse.
(5) Includes 501,465 shares of Class A common stock issuable upon the exercise
of warrants and 36,000 shares of Class A common stock held by his spouse.
The shares of Class B common stock include 195,000 shares issuable upon the
exercise of warrants and 30,000 shares held by his spouse.
(6) Includes 2,500 shares held by minor children. Does not include 26,000
shares of Class A common stock held by Sage, Rutty & Co., Inc. over which
Mr. Holly does not exercise voting or investment power. Mr. Holly disclaims
beneficial ownership of such shares.
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PROPOSAL ONE: ELECTION OF DIRECTORS
At the Annual Meeting, it is proposed to elect a Board of ten directors,
each to serve until the next annual meeting or until a successor is elected and
qualified. If no contrary specification is made, the persons named in the proxy
card will vote for the election of the nominees named below. If any of these
nominees should decline election or should by reason of unexpected occurrence
not be able to serve, the persons named in the proxy may exercise discretionary
authority to vote for a substitute or substitutes. All of the nominees are
presently serving as directors of the Company. Mr. Lawrence G. Bergman, who
currently is a director, is retiring and does not intend to stand for
re-election to the Company's Board of Directors. Mr. Bergman's term will expire
at the 2006 Annual Meeting. The names of the nominees for directors and certain
information about them are set forth below.
FOR ELECTION BY THE HOLDERS OF CLASS A COMMON STOCK:
MICHAEL A. CALLEN, age 65, serves as a Director of the Company and has
served in such capacity since May 1994. Mr. Callen received a Bachelor of Arts
degree from the University of Wisconsin in Economics and Russian. Mr. Callen has
been President of Avalon Argus Associates, a financial consulting firm, since
1996. Mr. Callen was Senior Advisor, The National Commercial Bank, Jeddah,
Kingdom of Saudi Arabia from April 1993 to April 1996. He was an independent
consultant from January 1992 until June 1993, and an Adjunct Professor at
Columbia University Business School during 1992. He was a Director of Citicorp
and Citibank and a Sector Executive at Citicorp, responsible for corporate
banking activities in North America, Europe and Japan, from 1987 to January
1992. Mr. Callen is also a Director of Intervest National Bank and Intervest
Mortgage Corporation, and also serves as a Director of AMBAC, Inc., a leading
provider of financial guarantees to the structured, asset-backed and
mortgage-backed securities sectors.
WAYNE F. HOLLY, age 49, serves as a Director of the Company and has served
in such capacity since June 1999. Mr. Holly received a Bachelor of Arts degree
in Economics from Alfred University. Mr. Holly is Chairman and President of
Sage, Rutty & Co., Inc., a member of the Boston Stock Exchange. Mr. Holly has
been an Officer and Director of Sage, Rutty & Co., Inc. since 1993. Mr. Holly is
also a Director of Intervest National Bank and Intervest Mortgage Corporation.
LAWTON SWAN, III, age 63, serves as a Director of the Company and has
served in such capacity since February 2000. Mr. Swan received a Bachelor of
Science degree from Florida State University in Business Administration and
Insurance. Mr. Swan is President and Chairman of the Board of Interisk
Corporation, a consulting firm specializing in risk management and employee
benefit plans, which he founded in 1978. Mr. Swan is also a Director of
Intervest National Bank and Intervest Mortgage Corporation.
FOR ELECTION BY THE HOLDERS OF CLASS B COMMON STOCK:
JEROME DANSKER, age 87, serves as Chairman of the Board of Directors and
Chief Executive Officer of the Company. He has served as Chairman of the Board
since 1996 and Chief Executive Officer since 2004, and has been a Director since
the Company's incorporation in 1993. Mr. Dansker received a Bachelor of Science
degree from the New York University School of Commerce, Accounts and Finance,
and a law degree from the New York University School of Law. Mr. Dansker also
serves as: Chairman of the Board of Directors of Intervest National Bank;
Chairman of the Board of Directors and Executive Vice President of Intervest
Mortgage Corporation; Chairman of the Board of Directors of Intervest Securities
Corporation; and as an Administrator of Intervest Statutory Trust I, II, III and
IV.
LOWELL S. DANSKER, age 55, serves as a Vice Chairman of the Board of
Directors, President and Treasurer of the Company, and has served in such
capacities, except for Vice Chairman, since the Company's incorporation in 1993.
He has served as Vice Chairman since October 2003. Mr. Dansker received a
Bachelor of Science in Business Administration from Babson College and a law
degree from the University of Akron School of Law. Mr. Dansker also serves as:
Vice Chairman of the Board of Directors and Chief Executive Officer of Intervest
National Bank; Vice Chairman of the Board of Directors, President and Treasurer
of Intervest Mortgage Corporation; Vice Chairman of the Board of
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Directors, Chief Executive Officer and Registered Principal of Intervest
Securities Corporation; and as an Administrator of Intervest Statutory Trust I,
II, III and IV.
PAUL R. DEROSA, age 64, serves as a Director of the Company and has served
in such capacity since February 2003. Mr. DeRosa received a Bachelor of Arts
degree in Economics from Hobart College and a Ph.D degree in Economics from
Columbia University. Mr. DeRosa is a principal of Mt. Lucas Management Corp., an
asset management firm where he is responsible for management of fixed income
investments of that firm's Peak Partners Hedge Fund, and has served in that
capacity since 1988. From July 1995 to March 1998, Mr. DeRosa was Chief
Executive Officer of Eastbridge Holdings Inc., a bond and currency trading
company. Mr. DeRosa is also a Director of Intervest National Bank and Intervest
Mortgage Corporation.
STEPHEN A. HELMAN, age 66, serves as a Director, and as Vice President and
Assistant Secretary of the Company and has served in such capacities since
December 2003 and February 2006, respectively. Mr. Helman received a Bachelor of
Arts degree from the University of Rochester and a law degree from Columbia
University. Mr. Helman has been an attorney practicing for more than 25 years.
Mr. Helman is also a Director and Vice President of Intervest National Bank and
a Director, Vice President and Assistant Secretary of Intervest Mortgage
Corporation.
THOMAS E. WILLETT, age 58, serves as a Director of the Company and has
served in such capacity since March 1999. Mr. Willett received a Bachelor of
Science degree from the United States Air Force Academy and a law degree from
Cornell University School of Law. Mr. Willett has been a member of Harris Beach
PLLC, a law firm in Rochester, New York, since 1986 and is also a Director of
Intervest National Bank and Intervest Mortgage Corporation.
DAVID J. WILLMOTT, age 67, serves as a Director of the Company and has
served in such capacity since March 1994. Mr. Willmott is a graduate of Becker
Junior College and attended New York University Extension and Long Island
University Extension of Southampton College. Mr. Willmott is the Editor and
Publisher of Suffolk Life Newspapers, which he founded more than 45 years ago,
and is also a Director of Intervest National Bank and Intervest Mortgage
Corporation.
WESLEY T. WOOD, age 62, serves as a Director of the Company and has served
in such capacity since March 1994. Mr. Wood received a Bachelor of Science
degree from New York University School of Commerce. Mr. Wood is a Director and
President of Marketing Capital Corporation, an international marketing
consulting and investment firm which he founded in 1973. Mr. Wood is also a
Director of Intervest National Bank and Intervest Mortgage Corporation, an
Advisory Board Member of The Center of Direct Marketing at New York University,
a member of the Advisory Trustees at Fairfield University in Connecticut, and a
Trustee of St. Dominics R.C. Church in Oyster Bay, New York.
Jerome Dansker is the father of Lowell S. Dansker. Other than as disclosed
above, there are no family relationships between any director, executive officer
or any person nominated or chosen by the Board of Directors to become a director
or executive officer.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION BY THE CLASS A AND CLASS B STOCKHOLDERS OF THE FOREGOING NOMINEES
FOR DIRECTOR.
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PROPOSAL TWO: AMENDMENT OF COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
On February 23, 2006, the Board of Directors of the Company unanimously
adopted a resolution recommending that the Company's Restated Certificate of
Incorporation be amended to increase the number of authorized shares of Class A
common stock of the Company from 9,500,000 shares to 12,000,000 shares (the
"Amendment"). The Board of Directors further directed that the Amendment be
submitted for consideration and approval by stockholders at the Annual Meeting.
In the event the Amendment is approved by the stockholders, the Company will
thereafter submit a Certificate of Amendment to the Delaware Secretary of State
for filing and the Amendment will become effective on the date of such filing.
5
The Company is presently authorized to issue 10,500,000 shares of its
capital stock, consisting of 9,500,000 shares of Class A common stock, 700,000
shares of Class B common stock and 300,000 shares of series preferred stock. As
of the record date for this meeting, there were 7,452,642 shares of Class A
common stock outstanding and another 1,270,940 shares of Class A common stock
reserved for issuance for the following: upon exercise of outstanding Class A
common stock warrants; for conversion of outstanding convertible debentures; and
for conversion of outstanding shares of Class B common stock, including shares
of Class B common stock to be issued upon exercise of outstanding Class B common
stock warrants. In addition, the Company is proposing that 750,000 shares of
Class A common stock be reserved for issuance under its proposed 2006 Long Term
Incentive Plan, as discussed elsewhere in this proxy statement. While the
Company's authorized but unissued shares of Class A common stock are sufficient
to meet its obligations under those commitments, after the issuance of shares to
meet those obligations, the Company would have available for issuance 26,418
shares of Class A common stock.
The Board of Directors believes it is in the best interest of the Company
and its stockholders to have additional shares of Class A common stock available
for future issuance in connection with possible acquisitions, equity financing
requirements and other general corporate purposes. Except for possible future
awards under the 2006 Long Term Incentive Plan or issuances in connection with
the exercise or conversion of outstanding warrants or securities, the Company
has no present plans, arrangements or understandings that will or may require or
involve the future issuance of any additional shares of Class A common stock.
The issuance of additional shares of Class A common stock for any of the
purposes described above could have a dilutive effect on the Company's earnings
per share, depending on the circumstances, and would dilute a stockholder's
percentage voting power in the Company. The proposed increase in authorized
shares could also have other effects on stockholders. The increase could deter
takeovers, in that additional shares could be issued (within the limits imposed
by applicable law and regulation) in one or more transactions that could make a
change in control or takeover of the Company more difficult. For example,
additional shares could be issued to dilute the stock ownership or voting rights
of persons seeking to obtain control. Similarly, the issuance of additional
shares to certain persons allied with the Company's management could have the
effect of making it more difficult to remove management by diluting the stock
ownership or voting rights of persons seeking to cause such removal.
The additional authorized shares could generally be issued by the Board of
Directors without requirement for further action of the stockholders. However,
applicable corporate governance rules of the Nasdaq Stock Market may require
stockholder approval in certain circumstances.
In the event stockholders approve the Amendment, Paragraph 4 of the
Company's Restated Certificate of Incorporation will be amended to read as
follows:
"The Corporation is authorized to issue three classes of shares to be
designated, respectively, Preferred Stock ("Preferred Stock"), Class A
common stock ("Class A common stock") and Class B common stock ("Class
B common stock"). The total number of shares of capital stock that the
Corporation is authorized to issue is Thirteen Million (13,000,000).
The total number of shares of preferred stock this Corporation shall
have authority to issue is Three Hundred Thousand (300,000). The total
number of shares of Class A common stock this Corporation shall have
authority to issue is Twelve Million (12,000,000). The total number of
shares of Class B common stock this Corporation shall have authority
to issue is Seven Hundred Thousand (700,000). All of the shares of
capital stock shall have a par value of $1.00 per share."
Approval of the Amendment will require the affirmative vote of a majority
of the outstanding shares entitled to vote thereon. Proxies received in response
to the Board's solicitation will be voted "FOR" approval of the Amendment if no
specific instructions are included thereon for this proposal.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
- --------------------------------------------------------------------------------
6
PROPOSAL THREE: 2006 LONG TERM INCENTIVE PLAN
GENERAL: On February 23, 2006, based on the recommendation of its
Compensation Committee, the Board of Directors of the Company adopted the 2006
Long Term Incentive Plan (the "Plan") under which stock options and other forms
of incentive compensation may be awarded to officers, employees and directors of
the Company and its subsidiaries. To become effective, the Plan must be approved
by the Company's stockholders at the Annual Meeting. A copy of the Plan is
attached to this proxy statement as Appendix B.
