SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement Confidential, for Use of the
[x] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2)) [ ]Y
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Virginia Commerce Bancorp, Inc.
(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)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
5. Total Fee Paid:
--------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Checkbox 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:
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
5350 LEE HIGHWAY
ARLINGTON, VIRGINIA 22207
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2000
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Virginia Commerce Bancorp, Inc.
(the "Company") will be held at The Tower Club, 8000 Towers Crescent Drive,
Vienna, Virginia, on April 26, 2000 at 4:00 p.m. for the following purposes:
1. To elect eight (8) directors to serve until their successors are
duly elected and qualified;
2 To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Shareholders of record as of the close of business on March 24, 2000
are 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/ Robert H. L'Hommedieu
-------------------------
Robert H. L'Hommedieu
Secretary
March 29, 2000
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE
MEETING, YOU MAY, IF YOU DESIRE, REVOKE YOUR PROXY AND VOTE IN PERSON.
<PAGE>
VIRGINIA COMMERCE BANCORP, INC.
5350 LEE HIGHWAY
ARLINGTON, VIRGINIA 22207
-------------------------------------
ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
-------------------------------------
INTRODUCTION
This proxy statement is being sent to shareholders of Virginia Commerce
Bancorp, Inc., a Virginia corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Bank for use at the
Annual Meeting of Shareholders to be held at 4:00 p.m. on April 26, 2000 (the
"Annual Meeting"), and at any adjournment or postponement of the Annual Meeting.
The purposes of the Annual Meeting are:
(1) electing eight (8) directors to serve until their successors are
duly elected and qualified; and
(2) transacting such other business as may properly come before the
Annual Meeting or any adjournment or postponement of the Annual
Meeting.
The Annual Meeting will be held at The Tower Club, 8000 Towers Crescent
Drive, Vienna, Virginia.
This proxy statement and proxy card are being sent to shareholders of
the Company on or about March 29, 2000. A copy of the Annual Report to
Shareholders of Virginia Commerce Bancorp, Inc. for the year ended December 31,
1999 also accompanies this proxy statement.
VOTING RIGHTS AND PROXIES
VOTING RIGHTS
Only shareholders of record at the close of business on March 24, 2000,
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof. On that date, the Company had 1,968,985
shares of common stock, par value $1.00 per share (the "Common Stock"),
outstanding, constituting the only class of stock outstanding, held by
approximately 750 shareholders of record. Each share of Common Stock is entitled
to one vote on all matters submitted to a vote of the shareholders. Shareholders
do not have the right to cumulate votes in the election of directors. Nominees
receiving a plurality of the votes cast at the Annual Meeting in the election of
directors will be elected as directors in the order of the number of votes
received. The presence, in person or by proxy, of not less than a majority of
the total number of outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting.
PROXIES
Shares represented by proxies received by the Company will be voted in
accordance with the instructions contained therein. Shares represented by
proxies for which no instruction is given will be voted FOR the election of the
Company's nominees for election as directors, and in the discretion of the
holders of the proxies on all other matters properly brought before the meeting
and any adjournment or postponement thereof. The judges of election appointed by
the Board of Directors for the Annual Meeting will determine the presence of a
quorum and will tabulate the votes cast at the Annual Meeting. Abstentions will
be treated as present for purposes of determining a quorum, but as unvoted for
purposes of determining the approval of any matter submitted to the vote of
shareholders. If a broker indicates that he or she does not have discretionary
authority to vote any shares of
<PAGE>
Common Stock as to a particular matter, such shares will be treated as present
for general quorum purposes, but will not be considered as present or voted with
respect to such matter.
