def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
|
Filed by the Registrant þ |
|
|
|
|
Filed by a Party other than the Registranto |
|
|
|
|
Check the appropriate box: |
|
|
|
o |
|
Preliminary Proxy Statement |
|
|
o |
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
|
|
þ |
|
Definitive Proxy Statement |
|
|
o |
|
Definitive Additional Materials |
|
|
o |
|
Soliciting Material Pursuant to §240.14a-12 |
OLD LINE BANCSHARES, 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):
þ |
|
No fee required. |
|
o |
|
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 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: |
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
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.: |
OLD LINE BANCSHARES, INC.
2995 Crain Highway
Waldorf, Maryland 20601
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2006, AT 5:00 P.M.
The Annual Meeting of Stockholders of Old Line Bancshares, Inc., a Maryland corporation, will
be held on May 25, 2006, at 5:00 p.m., local time, at Old Line Bancshares, Inc.s office located at
2995 Crain Highway, Waldorf, Maryland 20601 for the following purposes:
|
1. |
|
To elect three directors to serve for a three-year term ending at the
Annual Meeting of Stockholders to be held in 2009, and until their successors are
duly elected and qualified, and to elect one director to serve for a two-year term
until the Annual Meeting of Stockholders to be held in 2008, and until his successor
is duly elected and qualified. |
|
|
2. |
|
To amend Old Line Bancshares, Inc.s charter to increase the authorized shares of Old Line Bancshares, Inc.s common stock from 5,000,000 shares to
15,000,000 shares. |
|
|
3. |
|
To amend Old Line Bancshares, Inc.s charter to expressly grant the Board
of Directors the power to change the location of the principal office without the
approval of the stockholders. |
|
|
4. |
|
To ratify the appointment of Rowles & Company, LLP as independent public
accountants to audit the financial statements of Old Line Bancshares, Inc. for 2006. |
|
|
5. |
|
To act upon any other matter that may properly come before the meeting or
any adjournment or postponement thereof. |
Only stockholders of record at the close of business on April 5, 2006 will be entitled to
notice of and to vote at the meeting or any adjournment or postponement thereof.
Accompanying this notice is a proxy statement and proxy form. Whether or not you plan to
attend the meeting, please indicate your choices on the matters to be voted upon, date and sign the
enclosed proxy and return it in the enclosed postage-paid return envelope. You may revoke your
proxy at any time prior to or at the meeting by written notice to Old Line Bancshares, Inc., by
executing a proxy bearing a later date, or by attending the meeting and voting in person.
You are cordially invited to attend the meeting in person.
|
|
|
|
|
|
|
By Order of the Board of Directors,
|
|
|
|
|
|
|
|
|
|
/s/ Christine M. Rush |
|
|
|
|
|
|
|
|
|
Christine M. Rush, Secretary |
|
|
Waldorf, Maryland
April 14, 2006
OLD LINE BANCSHARES, INC.
2995 Crain Highway
P.O. Box 1890 Waldorf, Maryland 20604
PROXY STATEMENT
Annual Meeting of Stockholders to be held on
May 25, 2006 at 5:00 P.M.
INTRODUCTION
This Proxy Statement is furnished on or about April 14, 2006 to stockholders of Old Line
Bancshares, Inc. in connection with the solicitation of proxies by Old Line Bancshares, Inc.s
Board of Directors to be used at the annual meeting of stockholders described in the accompanying
notice (the Annual Meeting) and at any adjournments or postponements thereof. The purposes of
the Annual Meeting are set forth in the accompanying notice of annual meeting of stockholders.
This proxy material is being sent to Old Line Bancshares, Inc.s stockholders on or about
April 14, 2006. Old Line Bancshares, Inc.s annual report on Form 10-KSB, including financial
statements for the year ended December 31, 2005, has been mailed to all stockholders with this
proxy material.
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Old Line Bancshares, Inc. The
Board of Directors selected Messrs. Daniel W. Deming and James F. Dent or either of them, to act as
proxies with full power of substitution. The proxy is revocable at any time prior to or at the
Annual Meeting by written notice to Old Line Bancshares, Inc., by executing a proxy bearing a later
date, or by attending the Annual Meeting and voting in person. A written notice of revocation of a
proxy should be sent to the Secretary, Old Line Bancshares, Inc., P.O. Box 1890, Waldorf, Maryland
20604, and will be effective if received by the Secretary prior to the Annual Meeting. The
presence of a stockholder at the Annual Meeting alone will not automatically revoke such
stockholders proxy.
In addition to solicitation by mail, officers and directors of Old Line Bancshares, Inc. may
solicit proxies personally or by telephone. Old Line Bancshares, Inc. will not specifically
compensate these persons for soliciting such proxies. Old Line Bancshares, Inc. will bear the cost
of soliciting proxies. These costs may include reasonable out-of-pocket expenses in forwarding
proxy materials to beneficial owners. Old Line Bancshares, Inc. will reimburse brokers and other
persons for their reasonable expenses in forwarding proxy materials to customers who are beneficial
owners of the common stock of Old Line Bancshares, Inc. registered in the name of nominees.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on April 5, 2006 (the Record Date) are
entitled to notice of and to vote at the Annual Meeting. As of the close of business on that date,
there were outstanding and entitled to vote 4,248,898.5 shares of common stock, $0.01 par value per
share, each of which is entitled to one vote.
The presence, in person or by proxy, of stockholders entitled to cast a majority of all the
votes entitled to be cast at the Annual Meeting will be necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual Meeting.
For the election of directors, which requires a plurality of the votes cast, only proxies and
ballots indicating votes FOR a nominee or WITHHOLD AUTHORITY for a nominee are counted to
determine the total number of votes cast, and abstentions have no effect on the outcome of the
election.
The affirmative vote of at least a majority of all votes cast at the Annual Meeting is
sufficient for the ratification of the appointment of Rowles & Company LLP. An abstention is not
included in calculating votes cast with respect to this proposal.
1
The affirmative vote of two-thirds of the total votes entitled to be cast at the annual
meeting is required for the approval of the amendment to Old Line Bancshares, Inc.s charter to
increase Old Line Bancshares, Inc.s authorized shares of common stock from 5,000,000 to
15,000,000. An abstention will have the same effect as a vote against the amendment.
The affirmative vote of two-thirds of the total votes entitled to be cast at the annual
meeting is required for the approval of the amendment to Old Line Bancshares, Inc.s charter to
expressly grant the Board of Directors the power to change the location of the principal office of
Old Line Bancshares, Inc. without the approval of the stockholders. An abstention will have the
same effect as a vote against the amendment.
If your shares are held in the name of a bank, brokerage firm or other similar holder of
record (referred to as in street name), you will receive instructions from the holder of record
that you must follow in order for you to specify how your shares will be voted. If you do not
specify how you would like your shares to be voted, your shares held in street name may still be
voted. In general, holders of record have the authority to vote shares for which their customers do
not provide voting instructions on certain routine, uncontested items. In the case of non-routine
or contested items, the institution holding street name shares cannot vote the shares if it has not
received voting instructions. These are considered to be broker non-votes.
It is anticipated that each of the four items in this proxy statement is considered a routine
item for which street name shares may be voted without specific instructions. If your street name
holder of record signs and returns a proxy card on your behalf, but does not indicate how the
common stock should be voted, the common stock represented on the proxy card will be voted in the
manner described below.
All proxies will be voted as directed by the stockholder on the proxy form. A proxy, if
executed and not revoked, will be voted in the following manner (unless it contains instructions to
the contrary, in which event it will be voted in accordance with such instructions):
FOR the nominees for directors named below.