The Plan provides for stock-based award or other awards that offer the
Company's officers, employees and directors the possibility of future value,
depending on the long-term price appreciation of the Company's Class A common
stock and the award holder's continuing service with the Company. The forms of
awards permitted under the Plan include stock options, stock appreciation
rights, restricted stock or cash awards.
Stock options give the option holder the right to acquire from the Company
a designated number of shares of Class A common stock at a purchase price that
is fixed upon the grant of the option. Normally, the exercise price will be the
market price of Class A common stock on the date of grant. Stock options granted
under the Plan may be either tax-qualified stock options (so-called "incentive
stock options") or non-qualified stock options.
Stock appreciation rights ("SARs"), which are often granted in tandem with
options, have an economic value similar to that of options. When a SAR for a
particular number of shares is exercised, the holder receives a payment equal to
the difference between the market price of the shares on the date of exercise
and the exercise price of the shares under the SAR. Again, the exercise price
for SARs normally is the market price of the shares on the date the SAR is
granted. Under the Plan, holders of SARs may receive this payment - the
appreciation value - either in cash or shares of Class A common stock valued at
the fair market value on the date of exercise, as determined by the Company.
Restricted shares are shares of Class A common stock awarded to
participants at no cost. Restricted shares are forfeitable and non-transferable
until the shares vest. The vesting date or dates or the conditions for vesting
are established when the shares are awarded.
The Plan also permits cash awards, which is the right to receive a payment,
which may be in the form of cash, shares of Class A common stock, or a
combination, based on the attainment of pre-established goals.
All of the permissible types of awards are described in more detail below.
PURPOSES OF PLAN: The purposes of the Plan are to: attract and retain
officers, employees and directors for the Company and its subsidiaries; motivate
them by means of appropriate incentives to achieve long-range goals; provide
incentive compensation opportunities; and further identify their interests with
those of the Company's stockholders through compensation that is based on Class
A common stock.
ELIGIBLE RECIPIENTS: Persons eligible to receive awards under the Plan will
be those officers, employees and directors of the Company and its subsidiaries
who are selected by the Company's Board of Directors or the Committee of the
Board administering the Plan. As of the date of this proxy statement, no awards
have been granted and no award recipients have been selected under the Plan. No
individuals have an absolute right to participate in the Plan, nor is it
possible to estimate the type or amount of awards that may be granted to
eligible individuals or to eligible persons as a group.
ADMINISTRATION OF THE PLAN: Administration of the Plan will be entrusted to
a Committee of the Board of Directors (the "Committee"). It is presently
contemplated that the Compensation Committee of the Board of Directors will also
serve as the Committee under the Plan. Among other things, the Committee has the
authority to select persons who will receive awards, determine the types of
awards and the number of shares to be covered by awards, and to establish the
terms, conditions, performance criteria, restrictions and other provisions of
awards. The Committee will have authority to establish, amend and rescind rules
and regulations relating to the Plan.
7
SHARES AVAILABLE UNDER THE PLAN: The maximum number of shares of Class A
common stock that may be delivered to participants under the Plan is 750,000,
subject to adjustment for certain corporate changes affecting the shares, such
as stock splits. The maximum number of shares that may be covered by awards to
any single individual in any year is 200,000 and the maximum cash payment that
can be made to any individual for any single or combined performance goals for
any performance period is $1,000,000.
STOCK OPTIONS:
General. Subject to the provisions of the Plan, the Committee has the
authority to determine all grants of stock options under the Plan. That
determination will include: (i) the number of shares subject to any option; (ii)
the exercise price per share; (iii) the expiration date of the option; (iv) the
manner, time and date of permitted exercise; (v) other restrictions, if any, on
the option or the shares underlying the option; and (vi) any other terms and
conditions as the Committee may determine.
Option Price. The exercise price for stock options awarded under the Plan
will be determined at the time of grant. Normally, the exercise price will not
be less than the fair market value on the date of grant. As a matter of tax law,
the exercise price for any incentive stock option awarded under the Plan may not
be less than the fair market value of the shares on the date of grant. However,
incentive stock option grants to any person owning 10% or more of the Company's
voting stock must be at an exercise price not less than 110% of the fair market
value on the grant date.
Exercise of Options. Any option granted under the Plan may be exercised
only in accordance with the terms and conditions for such option established by
the Committee at the time of the grant. The option may be exercised by notice to
the Company, accompanied by payment of the exercise price. Payments may be made
in cash or, at the option of the Committee, by delivery of shares of Class A
common stock owned by the holder, in which case shares of Class A common stock
delivered in payment of the exercise price will be valued at such shares fair
market value on the date of exercise.
Expiration or Termination. Options, if not previously exercised, will
expire on the expiration date established by the Committee at the time of grant.
In the case of incentive stock options, such term cannot exceed ten years
provided that in the case of holders of 10% of the Company's voting stock, such
term cannot exceed five years. Options will terminate before their expiration
date if the holder's service with the Company or a subsidiary terminates before
the expiration date. The option may remain exercisable for specified periods
after certain terminations of employment, including terminations as a result of
death, disability or retirement, with the precise period during which the option
may be exercised to be established by the Committee and reflected in the grant
evidencing the award.
Incentive and Non-Qualified Options. The Plan provides for the grant of
either incentive stock options or non-qualified stock options. As is described
elsewhere in this summary, an incentive stock option is an option that is
intended to qualify under certain provisions of the Internal Revenue Code (the
"Code") for more favorable tax treatment than applies to non-qualified stock
options. Any option that does not qualify as an incentive stock option will be a
non-qualified stock option.
Under the Code, certain restrictions apply to incentive stock options. For
example, the exercise price for incentive stock options may not be less than the
fair market value of the shares on the grant date and the term of the option may
not exceed ten years. In addition, an incentive stock option may not be
transferred, other than by will or the laws of descent and distribution, and is
exercisable during the holder's lifetime only by the holder. In addition, no
incentive stock options may be granted to a holder that is first exercisable in
a single year if that option, together with all incentive stock options
previously granted to the holder that also first become exercisable in that
year, relate to shares having an aggregate market value in excess of $100,000,
measured at the grant date.
STOCK APPRECIATION RIGHTS: Under the Plan, the Committee may also grant
stock appreciation rights or "SARs." These awards are sometimes granted in
tandem with stock options. SARs provide the holder with the right, upon
exercise, to receive a payment, in cash or shares of stock, having a value equal
to the excess of the fair market value on the exercise date of the shares
covered by the exercise
8
of the SAR over the exercise price of those shares. Essentially, a holder of a
SAR benefits when the market price of the Class A common stock increases, to the
same extent that the holder of an option does, but, unlike an option holder, the
SAR holder need not pay an exercise price upon exercise of the award.
OTHER AWARDS: The Plan also authorizes the Committee to make other awards,
including Stock Awards and Cash Awards. A Stock Award is a grant of shares of
Class A common stock or of a right to receive shares in the future. These awards
will be subject to such conditions, restrictions and contingencies as the
Committee shall determine at the date of grant. Those may include requirements
for continuous service and/or the achievement of specified performance goals. A
Cash Award is an award that may be in the form of cash or shares of Class A
common stock or a combination, based on the attainment of pre-established
performance goals and other conditions, restrictions and contingencies
identified by the Committee.
OTHER MATERIAL PROVISIONS: Each award made under the Plan will be evidenced
by a written agreement, in such form as may be approved by the Committee.
The Plan provides that, in the event of various changes to the
capitalization of the Company, such as stock splits, stock dividends and similar
recapitalizations, an appropriate adjustment will be made by the Committee to
the number of shares covered by an award or to the exercise price of such award.
The Plan also permits the Committee to include in any agreement evidencing an
award, provisions that provide for certain changes in the award in the event of
a change of control transaction affecting the Company, including an acceleration
of vesting.
Except as otherwise determined by the Committee at the date of grant,
awards under the Plan will not be transferable, other than by will or the laws
of descent and distribution. Prior to any distribution under the Plan, the
Company is permitted to deduct or withhold an amount sufficient to satisfy any
federal, state or local tax withholding requirements.
The Board has the authority, at any time, to discontinue the granting of
awards under the Plan. The Board also has the authority to alter or amend the
Plan or any outstanding award or may terminate the Plan as to further grants,
provided that no amendment will, without the approval of the Company's
stockholders, to the extent that such approval is required by law or the rules
of an applicable exchange, increase the number of shares available under the
Plan, change the persons eligible for awards under the Plan, extend the time
within which awards may be made, or amend the provisions of the Plan related to
amendments. No amendment that would adversely affect any outstanding award made
under the Plan can be made without the consent of the holder of such award.
FEDERAL INCOME TAX CONSEQUENCES:
Stock Options. In general, the grant of a stock option will not be a
taxable event to the recipient and will not result in a tax deduction to the
Company. The tax consequences resulting from an exercise of a stock option and
the subsequent disposition of the shares acquired upon the exercise depends, in
part, on whether the option is an incentive stock option or a non-qualified
stock option.
Upon the exercise of a non-qualified stock option, the holder will
recognize ordinary compensation income in an amount equal to the excess of the
fair market value of the shares received upon exercise over the exercise price
(the "spread"). The Company will be able to claim a tax deduction for this
spread, provided it satisfies federal income tax withholding requirements and is
not otherwise precluded from taking a deduction because of Section 162(m)
deduction limitations described below. Any gain or loss upon the subsequent sale
or exchange of the shares by the holder will be capital gain or loss, long term
or short term, depending upon the holding period for the shares.
Upon the exercise of an incentive stock option, a holder will generally not
recognize taxable income at the time of exercise and no tax deduction will be
available to the Company, provided the option is exercised when the holder is an
employee of the Company or, in certain circumstances, within a limited time
thereafter. The difference between the exercise price and the fair market value
of the
9
shares on the date of exercise is treated by the holder as an item of adjustment
for purposes of the alternative minimum tax. If the shares acquired upon an
exercise of an incentive stock option are subsequently sold by the holder and
such sale takes place after the statutory "holding period" (which is the later
of two years from the date of grant or one year after the date of exercise), the
gain or loss realized will be the difference between the sales price and the
exercise price and will be treated as a long term capital gain or loss. If the
sale takes place prior to expiration of the holding period, the holder of the
shares will recognize ordinary income at the time of sale equal to the spread
and the Company will be entitled to a tax deduction in equal amount. The
remaining gain to the holder, if any, will be capital gain, either long term or
short term.
Stock Appreciation Rights. Generally, when the holder of a SAR exercises
the SAR, the amount of cash or the fair market value of the shares received upon
exercise will be ordinary compensation income to the holder and the Company will
be entitled to a corresponding tax deduction, subject to Section 162(m).
Restricted Shares. An award of restricted shares, like the grant of an
option, is not taxable to the recipient. The holder of restricted shares
generally will recognize ordinary compensation income at the time the
restrictions on the shares lapse, which is the vesting date thereof, based on
the fair market value of the Company's shares of Class A common stock on that
date. Subject to the Section 162(m) limitations, this amount is deductible for
federal income tax purposes by the Company. Dividends paid with respect to
restricted shares prior to vesting will be taxable as ordinary compensation
income to the holder (not as "qualifying dividends") and will be deductible by
the Company. A holder of restricted shares may elect, in lieu of the treatment
described above, to take immediate recognition of income at the time the shares
are received. In that event, the holder will recognize ordinary compensation
income equal to the fair market value of the shares at the date of grant, which
amount will be deductible by the Company, and dividends subsequently paid to the
holder with respect to the shares will be taxable to the holder as "qualifying
dividends" and will not be deductible by the Company.
Other Awards. Cash awards are generally taxable as ordinary compensation
income in the year of receipt and will be deductible as such by the Company.
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that the
compensation paid to any such covered employee exceeds $1,000,000. It is
possible that, in any particular year, compensation attributable to awards under
the Plan, when combined with all other types of compensation received by a
covered employee, may cause this limitation to be exceeded. For purposes of
Section 162(m), certain types of compensation, including "qualified
performance-based compensation," are disregarded. The Plan is structured so that
some awards granted under the Plan, including non-qualified stock options, may
qualify as "performance-based compensation," and thus will continue to be tax
deductible to the Company regardless of any Section 162(m) limits on the
deductibility of executive compensation.