Shareholders are requested to sign, date, mark and return promptly the
enclosed proxy in the postage paid envelope provided for this purpose, in order
to assure that their shares are voted. A proxy may be revoked at any time prior
to the voting thereof at the Annual Meeting through the granting of a later
proxy with respect to the same shares, by written notice to Peter A. Converse,
President of the Company, at the address noted above, at any time prior to the
voting thereof, or by voting in person at the Annual Meeting. Attendance at the
Annual Meeting will not, in itself, revoke a proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITIES OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of March 1, 2000
concerning the number and percentage of shares of the Company's Common Stock
beneficially owned by its directors, nominees for director and by its directors
and executive officers as a group. Except as otherwise indicated, all shares are
owned directly, and the named person possesses sole voting and sole investment
power with respect to all such shares.
<TABLE>
<CAPTION>
Percentage of Class
Name and Position Number of Shares Beneficially Owned Beneficially Owned(1)
- ---------------------------------------------- --------------------------------- -------------------
<S> <C> <C>
Leonard Adler, Director 24,867(2) 1.26%
Peter A. Converse, President, CEO and Director 78,779(3) 3.87%
1.85%
W. Douglas Fisher, Chairman of the Board of
Directors 71,898(4)(5) 3.62%
David M. Guernsey, Vice Chairman of the Board of
Directors 24,228(4)(6) 1.22%
Robert H. L'Hommedieu, Director and Secretary 76,964(4) 3.87%
Norris E. Mitchell, Director 91,889(4) 4.62%
Arthur L. Walters, Director 292,764(4)(7) 14.73%
All directors and executive officers as a group
(11 persons) 728,993(8) 33.44%
</TABLE>
- ------------------------------------------------
(1) Based on 1,968,985 shares outstanding as of March 1, 2000, except with
respect to individuals holding options or warrants to acquire Common
Stock exercisable within sixty days of March 1, 2000, in which event
represents percentage of shares issued and outstanding as of March 1,
2000 plus the number of such options or warrants held by such person,
and all directors and officers as a group, which represents percentage
of shares outstanding as of March 1, 2000 plus the number of such
options or warrants held by all such persons as a group.
(2) Includes presently exercisable warrants to acquire 12,100 shares of
Common Stock.
(3) Includes presently exercisable options to acquire 64,380 shares of
Common Stock.
(4) Includes presently exercisable warrants to acquire 17,968 shares of
Common Stock.
(5) Represents shares held jointly by Mr. Fisher and his wife over which
they share voting and investment power.
(6) Represents shares held by Guernsey Office Products, Inc., of which Mr.
Guernsey is Chief Executive Officer and principal shareowner.
(7) Represents shares held jointly by Mr. Walters and his wife over which
they share voting and investment power, and shares held by
TransAmerican Equities Corp. and C.W. Cobb and Associates, of which Mr.
Walters is President.
(8) Includes presently exercisable options and warrants to acquire 210,702
shares of Common Stock.
2
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to persons
known to the Bank who own or may be deemed to own more than five percent of the
Company's Common Stock as of March 1, 2000. Also included is information
regarding the beneficial ownership of executive officers of the Company the
compensation of which is disclosed in this proxy statement, but who are not
members of the Board of Directors.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner(s) Number of Shares Beneficially Owned Percentage of Class Beneficially Owned(1)
--------------------------------------- ----------------------------------- -----------------------------------------
<S> <C> <C>
5% Shareholders
Julian and Dorothy S. Davidson 134,307 6.82%
1240 Deborah Drive, SE
Huntsville, Alabama 35801
Arthur L. and Lilly D. Walters 292,764(2) 14.75%
4141 N. Henderson Road
Arlington, Virginia 22203
Executive Officers Who are Not
Directors
R.B. Anderson, Jr. 14,434(3) 0.73%
</TABLE>
(1) Based on 1,968,985 shares outstanding as of March 1, 2000, except with
respect to individuals holding options or warrants to acquire Common
Stock exercisable within sixty days of March 1, 2000, in which event
represents percentage of shares issued and outstanding as of March 1,
2000 plus the number of such options or warrants held by such person.
(2) Includes presently exercisable warrants to acquire 17,968 shares of
Common Stock.