FOR
the amendment to Old Line Bancshares, Inc.s charter to increase the authorized shares of
Old Line Bancshares, Inc.s common stock from 5,000,000 shares to 15,000,000 shares.
FOR the amendment to Old Line Bancshares, Inc.s charter to expressly grant the Board of
Directors the power to change the location of the principal office without the approval of
the stockholders.
FOR ratification of the appointment of Rowles & Company, LLP as independent public
accountants for 2006.
Proxies will be voted in the discretion of the holder on such other business as may properly
come before the Annual Meeting or any adjournments or postponements thereof.
IT IS ANTICIPATED THAT OLD LINE BANCSHARES, INC.S DIRECTORS AND OFFICERS WILL VOTE THEIR SHARES OF
COMMON STOCK IN FAVOR OF THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS LISTED HEREIN, FOR THE
APPROVAL OF THE ARTICLES OF AMENDMENT AND FOR THE RATIFICATION OF THE APPOINTMENT OF ROWLES &
COMPANY, LLP.
2
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets forth information with respect to the beneficial ownership of Old
Line Bancshares, Inc.s common stock by each director, by its executive officers and by all of its
directors and executive officers as a group, as well as information regarding each other person
that we believe own in excess of 5% of the outstanding common stock. Unless otherwise noted below,
we believe that each person named in the table has or will have the sole voting and sole investment
power with respect to each of the securities reported as owned by such person.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number |
|
|
|
|
|
|
|
|
Options to |
|
of Shares |
|
|
Name and Address of |
|
Common |
|
Purchase |
|
Beneficially |
|
Percentage of |
Beneficial Owner (1) |
|
Stock |
|
Common Stock |
|
Owned (2) |
|
Ownership (3) |
Charles A. Bongar, Jr.(4) |
|
|
24,890 |
|
|
|
3,100 |
|
|
|
27,990 |
|
|
|
0.66 |
% |
Joseph E. Burnett(5) |
|
|
19,800 |
|
|
|
15,460 |
|
|
|
35,260 |
|
|
|
0.83 |
% |
Craig E. Clark(6) |
|
|
84,199 |
|
|
|
3,100 |
|
|
|
87,299 |
|
|
|
2.05 |
% |
James W. Cornelsen |
|
|
50,494 |
|
|
|
55,700 |
|
|
|
106,194 |
|
|
|
2.47 |
% |
Daniel W. Deming(7) |
|
|
19,200 |
|
|
|
8,500 |
|
|
|
27,700 |
|
|
|
0.65 |
% |
James F. Dent |
|
|
43,290 |
|
|
|
8,500 |
|
|
|
51,790 |
|
|
|
1.22 |
% |
Nancy L. Gasparovic |
|
|
7,300 |
|
|
|
8,500 |
|
|
|
15,800 |
|
|
|
0.37 |
% |
Frank Lucente(8) |
|
|
137,170 |
|
|
|
4,000 |
|
|
|
141,170 |
|
|
|
3.32 |
% |
Gail D. Manuel(9) |
|
|
9,900 |
|
|
|
4,900 |
|
|
|
14,800 |
|
|
|
0.35 |
% |
John D. Mitchell(10) |
|
|
10,828 |
|
|
|
8,500 |
|
|
|
19,328 |
|
|
|
0.45 |
% |
Gregory S. Proctor, Jr. |
|
|
10,302 |
|
|
|
2,200 |
|
|
|
12,502 |
|
|
|
0.29 |
% |
Christine M. Rush(11) |
|
|
1,800 |
|
|
|
14,960 |
|
|
|
16,760 |
|
|
|
0.39 |
% |
Suhas R. Shah |
|
|
200 |
|
|
|
|
|
|
|
200 |
|
|
|
0.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All directors & executive officers
as a group (13 people) |
|
|
419,373 |
|
|
|
137,420 |
|
|
|
556,793 |
|
|
|
12.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey A. Miller and Eric D. Jacobs(12)
c/o Miller & Jacobs Capital, L.L.C.
P.O. Box 26039, Gallows Bay Station
Christiansted, Virgin Islands 00824 |
|
|
261,310 |
|
|
|
|
|
|
|
261,310 |
|
|
|
6.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP(13)
75 State Street
Boston, MA. 02109 |
|
|
275,000 |
|
|
|
|
|
|
|
275,000 |
|
|
|
6.47 |
% |
|
|
|
|
(1) |
|
Unless otherwise indicated, the address of each person listed in the foregoing table is the
address of Old Line Bancshares, Inc. |
|
(2) |
|
The total number of shares beneficially owned includes shares of common stock owned by the
named persons as of the date of this proxy statement and shares of common stock subject to
options held by the named persons that are exercisable as of, or within 60 days of, the date
of this proxy statement. |
|
(3) |
|
The shares of common stock subject to options are deemed outstanding for the purpose of
computing the percentage ownership of the person holding the options, but are not deemed
outstanding for the purpose of computing the percentage ownership of any other person. |
|
(4) |
|
Includes 480 shares of common stock held for the benefit of his grandson.
|
|
(5) |
|
Includes 1,620 shares of common stock held jointly with his spouse. |
|
(6) |
|
Includes 64,763 shares of common stock held jointly with his spouse. Does not include 11,329
shares owned by an individual retirement account for the benefit of his spouse. Mr. Clark
disclaims beneficial ownership in such shares. Does not include 4,800 shares of common stock
held in trust for the benefit of his mother-in-law. His spouse is trustee of the trust. Mr.
Clark disclaims beneficial ownership in such shares. |
|
(7) |
|
Holds 7,840 shares of common stock jointly with his spouse, 10,000 shares of common stock in
Deming Associates, Inc. of which Mr. Deming is President and sole owner, and 1,000 shares of
common stock in Livingston, Ltd. of which Mr. Deming is Vice President, Secretary and
Treasurer and fifty percent owner. |
3
|
|
|
(8) |
|
Includes 74,450 shares of common stock held by Lucente Enterprises, Inc., of which Mr.
Lucente is the President, and 4,610 shares of common stock held by Chesapeake Custom Homes,
LLC, of which Lucente Enterprises, Inc. is a manager and the majority member. Does not
include 6,260 shares owned by an individual retirement account for the benefit of his spouse.
Mr. Lucente disclaims beneficial ownership in such shares. |
|
(9) |
|
Includes 1,008 shares of common stock held jointly with her spouse.
|
|
(10) |
|
Includes 60 shares of common stock held for the benefit of his granddaughter.
|
|
(11) |
|
Includes 360 shares of common stock held jointly with Mark O. Posten. |
|
(12) |
|
Mr. Jacobs and Mr. Miller have reported that they indirectly own 261,310 shares of common
stock as the sole managers and members of Miller & Jacobs Capital, L.L.C., which is affiliated
with several investment entities, including the Acadia Master Fund I, Ltd. |
|
(13) |
|
Wellington Management Company, LLP has reported that it holds 275,000 shares of common stock
in its capacity as investment adviser and the securities are owned by clients of Wellington
Management Company, LLP. |
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors currently has 11 directors, divided into three classes Class A, Class
B and Class C. The directors in each class are elected to serve for a three year term and until
their respective successors are duly elected and qualified.
All of the members of Old Line Bancshares, Inc.s Board of Directors, except Gregory S.
Proctor, Jr. and Suhas R. Shah, have served since the incorporation of Old Line Bancshares, Inc. in
April 2003.
The Board of Directors is recommending the election of Charles A. Bongar, Jr., Nancy L.