Recognition of Compensation Expense. In accordance with Statement of
Financial Accounting Standards No.123R, "Share-Based Payment," the Company is
required to recognize compensation expense in its income statement for the
grant-date fair value of stock options and other equity-based compensation
issued to its employees and directors, the amount of which can only be
determined at the time of grant.
PLAN BENEFITS: Because no awards have yet been made under the Plan, and
because the identity of award recipients and the size of awards that may be made
to them under the Plan have not yet been determined, prospective Plan benefits
with respect to the Company's employees and directors, individually and as a
group, are not yet determinable.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE 2006 LONG TERM INCENTIVE PLAN.
- --------------------------------------------------------------------------------
10
PROPOSAL FOUR: AMENDMENTS TO COMMON STOCK WARRANTS HELD BY CHAIRMAN
The Company has previously awarded and issued to Jerome Dansker, its
Chairman, (i) warrants to purchase up to 501,465 shares of Class A common stock
at an exercise price of $6.67 per share, expiring on January 31, 2007, (ii)
warrants to purchase up to 145,000 shares of Class B common stock at an exercise
price of $6.67 per share, expiring on January 31, 2008, and (iii) warrants to
purchase up to 50,000 shares of Class B common stock at an exercise price of
$10.00 per share, expiring on January 31, 2008. The warrant related to 145,000
shares of Class B common stock allows the Company, at its election, to establish
an earlier expiration date to occur after February 1, 2007 and prior to January
31, 2008. The stockholders of the Company previously approved all of these
awards. All of the Class B common stock is convertible into Class A common stock
on a share for share basis.
The Company's Board of Directors believes that these warrants continue to
serve as a valuable long-term incentive to the Chairman and is recommending that
the terms of these warrants be amended as follows: first, it is proposed that
the early termination discretion related to the warrant for 145,000 shares of
Class B common stock be eliminated; and second, it is proposed that the warrants
be amended to confer upon the Board of Directors of the Company the authority to
extend the expiration date of the warrants from time to time, at the Board's
discretion, provided that, in no event shall the term of the warrants be
extended beyond January 31, 2018.
In accordance with Statement of Financial Accounting Standards No.123R,
"Share-Based Payment," the extension of the terms of these warrants will require
the Company to record compensation expense in its income statement at the time
of extension. The precise amount of any compensation expense will be determined
based on the estimated fair value of the warrants immediately before and
immediately after any extension and will depend upon a variety of factors,
including the length of any extension that may be approved by the Board of
Directors. The amounts will be computed using acceptable formulas which make
certain assumptions with respect to future values of the Company's Class A
common stock. The Company believes that any compensation expense it may record
will be tax deductible in computing the Company's taxable income.
Approval of this proposal to amend the warrants will require the
affirmative vote of a majority of the outstanding shares voting thereon. Proxies
received in response to the Board's solicitation will be voted "FOR" approval if
no specific instructions are included thereon for this proposal.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE APPROVAL OF THE PROPOSAL TO AMEND THE COMMON STOCK WARRANTS.
- --------------------------------------------------------------------------------
11
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
The Company is committed to maintaining the highest standards of business
conduct and corporate governance, which management believes are essential to
running the business efficiently, serving the Company's stockholders well and
maintaining the Company's integrity in the marketplace. The Company has a
written code of business conduct and ethics that applies to its directors,
officers and employees, and also has a written code of ethics for its principal
executive and principal financial officers. The Company's Audit Committee has
procedures in place for the submission of complaints or concerns regarding
financial statement disclosures and other matters. Copies of any of these
documents will be furnished upon written request and without charge to
beneficial holders of the Class A common stock of the Company by writing to:
Intervest Bancshares Corporation, Attention: Secretary, One Rockefeller Plaza
(Suite 400) New York, New York, 10020.
DIRECTOR NOMINATIONS PROCESS
The Company does not have a standing nominating committee, and the
Company's Board of Directors has determined that its director nomination policy
works efficiently without the need for a separate nominating committee.
Candidates for nomination for election by the holders of the Company's Class A
common stock are reviewed by those directors who qualify as "independent"
directors, as such term is defined in the rules of the Nasdaq Stock Market. The
independent directors then recommend a slate of nominees for election by the
holders of the Company's Class A common stock to the full Board of Directors for
review and approval. Class B stockholders, who are comprised of Jerome Dansker,
Lowell S. Dansker, Helene D. Bergman and Jean Dansker, recommend the nominees
for Class B directors to the full Board of Directors. The full Board of
Directors approves the nominees for election by the holders of the Company's
Class A and Class B common stock. The independent directors will consider
candidates recommended by the Company's management, and will also consider
candidates recommended by any of the Company's stockholders. There are no
differences in the manner in which the independent directors evaluate
stockholder-recommended nominees, as compared with nominees obtained from other
sources.
Any stockholder of the Company may nominate one or more persons for
election by the holders of Class A common stock as a director of the Company at
an annual meeting if the stockholder complies with the notice, information and
consent provisions contained in the Company's bylaws. In order for the director
nomination to be timely, a stockholder's notice to the Company's Secretary must
be delivered not less than 90 days nor more than 120 days in advance of the
corresponding date of the proxy statement and notice released to stockholders in
connection with the Company's immediately preceding annual meeting of
stockholders. In the event that the Company sets an annual meeting date that is
not within 30 days before or after the date of the immediately preceding annual
meeting, notice by the shareholder must be received no later than the close of
business on the 10th day following the day on which notice of the date of the
meeting was mailed or public disclosure of the date was made, whichever occurs
first. To be in proper form, a notice must also contain information concerning
the proposed nominee, including: the name, age, business address and residence
address of the person; the principal occupation of the person; the beneficial
ownership of Company shares of the person; and any other information related to
the person that would be required to be filed in a proxy statement or other
filings required to be made in connection with the solicitation of proxies.
AFFIRMATIVE DETERMINATIONS REGARDING DIRECTOR INDEPENDENCE
The Board of Directors has determined that each of the following directors
is an "independent" director as such term is defined in Nasdaq Marketplace Rule
4200(a)(15): Michael A. Callen; Paul R. DeRosa; Lawton Swan, III; Thomas E.
Willett; David J. Willmott; and Wesley T. Wood. In this proxy statement, these
six directors are referred to individually as an "Independent Director" and
collectively as "Independent Directors." A director is considered independent
only if the director does not have, and generally has not had in the most recent
three years, any material relationships with the Company, including any
affiliation with the Company's independent auditors.
12
The Board of Directors has also determined that each member of the Audit
Committee meets the independence requirements applicable to the Audit Committee
prescribed by the Nasdaq Stock Market and the Securities and Exchange Commission
("SEC"). The Board further determined that Michael A. Callen and Paul R. DeRosa,
members of the Audit Committee, are "Audit Committee Financial Experts," as such
term is defined in applicable SEC rules.
COMMUNICATIONS WITH THE BOARD
The Company has a procedure in place to facilitate communications to the
Board of Directors by stockholders. Under the process approved by the Board, the
Company's Secretary reviews all correspondence addressed to the Board of
Directors or any individual member of the Board, and will forward to the Board a
summary of all such correspondence and copies of all correspondence that, in the
opinion of the Secretary, deals with the functions of the Board or any of its
Committees or that is otherwise determined to require the Board's attention.
Directors may at any time review a log of all correspondence received by the
Company that is addressed to the Board or individual members of the Board and
request copies of such correspondence.
Concerns related to accounting, internal controls or auditing matters are
immediately brought to the attention of the Company's Audit Committee and are
handled in accordance with procedures established by the Audit Committee.
Individuals may communicate with the Board by writing to Intervest Bancshares
Corporation, Attention: Secretary, One Rockefeller Plaza (Suite 400) New York,
New York 10020.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Regular meetings of the Board of Directors are held every other month and
special meetings of the Board of Directors are held from time to time as needed.
The Board of Directors held six meetings in 2005. The Independent Directors meet
at regularly scheduled sessions without the Company's management.
During the period that each director served as such, all of the directors
(except Mr. Wood and Mr. DeRosa) attended at least 75% of the total meetings
held by the Board of Directors and by the Committees on which they served during
2005. Mr. Wood and Mr. DeRosa attended four of the six meetings held by the
Board of Directors and Mr. DeRosa attended six of the nine Audit Committee
meetings held. The Company does not have a policy that requires members of the
Board to attend its annual meeting of stockholders. Three members of the Board
attended the Company's most recent annual meeting of stockholders.
COMMITTEES OF THE BOARD OF DIRECTORS
Currently, the Company's Board of Directors has the following standing
committees:
EXECUTIVE COMMITTEE. Members of the Executive Committee are Jerome Dansker,
Chairman, Lawrence G. Bergman and Lowell S. Dansker. The Executive Committee
exercises all of the power of the Board between meetings of the Board. The
Executive Committee held four meetings in 2005.
AUDIT COMMITTEE. Members of the Audit Committee are Michael A. Callen,
Chairman, Paul R. DeRosa, Lawton Swan, III and David J. Willmott. The members of
the Audit Committee are independent directors under the Nasdaq corporate
governance rules. The Audit Committee held nine meetings in 2005. The Company's
Audit Committee also serves as the audit committee of Intervest National Bank
and Intervest Mortgage Corporation, the Company's subsidiaries.
As set forth in more detail in its charter (a copy of which is attached to
this proxy statement as appendix A), the Audit Committee's primary
responsibilities fall into four broad categories: (1) monitoring the preparation
of quarterly and annual financial statements by the Company's management,
including discussions with management and the Company's outside auditors; (2)
overseeing the relationship between the Company and the Company's outside
auditors, including recommending their appointment or removal, reviewing the
scope of their audit services and related fees, as well as any other services
13
that may be provided to the Company, and determining whether the outside
auditors are independent; (3) overseeing the internal audit function; and (4)
compliance oversight responsibilities, including review and approval of all
related party transactions.
COMPENSATION COMMITTEE. Members of the Compensation Committee are Wesley
T. Wood, Chairman, Michael A. Callen and Paul R. DeRosa. All members of the
Compensation Committee are independent directors under the Nasdaq corporate
governance rules. The Compensation Committee held two meetings in 2005.
The Compensation Committee operates under a charter and is responsible for
setting executive officer compensation, for making recommendations to the full
Board concerning Director compensation and for general oversight of the
compensation and benefit programs for the Company's other employees.
In addition, Intervest National Bank's Board of Directors has a standing
Loan Committee whose members consist of Jerome Dansker, Chairman, Lowell S.
Dansker, Lawrence G. Bergman and Wesley T. Wood. The Loan Committee is
responsible for the review and approval of loans made by Intervest National Bank
consistent with the loan policy approved by its Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee had any relationship with the
Company or its subsidiaries requiring disclosure under applicable SEC rules
regarding Compensation Committee interlocks and insider participation in
compensation decisions. None of the Company's executive officers served on any
board of directors or compensation committee of any other company (except for
our wholly owned subsidiaries) for which any of the Company's directors served
as an executive officer.
COMPENSATION OF DIRECTORS
All the Company's directors are also directors of Intervest National Bank
and Intervest Mortgage Corporation and receive fees for attendance at meetings
of the Boards of Directors and at meetings of the Committees of the Boards. The
amount of these fees are evaluated and adjusted periodically by the Board of
Directors based on the recommendation of the Compensation Committee.
The fees paid are noted in the table that follows:
Amount Per
----------
Meeting Attended
----------------
Chairman and Vice Chairman of the Company's Board of Directors (1) $ 4,000
Other members of the Company's Board of Directors (1) $ 1,250
Chairman of all Board Committees of the Company and its subsidiaries (2) $ 1,000
Other members of all Board Committees of the Company and its subsidiaries (2) $ 750
- -----------------------------------------------------------------------------------------------
(1) The same fee is also paid for each Board Meeting of Interest National Bank
and Intervest Mortgage Corporation attended by directors, except for
Messrs. Raymond Sullivan and Keith Olsen, who are directors of Intervest
National Bank and do not receive any compensation for attending meetings.
Effective February 2006, Stephen A. Helman, a director of the Company, was
also elected a Vice President of the Company, Intervest Mortgage
Corporation and Intervest National Bank and no longer receives any fees for
attending meetings.