(3) Includes presently exercisable options to acquire 11,125 shares of
Common Stock.
The Company knows of no other person or persons, other than street name
nominee owners, who, beneficially or of record, own in excess of five percent of
the Company's Common Stock. Further, the Company is not aware of any arrangement
which at a subsequent date may result in a change of control of the Company.
ELECTION OF DIRECTORS
Eight (8) directors will be elected at the Annual Meeting for a
one-year period until the 2001 Annual Meeting of Shareholders and until their
successors have been elected and qualified. Unless authority is withheld, all
proxies in response to this solicitation will be voted for the election of the
nominees listed below. Each nominee has indicated a willingness to serve if
elected. However, if any nominee becomes unable to serve, the proxies received
in response to this solicitation will be voted for a replacement nominee
selected in accordance with the best judgment of the proxy holders named
therein. Each of the nominees for election as director currently serves as a
director.
The Board of Directors recommends that shareholders vote FOR each of
the nominees to the Bank's Board of Directors.
3
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
Director
Name and Age(1) Position Principal Occupation During Past Five Years Since(2)
--------------------------- ----------------------- --------------------------------------------------- -----------------
<S> <C> <C> <C>
Leonard Adler, 64 Director Chairman of the Board, Adler Financial Group; 1998(3)
Principal, Total Crafts
Peter A. Converse, 49 Director, President and President and CEO of the Bank January 1994 to present): 1994
CEO of the Company and Senior Vice President/Chief Lending Officer, Federal
the Bank Capital Bank (March 1992 to December 1993); Senior
Vice President, Bank of Maryland (October 1990 to
March 1992); Executive Vice President/Chief Lending
Officer, Century National Bank (May 1986 to July 1990)
Frank L. Cowles, Jr., 70 Director Owner and President: Cowles Nissan; Cowles Chrysler- 1988
Plymouth; Cowles Ford; Scottsville Hardware; and
Greenfields Farm; Of Counsel, Cowles, Rinaldi & Arnold
(law firm)
W. Douglas Fisher, 62 Chairman of the Board Retired - Vice President, Aztech Corp. (computer 1988
systems); President, Executive Systems, Inc.
(computer Systems) (1990 to 1992)
David M. Guernsey, 52 Vice Chairman of the Owner and Chief Executive Officer, Guernsey Office 1988
Board Products, Inc.
Robert H. L'Hommedieu, 73 Director and Secretary Retired: Vice President, Hess, Egan, Hagerty and 1988
L'Hommedieu, Inc. (insurance brokerage) (through 1991)
Norris E. Mitchell, 63 Director Co-Owner, Gardner Homes Realtors 1988
Arthur L. Walters, 80 Director Owner and President, TransAmerican Bankshares and 1993
various affiliates thereof; President, C. W. Cobb
and Associates, Inc., mortgage bankers; co-owner
of various real estate development and management
companies
</TABLE>
---------------------------
(1) As of March 1, 2000.
(2) The Company became the holding company for Virginia Commerce Bank (the
"Bank"), the Company's wholly owned subsidiary on December 22, 1999.
The date of commencement of service shown includes service prior to
December 23, 1999 as director of the Bank.
(3) Mr. Adler was appointed to the Board of Directors of the Bank effective
January 1998. He previously served as a member of the Board of
Directors of the Bank from 1989 to 1991.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Bank met twelve (12) times during 1999,
and the Board of Directors of the Company met one (1) time. All members of the
Board of Directors attended at least 75% of the meetings held by the Board of
Directors of the Company and the Bank and by all committees on which such
members served during the 1999 fiscal year or any portion thereof.
The Board of Directors of the Bank has the following standing
committees, which perform their respective functions for the Company and the
Bank: (a) Audit Committee, (b) Personnel and Compensation Committee, (c)
Asset/Liability, Investment and Funds Management Committee, (d) Loan Committee,
(e) Strategic Planning Committee, (f) CRA Committee, (g) Merger, Acquisition and
Expansion Committee and (h) the Technology Committee. The Board of Directors
does not have a standing nominating committee.