Gasparovic and Frank Lucente, Jr. as Class B directors for a term ending at the 2009 annual meeting
of stockholders. The Board of Directors is also recommending the election of Suhas R. Shah, who
was appointed to the Board in January 2006, as a Class A director for a term ending at the 2008
annual meeting of stockholders.
All of the nominees are now directors of Old Line Bancshares, Inc. and each nominee has
consented to serve as a director, if elected. The directors whose terms have not expired will
continue to serve as directors until the expiration of their respective terms.
It is not contemplated that any of the nominees will become unavailable to serve, but if that
should occur before the Annual Meeting, proxies that do not withhold authority to vote for the
nominees listed below will be voted for another nominee, or nominees, selected by the Board of
Directors.
The proxies solicited hereby, unless directed to the contrary, will be voted For the
election as directors of all four nominees named below. In order to be elected, a plurality of the
shares cast at the Annual Meeting is necessary. Abstentions and broker non-votes have no effect on
the outcome of the election.
Information regarding the nominees and the directors who will continue to serve unexpired
terms, and certain information relating to them, follows.
The Board of Directors recommends that stockholders vote FOR the election of all nominees.
Nominees for election to the Board of Directors for a three-year term expiring in 2009:
Charles A. Bongar, Jr., 61, is a lawyer with the firm of Andrews, Bongar, Starkey & Claggett,
P.A. The firm has an office in Waldorf, Maryland. He has practiced law since 1972 and specializes
in real estate transactions, estate probate, and personal injury cases. Mr. Bongar resides in
LaPlata, Maryland. He has been a member of the Board of Directors of Old Line Bank since 1993.
Nancy L. Gasparovic, 58, is owner and operator of Title Professionals, Ltd., a real estate
settlement company in LaPlata, Maryland. Ms. Gasparovic resides in Issue, Maryland. She has been
a member of the Board of Directors of Old Line Bank since 1993.
4
Frank Lucente, Jr., 64 is Chairman of Chesapeake Custom Homes, a Suburban Maryland residential
home builder and developer, and President of Lucente Enterprises, a land development holding
company. Mr. Lucente resides in Tequesta, Florida. He has been a member of the Board of Directors
of Old Line Bank since 2002. In December 2003, the Board of Directors voted unanimously to appoint
Mr. Lucente to the newly established position of Vice Chairman of the Board of Directors of Old
Line Bank. Mr. Lucente also serves in that position for Old Line Bancshares, Inc.
Nominees for election to the Board of Directors for the remainder of the three-year term
expiring in 2008:
Suhas R. Shah, CPA, 51, is a principal and member of Source One Business Services, LLC, and
has served in that capacity since 1986 and is a principal and shareholder of Regan, Russell,
Schickner & Shah, P.A. and has served in that capacity since 1986. Source One Business Services,
LLC is located in Ellicott City, Maryland. The company provides cash flow and budgeting analysis;
computer consulting; tax planning and preparation for corporations, individuals, estates and
trusts; litigation support; financial forecasts; and merger and acquisitions advisory services to a
variety of clients. Regan, Russell, Schickner & Shah, P.A. is a certified public accounting firm
located in Ellicott City, Maryland. Mr. Shah resides in Marriottsville,Maryland. He has been a
member of the Board of Directors of Old Line Bank since January 2006.
Continuing Directors:
The directors whose terms have not expired are as follows:
Term Expiring at 2007 Annual Meeting
James W. Cornelsen, 51, is the President and Chief Executive Officer of Old Line Bancshares,
Inc. and Old Line Bank. He joined Old Line Bank and became a member of its Board of Directors in
1994. He has 30 years of commercial banking experience. Prior to joining Old Line Bank, Mr.
Cornelsen was a Senior Vice President at Sequoia National Bank and Vice President of Commercial
Lending at Citizens Bank of Maryland. Mr. Cornelsen resides in LaPlata, Maryland.
Daniel W. Deming, 57, is a Director of Deming Associates, Inc., in Accokeek, Maryland. He
also serves as a Director of Kanawha Roxalana Company, in West Virginia and is a Director of
Livingston, Ltd. All three of these companies are engaged in various aspects of real estate. Mr.
Deming resides in Accokeek, Maryland. He has been a member of the Board of Directors of Old Line
Bank since 1992.
James F. Dent, 69, is owner and operator of a State Farm Insurance Agency that he established
in 1961. He resides in LaPlata, Maryland. Mr. Dent is a founder of Old Line Bank and has served
as a member of the Board of Directors of Old Line Bank since 1988.
John D. Mitchell, Jr., 57, is President of JCV, Inc. a petroleum equipment company located in
Hughesville, Maryland. Mr. Mitchell resides in LaPlata, Maryland. He has been a member of the
Board of Directors of Old Line Bank since 1992.
Term Expiring at 2008 Annual Meeting
Craig E. Clark, 64, is President of Waldorf Carpets, Inc., a wholesale and retail flooring
company, which he established in 1969. Mr. Clark is a founder of Old Line Bank. He has served as
Chairman of the Board of Directors of Old Line Bank since 1994 and of Old Line Bancshares, Inc.
since its incorporation in April 2003 and served as a member of the Board of Directors of Old Line
Bank since 1988. Mr. Clark resides in Lusby, Maryland.
Gail D. Manuel, 50, is owner and Director of Trinity Memorial Gardens and Mausoleum in
Waldorf, Maryland. She is a past Board of Director of the Charles County Chamber of Commerce and
past President of Charles County Zonta Club. She resides in Welcome, Maryland. She has been a
member of the Board of Directors of Old Line Bank since 1994.
Gregory S. Proctor Jr., 42, is President and Chief Executive Officer of G.S. Proctor &
Associates, Inc., a Maryland registered lobbying and consulting firm, which he established in 1995.
He resides in Upper Marlboro, Maryland. He has been a member of the Board of Directors of Old
Line Bancshares, Inc. and Old Line Bank since 2004.
5
The Board of Directors has determined that Directors Charles A. Bongar, Craig E. Clark, Daniel
W. Deming, James F. Dent, Nancy L. Gasparovic, Gail D. Manuel, John D. Mitchell, Gregory S.
Proctor, Jr. and Suhas R. Shah are independent as defined under the applicable rules and listing
standards of the Nasdaq Stock Market, Inc.
BOARD MEETINGS AND COMMITTEES
Old Line Bancshares, Inc.s Board of Directors meets each month (usually the fourth Thursday
of each month) and such special meetings as circumstances may require. The Board of Directors of
Old Line Bancshares, Inc. and Old Line Bank met twelve times during 2005. Each director attended
at least 75% of the total number of meetings of the Board of Directors and the Board committees of
Old Line Bancshares, Inc. and Old Line Bank which he or she was a member during 2005.
The Board of Directors of Old Line Bancshares, Inc. has standing Audit, Nominating and
Compensation Committees. Old Line Bank also has a number of standing committees, including the
Asset & Liability Committee, Audit Committee, Compensation Committee, Loan/Loan Review Committee,
Nominating Committee and Real Estate Committee. The members of Old Line Bancshares, Inc.s and Old
Line Banks Audit, Compensation and Nominating Committees are the same, and these committees
typically hold joint meetings.
Old Line Bancshares, Inc.s policy requires that, in the absence of an unavoidable conflict,
all directors are expected to attend the annual meeting of Old Line Bancshares, Inc.s
stockholders. All members of the Board of Directors of Old Line Bank attended the 2005 annual
meeting.
Audit Committee
Old Line Bancshares, Inc.s Audit Committee members are Craig E. Clark, James F. Dent, John D.