(2) Effective as of June 23, 2005, the fees paid to the Chairman of the Audit
Committee and the other members of the Audit Committee were increased to
$3,500 and $1,500 for each meeting attended, respectively.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the Audit Committee does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
Company filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, except to the extent the Company specifically incorporates this report
by reference therein.
We, the Audit Committee of the Board of Directors, are directors who meet
the Nasdaq Stock Market standards for independence. Each of us also meets the
SEC's requirements for audit committee
14
member independence. We operate under a written charter adopted by the Board of
Directors, a copy of which is attached to this proxy statement as Appendix A.
We met with management periodically during the year to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. We discussed these matters with Hacker, Johnson & Smith, P.A., P.C,
the Company's independent auditors ("Auditors"), and with appropriate Company
financial personnel and the Company's internal auditor.
We discussed with the Company's senior management and Auditors the process
used for certifications by the Company's principal executive officer and
principal financial officer, which are required for certain of the Company's
filings with the SEC. We met privately at our regularly scheduled committee
meetings with both the Auditors and the Company's internal auditor, as well as
with the Company's principal financial officer and the Company's counsel, each
of whom has unrestricted access to us.
We reviewed with management and the Auditors, the Company's audited
financial statements, and met separately with both management and the Auditors
to discuss and review those financial statements and reports prior to issuance.
Management has represented and the Auditors have confirmed to us that the
financial statements were prepared in accordance with U.S. generally accepted
accounting principles. Management has primary responsibility for the Company's
financial statements and the overall reporting process, including the Company's
system of internal controls. The Auditors audited the annual financial
statements prepared by management, expressed an opinion as to whether those
financial statements fairly present the financial position, results of
operations and cash flows of the Company in conformity with U.S. generally
accepted accounting principles and discussed with us any issues they believe
should be raised with us.
We appointed the Auditors as the independent auditors for the Company for
2006 after reviewing the firm's performance and independence from management. We
received from and discussed with the Auditors written disclosure and the letter
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). These items relate to that firm's
independence from the Company.
We also discussed with the Auditors matters required to be discussed by the
Statement on Auditing Standards No. 61 (Communication with Audit Committees) of
the Auditing Standards Board of the American Institute of Certified Public
Accountants to the extent applicable. We implemented a procedure to monitor
auditor independence, reviewed audit and non-audit services performed by the
Auditors, and discussed with the Auditors their independence.
Relying on the reviews and discussions referred to above, we recommended to
the Board of Directors that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2005.
Audit Committee: Michael A.Callen (Chairman), Paul R. DeRosa, Lawton Swan, III,
David J. Willmott
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the Compensation Committee does not constitute
soliciting material and shall not be deemed filed or incorporated by reference
into any Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this report by reference therein.
We, the Compensation Committee of the Board of Directors, operate under a
written charter adopted by the Board of Directors and have the primary
responsibility to set the Company's compensation principles that serve to guide
the design of compensation plans and programs applicable to employees at all
levels of the organization. The Compensation Committee is composed entirely of
independent, non-employee members of the Board of Directors. No former employees
of the Company serve on this committee.
15
We periodically review the competitiveness of the Company's compensation
programs in order to evaluate whether they are achieving their desired goals and
objectives. The goal of the Company's compensation programs is to attract,
motivate and retain highly talented individuals. With respect to the executive
officers of the Company, the Company's executive compensation program is
principally designed to give executives incentives to focus on and achieve the
Company's business objectives. Key elements of the compensation program are
competitive base salaries and annual performance-based bonuses, which seek to
recognize individual performance each year. The Company has, from time to time,
granted equity incentives in the form of stock purchase warrants that provide
financial rewards to officers, employees and directors if there is stock price
appreciation over the period of exercisability.
We review the performance of the Company's executive officers and their
compensation at least annually in the context of total compensation packages
awarded to executives with similar responsibilities at similar companies in the
financial sector. The bonuses paid to the executive officers in 2005 were
intended to recognize their accomplishments as well as those of the Company and
its subsidiaries in the past year. In addition, we recommended to the Board that
the Company renew those executive officer employment agreements that were
expiring in 2005.
We reviewed and recommended to the Board of Directors that they adopt the
2006 Long Term Incentive Plan discussed elsewhere in this proxy statement. We
believe that this plan will help the Company to attract and retain employees by
providing the Company with flexibility to award them with appropriate incentives
to achieve the Company's long-range goals.
We reviewed all components of the Chairman's compensation, including
salary, bonuses and benefits. In making our review, we took into account the
Company's progress and performance in 2005 under the leadership of the Chairman,
noting that the Company reported consolidated earnings of $18.2 million for 2005
and consolidated assets of $1.7 billion at December 31, 2005, while continuing
to maintain a favorable efficiency ratio of 23%. The efficiency ratio is a
measure of the Company's ability to control expenses as a percentage of its
revenues. The Company also raised $26.3 million of capital in 2005 through a
public offering of its Class A common stock. Based on this review and our
recommendation to the Board, the Company awarded incentive compensation and
bonuses in the total amount of $581,000 to the Chairman to recognize his
performance and in particular his additional efforts associated with increasing
capital. We believe the aggregate compensation paid to the Chairman in 2005 was
reasonable and not excessive.
We reviewed the impact of Section 162(m) of the Internal Revenue Code on
the Company. Generally, Section 162(m) does not permit publicly held companies
like the Company to deduct compensation paid to certain executive officers (the
Chief Executive Officer and the next four most highly-compensated officers, each
defined as a covered employee) to the extent that the amount of the compensation
payable to that covered employee for the taxable year exceeds $1.0 million per
officer in any year. However, compensation payable under a performance-based
compensation plan that is approved by stockholders at least once every five
years will not be subject to this deduction limitation so long as the plan
complies with the other requirements set forth in Section 162(m). Currently, the
Company does not have such a qualifying incentive compensation plan and as a
result certain compensation paid to the Chief Executive Officer may not qualify
for a federal tax deduction in computing the Company's taxable income.
Compensation Committee: Wesley T. Wood (Chairman), Michael A. Callen, Paul R.
DeRosa
16
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning all compensation
awarded to, earned by or paid to the Company's Chief Executive Officer and the
four other most highly compensated executive officers collectively referred to
as "named executive officers" in this proxy statement, for all services rendered
in all capacities to the Company and all of its subsidiaries during each of the
past three fiscal years.
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name Other Annual
Principal Position Year Salary(1) Bonuses Compensation(2) Awards Pay-Outs
- -------------------------------------------------------------------------------------------------------
JEROME DANSKER, 2005 $ 633,720 $581,000 ---- ---- ----
Chairman, 2004 $ 496,202 $300,000 ---- ---- ----
Chief Executive Officer 2003 $ 380,914 $ 10,000 ---- ---- ----
- -------------------------------------------------------------------------------------------------------
LOWELL S. DANSKER, 2005 $ 391,317 $386,000 $ 7,650 ---- ----
Vice Chairman, 2004 $ 288,700 $ 25,000 $ 4,800 ---- ----
President 2003 $ 174,500 $ 15,000 $ 3,222 ---- ----
- -------------------------------------------------------------------------------------------------------
LAWRENCE G. BERGMAN 2005 $ 245,426 $226,000 ---- ---- ----
Vice President, 2004 $ 171,750 $ 25,000 ---- ---- ----
Secretary 2003 $ 116,500 $ 7,500 ---- ---- ----
- -------------------------------------------------------------------------------------------------------
KEITH A. OLSEN, (3) 2005 $ 195,712 $ 10,000 $ 6,171 ---- ----
President - Florida Division 2004 $ 171,558 $ 10,000 $ 5,447 ---- ----
Intervest National Bank 2003 $ 161,000 $ 10,000 $ 5,430 ---- ----
- -------------------------------------------------------------------------------------------------------
JOHN J. ARVONIO, (4) 2005 $ 164,375 $ 10,000 $ 5,231 ---- ----
Chief Accounting Officer 2004 $ 145,240 $ 10,000 $ 4,358 ---- ----
2003 $ 137,596 $ 7,500 $ 4,353 ---- ----
- -------------------------------------------------------------------------------------------------------
(1) Includes director and committee fees, commissions from sales of debentures,
expense allowance, unused vacation pay and unreimbursed medical expenses
paid by the Company and its subsidiaries.
(2) Represents matching contributions under the 401(k) plan.
(3) Mr. Olsen serves as an executive officer of Intervest National Bank but
does not serve as an executive officer of the Company.
(4) Mr. Arvonio also serves as Senior Vice President, Chief Financial Officer
and Secretary of Intervest National Bank. Mr. Arvonio was elected Chief
Accounting Officer of the Company in December 2005.
AGGREGATED WARRANT GRANTS, EXCERCISES AND YEAR-END WARRANT VALUES
No warrants or options were granted to or excercised by any of the named
executive officers during 2005.
The following table contains information as of December 31, 2005 regarding
the number of warrants that are exercisable for shares of Class A and Class B
common stock held by Jerome Dansker, the Company's Chairman and Chief Executive
Officer. All the warrants are currently exercisable. No other officer named in
the summary compensation table above held warrants or options.
Number of Securities
Underlying
Warrants at Year End Aggregate Value of
-------------------- Unexercised In-the-
Class A Class B Money Warrants at
Shares Shares Year End
--------------------------------------------
501,465 195,000 $ 12,014,673
The aggregate value of unexercised in-the-money warrants at year end was
calculated by subtracting the exercise price from the fair market value of the
underlying shares. For purposes of this table, fair market value is deemed to be
$24.16 per share, the average of the high and low prices reported by the Nasdaq
Stock Market for transactions in the Company's Class A common stock on December
29, 2005. There is no established trading market for the Class B common stock.
As a result, for purposes of this table, the fair market value of the Class B
common stock is also deemed to be $24.16 per share since the Class B common
stock is convertible into Class A common stock on a share for share basis.
17
EQUITY COMPENSATION PLAN INFORMATION
The table below summarizes information as of December 31, 2005 relating to
equity compensation plans of the Company pursuant to which rights to acquire
shares of Class A and Class B common stock have been granted. All of the rights
were granted before 2001.
Number of shares to be Weighted-average Number of securities
issued upon exercise of exercise price of remaining available
outstanding warrants outstanding warrants for future issuance
--------------------------- -------------------------- ------------------------
Class A (1) Class B (1) Class A Class B Class A Class B
- --------------------------------------------------------------------------------------------------------------------
Plans approved by stockholders 501,465 195,000 $ 6.67 $ 7.52 ---- ----
Plans not approved by stockholders ---- ---- ---- ---- ---- ----
- --------------------------------------------------------------------------------------------------------------------
(1) The rights consist of warrants to purchase shares of Class A and B common
stock issued to the Chairman of the Company, the grant of which was
ratified by the stockholders of the Company.
EMPLOYMENT AGREEMENTS
On July 1, 2004, the Company entered into an employment and supplemental
benefits agreement with Mr. Jerome Dansker, the Company's Chairman and Chief
Executive Officer. Mr. Jerome Dansker's current annual salary under this
agreement is $259,000, subject to annual increases pursuant to a formula
described in the agreement. In addition to his salary, Mr. Jerome Dansker is
entitled to receive such bonuses or incentive compensation as may, from time to
time, be approved by the Board of Directors as well as an expense account,
currently amounting to $650 per month, which increases annually in the same
proportion as the increase in Mr. Jerome Dansker's salary for such year. Mr.
Jerome Dansker is also entitled to payment of unused vacation, reimbursement of
all travel expenses incurred by him in the performance of his duties and to
participate in the Company's employee benefit plans or programs, to the extent
that his position and other qualifications make him eligible to participate. The
agreement does not limit the Board of Dierctors' power to award to Mr. Jerome
Dansker, whether or not pursuant to the agreement, any bonus, stock options,
warrants or any other form of benefit or compensation.
The terms of the agreement provide that Mr. Jerome Dansker may devote as
much of his time to the Company's affairs as in his judgment the conduct of his
duties will require. The agreement further provides that Mr. Jerome Dansker may
engage in the following: (i) any other business; (ii) financing, acquiring,
operating, selling or otherwise disposing of real property for his own account
or for the account of any such other business; or (iii) performing services on
behalf of any other business entity. Under the agreement, Mr. Jerome Dansker may
engage in the same or similar businesses as those of the Company, and the
Company will not have any right to participate in any such other businesses or
investments.