The Audit Committee, presently composed of Messrs. Fisher, L'Hommedieu
and Mitchell, is responsible for the review and evaluation of the Company's
internal controls and accounting procedures. It also periodically reviews audit
reports with the Company's independent auditors, and recommends the annual
appointment of such auditors. Mr. L'Hommedieu annually reviews the adequacy of
the Company's insurance coverage and reports to the Board of Directors
concerning same. During the 1999 fiscal year, the Audit Committee met four
times.
The Personnel and Compensation Committee, presently composed of Messrs.
Converse, Cowles, Fisher, Mitchell and Walters, is responsible, together with
management, for the adoption of the Company's personnel
4
<PAGE>
policies and establishing salary and compensation guidelines and levels for all
Company officers and personnel. The Committee is also responsible for annually
nominating the officers of the Company, evaluating the performance thereof and
recommending the grant of stock options under the Company's Option Plan (as
defined below). During the 1999 fiscal year, the Personnel and Compensation
Committee met twice.
The Asset/Liability, Investment and Funds Management Committee,
presently composed of Messrs. Converse, Mitchell and Walters, is responsible for
the annual review and evaluation of the Bank's funds management and investment
policies and the recommendation of guidelines for such activities. The Committee
also provides ongoing oversight of management decisions regarding
asset/liability management, investments and funds management. During the 1999
fiscal year, the Asset/Liability, Investment and Funds Management Committee met
twelve times.
The Loan Committee, presently composed of Mr. Converse, President and
Chief Executive Officer and four outside members of the Board of Directors on a
rotating basis, is responsible for the review and evaluation of the Bank's loan
policies, oversight of loan portfolio administration and the approval of loans
which exceed internal loan authorities. During the 1999 fiscal year, the Loan
Committee met twenty-four times.
The Strategic Planning Committee, presently composed of Messrs. Cowles,
Fisher and L'Hommedieu, is responsible for the preparation and recommendation to
the Board of Directors of both short-term and long-term plans and objectives for
the Bank. During the 1999 fiscal year, the Strategic Planning Committee met
once.
The CRA Committee, presently composed of the calling officers of the
Bank and Messrs. Adler, Converse and Guernsey, is responsible for establishing
and monitoring the Bank's compliance with the provisions of the Community
Reinvestment Act. During the 1999 fiscal year, the CRA Committee met four times.
The Merger, Acquisition and Expansion Committee, presently composed of
Messrs. Cowles, Mitchell and Walters, is responsible for the review and
evaluation of potential expansion and acquisition opportunities for the Bank
which may develop. During the 1999 fiscal year, the Merger, Acquisition and
Expansion Committee met two times.
The Technology Committee, presently composed of Messrs. Converse,
Fisher and Guernsey, is responsible for developing and reviewing strategies for
addressing competitive issues through the implementation of new technologies.
During the 1999 fiscal year, the Technology Committee met four times.
DIRECTORS' COMPENSATION
During the fiscal year ended December 31, 1999, the directors received
an aggregate of $86,000 for attendance at meetings of the Board of Directors of
the Company and the Bank. All directors were entitled to receive $1,000 monthly
for attendance at Board and committee meetings. The directors receive no
compensation for attendance at committee meetings. In January 2000, each of the
seven outside directors of the Company received options to purchase 5,000 shares
of Common Stock at an exercise price of $14.32 per share. The options vest in
equal installments over a period of three years, commencing in 2001, have a term
of 10 years from the date of grant.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to the current
executive officers of the Company who are not also directors.