Mitchell, Jr. and Suhas R. Shah. The Board of Directors has determined that each of these
individuals is independent, as defined under the applicable rules and listing standards of the
Nasdaq Stock Market, Inc. and the rules and regulations of the Securities and Exchange Commission.
In addition, the Board of Directors has determined that each committee member is able to read and
understand fundamental financial statements, including Old Line Bancshares, Inc.s consolidated
balance sheet, income statement and cash flow statement. In addition, the Board of Directors has
determined that Mr. Shah is an audit committee financial expert as that term is defined by the
rules and regulations of the Securities and Exchange Commission.
The Audit Committee of Old Line Bancshares, Inc. and Old Line Bank held four meetings in 2005.
The Audit Committees primary responsibilities are to assist the Board by monitoring (i) the
integrity of the financial statements of Old Line Bancshares, Inc.; (ii) the independent auditors
qualifications and independence; (iii) the performance of Old Line Bancshares, Inc.s and its
subsidiaries internal audit function and independent auditors; (iv) Old Line Bancshares Inc.s
system of internal controls; (v) Old Line Bancshares, Inc.s financial reporting and system of
disclosure controls; and (vi) Old Line Bancshares, Inc.s compliance with legal and regulatory
requirements.
In addition, the Audit Committee was appointed to oversee treatment of, and any necessary
investigation concerning, any employee complaints or concerns regarding Old Line Bancshares, Inc.s
accounting and auditing matters. Pursuant to procedures adopted by Old Line Bancshares, Inc., any
employee with such complaints or concerns is encouraged to report them, anonymously if they desire,
to the Chair of the Audit Committee for investigation, and appropriate corrective action, by the
Audit Committee.
The Audit Committee has adopted a written charter, a copy of which is available in the
shareholder relations section of Old Line Banks website at www.oldlinebank.com.
Nominating Committee
Old Line Bancshares Inc.s Nominating Committee members are Nancy L. Gasparovic, Craig E.
Clark and Gregory S. Proctor, Jr. The Board of Directors has determined that each of these
individuals is independent, as defined under the applicable rules and listing standards of the
Nasdaq Stock Market, Inc. The Nominating Committee has adopted a written charter, a copy of
which is available in the shareholder relations section of Old Line Banks website at
oldlinebank.com. The Nominating Committee of Old Line Bancshares, Inc. held one meeting in 2005.
6
The Nominating Committee determines whether the incumbent directors should stand for
reelection to the Board of Directors and identifies and evaluates candidates for membership on the
Board of Directors. In the case of a director nominated to fill a vacancy on the Board of
Directors due to an increase in the size of the Board of Directors, the Nominating Committee
recommends to the Board of Directors the class of directors in which the director-nominee should
serve. The Nominating Committee also conducts appropriate inquiries into the backgrounds and
qualifications of possible director candidates and reviews and makes recommendations regarding the
composition and size of the Board of Directors.
The Nominating Committee also evaluates candidates for nomination to the Board of Directors
who are recommended by a stockholder. Stockholders who wish to recommend individuals for
consideration by the Nominating Committee to become nominees for election to the Board may do so by
submitting a written recommendation to the Secretary of Old Line Bancshares, Inc. at P.O. Box 1890,
Waldorf, Md. 20604. Submissions must include sufficient biographical information concerning the
recommended individual, including age, five year employment history with employer names and a
description of the employers business, whether such individual can read and understand basic
financial statements and board memberships for the Nominating Committee to consider. A written
consent of the individual to stand for election if nominated and to serve if elected by the
stockholders must accompany the submission. The Nominating Committee will consider recommendations
received by a date not later than 120 calendar days before the date the Proxy Statement was
released to stockholders in connection with the prior years annual meeting for nomination at that
annual meeting. The Nominating Committee will consider nominations received beyond that date at
the annual meeting subsequent to the next annual meeting.
The Nominating Committee evaluates nominees for directors recommended by security holders in
the same manner in which it evaluates any nominees for directors. Minimum qualifications include
high moral character, mature judgment, familiarity with Old Line Bancshares Inc.s business and
industry, independence of thought and ability to work collegially.
Compensation Committee
Old Line Bancshares, Inc.s Compensation Committee members are Charles A. Bongar, Craig E.
Clark, and Gail D. Manuel. The Board of Directors has determined that each of these individuals
is independent, as defined under the applicable rules and listing standards of the Nasdaq Stock
Market, Inc. The Compensation Committee of Old Line Bancshares, Inc. and Old Line Bank held three
meetings in 2005.
The Compensation Committee evaluates the performance of the President and Chief Executive
Officer and makes recommendations to the Board of Directors regarding the President and Chief
Executive Officers compensation. The Compensation Committee also reviews the current industry
practices regarding compensation packages provided to executive management and the Board of
Directors, including salary, bonus, stock options and other perquisites. Based on recommendations
from the President and Chief Executive Officer, the Compensation Committee approves compensation
provided to members of executive management, excluding the President and Chief Executive Officer.
The Compensation Committee also evaluates and recommends to the Board of Directors fees for
non-employee board members.
DIRECTOR COMPENSATION
For 2005, each non-employee Director of Old Line Bank, other than the Chairman of the Board
and the Vice Chairman of the Board, received $400 for each attended meeting of the Board of
Directors, and $200 for each attended meeting of the asset & liability committee, the loan/loan
review committee, the real estate committee and the nominating committee. Each non-employee
Director of Old Line Bank, other than the Chairman of the Board and the Vice Chairman of the Board,
also received $300 for each attended meeting of the compensation committee and the audit committee.
Each non-employee Director of Old Line Bank, other than the Chairman of the Board and the Vice
Chairman of the Board, also received a $250 quarterly retainer. During 2005, the Chairman of the
Board received an annual compensation of $30,000 and the Vice Chairman received an annual
compensation of $15,000.
During 2006, it is anticipated that each non-employee Director of Old Line Bank will receive
the same cash compensation as the compensation received in 2005. We reserve the right to change
these amounts during 2006.
Old Line Bancshares, Inc. has paid no cash remuneration, direct or otherwise, to its directors
since its incorporation. It is expected that unless and until Old Line Bancshares, Inc. becomes
actively involved in additional businesses other than owning all the capital stock of Old Line
Bank, no separate cash compensation will be paid to the directors of Old Line Bancshares, Inc. in
addition to
7
that paid to them by Old Line Bank in their capacities as directors of Old Line Bank.
However, Old Line Bancshares, Inc. may determine in the future that such separate cash compensation
is appropriate.
In addition to cash compensation, since 1997, Old Line Bancshares, Inc. or Old Line Bank
(prior to Old Line Banks reorganization into the holding company structure) has granted options in
December of each year to its non-employee directors. Historically, each non-employee director was
granted an option to purchase 900 shares. For 2004, Old Line Bancshares, Inc. increased the amount
to 1,200 and in 2005 it granted 1,000 shares. All options were granted at fair market value, are
exercisable immediately, and expire on the tenth anniversary of the grant date. Also,
the options terminate (if not exercised) on the first anniversary of the termination of the
directors service on the Board of Directors.
Old Line Bancshares, Inc. intends to grant options to purchase 1,000 shares of its common
stock to its non-employee directors in December 2006 It is anticipated that the options will be
granted at fair market value, will be exercisable immediately, and will expire on the tenth
anniversary of the grant date. It is also anticipated that the options will terminate (if
not exercised) on the first anniversary of the termination of the directors service on the Board
of Directors. Old Line Bancshares, Inc. reserves the right to change this policy, including a
change which grants non-employee directors options to purchase more than 1,000 shares of common
stock.