In the event of Mr. Jerome Dansker's disability, as defined in the
agreement, or death, the Company will pay to Mr. Jerome Dansker, his wife or his
estate, as applicable, a specified amount over a period equal to the greater of
(i) three years, and (ii) the number of months remaining in the stated term of
the agreement. The specified amount is equal to a percentage, 50% in the case of
disability and 25% in the case of death, of Mr. Jerome Dansker's monthly salary
had the agreement continued in force and effect. This amount (or the balance of
any remaining amount if monthly payments have previously commenced due to
disability) will, in the case of death, be paid to Mr. Jerome Dansker's estate
in a lump sum and will, for these purposes, be calculated on the basis of annual
salary increases at the rate of six percent. The obligation to pay the specified
amount survives the expiration of the term of the agreement.
Subject to certain exceptions, the Company agreed to indemnify Mr. Jerome
Dansker to the fullest extent permitted by law, against all losses, claims,
damages or liabilities, including
18
legal fees, disbursements, and any other expenses incurred in investigating or
defending against any such loss, claim, damage or liability.
In the event of any sale of the Company's assets or stock, merger,
reorganization or other transaction, the Company's successor will, as a
condition to the consummation of such transaction, expressly assume and agree to
perform the agreement. The agreement expires on June 30, 2014, unless terminated
earlier by Mr. Jerome Dansker upon thirty days' prior notice.
Mr. Jerome Dansker also has an employment agreement with the Company's
subsidiary, Intervest Mortgage Corporation, for a term ending June 30, 2014.
Pursuant to the agreement, Mr. Dansker serves as the Executive Vice President
of Intervest Mortgage Corporation. The agreement is similar to the employment
and supplemental benefits agreement between him and the Company described above
and provides for, among other items: (i) a current annual salary of $224,000,
subject to annual increases, pursuant to a formula described in the agreement
and additional salary of $1,000 per month for each $10.0 million or part thereof
of gross assets of the subsidiary in excess of $110.0 million, which level of
gross assets is determined at the end of each month; (ii) an expense account
currently amounting to $1,340 per month, subject to increases pursuant to a
formula set forth in the agreement; (iii) coverage of all medical and
hospitalization expenses of Mr. Dansker and his wife; (iv) payment of a lump sum
amount equal to 50% of the amount which would have been paid during the balance
of the term in the event of Mr. Dansker's death; (v) payment of an amount equal
to 50% of the amount which would have been paid under the agreement in monthly
installments for a term equal to the greater of three years or the balance of
the term in the event of retirement or disability; (vi) unlimited use of a car
and driver during the term of the agreement and the balance of his lifetime, or
Mrs. Dansker's lifetime, if she survives Mr. Dansker; and (vii) an office at the
offices of the subsidiary, which Mr. Dansker can use in connection with his
duties for the subsidiary and for any other purposes as Mr. Dansker may
determine, during the balance of Mr. Dansker's lifetime and after the expiration
of the term of the agreement. If the subsidiary ceases to maintain offices in
Midtown Manhattan, City of New York, then the subsidiary will pay Mr. Dansker an
amount, as reasonably determined by Mr. Dansker, reflecting the cost of an
office and secretarial services in the City of New York.
On July 1, 2004, Mr. Lowell Dansker and Mr. Lawrence Bergman also entered
into employment and supplemental benefits agreements with the Company. Pursuant
to the agreements, Mr. Lowell Dansker serves as the Company's President and
Treasurer, and Mr. Bergman serves as a Vice President and the Secretary of the
Company. Mr. Lowell Dansker's and Mr. Bergman's current annual salaries under
the agreements are $244,000 and $224,000, respectively, subject to annual
increases pursuant to a formula described in the agreements. In addition to
their salary, Mr. Lowell Dansker and Mr. Bergman are entitled to receive such
bonuses or incentive compensation as may, from time to time, be approved by the
Board of Directors of the Company as well as to obtain the reimbursement of all
travel expenses incurred by each of them in the performance of their duties and
to participate in the Company's employee benefit plans or programs, to the
extent that their positions and other qualifications make them eligible to
participate. The agreements do not limit the Board of Directors' power to award
to each of Mr. Lowell Dansker and Mr. Lawrence Bergman, whether or not pursuant
to the agreements, any bonus, stock options, warrants or any other form of
benefit or compensation.
Under their respective agreements, the Company provides each of Mr. Lowell
Dansker and Mr. Bergman with an office, which they can use in connection with
their duties as executive officers of the Company and for any other purposes as
each of them may determine. Upon the expiration of the term of the agreements,
the Company will continue to provide each of Mr. Lowell Dansker and Mr. Bergman
with an office for a period of two years. If the Company cease to maintain its
office in Midtown Manhattan, City of New York, then the Company will pay each
19
of them an amount, as reasonably determined by them, reflecting the cost of an
office and secretarial services in New York City.
Mr. Lowell Dansker's and Mr. Bergman's respective agreements expire on June
30, 2014, unless terminated earlier, upon thirty days' prior notice, by Mr.
Lowell Dansker or Mr. Bergman, as applicable, and permit each of them to devote
as much of their time to the Company's affairs as in their judgment the conduct
of their duties will require. The agreements further provide that each may
engage in the following: (i) any other business; (ii) financing, acquiring,
operating, selling or otherwise disposing of real property for their own account
or for the account of any such other business; or (iii) performing services on
behalf of any other business entity. Under the agreements, Mr. Lowell Dansker
and Mr. Bergman may engage in the same or similar businesses as those of the
Company, and the Company will not have any right to participate in any such
other businesses or investments.
Mr. Lowell Dansker's and Mr. Bergman's respective agreements also contain
certain other provisions, including disability and death benefits and
indemnification, which are similar to those described in connection with Mr.
Jerome Dansker's agreement above. In addition, Mr. Lowell Dansker is entitled to
an expense account, currently amounting to $660 per month, which increases
annually in the same proportion as the increase in his salary for such year and
to an unlimited use of a car. Following the expiration of the agreement, the
Company will provide Mr. Lowell Dansker with an unlimited use of a car for a
period of two years.
Intervest National Bank, the Company's subsidiary, has employment
agreements with its President, Raymond C. Sullivan, its President of the Florida
Division, Keith A. Olsen, and its Senior Vice President and Chief Financial
Officer, John J. Arvonio that expire on December 31, 2006. The agreements are
renewable from year to year upon mutual written consent and have annual base
salaries in the present amounts of $180,000 for Mr. Sullivan, $250,000 for Mr.
Olsen and $180,000 for Mr. Arvonio. Mr. Arvonio also receives an additional
$10,000 annually beginning in 2006 for his duties as Chief Accounting Officer of
the Company for which there is no written employment agreement. The agreements
provide for expense reimbursements, medical and life insurance benefits, bonuses
and other benefits as may be provided by the Board of Directors of the Bank. The
agreements also provide for the payment of base salary through December 31, 2006
and an additional payment of up to six months base salary in the event of a
termination without cause. The agreements give the executive the right, during
the one year period following any change in control of the Company, to terminate
his employment, in which case he is entitled to receive compensation through
December 31, 2006, together with an additional payment of up to six months base
salary.
Intervest Mortgage Corporation, the Company's subsidiary, has an employment
agreement with its Vice President and Controller, John H. Hoffmann. The
agreement includes the same terms and conditions as the agreements between the
Bank and Mr. Sullivan, Mr. Olsen and Mr. Arvonio, described above, except for
the annual base salary. Mr. Hoffmann's current annual base salary is $115,000.
STOCK PERFORMANCE GRAPH
The following stock performance graph compares the cumulative total
shareholder return of the Company's Class A common stock against the cumulative
total return of the Nasdaq Stock Market (U.S. companies) Index, an index for
banks with total assets of $1 billion to $5 billion, and the Nasdaq Bank index.
The stock performance graph was prepared by SNL Financial L.C. and assumes
that $100 was invested on December 31, 2000. The points marked on the horizontal
axis correspond to December 31 of each year. Each of the referenced indices is
calculated in the same manner.
20
[GRAPHIC OMITTED]
PERIOD ENDING
----------------------------------------------------------------
INDEX 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
- --------------------------------------------------------------------------------------------------
Intervest Bancshares Corporation $ 100.00 $ 197.33 $ 288.00 $ 390.67 $ 526.37 $ 660.00
NASDAQ Composite $ 100.00 $ 79.18 $ 54.44 $ 82.09 $ 89.59 $ 91.54
SNL $1B-$5B Bank Index $ 100.00 $ 121.50 $ 140.26 $ 190.73 $ 235.40 $ 231.38
SNL NASDAQ Bank Index $ 100.00 $ 108.85 $ 111.95 $ 144.51 $ 165.62 $ 160.57
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Intervest National Bank, the Company's subsidiary, has in the past and may
in the future enter into various loan and other banking transactions in the
ordinary course of business with the Company's directors and executive officers
(or associates of such persons). All such transactions: (i) are made in the
ordinary course of business, (ii) are made on substantially the same terms,
including interest rates and collateral on loans, as those generally prevailing
at the time for comparable transactions with unrelated persons, and (iii) do not
involve more than the normal risk of collectability or present other unfavorable
features. There were no loans outstanding or made to any directors or executive
officers during the year ended December 31, 2005.
The Company, its directors and entities affiliated with certain directors
of the Company, have in the past and may in the future participate in mortgage
loans originated by the Company's subsidiaries. Such participations are on
substantially the same terms as would apply for comparable transactions with
other persons and the interest of the participants in the collateral securing
those loans is pari passu with such subsidiaries. At December 31, 2005, there
were no such transactions outstanding.
21
Intervest National Bank has deposit accounts from affiliated companies,
directors, executive officers and members of their immediate families and
related business interests, all of which are on terms comparable to those made
available to non-affiliates. These accounts aggregated to a total of
approximately $52 million at December 31, 2005.
Mr. Wayne F. Holly, a director of the Company, is the Chairman and
President of Sage, Rutty & Co., Inc. ("Sage Rutty"), a broker/dealer, which firm
has acted as underwriter or placement agent from time to time in connection with
securities offerings of the Company and of Intervest Mortgage Corporation.
Intervest National Bank also uses such firm to purchase investment securities.
Intervest Mortgage Corporation paid approximately $925,000 in 2005 to Sage Rutty
in connection with the placement of its debentures. These amounts do not include
commissions reallowed by Sage Rutty to other brokers/dealers, including
Intervest Securities Corporation, another subsidiary of the Company, which
participated in the placement of the aforementioned debentures. Intervest
National Bank paid commissions of approximately $22,000 in 2005 to Sage Rutty in
connection with the purchase of securities for its investment portfolio.
Mr. Lowell S. Dansker, the Company's Vice Chairman and President, also is a
registered principal of Intervest Securities Corporation and, in that capacity,
receives compensation directly from Intervest Securities Corporation in
connection with sales of securities by that entity. Mr. Dansker received
compensation of $54,000 for such sales in 2005. All such compensation is
included in the salary column of the Summary Compensation Table.
Mr. Thomas E. Willett, a director of the Company, is a member of Harris
Beach PLLC, a law firm that provides legal services to the Company and its
subsidiaries. The total of fees paid by the Company to Harris Beach PLLC in 2005
was less than 5% of that firm's gross revenues for that firm's last full fiscal
year.
From time to time, certain relatives of the Company's executive officers
and directors may perform clerical or similar services for the Company or its
subsidiaries on a part-time basis, for which such individuals receive de minimis
compensation.
Except for the transactions described above and outside of normal customer
relationships, none of the directors, officers or principal stockholders of the
Company and no corporations or firms with such persons or entities are
associated, currently maintains or has maintained since the beginning of the
last fiscal year, any significant business or personal relationship with the
Company or with its subsidiaries other than such as arises by virtue of such
position or ownership interest in the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's common stock to file initial reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms filed by such
persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and more than 10% stockholders were satisfied except that Mr. Stephen
A. Helman inadvertently failed to timely report the acquisition of 10,600 shares
of Class A common stock. The transaction was subsequently reported on Form 4 and
all transactions are reflected in this proxy statement.