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------- ------------ -------------------------------------------------------
<S> <C> <C>
R.B. Anderson, Jr. 45 Executive Vice President and Chief Lending Officer
Laurie P. Barnwell 44 Executive Vice President, Retail Banking
William K. Beauchesne 44 Executive Vice President and Chief Financial Officer
</TABLE>
5
<PAGE>
R.B. Anderson, Jr. - Mr. Anderson, Executive Vice President and Chief
Lending Officer of the Bank, joined Virginia Commerce Bank in May 1996. Prior to
joining the Bank, Mr. Anderson was a Senior Vice President and Senior Commercial
Loan Officer at Allegiance Bank, N.A., Bethesda, Maryland, with which he served
since March 1987. Mr. Anderson has over twenty-three years of managerial,
administrative and operational lending experience.
Laurie P. Barnwell - Ms. Barnwell, Executive Vice President, Retail
Banking, joined the Bank in May 1994 as Vice President and Branch Administrator.
Prior to that time, Ms. Barnwell was an Assistant Vice President and Banking
Service Manager at Tysons National Bank, where she had served since July 1991.
She had previously served as a Senior Vice President of retail banking and
marketing with Trustbank FSB, which she joined in 1981. Ms. Barnwell has over
nineteen years of administrative, managerial and operational experience in
retail banking and marketing.
William K. Beauchesne - Mr. Beauchesne, Executive Vice President and
Chief Financial Officer of the Bank, joined the Bank in August 1995. Prior to
joining the Bank, Mr. Beauchesne served as Chief Operations Officer and Director
of Metropolitan Bank for Savings, FSB, Arlington, Virginia. Mr. Beauchesne has
over twenty-one years of accounting, operations and financial management
experience in the banking industry.
EXECUTIVE OFFICER COMPENSATION AND CERTAIN TRANSACTIONS
COMPENSATION - OVERVIEW
The following table sets forth a comprehensive overview of the
compensation for Mr. Converse, the Company's and the Bank's Chief Executive
Officer, and Mr. Anderson, the Bank's Chief Lending Officer, during the 1999,
1998 and 1997 fiscal years. No other executive officer of the Bank received
total salary and bonus of $100,000 or more during the fiscal year ended December
31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation Awards
- ----------------------- -------------------------------------------- ------------------ ------------------
Securities
Name and Principal Underlying All Other
Position Year Salary Bonus(1) Options Compensation($)
- ----------------------- ----------- ------------ ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Peter A. Converse, 1999 $150,000 $58,000 8,250(2) $16,000(3)
Director, President
and Chief Executive 1998 $140,000 $40,000 9,075(4) $12,000(3)
Officer - Company and 1997 $125,000 $30,000 17,968(5) $9,114(3)
Bank
R.B. Anderson, Jr., 1999 $100,000 $20,000 2,750(2) $3,640(6)
Executive Vice 1998 $94,000 $10,000 3,025(4) $2,745(6)
President and Chief
Lending Officer - Bank 1997 $88,000 $8,000 2,693(5) $1,825(6)
</TABLE>
- -----------------------
(1) Amounts shown as bonus compensation accrue in the year indicated and
are paid in the following year.
(2) As adjusted for the stock restructuring in May 1999. The award vests in
equal installments over a three year period, commencing in 2000.
(3) Includes $5,000, $5,000 and $3,114 for 401(k) matching contribution in
1999, 1998 and 1997, respectively, plus $11,000 $7,000 and $6,000 of
director fees paid by the Company/Bank in 1999, 1998 and 1997,
respectively.
(4) As adjusted for the stock restructurings in May 1998 and May 1999.
(5) As adjusted to reflect 10% stock dividend paid in April 1997, a 35%
stock split in the form of a dividend paid in June 1997 and the stock
restructurings in May 1998 and May 1999.
(6) Represents 401(k) matching contributions.