8
EXECUTIVE COMPENSATION
Executive Compensation
The following table sets forth the compensation paid by Old Line Bank to its Chief Executive
Officer and to any other executive officer who received compensation in excess of $100,000 during
2005.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation |
|
|
Long-term Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Securities |
|
|
|
|
Name and Principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual |
|
|
Underlying |
|
|
All Other |
|
Position |
|
Year |
|
|
Salary ($) |
|
|
Bonus ($) |
|
|
Compensation |
|
|
Options (#) |
|
|
Compensation |
|
James W. Cornelsen, President &
Chief Executive Officer (1) |
|
|
2005 |
|
|
$ |
190,000 |
|
|
$ |
63,000 |
|
|
$ |
|
|
|
|
19,700 |
|
|
$ |
12,524 |
|
|
|
|
2004 |
|
|
|
150,000 |
|
|
|
40,000 |
|
|
|
117,000 |
|
|
|
10,800 |
|
|
|
9,439 |
|
|
|
|
2003 |
|
|
|
135,000 |
|
|
|
30,000 |
|
|
|
|
|
|
|
3,960 |
|
|
|
11,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Burnett
Senior Vice President &
Chief Lending Officer (2) |
|
|
2005 |
|
|
$ |
127,000 |
|
|
$ |
25,000 |
|
|
|
|
|
|
|
8,800 |
|
|
$ |
7,234 |
|
|
|
|
2004 |
|
|
|
114,000 |
|
|
|
17,000 |
|
|
|
|
|
|
|
3,960 |
|
|
|
6,105 |
|
|
|
|
2003 |
|
|
|
107,000 |
|
|
|
15,000 |
|
|
|
|
|
|
|
2,700 |
|
|
|
6,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christine M. Rush
Senior Vice President,
Chief Financial Officer,
Corporate Secretary &
Chief Credit Officer (3) |
|
|
2005 |
|
|
$ |
121,000 |
|
|
$ |
24,000 |
|
|
|
|
|
|
|
8,300 |
|
|
$ |
6,924 |
|
|
|
|
2004 |
|
|
|
100,000 |
|
|
|
17,000 |
|
|
|
|
|
|
|
3,960 |
|
|
|
5,609 |
|
|
|
|
2003 |
|
|
|
90,000 |
|
|
|
14,000 |
|
|
|
|
|
|
|
2,700 |
|
|
|
4,794 |
|
|
|
|
(1) |
|
Other compensation includes $10,136, $6,783, and $6,633 of contributions to Old Line
Banks 401(k) retirement plan for 2005, 2004, and 2003, respectively; $2,388, $2,480, and
$3,160 of term life insurance payments paid by Old Line Bank on Mr. Cornelsens behalf for
2005, 2004 and 2003, respectively; auto reimbursement of $0, $176 and $1,276 in 2005, 2004,
and 2003, respectively. In 2004, Mr. Cornelsen exercised his option to purchase 18,000
shares of common stock at an exercise price of $2.81. The market price of the common stock
on the date of exercise was $9.31. The exercise price, the market price and the number of
shares of common stock are adjusted for the 20% stock dividend paid on March 24, 2005.
Other annual compensation in 2004 represents the dollar difference between the price paid
of the common stock and the fair market value of the common stock at exercise of the
options. |
|
(2) |
|
Other compensation includes $6,115, $4,890, and $4,910 of contributions to Old Line
Banks 401(k) retirement plan for 2005, 2004 and 2003, respectively; and $1,119, $1,215,
and $1,216 of term life insurance payments paid by Old Line Bank on Mr. Burnetts behalf
for 2005, 2004, and 2003, respectively. |
|
(3) |
|
Other compensation includes $5,828, $4,279, and $4,190, of contributions to Old Line
Banks 401(k) retirement plan for 2005, 2004 and 2003 respectively; and $1,096, $1,330, and
$604 of term life insurance payments paid by Old Line Bank on Ms. Rushs behalf for 2005,
2004, and 2003. |
9
The following table contains information concerning the grant of stock options made
during the last completed fiscal year to Messrs. Cornelsen and Burnett and Ms. Rush.
Individual Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
% of Total |
|
|
|
|
|
|
|
|
|
Securities |
|
|
Options |
|
|
|
|
|
|
|
|
|
Underlying |
|
|
Granted to |
|
|
|
|
|
|
|
|
|
Options |
|
|
Employees in |
|
|
Exercise or Base |
|
|
Expiration |
|
Name |
|
Granted |
|
|
Fiscal Year |
|
|
Price ($/Share)(1) |
|
|
Date |
|
James W. Cornelsen (2) |
|
|
19,700 |
|
|
|
27.82 |
% |
|
$ |
10.44 |
|
|
|
12/31/2015 |
|
Joseph E. Burnett (3) |
|
|
8,800 |
|
|
|
12.43 |
% |
|
$ |
10.44 |
|
|
|
12/31/2015 |
|
Christine M. Rush (4) |
|
|
8,300 |
|
|
|
11.72 |
% |
|
$ |
10.44 |
|
|
|
12/31/2015 |
|
|
|
|
(1) |
|
The exercise price is equal to the fair market value on the date of grant. |
|
(2) |
|
Mr. Cornelsen received options to purchase 19,700 shares of common stock in December
2005 pursuant to his employment agreement and the 2005 Stock Option Model. One-third of
the grant vested as of December 31, 2005, one-third of the grant will vest on December 31,
2006 and one-third of the grant will vest on December 31, 2007. |
|
(3) |
|
Mr. Burnett received options to purchase 8,800 shares of common stock in December 2005
pursuant to his employment agreement and the 2005 Stock Option Model. One-third of the
grant vested as of December 31, 2005, one-third of the grant will vest on December 31, 2006
and one-third of the grant will vest on December 31, 2007. |
|
(4) |
|
Ms. Rush received options to purchase 8,300 shares of common stock in December 2005
pursuant to her employment agreement and the 2005 Stock Option Model. One-third of the
grant vested as of December 31, 2005, one-third of the grant will vest on December 31, 2006
and one-third of the grant will vest on December 31, 2007. |
The following table sets forth underlying unexercised options held as of December 31,
2005 by Mr. Cornelsen, Mr. Burnett and Ms. Rush and the aggregate dollar value of in-the-money
unexercised options held as of December 31, 2005 by Mr. Cornelsen, Mr. Burnett and Ms. Rush.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities |
|
|
|
|
|
|
Underlying |
|
|
Value of Unexercised |
|
|
|
Unexercised Options at |
|
|
in-the-Money Options |
|
Name |
|
December 31, 2005 |
|
|
at December 31, 2005(1) |
|
|
|
Exercisable |
|
|
Unexercisable |
|
|
Exercisable |
|
|
Unexercisable |
|
James W. Cornelsen |
|
|
38,967 |
(2) |
|
|
16,733 |
|
|
$ |
134,901 |
|
|
$ |
2,196 |
|
Joseph E. Burnett |
|
|
8,273 |
(3) |
|
|
7,187 |
|
|
|
3,937 |
|
|
|
805 |
|
Christine M. Rush |
|
|
8,107 |
(4) |
|
|
6,853 |
|
|
|
3,937 |
|
|
|
805 |
|
|
|
|
(1) |
|
Represents the total gain which would be realized if all in-the-money options held at
December 31, 2005 were exercised, determined by multiplying the number of shares underlying
the options by the difference between the per share option exercise price and the fair
market value of the shares at December 31, 2005 of $10.44. |
|
(2) |
|
The exercise price of these options is $3.97 per share with respect to 3,600 of these
options, $4.72 per share with respect to 3,600 of these options, $3.60 per share with
respect to 4,500 of these options, $4.39 per share with respect to 4,500 of these options,
$4.94 per share with respect to 4,500 of these options, $9.58 per share with respect to
4,500 of these options, $9.83 per share with respect to 10,800 of these options and $10.44
per share with respect to 19,700 of these options. |
|
(3) |
|
The exercise price of these options is $9.58 per share with respect to 2,700 of these
options, $9.83 per share with respect to 3,960 of these options, and $10.44 per share with
respect to 8,800 of these options. |
|
(4) |
|
The exercise price of these options is $9.58 per share with respect to 2,700 of these
options, $9.83 per share with respect to 3,960 of these options and $10.44 per share with
respect to 8,300 of these options. |
10
The following table sets forth certain information as of December 31, 2005, with respect
to compensation plans under which equity securities of Old Line Bancshares, Inc. are authorized for
issuance.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
Number of securities to be |
|
|
|
|
|
|
issued upon exercise of |
|
Weighted average exercise price |
|
Number of securities |
|
|
outstanding options, |
|
of outstanding options, warrants |
|
remaining available for |
Plan Category |
|
warrants and rights |
|
and rights |
|
future issuance |
Equity compensation
plans approved by
security
holders(1) |
|
172,620 |
|
$10.21 |
|
214,680 |
|
|
|
(1) |
|
Includes the 1990 Stock Option Plan, as amended, the 2001 Incentive Stock Option Plan, as
amended, and the 2004 Equity Incentive Plan. The 1990 Stock Option Plan, as amended, and the
2001 Incentive Stock Option Plan, as amended, were approved by security holders of Old Line
Bank and its predecessor, Old Line National Bank. Effective September 15, 2003, all of the
then stockholders of Old Line Bank became stockholders of Old Line Bancshares, Inc. The 2004
Equity Incentive Plan was approved by security holders of Old Line Bancshares, Inc. |
Employment Agreements
Old Line Bank has entered into employment agreements with each of James W. Cornelsen, Joseph