22
INDEPENDENT PUBLIC ACCOUNTANTS
APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors of the Company has appointed
the firm of Hacker, Johnson & Smith P.A., P.C. ("Hacker Johnson") as the
Company's independent auditors for the year ending December 31, 2006. Such firm
served as the Company's independent auditors for the year ending December 31
2005.
In making its determination to appoint Hacker Johnson as the Company's
independent auditors for 2006, the Audit Committee considered and determined
that the provision of non-audit services as described below is compatible with
maintaining the independence of the Company's principal independent auditors.
In fulfilling its oversight responsibility of reviewing the services
performed by the Company's independent auditors, the Audit Committee carefully
reviews the policies and procedures for the engagement of the independent
auditors. The Audit Committee also discussed with Hacker Johnson the overall
scope and plans for the audit, the results of its audit and fees paid by the
Company.
Hacker Johnson has advised the Company that neither the firm nor any of its
associates has any relationship with the Company or its subsidiaries other than
the usual relationship that exists between independent public accountants and
clients. Representatives from Hacker Johnson are not expected to be present at
the Annual Meeting.
On November 18, 2005, Intervest Mortgage Corporation, the Company's
subsidiary, engaged Hacker Johnson to be its new independent auditors replacing
Eisner LLP. Eisner LLP previously served as the principal independent auditors
for Intervest Mortgage Corporation. Hacker Johnson had relied on the reports of
Eisner LLP in connection with its own reports. The Company's Audit Committee
participated in and approved the decision to change Intervest Mortgage
Corporation's independent auditors. The reports of Eisner LLP on the
consolidated financial statements of Intervest Mortgage Corporation as of and
for the years ended December 31, 2004 and 2003 did not contain any adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope or accounting principles. During the two most recent
fiscal years ended December 31, 2004 and 2003 and the subsequent interim period
preceding November 18, 2005, there have been no disagreements with Eisner LLP on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Eisner LLP, would have caused it to make reference to the
subject matter of the disagreement(s) in connection with its report on the
consolidated financial statements of Intervest Mortgage Corporation. No
"reportable events", as such term is defined in Item 304(a)(1)(v) of Regulation
S-K, occurred within the two most recent fiscal years ended December 31, 2004
and 2003 and the subsequent interim period preceding November 18, 2005.
AUDITOR FEES AND SERVICES
The following table summarizes fees billed for professional services for
the years ended December 31, 2005 and 2004 rendered by the Company's principal
independent auditors, Hacker Johnson, and by Eisner LLP, who previously served
as the principal independent auditors for Intervest Mortgage Corporation.
23
2005 2004
------------------------------------------------------
Hacker, Johnson & Smith P.A., P.C:
Audit fees (1) $ 79,000 $72,000
Audit fees (2) 50,000 -
Tax fees (3) 11,000 11,000
All other fees (4) 30,000 -
------------------------------------------------------
Total $170,000 $83,000
------------------------------------------------------
Eisner LLP
Audit fees (5) $ 16,800 $45,600
Tax fees - -
All other fees (6) 51,500 28,000
------------------------------------------------------
Total $ 68,300 $73,600
------------------------------------------------------
(1) Consist of fees for the audit of the Company's annual consolidated
financial statements for the years ended December 31, 2005 and 2004, and
for the review of the Company's quarterly consolidated financial statements
included in its Quarterly Reports on Form 10-Q filed during 2005 and 2004.
(2) Consist of fees for the audit of the Intervest Mortgage Corporation's
annual consolidated financial statements for the years ended December 31,
2005, 2004 and 2003.
(3) Consist of fees for the preparation of the Company's income tax returns.
(4) Consist of fees for the review of the Company's registration statement
filed in 2005 related to the issuance of its Class A common stock.
(5) Consist of fees for the review of Intervest Mortgage Corporation's
quarterly consolidated financial statements included in its Quarterly
Reports on Form 10-Q filed during 2005 and 2004, and for the audit of
Intervest Mortgage Corporation's annual consolidated financial statements
for the year ended December 31, 2004.
(6) Consist of fees for the review of registration statements filed in 2005 and
2004 related to the issuance of Intervest Mortgage Corporation's
subordinated debentures as well as a registration statement filed in 2005
related to the issuance of the Company's Class A common stock.
OTHER MATTERS
The Audit Committee pre-approves all audit and permissible non-audit
services to be provided by the independent auditors and the estimated fees for
these services. Of the time expended by the Company's principal auditors to
audit the Company's financial statements for the fiscal year ended December 31,
2005, 100% of such time involved work performed by persons who were the
principal auditors' full-time, permanent employees.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Requirements for Stockholder Proposals to be considered for inclusion in
the Company's Proxy Materials.
Stockholders of the Company may submit proposals on matters appropriate for
stockholder action at meetings of stockholders in accordance with Rule 14a-8
promulgated under the Securities Exchange Act of 1934. For such proposals to be
included in the proxy materials relating to the 2007 Annual Meeting of
Stockholders, all applicable requirements of Rule 14a-8 must be satisfied and
proposals must be received by the Company no later than December 16, 2006. Such
proposals should be delivered to the Secretary, Intervest Bancshares
Corporation, One Rockefeller Plaza (Suite 400), New York, New York 10020.
Requirements for Stockholder Proposals to be Brought Before the Annual
Meeting.
Except in the case of proposals made in accordance with Rule 14a-8 and for
stockholder nominations to the Board of Directors, which are governed by the
procedures for director nominations described above, for proposals to be
considered at an Annual Meeting, the stockholder must have given notice thereof
in writing to the Secretary of the Company not less than 90 nor more than 120
days in advance of the date of the Company's proxy statement in connection with
the immeditately preceding annual meeting of stockholders. To be timely for the
2007 Annual Meeting, a stockholder's notice must be delivered to or mailed and
received by the Secretary of the Company after December 16, 2006 and prior to
January 15, 2007. A
24
stockholder's notice to the Secretary must set forth, as to each matter the
stockholder proposes to bring before the Annual Meeting, the information
required by the Company's bylaws.
In addition, the proxy solicited by the Board of Directors for the 2007
Annual Meeting will confer discretionary authority to vote (i) on any proposal
presented by a stockholder at that meeting for which the Company has not been
provided with notice prior to January 15, 2007, and (ii) on any other proposal
(notwithstanding timely notice) made in accordance with the Company's bylaws, if
the proxy statement briefly describes the matter and how management will direct
the proxy holders to vote on it, if the stockholder does not comply with the
requirements of Rule 14a-4(c)(2) of the Securities Exchange Act of 1934.
OTHER MATTERS
The cost of solicitation of the proxies by the Company will be borne by the
Company. In addition to such solicitation of proxies by mail, the Company,
through its directors, officers and employees, may also solicit proxies
personally or by telephone, telegraph or fax. The Company will request persons,
firms and corporations holding shares of common stock in their names or in the
names of their nominees, which are beneficially owned by others, to send proxy
material to and obtain proxies from such beneficial owners and will reimburse
such holders for their reasonable expenses in doing so.
As of this date, the Board of Directors does not know of any business to be
brought before the meeting other than as specified above. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote in such manner as may be determined by a
majority of the Board of Directors or its Executive Committee.
Copies of the 2005 Annual Report of the Company are included in this
mailing to stockholders. Additional copies of the Company's 2005 Annual Report
may be obtained by written request addressed to Intervest Bancshares
Corporation, Attention: Secretary, One Rockefeller Plaza (Suite 400) New York,
New York 10020.
By Order of the Board of Directors,
/S/ Lawrence G. Bergman
------------------------
Lawrence G. Bergman
Secretary
Dated: April 15, 2006
A COPY OF THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K FOR ITS MOST RECENT
FISCAL YEAR, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED UPON REQUEST AND WITHOUT CHARGE TO BENEFICIAL HOLDERS OF THE CLASS A
COMMON STOCK OF THE COMPANY. WRITTEN REQUESTS SHOULD BE DIRECTED TO: INTERVEST
BANCSHARES CORPORATION, ATTENTION: SECRETARY, ONE ROCKEFELLER PLAZA (SUITE 400)
NEW YORK, NEW YORK 10020. TELEPHONE INQUIRIES SHOULD BE DIRECTED TO (212)
218-2800. IN ADDITION, THE ANNUAL REPORT OF THE COMPANY ON FORM 10-K (WITH
EXHIBITS) IS AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE
(WWW.SEC.GOV).
25
APPENDIX A
April 2005
INTERVEST BANCSHARES CORPORATION
INTERVEST NATIONAL BANK
INTERVEST MORTGAGE CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the Board
in monitoring (1) the integrity of the financial statements of Intervest
Bancshares Corporation (the "Company"), (2) the independent auditors'
qualifications and independence, (3) the performance of the Company's internal
audit function and independent auditors, and (4) compliance by the Company with
legal and regulatory requirements.
The Audit Committee shall prepare the report required by the rules of the
Securities and Exchange Commission (the "Commission") to be included in the
Company's annual proxy statement.
The Audit Committee serves as the Audit Committee for Intervest Bancshares
Corporation and its wholly-owned subsidiaries, Intervest National Bank and
Intervest Mortgage Corporation. As such, it is also the Audit Committee required
by the rules of the Comptroller of the Currency. References in this charter to
the "Company" shall include reference to the Company's subsidiaries, as
appropriate.
COMPOSITION
The Audit Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Audit Committee.
Audit Committee members shall meet the independence and educational requirements
of the NASDAQ Corporate Governance Rules, Section 10A(m)(3) of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Commission. Among other things, all members of the Audit Committee shall have a
working familiarity with basic finance and accounting practices. Audit Committee
members may enhance their familiarity with finance and accounting by
participating in educational programs conducted by the Company or outside
consultants.
The members of the Audit Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chairperson is elected by the full Board, the
members of the Audit Committee may designate a Chairperson by majority vote of
the full Audit Committee membership.
MEETINGS
The Audit Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Audit Committee should meet privately in executive session at least annually
with management and the
A-1
independent auditors separately to discuss any matters that the Audit Committee
or each of these groups believes should be discussed privately. In addition,
the Audit Committee or at least its Chairperson should meet with the independent
auditors and management quarterly to review the Corporation's financial
statements consistent with Section IV.3 below.
RESPONSIBILITIES AND DUTIES
The Audit Committee shall have the sole authority to appoint or replace the
independent auditor(s) of the Company and its subsidiaries. The Audit Committee
shall be directly responsible for the compensation and oversight of the work of
the independent auditors (including resolution of disagreements between
management and the independent auditors regarding financial reporting) for the
purpose of preparing or issuing an audit report or related work. The independent
auditors shall report directly to the Audit Committee.
The Audit Committee shall preapprove all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditors, subject to the de minimus exception for
non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange
Act which are approved by the Audit Committee prior to the completion of the
audit.
The Audit Committee shall have the authority, to the extent it deems necessary
or appropriate, to retain independent legal, accounting or other advisors. The
Company shall provide for appropriate funding, as determined by the Audit
Committee, for payment of compensation to the independent auditor for the
purpose of rendering or issuing an audit report and to any advisors employed by
the Audit Committee.
The Audit Committee shall make regular reports to the Board of Directors. The
Audit Committee shall review and reassess the adequacy of this Charter annually
and recommend any proposed changes to the Board for approval. The Audit
Committee will see that the charter is published at least every three years in
accordance with SEC regulations.
The Audit Committee, to the extent it deems it necessary or appropriate, shall:
Financial Statement and Disclosure Matters
- ----------------------------------------------
1. Review and discuss with management and the independent auditors the annual
audited financial statements, including disclosures made in management's
discussion and analysis, and recommend to the Board whether the audited
financial statements should be included in the Company's Report on Form 10-K.
2. Review and discuss with management and the independent auditors the
Company's (and its subsidiaries') quarterly financial statements prior to the
filing of its Form 10-Q, including the results of the independent auditors'
reviews of the quarterly financial statements.
3. Discuss with management and the independent auditors significant financial
reporting issues and judgments made in connection with the preparation of the
Company's financial statements, including any significant changes in the
Company's selection or application of accounting principles, any major issues as
to the adequacy of the Company's internal controls and any special steps adopted
in light of material deficiencies.
4. Review and discuss quarterly reports from the independent auditors on:
(a) All critical accounting policies and practices to be used.
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(b) All alternative treatments of financial information with generally
accepted accounting principles that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments, and the
treatment preferred by the auditors.