6
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Percent of Total
Number of Securities Options Granted to Exercise
Underlying Options Employees in Fiscal Price Per Expiration
Name Granted Year Share Date
- --------------------- ------------------------ ---------------------- -------------- ---------------
<S> <C> <C> <C> <C>
Peter A. Converse 8,250(1) 32.74% $13.52 January 2009
R.B. Anderson, Jr. 2,750(1) 10.91% $13.52 January 2009
</TABLE>
- ---------------------
(1) As adjusted to reflect the stock restructuring in May 1999. The award
vests in equal installments over a three year period, commencing in
2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR AND OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at December 31, In-The-Money Options
Acquired on Value 1999 at December 31, 1999 b
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisa le
- --------------------- ---------------- -------------- --------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Peter A. Converse 0 0 64,380/5,500 $901,320/$77,000
R.B. Anderson, Jr. 0 0 11,125/1,834 $155,750/$25,676
</TABLE>
- ---------------------
EMPLOYEE BENEFIT PLANS
The Company provides all officers and full-time employees with group
life and medical and dental insurance coverage. With the exception of the
President and the Executive Vice President - Chief Lending Officer, all officers
and employees pay a portion of the premium costs of medical and dental
insurance.
401(k) Plan. Since 1991, the Bank has maintained a 401(k) defined
contribution plan (the "Plan"). Employees who are at least 21 years of age, have
completed at least ninety days of continuous service with the Bank and have
completed at least 1,000 hours of work during any Plan year are eligible to
participate in the Plan. Under the Plan, a participant may contribute up to 15%
of his or her compensation for the year, subject to certain limitations. The
Bank may also make, but is not required to make, a discretionary contribution
for each participant. The amount of such contribution, if any, is determined on
an annual basis by the Board of Directors. Contributions by the Bank totaled
$74,013.50 for the fiscal year ended December 31, 1999.
Stock Option Plans. Under the Incentive Stock Option Plan approved by
the Bank's shareholders in 1989 ("1989 Option Plan"), 107,811 shares of Common
Stock (as adjusted) were available for issuance under options granted between
July 20, 1988 and May 15, 1998. The 1989 Option Plan was designed to enable the
Bank to attract and retain qualified personnel and to reward outstanding
performance. Eligible employees ("Participants") are those employees, including
officers, who at the time options are granted, serve in managerial positions or
are deemed to be "key employees" by the Board of Directors. The Board of
Directors, in its sole discretion, administered the 1989 Option Plan. No further
grants may be made under the 1989 Option Plan. Upon the reorganization of the
Bank into the holding company form of ownership in 1999, the Company adopted the
1989 Option Plan, and the outstanding options to purchase Bank common stock
became options to acquire Company Common Stock. As of March 1, 2000, there were
an aggregate of 100,095 options to purchase shares of Common Stock outstanding
under the 1989 Option Plan, at exercise prices ranging from $4.98 to $12.40 per
share. Options outstanding under the 1989 Option Plan will expire no later than
May 2008.
At the 1998 Annual Meeting, the shareholders approved a new option plan
(the "1998 Option Plan") pursuant to which 110,000 shares of Common Stock (as
adjusted for the stock restructuring in May 1999) are available for issuance
under options granted between May 1998 and May 2008. Upon the reorganization of
the Bank into the holding company form of ownership in 1999, the Company adopted
the 1998 Option Plan, and the outstanding options to purchase Bank common stock
became options to acquire Company Common Stock.
7
<PAGE>
Options under the 1998 Option Plan may be either incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or options that are not ISOs ("Non-ISOs"). Awards to
directors may consist only of Non-ISOs The purpose of the 1998 Option Plan is to
advance the interests of the Company through providing selected key employees
and the directors of the Company and its subsidiaries with the opportunity to
acquire shares of Common Stock. By encouraging such stock ownership, the Company
seeks to attract, retain and motivate the best available personnel for positions
of substantial responsibility and to provide additional incentive to key
employees and directors of the Company to promote the success of the business,
as measured by the value of its shares, and to increase the commonality of
interests among key employees, directors and other shareholders. The 1998 Option
Plan is administered by the Personnel and Compensation Committee of the Board of
Directors, which will perform the functions of the option committee (the
"Committee"), consisting of at least three directors of the Company who are not
employees of the Company.