W. Burnett and Christine M. Rush.
On March 31, 2003, Old Line Bank entered into a new employment agreement with Mr. Cornelsen
(replacing a 1999 agreement) to serve as the President and Chief Executive Officer of Old Line
Bank. This agreement provides for an initial term of five years and may be extended by the Board
of Directors, in their sole discretion, for one additional year or such greater term as the Board
of Directors deems appropriate. In December 2003, 2004 and 2005, the Board of Directors extended
the term by one additional year. Mr. Cornelsens employment agreement is currently set to expire
in March 2011.
Mr. Cornelsens agreement currently provides for a salary of $205,000 and Mr. Cornelsen may receive
an annual bonus to be determined by the Board of Directors. In addition, Mr. Cornelsen is entitled
to receive an annual grant of options to purchase at least 4,500 shares of common stock of Old Line
Bancshares, Inc., assuming such options are available to grant under a stockholder approved stock
option plan.
The agreement terminates upon Mr. Cornelsens death, permanent disability or by mutual written
agreement. In addition, Mr. Cornelsen may terminate the agreement within six months following a
change in control, as described below, or for good reason as described in the agreement. Old
Line Bank may terminate the agreement for certain events constituting cause as described in the
agreement. Old Line Bank may also terminate the agreement without cause provided that it provides
sixty days prior written notice to Mr. Cornelsen.
If Mr. Cornelsen terminates the agreement for good reason, or if Old Line Bank terminates Mr.
Cornelsens employment without cause or because of permanent disability, Mr. Cornelsen will receive
severance pay for the remaining term of the agreement in an amount equal to his average annual
compensation over the prior five years.
If Mr. Cornelsen is terminated or terminates his employment in anticipation of or within six
months following a change in control, he is entitled to a single payment equal to 2.99 times his
average annual compensation over the prior five years. If the change of control payments were
required to be paid in 2006, Mr. Cornelsen would receive approximately $513,000.
Pursuant to the employment agreement, a change in control will occur if:
any person or persons acting in concert acquires, whether by purchase, assignment, transfer,
pledge or otherwise (including as a result of a redemption of securities), then outstanding
voting securities of Old Line Bancshares, Inc, if, after the
transaction, the acquiring person (or persons) owns, controls or holds with power to vote
twenty-five percent (25%) or more of any class of voting securities of Old Line Bancshares,
Inc., as the case may be;
11
|
|
|
within any twelve-month period (beginning on or after the effective date of the
employment agreement) the persons who were directors of Old Line Bancshares, Inc.
immediately before the beginning of such twelve-month period (the Incumbent Directors)
cease to constitute at least a majority of such Board of Directors; provided that any
director who was not a director as of the effective date of the employment agreement
will be deemed to be an Incumbent Director if that director was elected to such Board of
Directors by, or on the recommendation of or with the approval of, at least two-thirds
of the directors who then qualified as Incumbent Directors; |
|
|
|
|
the stockholders of Old Line Bancshares, Inc. approve a reorganization, merger or
consolidation with respect to which persons who were the stockholders of Old Line
Bancshares, Inc. immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than fifty percent (50%) of the combined voting
power entitled to vote in the election of directors of the reorganized, merged or
consolidated companys then outstanding voting securities (other than in connection with
the formation of the holding company); or |
|
|
|
|
all or substantially all of the assets of Old Line Bancshares, Inc. are sold,
transferred or assigned to any third party. |
On March 31, 2003, Old Line Bank entered into employment agreements with Mr. Burnett and Ms.
Rush to serve as Senior Vice Presidents of Old Line Bank. Each agreement has an initial term of
two years and thereafter automatically extends for periods of one year unless Old Line Bank
terminates the automatic renewal by giving written notice ninety days prior to the renewal date.
Old Line Bank did not provide such a notice within 90 days of March 31, 2006.
Mr. Burnetts agreement currently provides for a salary of $142,000 and Ms. Rushs agreement
currently provides for a salary of $135,500. Each of these two officers may receive an annual
discretionary bonus. In addition, these officers are each entitled to receive an annual grant of
options to purchase at least 2,700 shares of common stock of Old Line Bancshares, Inc., assuming
such options are available to grant under a stockholder approved stock option plan.
Each agreement terminates upon the employees death or physical or mental incapacitation that
has left the employee unable to perform his or her duties for a period of sixty consecutive days.
In addition, the employee may terminate his or her agreement by giving Old Line Bank sixty days
written notice. Old Line Bank may terminate each agreement for certain events constituting cause
as described in the agreements. Each employee is entitled to receive the remaining balance of his
or her unused vacation and personal leave at the termination of employment unless the employee is
terminated for cause.
Other Executive Benefits
Incentive Plan Model and Stock Option Model
On June 24, 2005, our Board of Directors approved an Incentive Plan Model and a Stock Option
Model for calendar year 2005 for Messrs. Cornelsen and Burnett and Ms. Rush. The Incentive Plan
Model and the Stock Option Model provided mechanisms under which the compensation committee could,
in its discretion, authorize cash and equity compensation bonuses to the executive officers. To
date, the compensation committee has not adopted new models for 2006.
The models provided the compensation committee with guidelines for determining discretionary
bonuses. The cash bonus under the Incentive Plan Model was determined by multiplying the named
executives base salary by a percentage factor calculated based on our return on assets, return on
equity and earnings per share at a threshold, target and stretch level. The options to be granted
under the Stock Option Model depended on whether Old Line Bancshares, Inc. met the cumulative
threshold, target and stretch levels for our return on assets, return on equity and earnings per
share. If met, options with a value equal on the date of grant to a percentage of the executives
base salary based on the Black-Scholes pricing model would be issued to the executives.