(c) Other material written communications between the independent
auditors and management, such as any management letter or schedule of unadjusted
differences.
5. Discuss with management the Company's earnings press releases, including
the use of "pro forma" or "adjusted" non-GAAP information, as well as financial
information and earnings guidance provided to analysts and rating agencies.
Such discussion may be done generally (consisting of discussing the types of
information to be disclosed and the types of presentations to be made).
6. Discuss with management and the independent auditors the effect of
regulatory and accounting initiatives, as well as off-balance sheet structures,
on the Company's financial statements.
7. Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures, including
the Company's risk assessment and risk management policies.
8. Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit, including any difficulties encountered in the course of the audit
work, restrictions on the scope of activities or access to requested
information, and any significant disagreements with management.
9. Review disclosures made to the Audit Committee by the Company's chief
executive and chief financial officers during their certification process for
the Reports on Form 10-K and Form 10-Q about any significant deficiencies in the
design or operation of internal controls or material weaknesses therein and any
fraud involving management or other employees who have a significant role in the
Company's internal controls.
Oversight of the Company's Relationship with the Independent Auditors
- ---------------------------------------------------------------------
10. Obtain and review a report from the independent auditors at least
annually regarding (a) the independent auditors' internal quality control
procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firms, or by any inquiry or
investigation by governmental or professional authorities within the preceding
five years respecting one or more independent audits carried out by the firms,
(c) any steps taken to deal with any such issues, and (d) all relationships
between the independent auditors and the Company. Evaluate the qualifications,
performance and independence of the independent auditors, including considering
whether the auditors' quality controls are adequate and the provision of
permitted non-audit services is compatible with maintaining the auditors'
independence, and taking into account the opinions of management and the
internal auditors. The Audit Committee shall present its conclusions with
respect to the independent auditors to the Board.
11. Discuss with the independent auditors the planning and staffing of the
annual audit.
Oversight of the Internal Audit Function
- ----------------------------------------
12. Review the appointment and replacement of the internal auditors for the
Company and review and approve the plan for internal audits.
A-3
13. Review the significant reports to management prepared by the internal
auditors and management's responses.
14. Discuss with the independent auditor and management the internal audit
function responsibilities, budget and staffing and any recommended changes in
the planned scope of the internal audit.
15. Meet with the internal auditors to review the progress of their internal
audits and to discuss any significant findings and recommendations.
16. Review and approve the audit scope, procedures and frequencies to ensure
they are commensurate with the Company's activities and risks.
17. Conduct an annual review of the internal auditor's expertise and job
performance, which review will include an assessment of the independence of the
internal audit function from management.
18. Require the internal auditor to provide, no less frequently than once
per month, a written report containing an outline and general overview of audit
activities during the prior month. The report, which should be issued on or
about the first day of each month, will be distributed to each member of the
Committee, as well as the Company's chief executive officer.
19. Require the internal auditor to include, in each monthly report, a copy
of the annual audit plan matrix, which matrix will be updated to reflect the
completion of each segment of the annual plan, so as to enable the Committee to
monitor performance against the annual plan.
Compliance Oversight Responsibilities
- ---------------------------------------
20. Obtain from the independent auditors assurance that Section 10A(b) of
the Exchange Act has not been implicated.
21. Obtain reports from management, the Company's internal auditors and the
independent auditors that the Company and its subsidiaries are in conformity
with applicable legal requirements and the Company's Code of Ethics. Review
reports and disclosures of insider and affiliated party transactions and review
and approve all related-party transactions. Advise the Board with respect to
the Company's policies and procedures regarding compliance with applicable laws
and regulations and with the Company's Code of Ethics.
22. Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal accounting
controls or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters.
LIMITATION OF AUDIT COMMITTEE'S ROLE
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements and disclosures are
complete and accurate and are in accordance with generally accepted accounting
principles and applicable rules and regulations. These are the responsibilities
of management and the independent auditors.
A-4
APPENDIX B
FEBRUARY 2006
INTERVEST BANCSHARES CORPORATION
LONG-TERM INCENTIVE PLAN
------------------------
SECTION 1 GENERAL
-------
1.1 Purpose. This Intervest Bancshares Corporation Long-Term Incentive
-------
Plan (the "Plan") has been established by Intervest Bancshares Corporation (the
"Company") (a) to attract and retain persons eligible to participate in the
Plan; (b) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (c) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (d) further identify
Participants' interests with those of the Company's other stockholders through
compensation that is based on the Company's common stock; and thereby promote
the long-term financial interest of the Company and the Related Companies,
including the growth in value of the Company's equity and enhancement of
long-term stockholder return.
1.2 Participation. Subject to the terms and conditions of the Plan,
-------------
the Committee shall determine and designate, from time to time, from among the
Eligible Individuals, those persons who will be granted one or more Awards under
the Plan, and thereby become "Participants" in the Plan. In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacements of awards outstanding
under the Plan, or any other plan or arrangement of the Company or a Related
Company (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Related Company).
1.3 Operation, Administration and Definitions. The operation and
--------------------------------------------
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to Operation and
Administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 1.4 of the Plan).
1.4 Defined Terms. For purposes of the Plan, the terms listed below
--------------
shall be defined as follows:
(a) Award. The term "Award" shall mean any award or benefit granted to
-----
any Participant under the Plan, including, without limitation, the grant of
Options, SARs, Stock Awards and Cash Awards.
(b) Board. The term "Board" shall mean the Board of Directors of the
-----
Company.
(c) Change in Control. The term "Change in Control" means a change in
------------------
control occurring after the Effective Date of this Plan of a nature that would
be required to be reported in a proxy statement with respect to the Company
(even if the Company is not actually subject to said reporting requirements) in
response to Item 6(e) (or any comparable or successor Item) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), except that any merger, consolidation or corporate
reorganization in which the owners of the Company's capital stock entitled to
vote in the election of directors (the "Voting Stock") prior to said combination
receive 75% or more of the resulting entity's Voting Stock shall not be
considered a change in control for the purposes of this Plan;
B-1
and provided that, without limitation of the foregoing, such change in control
shall be deemed to have occurred if (i) any "person" (as that term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act, excluding any stock purchase or
employee stock ownership plan maintained by the Company or a Related Company)
becomes the "beneficial owner" (as that term is defined by the Securities and
Exchange Commission for purposes of Section 13(d) of the Exchange Act), directly
or indirectly, of more than 15% of the outstanding Voting Stock of the Company
or its successors; or (ii) during any period of two consecutive years a majority
of the Board of Directors no longer consists of individuals who were members of
the Board of Directors at the beginning of such period, unless the election of
each director who was not a director at the beginning of the period was approved
by a vote of at least 75% of the directors still in office who were directors at
the beginning of the period.
(d) Code. The term "Code" means the Internal Revenue Code of 1986, as
----
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
(e) The term "Committee" is as defined in Section 5.
---------
(f) The term "Eligible Individual" shall mean any employee, officer or
-------------------
non-employee director of the Company or a Related Company.
(g) Fair Market Value. For purposes of determining the "Fair Market
------------------- -----------
Value" of a share of Stock, the following rules shall apply:
- -----
(i) If the Stock is at the time listed or admitted to trading on
any stock exchange or a national market system, including without limitation the
Nasdaq National Market, then the "Fair Market Value" shall be the mean between
the lowest and highest reported sale prices of the Stock on the date in question
on the principal exchange on which the Stock is then listed or admitted to
trading. If no reported sale of Stock takes place on the date in question on
the principal exchange, then the reported closing asked price of the Stock on
such date on the principal exchange shall be determinative of "Fair Market
Value."
(ii) If the Stock is not at the time listed or admitted to trading
on a stock exchange, the "Fair Market Value" shall be the mean between the
lowest reported bid price and highest reported asked price of the Stock on the
date in question in the over-the-counter market, as such prices are reported in
a publication of general circulation selected by the Committee and regularly
reporting the market price of Stock in such market.
(iii) If the Stock is not listed or admitted to trading on any
stock exchange or traded in the over-the-counter market, the "Fair Market Value"
shall be as determined in good faith by the Committee.
(h) Related Companies. The term "Related Company" means (i) any
------------------
corporation, partnership, joint venture or other entity during any period in
which it owns, directly or indirectly, at least 50% of the voting power of all
classes of stock of the Company (or successor to the Company) entitled to vote;
and (ii) any corporation, partnership, joint venture or other entity during any
period in which at least 50% voting or profits interest is owned, directly or
indirectly, by the Company, by any entity that is a successor to the Company, or
by any entity that is a Related Company by reason of clause (i) next above.
(i) Stock. The term "Stock" shall mean shares of Class A Common stock
-----
of the Company.
B-2
SECTION 2. OPTIONS AND SARS
------------------
2.1 Descriptions.
------------
(a) The grant of an "Option" entitles the Participant to purchase
shares of Stock at an Exercise Price established by the Committee. Options
granted under this Section 2 may be either Incentive Stock Options or
Non-Qualified Stock Options, as determined in the discretion of the Committee.
An "Incentive Stock Option" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option" described in Section
422(b) of the Code. A "Non-Qualified Option" is an Option that is not intended
to be an "incentive stock option" as that term is described in Section 422(b) of
the Code.
(b) A stock appreciation right (a "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection 2.5),
value equal to all or a portion of the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee pursuant to Section 2.2 of the Plan.
2.2 Exercise Price. The "Exercise Price" of each Option and SAR
---------------
granted under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price for Incentive Stock Options shall
not be less than 100% of the Fair Market Value of a share of Stock as of the
Pricing Date (or less than 110% of the Fair Market Value of a share of Stock as
of the Pricing Date in the case of Participants owning 10% of the voting stock
of the Company). For purposes of the preceding sentence, the "Pricing Date"
shall be the date on which the Option is granted.
2.3 Exercise. An Option and SAR shall be exercisable in accordance
--------
with such terms and conditions and during such periods as may be established by
the Committee.
2.4 Payment of Option Exercise Price. The payment of the Exercise
------------------------------------
Price of an Option granted under this Section 2 shall be subject to the
following:
(a) Subject to the following provisions of this subsection 2.4, the
full Exercise Price for shares of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in the case of
an exercise arrangement approved by the Committee and described in subsection
2.4(c), payment may be made as soon as practicable after the exercise).
(b) The Exercise Price shall be payable in cash or, at the option of
the Committee, by tendering shares of Stock (by either actual delivery of shares
or by attestation, with such shares valued at Fair Market Value as of the day of
exercise), or in any combination thereof, as determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by authorizing a third party to sell shares
of Stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding resulting from such exercise.
2.5 Settlement of Award. Distribution following exercise of an Option
--------------------
or SAR, and shares of Stock distributed pursuant to such exercise, shall be
subject to such conditions,
B-3
restrictions and contingencies as the Committee may establish. Settlement of
SARs may be made in shares of Stock (valued at their Fair Market Value at the
time of exercise), in cash, or in a combination thereof, as determined in the
discretion of the Committee. The Committee, in its discretion, may impose such
conditions, restrictions and contingencies with respect to shares of Stock
acquired pursuant to the exercise of an Option or SAR as the Committee
determines to be desirable.
SECTION 3 OTHER AWARDS
- ---------- -------------
3.1 Stock Award. A Stock Award is a grant of shares of Stock or of a
------------
right to receive shares of Stock (or their cash equivalent or a combination of
both) in the future. Each Stock Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall determine. These may
include continuous service and/or the achievement of performance goals. The
performance goals that may be used by the Committee for such Awards may consist
of cash generation targets, profit, revenue and market share targets,
profitability targets as measured by return ratios, and stockholder returns. The
Committee may designate a single goal criterion or multiple goal criteria for
performance measurement purposes, with the measurement based on absolute Company
or business unit performance and/or on performance as compared with that of
other publicly-traded companies.
3.2 Cash Award. A Cash Award is a right denominated in cash or cash
-----------
units to receive a payment, which may be in the form of cash, shares of Stock or
a combination, based on the attainment of pre-established performance goals and
such other conditions, restrictions and contingencies as the Committee shall
determine. The performance goals that may be used by the Committee for such
awards may consist of cash generation targets, profits, revenue and market share
targets, profitability targets as measured by return ratio, stockholder returns
and such other goals as may be designated by the Committee. The Committee may
designate a single goal criterion or multiple goal criteria for performance
measurement purposes with the measurement based on absolute Company or business
unit performance and/or on performance as compared with that of other
publicly-traded companies.