A Participant may, under the 1998 Option Plan, receive additional
options notwithstanding the earlier grant of options and regardless of their
having been exercised, expired, or surrendered. Participants owning more than
10% of the voting power of all classes of the Company's voting securities (and
of its parent or subsidiary companies, if any) may not receive additional ISO's
unless the option exercise price is at least 110% of the fair market value of
the Common Stock and unless the option expires on the fifth anniversary of the
date of its grant. All other options granted under the 1998 Option Plan may
expire no later than the tenth anniversary of the date of their grant.
Option exercise prices are determined by the Committee on the date the
subject options are granted. In the event of any merger, consolidation,
recapitalization, reorganization, reclassification, stock dividend, stock split,
combination or subdivision of shares, or similar event in which the number or
kind of shares is changed without receipt or payment of consideration by the
Company, the Committee will adjust both the number and kind of shares of stock
as to which Options may be awarded under the 1998 Option Plan, the affected
terms (including exercise price) of all outstanding Options and the aggregate
number of shares of Common Stock remaining available for grant under the 1998
Option Plan. Options may be exercised in whole or in part and are not
transferable except upon the death of the participant. Any unexercised options
then existing may be exercised by the transferee under the terms of such
options.
No Option may be exercised within six months of its date of grant. In
the absence of Committee action to the contrary: (A) an otherwise unexpired ISO,
or a Non-ISO granted to an employee, shall cease to be exercisable upon (i) an
employee's termination of employment for "just cause" (as defined in the 1998
Option Plan), (ii) the date three months after an employee terminates service
for a reason other than just cause, death, or disability, or (iii) the date one
year after an employee terminates service due to disability, or two years after
termination of such service due to his death; (B) an unexpired Non-ISO granted
to a non-employee director shall be exercisable at any time (but not later than
the date on which the Non-ISO would otherwise expire.) Notwithstanding the
provisions of any Option which provides for its exercise in installments as
designated by the Committee, such Option shall become immediately exercisable
upon the optionee's death or permanent and total disability. Notwithstanding the
provisions of any award which provide for its exercise or vesting in
installments, on the date of a change in control, all Options issued under the
1998 Option Plan shall be immediately exercisable and fully vested. At the time
of a change in control, the optionee shall, at the discretion of the Committee,
be entitled to receive cash in an amount equal to the excess of the fair market
value of the Common Stock subject to such Option over the exercise price of such
shares, in exchange for the cancellation of such Options by the optionee.
Notwithstanding the previous sentence, in no event may an Option be cancelled in
exchange for cash within the six-month period following the date of its grant.
For purposes of the 1998 Option Plan, "change in control" means any one
of the following events: (1) the acquisition of ownership of, holding or power
to vote more than 51% of the Company's voting stock; (2) the acquisition of the
power to control the election of a majority of the Company's directors; (3) the
exercise of a controlling influence over the management or policies of the
Company by any person or by persons acting as a group within the meaning of
Section 13(d) of the Exchange Act; or (4) the failure during any period of two
consecutive years, of individuals who at the beginning of such period constitute
the Board of Directors of the
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Company (the "Continuing Directors") for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Board was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be considered a
Continuing Director. For purposes of defining "change in control," the term
"person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed. The decision
of the Committee as to whether a change in control has occurred shall be
conclusive and binding.
As of December 31, 1999, the Company had options for the purchase of
126,945 shares of Common Stock issued and outstanding under the 1989 and 1998
Option Plans. Subsequent to December 31, 1999, options to purchase 67,000 shares
of Common Stock, at an exercise price of $14.28 per share, were issued to
eighteen officers and seven outside directors of the Company and Bank, including
options to purchase 10,000 shares of Common Stock issued to Mr. Converse, an
option to purchase 3,000 shares of Common Stock issued to Mr. Anderson, and
options to purchase 5,000 issued to each of the seven outside directors. All of
the awards made to date under the 1998 Option Plan vest over a period of three
years, commencing in the year after the award is made. As of the date hereof,
options to acquire 16,150 shares of Common Stock are subject to issuance
pursuant to the 1998 Option Plan.