Under the Incentive Plan Model, at the target levels, Mr. Cornelsen would be eligible to
receive a bonus equal to 25% of his base salary and Mr. Burnett and Ms. Rush would be eligible to
receive a bonus equal to 15% of their base salaries. Under the Stock Option Model, at the target
levels, the officers would be eligible to receive options with a value equal on the date of grant
to 20% (for Mr. Cornelsen) or 10% (for Mr. Burnett and Ms. Rush) of base salary based on
Black-Scholes pricing model.
The compensation committee designed the incentive structure to reward achievement based on Old
Line Bancshares, Inc.s return on assets, return on equity and earnings per share, and to
discourage the achievement of one metric at the expense of the others.
12
The Board of Directors and
the compensation committee of the Board of Directors were authorized to adjust, modify or terminate
the models, in full or in part, at any time in their sole discretion. The Stock Option Model did
not affect the minimum number of options that the executives were to receive as provided for in
their employment agreements, subject to the terms of those agreements.
On December 30, 2005, the compensation committee of the Board of Directors of Old Line
Bancshares, Inc. and Old Line Bank, reviewed the anticipated financial performance of Old Line
Bancshares, Inc. and Old Line Bank for the fiscal year ended December 31, 2005 in order to
determine what, if any, cash bonus or incentive stock option bonus should be paid to the executive
officer pursuant to the Incentive Plan Model and Stock Option Model. In making its review, the
compensation committee reviewed Old Line Bancshares, Inc.s actual anticipated financial
performance and considered the impact of the stock offering that was completed in October 2005 and
the addition of the College Park loan production office in August 2005 on the financial
performance.
Based on this review, effective December 30, 2005, we paid cash bonuses and issued incentive
stock options to Mr. Cornelsen, Mr. Burnett and Ms. Rush as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Officer |
|
Cash Bonus |
|
|
Number of Options |
|
|
Exercise Price |
|
James W. Cornelsen |
|
$ |
63,000 |
|
|
|
19,700 |
|
|
$ |
10.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph Burnett |
|
|
25,000 |
|
|
|
8,800 |
|
|
|
10.44 |
|
Christine Rush |
|
|
24,000 |
|
|
|
8,300 |
|
|
|
10.44 |
|
One-third of the option grant vested as of December 31, 2005, one-third of the option grant will
vest on December 31, 2006 and one-third of the option grant will vest on December 31, 2007. The
options were issued from the Registrants 2004 Equity Incentive Plan.
Salary Continuation Agreements and Supplement Life Insurance Agreements
On January 3, 2006, Old Line Bank entered into Salary Continuation Agreements and Supplemental
Life Insurance Agreements and started accruing for a related annual expense, with Mr. Cornelsen,
Mr. Burnett and Ms. Rush.
Under the Salary Continuation Agreements, and in accordance with the conditions specified
therein, benefits accrue over time from the date of the agreement until the executive reaches the
age of 65. Upon full vesting of the benefit, the executives will be paid the following annual
amounts for 15 years: Mr. Cornelsen $131,607; Mr. Burnett $23,177; and Ms. Rush $56,658.
The agreements also provide for payments to the executives if their employment is terminated
prior to age 65, including as a result of death or disability (as defined in the agreements). The
agreements also provide for 100% vesting in the event of a separation from service (defined as the
termination of the executives employment for any reason other than death or disability) following
a change in control (as defined in the agreements). Change in control is defined in the agreements
by reference to the definition in Section 409A of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder.
13
The following charts show the payments to be made to the executives pursuant to the Salary
Continuation Agreements:
James Cornelsen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
Disability |
|
|
Change in |
|
|
Pre-Retirement |
|
|
|
|
|
|
|
Annual |
|
|
Annual |
|
|
Control Annual |
|
|
Annual Death |
|
|
|
Age |
|
|
Benefit(1) |
|
|
Benefit(1) |
|
|
Benefit(2) |
|
|
Benefit |
|
1/1/2006 |
|
|
51 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
68,389 |
|
|
$ |
131,607 |
|
1/1/2007 |
|
|
52 |
|
|
|
9,698 |
|
|
|
9,698 |
|
|
|
71,809 |
|
|
|
131,607 |
|
1/1/2008 |
|
|
53 |
|
|
|
19,396 |
|
|
|
19,396 |
|
|
|
75,399 |
|
|
|
131,607 |
|
1/1/2009 |
|
|
54 |
|
|
|
29,094 |
|
|
|
29,094 |
|
|
|
79,169 |
|
|
|
131,607 |
|
1/1/2010 |
|
|
55 |
|
|
|
38,793 |
|
|
|
38,793 |
|
|
|
83,128 |
|
|
|
131,607 |
|
1/1/2011 |
|
|
56 |
|
|
|
48,491 |
|
|
|
48,491 |
|
|
|
87,284 |
|
|
|
131,607 |
|
1/1/2012 |
|
|
57 |
|
|
|
58,189 |
|
|
|
58,189 |
|
|
|
91,648 |
|
|
|
131,607 |
|
1/1/2013 |
|
|
58 |
|
|
|
67,887 |
|
|
|
67,887 |
|
|
|
96,231 |
|
|
|
131,607 |
|
1/1/2014 |
|
|
59 |
|
|
|
77,585 |
|
|
|
77,585 |
|
|
|
101,042 |
|
|
|
131,607 |
|
1/1/2015 |
|
|
60 |
|
|
|
87,283 |
|
|
|
87,283 |
|
|
|
106,095 |
|
|
|
131,607 |
|
1/1/2016 |
|
|
61 |
|
|
|
96,982 |
|
|
|
96,982 |
|
|
|
111,399 |
|
|
|
131,607 |
|
1/1/2017 |
|
|
62 |
|
|
|
106,680 |
|
|
|
106,680 |
|
|
|
116,969 |
|
|
|
131,607 |
|
1/1/2018 |
|
|
63 |
|
|
|
116,378 |
|
|
|
116,378 |
|
|
|
122,818 |
|
|
|
131,607 |
|
1/1/2019 |
|
|
64 |
|
|
|
126,076 |
|
|
|
126,076 |
|
|
|
128,959 |
|
|
|
131,607 |
|
6/23/2019 (3) |
|
|
65 |
|
|
|
131,607 |
|
|
|
131,607 |
|
|
|
131,607 |
|
|
|
131,607 |
|
Joseph E. Burnett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
Disability |
|
|
Change in |
|
|
Pre-Retirement |
|
|
|
|
|
|
|
Annual |
|
|
Annual |
|
|
Control Annual |
|
|
Annual Death |
|
|
|
Age |
|
|
Benefit(1) |
|
|
Benefit(1) |
|
|
Benefit(2) |
|
|
Benefit |
|
1/1/2006 |
|
|
60 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
18,234 |
|
|
$ |
23,177 |
|
1/1/2007 |
|
|
61 |
|
|
|
4,611 |
|
|
|
4,611 |
|
|
|
19,145 |
|
|
|
23,177 |
|
1/1/2008 |
|
|
62 |
|
|
|
9,223 |
|
|
|
9,223 |
|
|
|
20,103 |
|
|
|
23,177 |
|
1/1/2009 |
|
|
63 |
|
|
|
13,834 |
|
|
|
13,834 |
|
|
|
21,108 |
|
|
|
23,177 |
|
1/1/2010 |
|
|
64 |
|
|
|
18,446 |
|
|
|
18,446 |
|
|
|
22,163 |
|
|
|
23,177 |
|
1/1/2011 (3) |
|
|
65 |
|
|
|
23,177 |
|
|
|
23,177 |
|
|
|
23,177 |
|
|
|
23,177 |
|
14
Christine M. Rush