SECTION 4 OPERATION AND ADMINISTRATION
- ---------- ------------------------------
4.1 Effective Date. Subject to the approval of the stockholders of the
--------------
Company, the Plan shall be effective as of February 23, 2006 (the "Effective
Date"); provided, however, that to the extent that Awards are made under the
Plan prior to its approval by stockholders, they shall be contingent on approval
of the Plan by the stockholders of the Company. The Plan shall be unlimited in
duration and, in the event of Plan termination, shall remain in effect as long
as any Awards under it are outstanding; provided, however, that, to the extent
required by the Code, no Incentive Stock Options may be granted under the Plan
on a date that is more than ten years from the date the Plan is adopted or, if
earlier, the date the Plan is approved by stockholders.
4.2 Shares Subject to Plan.
-------------------------
(a) (i) Subject to the following provisions of this subsection 4.2,
the maximum number shares of Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be 750,000 shares.
(ii) Any shares of Stock granted under the Plan that are forfeited
back to the Company because of the failure to meet an Award contingency or
condition shall again be
B-4
available for delivery pursuant to new Awards granted under the Plan. To the
extent any shares of Stock covered by an Award are not delivered to a
Participant or beneficiary because the Award is forfeited or canceled, or the
shares of Stock are not delivered because the Award is settled in cash, such
shares shall not be deemed to have been delivered for purposes of determining
the maximum number of shares of Stock available for delivery under the Plan.
(iii) If the Exercise Price of any Option granted under the Plan
or any Prior Plan is satisfied by tendering shares of Stock to the Company (by
either actual delivery or by attestation), only the number of shares of Stock
issued net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or obligations to grant future
awards) under the plans or arrangements of another entity shall not reduce the
maximum number of shares of Stock available for delivery under the Plan, to the
extent that such settlement, assumption or substitution as a result of the
Company or a Related Company acquiring another entity (or an interest in another
entity).
(b) Subject to subsection 4.2(c), the following additional maximums are
imposed under the Plan.
(i) The maximum number of shares of Stock that may be issued by
Options intended to be Incentive Stock Options shall be 750,000 shares.
(ii) The maximum number of shares that may be covered by Awards
granted to any one individual pursuant to Section 2 (relating to Options and
SARs) shall be 200,000 shares in any one calendar year.
(iii) The maximum payment that can be made for awards granted to
any one individual pursuant to Section 3 (relating to Stock Awards and Cash
Awards) shall be $1,000,000 for any single or combined performance goals
established for any specified performance period. If an Award granted under
Section 3 is, at the time of grant, denominated in shares, the value of the
shares of Stock for determining this maximum individual payment amount will be
the Fair Market Value of a share of Stock on the first day of the applicable
performance period.
(c) Subject to Section 4.14 below relating to changes in control, in
the event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee (a) will make any appropriate
adjustments to the maximum number of shares of Stock that may be delivered to
Participants and their beneficiaries under this subsection 4.2(a) and (b), and
(b) will adjust Awards to preserve the benefits or potential benefits of the
Awards. Action by the Committee may include adjustment of: (i) the number and
kind of shares which may be delivered under the Plan; (ii) the number and kind
of shares subject to outstanding Awards; and (iii) the Exercise Price of
outstanding Options and SARs; as well as any other adjustments that the
Committee determines to be equitable.
B-5
4.3 Limit on Distribution. Distribution of shares of Stock or other
-----------------------
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance may be
effected on a noncertificated basis, to the extent not prohibited by applicable
law or the applicable rules of any stock exchange or a national market system,
including without limitation the Nasdaq National Stock Market.
4.4 Tax Withholding. Whenever the Company proposes or is required to
----------------
distribute Stock under the Plan, the Company may require the recipient to remit
to the Company an amount sufficient to satisfy any Federal, state and local tax
withholding requirements prior to the delivery of any certificate for such
shares or, in the discretion of the Committee, the Company may withhold from the
shares to be delivered shares sufficient to satisfy all or a portion of such tax
withholding requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy any Federal,
state and local tax withholding requirements.
4.5 Dividends and Dividend Equivalents. An Award may provide the
-------------------------------------
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.
4.6 Payments. Awards may be settled through cash payments, the
--------
delivery of shares of Stock, the granting of replacement Awards, or combination
thereof as the Committee shall determine. Any Award settlement, including
payment deferrals, may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred Stock equivalents.
4.7 Transferability. Except as otherwise provided by the Committee,
---------------
Awards under the Plan are not transferable except as designated by the
Participant by will or by the laws of descent and distribution.
4.8 Form and Time of Elections. Unless otherwise specified herein,
------------------------------
each election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
B-6
4.9 Agreement With Company. At the time of an Award to a Participant
------------------------
under the Plan, the Committee may require a Participant to enter into an
agreement with the Company (the "Agreement") in a form specified by the
Committee, agreeing to the terms and conditions of the Plan and to such
additional terms and conditions, not inconsistent with the Plan, as the
Committee may, in its sole discretion, prescribe.
4.10 Limitation of Implied Rights.
-------------------------------
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Company or any Related Company whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Related
Company, in their sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the stock
or amounts, if any, payable under the Plan, unsecured by any assets of the
Company or any Related Company. Nothing contained in the Plan shall constitute
a guarantee that the assets of such companies shall be sufficient to pay any
benefits to any person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any Eligible Individual the right to be
retained in the employ of the Company or any Related Company, nor any right or
claim to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan. Except as otherwise provided in the Plan,
no Award under the Plan shall confer upon the holder thereof any right as a
stockholder of the Company prior to the date on which the individual fulfills
all conditions for receipt of such rights.
4.11 No Fractional Shares. No fractional shares of Stock shall be
----------------------
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash shall be paid or transferred in lieu of any fractional
shares of Stock, or whether such fractional shares of Stock or any rights
thereto shall be canceled.
4.12 Evidence. Evidence required of anyone under the Plan may be by
--------
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
4.13 Exceeding Limitations. To the extent that the aggregate Fair
----------------------
Market Value of Stock (determined at the time the Option is granted) with
respect to which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans of the Company and all
Related Companies) exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options, to the extent required by Section 422 of the Code.
4.14 Change in Control. Subject to the provisions of subsection 4.2
-------------------
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or the agreement reflecting the applicable Award, upon the occurrence of a
Change in Control:
(a) All outstanding Options (regardless of whether in tandem with
SARs) shall become fully exercisable.
(b) All outstanding SARs (regardless of whether in tandem with
Options) shall become fully exercisable.
(c) All Stock Awards shall become fully vested.
B-7
4.15. Action by Company or Related Company. Any action required or
----------------------------------------
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of the Company.
4.16. Gender and Number. Where the context admits, words in any gender
-----------------
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
SECTION 5 COMMITTEE
- ---------- ---------
5.1. Administration. The authority to control and manage the operation
--------------
and administration of the Plan shall be vested in a committee (the "Committee")
in accordance with this Section 5.
5.2. Selection of Committee. The Committee shall be selected by the
------------------------
Board, and shall consist of two or more members of the Board.
5.3. Powers of Committee. The authority to manage and control the
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operation and administration of the Plan shall be vested in the Committee,
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals those
persons who shall receive Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of shares covered by the Awards, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and (subject to the restrictions imposed by
Section 6) to cancel or suspend Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
individual, the individual's present and potential contribution to the Company's
success and such other factors as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which Awards under the Plan
will be structured to conform to the requirements applicable to
performance-based compensation as described in Code Section 162(m), and to take
such action, establish such procedures, and impose such restrictions at the time
such Awards are granted as the Committee determines to be necessary or
appropriate to conform to such requirements.
(c) The Committee will have the authority and discretion to establish
terms and conditions of Awards as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of jurisdictions
outside of the United States.
(d) The Committee will have the authority and discretion to interpret
the Plan, to establish, amend, and rescind any rules and regulations relating to
the Plan, to determine the terms and provisions of any agreements made pursuant
to the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.
(e) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan is final and binding.
B-8
(f) Except as otherwise expressly provided in the Plan, where the
Committee is authorized to make a determination with respect to any Award, such
determination shall be made at the time the Award is made, except that the
Committee may reserve the authority to have such determination made by the
Committee in the future (but only if such reservation is made at the time the
Award is granted and is expressly stated in the Agreement reflecting the Award).
(g) In controlling and managing the operation and administration of the
Plan, the Committee shall act by a majority of its then members, by meeting or
by a writing filed without a meeting. The Committee shall maintain and keep
adequate records concerning the Plan and concerning its proceedings and acts in
such form and detail as the Committee may decide.
5.4 Delegation by Committee. Except to the extent prohibited by
-------------------------
applicable law or the applicable rules of a stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time.
5.5 Information to be Furnished to Committee. The Company and Related
-----------------------------------------
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an Eligible Individual's employment or other provision of
services, termination of employment or cessation of the provision of services,
leave of absence, reemployment and compensation shall be conclusive on all
persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 6 EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
- ---------- -----------------------------------------------------------------
6.1 Effect on Other Awards or Bonuses. Neither adoption of the Plan
------------------------------------
nor the grant of Awards to a Participant will affect the Company's right to
grant to such Participant Awards that are not subject to the Plan, to issue to
such Participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued to Eligible Individuals.
6.2 Discontinuance, Cancellation, Amendment and Termination. The Board
-------------------------------------------------------
may at any time discontinue granting Awards under the Plan. The Board may at
any time or times alter or amend the Plan or any outstanding Award for any
purpose which may at the time be permitted by law, or may at any time terminate
the Plan as to any further grants of Awards, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment will, without the
approval of (a) the Company's stockholders, to the extent stockholder approval
of the amendment is required by applicable law or regulations or the
requirements of the principal exchange or interdealer quotation system on which
the Stock is listed or quoted, (i) increase the maximum number of shares
available under the Plan, (ii) change the group of persons eligible to receive
Awards under the Plan, (iii) extend the time within which Awards may be granted,
or (iv) amend the provisions of this Section 6.2, and (b) each affected
Participant if the amendment, alteration or termination would adversely affect
the Participant's rights or obligations under any Award made prior to the date
of the amendment, alteration or termination. The termination of the Plan would
not affect the validity of any Award outstanding on the date of termination.
B-9
PROXY INTERVEST BANCSHARES CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2006
The undersigned, revoking any proxy heretofore given, hereby constitutes and
appoints Jerome Dansker and Lowell S. Dansker, or either of them, proxies of the
undersigned, each with full power of substitution, to vote all shares of Class A
common stock of INTERVEST BANCSHARES CORPORATION (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on Thursday, May 25, 2006 at 9:30 A.M. local time (the "Annual Meeting"), and at
any adjournment or postponement thereof, as hereinafter specified with respect
to the following proposals, more fully described in the Notice of and Proxy
Statement for the Annual Meeting, receipt of which is hereby acknowledged. The
Board of Directors recommends a vote FOR all of the director nominees and a vote
FOR proposals 2, 3 and 4.
1. Election of Directors;
Nominees: Michael A. Callen, Wayne F. Holly, Lawton Swan, III
WITHHELD
FOR all nominees for all
listed above Nominees To withhold authority to vote for any individual
nominee, print the name(s) on the lines below.
[_] [_]
__________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
2. To consider and approve an amendment to the Company's For [_] Against [_] Abstain [_]
Restated Certificate of Incorporation to increase the
number of authorized shares of Class A common stock
from 9,500,000 to 12,000,000;
3. To consider and approve the 2006 Long Term Incentive For [_] Against [_] Abstain [_]
Plan;
4. To consider and approve amendments to outstanding For [_] Against [_] Abstain [_]
common stock warrants held by the Chairman; and
5. In their discretion, upon any other business which may
properly come before the Annual Meeting or any
adjournment or postponement thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE PROPOSALS SET FORTH
---
HEREIN UNLESS A CONTRARY CHOICE IS SPECIFIED. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ANY OTHER MATTERS WHICH PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
Signature ________________ Date _______ Signature ________________ Date_______
Note: (Please sign exactly as name appears hereon. For joint accounts, each
joint owner should sign. Executors, administrators, trustees, etc. should so
indicate when signing).
COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.