Employment Agreements. Mr. Converse, who became President and Chief
Executive Officer of the Bank effective January 1, 1994, does not have a
comprehensive, written employment agreement. Mr. Converse is currently entitled
to receive salary of $165,000 per year, Company-paid medical insurance for his
family and himself, director fees of $1,500 per month, and the use of a bank
owned automobile. Mr. Converse is also entitled to participation in all other
generally available employee benefit plans. It is anticipated that Mr. Converse
will receive a performance related bonus at the end of the fiscal year. The
Board of Directors has agreed to provide Mr. Converse with a change in control
agreement, which would pay him one year of base salary in the event of his
termination or certain other events, following a change in control of the
Company. As of the date hereof, no written agreement has been prepared, and
detailed provisions of the agreement have not been established.
Transactions with Management and Others. Some of the directors of the
Company and Bank or companies with which they are associated, and some of the
officers of the Company and Bank, were customers of, and had banking
transactions with, the Bank during the fiscal year ended December 31, 1999. All
loans and commitments to make loans to such persons by the Bank were made in the
normal course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons; and in the opinion of management, did not
and do not involve more than a normal risk of collectibility or present other
unfavorable features. The aggregate amount outstanding on such loans at December
31, 1999 was $ 1,974,549. None of these loans has ever been adversely
classified, and all of such loans are current as to the payment of interest and
principal.
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 directors and executive officers, and persons who own more than ten
percent of the Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission, and
to provide the Company with copies of all Forms 3, 4, and 5 they file.
Based solely upon the Company's review of the copies of the forms which
it has received and written representations from the Company's directors,
executive officers and ten percent shareholder, the Company is not aware of any
failure of any such person to comply with the requirements of Section 16(a).
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected the independent certified public
accounting firm of Yount, Hyde & Barbour, P.C. to audit the accounts of the Bank
for the fiscal year ended December 31, 2000. Representatives of Yount, Hyde &
Barbour are expected to be present at the Annual Meeting and available to
respond to appropriate questions. The representatives also will be provided with
an opportunity to make a statement, if they desire.
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COSTS OF SOLICITATION
The cost of the proxy solicitation is being borne by the Company. In
addition to the use of the mail, proxies may be solicited personally or by
telephone, by officers, regular employees or directors of the Company , who will
not be compensated for any such services.
Brokerage firms, fiduciaries and other custodians who forward
soliciting material to the beneficial owners of shares of Common Stock held of
record by them will be reimbursed for their reasonable expenses incurred in
forwarding such material.
FORM 10-KSB ANNUAL REPORT
THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER SOLICITED HEREBY, WITHOUT
CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1999 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON WRITTEN
REQUEST. REQUESTS SHOULD BE DIRECTED TO THE COMPANY'S CHIEF FINANCIAL OFFICER,
WILLIAM K. BEAUCHESNE, 14201 SULLYFIELD CIRCLE, SUITE 200 CHANTILLY, VIRGINIA
20151.
OTHER MATTERS
Management is not aware of any other matters to be presented for action
by shareholders at the Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting or any adjournment thereof, the
persons named in the accompanying proxy will vote such proxy in accordance with
their judgment on such matters.
SHAREHOLDER PROPOSALS
All proposals of shareholders to be presented for consideration at the
next annual meeting and included in the Company's proxy materials must be
received by the Company no later than November 29, 2000.
By Order of the Board of Directors
VIRGINIA COMMERCE BANCORP, INC.
Robert H. L'Hommedieu, Secretary
March 29, 2000
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