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
Disability |
|
|
Change in |
|
|
Pre-Retirement |
|
|
|
|
|
|
|
Annual |
|
|
Annual |
|
|
Control Annual |
|
|
Annual Death |
|
|
|
Age |
|
|
Benefit(1) |
|
|
Benefit(1) |
|
|
Benefit(2) |
|
|
Benefit |
|
1/1/2006 |
|
|
49 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
27,033 |
|
|
$ |
56,658 |
|
1/1/2007 |
|
|
50 |
|
|
|
3,696 |
|
|
|
3,696 |
|
|
|
28,384 |
|
|
|
56,658 |
|
1/1/2008 |
|
|
51 |
|
|
|
7,392 |
|
|
|
7,392 |
|
|
|
29,804 |
|
|
|
56,658 |
|
1/1/2009 |
|
|
52 |
|
|
|
11,088 |
|
|
|
11,088 |
|
|
|
31,294 |
|
|
|
56,658 |
|
1/1/2010 |
|
|
53 |
|
|
|
14,784 |
|
|
|
14,784 |
|
|
|
32,858 |
|
|
|
56,658 |
|
1/1/2011 |
|
|
54 |
|
|
|
18,480 |
|
|
|
18,480 |
|
|
|
34,501 |
|
|
|
56,658 |
|
1/1/2012 |
|
|
55 |
|
|
|
22,176 |
|
|
|
22,176 |
|
|
|
36,226 |
|
|
|
56,658 |
|
1/1/2013 |
|
|
56 |
|
|
|
25,872 |
|
|
|
25,872 |
|
|
|
38,038 |
|
|
|
56,658 |
|
1/1/2014 |
|
|
57 |
|
|
|
29,568 |
|
|
|
29,568 |
|
|
|
39,940 |
|
|
|
56,658 |
|
1/1/2015 |
|
|
58 |
|
|
|
33,264 |
|
|
|
33,264 |
|
|
|
41,937 |
|
|
|
56,658 |
|
1/1/2016 |
|
|
59 |
|
|
|
36,960 |
|
|
|
36,960 |
|
|
|
44,033 |
|
|
|
56,658 |
|
1/1/2017 |
|
|
60 |
|
|
|
40,656 |
|
|
|
40,656 |
|
|
|
46,235 |
|
|
|
56,658 |
|
1/1/2018 |
|
|
61 |
|
|
|
44,352 |
|
|
|
44,352 |
|
|
|
48,547 |
|
|
|
56,658 |
|
1/1/2019 |
|
|
62 |
|
|
|
48,048 |
|
|
|
48,048 |
|
|
|
50,974 |
|
|
|
56,658 |
|
1/1/2020 |
|
|
63 |
|
|
|
51,744 |
|
|
|
51,744 |
|
|
|
53,523 |
|
|
|
56,658 |
|
1/1/2021 |
|
|
64 |
|
|
|
55,440 |
|
|
|
55,440 |
|
|
|
56,199 |
|
|
|
56,658 |
|
3/6/2021(3) |
|
|
65 |
|
|
|
56,658 |
|
|
|
56,658 |
|
|
|
56,658 |
|
|
|
56,658 |
|
|
|
|
(1) |
|
Payments are made in 180 equal monthly installments commencing within 60 days following normal retirement age. |
|
(2) |
|
Payments are made in 180 equal monthly installments commencing at separation of service. |
|
(3) |
|
This is the date the Executive reaches normal retirement age. |
Under the Supplemental Life Insurance Agreements, Old Line Bank is obligated to cause the
payment of death benefits to the executives designated beneficiaries in the following amounts: Mr.
Cornelsen $717,558; Mr. Burnett $410,556 and Ms. Rush $827,976.
Information Regarding Executive Officers Who are Not Directors and Key Employees
Executive Officers
Joseph E. Burnett, 60, joined Old Line Bank as a Senior Vice President and Chief Lending
Officer in August 2001. He is also a Senior Vice President of Old Line Bancshares, Inc. He has
over 40 years of banking experience in the Washington, D.C. metropolitan area specializing in
commercial transactions. Prior to joining Old Line Bank, Mr. Burnett was a Senior Vice President
in Commercial Lending at Farmers Bank for two years (1999-2001) and at Suburban Bank for twelve
years (1987-1999). Mr. Burnett resides in Dunkirk, Maryland. One of our new commercial lenders,
Ms. Sandi Burnett, is the sister in law of Mr. Burnett.
Christine M. Rush, 50, joined Old Line Bank in 1998. She is a Senior Vice President, the
Chief Financial Officer, the Chief Credit Officer and the Secretary of Old Line Bank. She is also
a Senior Vice President, Chief Financial Officer and the Secretary of Old Line Bancshares, Inc.
Prior to joining Old Line Bank, Ms. Rush was a Vice President in Commercial Lending and Cash
Management at Signet Bank. She has over 28 years banking and financial management experience. Ms.
Rush resides in LaPlata, Maryland.
15
Key Employees
Jeffrey Franklin, 40, Senior Vice President of Old Line Bank, has been in charge of branch
operations of Old Line Bank since March 2002. Prior to joining Old Line Bank, he was a Vice
President at The Columbia Bank where he was responsible for various aspects of branch operations
for six years. Prior to his tenure at The Columbia Bank, he held various positions at First
Virginia Bank. Mr. Franklin has over 15 years of banking experience. He resides in Crofton,
Maryland.
Erin G. Lyddane, 31, Treasurer and Vice President of Old Line Bank, has been responsible for
the daily operations of the bank and financial reporting since February 2000. She has worked in
various positions at the bank, including Assistant Vice President, Branch Manager, Assistant
Treasurer and Cashier. She joined Old Line Bank in 1992. She resides in LaPlata, Maryland.
Sandi F. Burnett, 47, Senior Vice President of Old Line Bank, is the team leader for the
College Park loan production office since August 2005. Prior to joining Old Line Bank, she was
employed by BB&T, a major south-eastern regional bank, most recently as a City Executive, Senior
Vice President. In this capacity, she was responsible for supervising the overall team management,
portfolio quality and growth within suburban Maryland, principally Prince Georges County. Prior
to this position, she was employed by Commerce Bank, a local bank that merged into BB&T in 1999.
She started with Commerce Bank in 1994. Ms. Burnett is a career banker with over 26 years of
commercial banking experience. She resides in Lothian, Maryland. Ms. Burnett is the sister in law
of Joseph W. Burnett.
The officers of Old Line Bancshares, Inc. and Old Line Bank are elected annually by the
respective Boards of Directors following the annual meeting of stockholders and serve for terms of
one year or until their successors are duly elected and qualified except where a longer term is
expressly provided in an employment contract duly authorized and approved by the Board of
Directors. See Executive Compensation Employment Agreements.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, Old Line Bancshares, Inc.s directors and executive
officers and persons holding more than ten percent of the outstanding shares of common stock are
required to report their ownership and changes in such ownership to the Securities and Exchange
Commission and Old Line Bancshares, Inc. Based solely on its review of the copies of such reports,
Old Line Bancshares, Inc. believes that, for the year ended December 31, 2005, all Section 16(a)
filing requirements applicable to Old Line Bancshares, Inc.s officers, directors and greater than
ten percent shareholders were complied with on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Old Line Bank has had in the past, and expects to have in the future, banking transactions
with directors and executive officers and the business and professional organizations in which they
are associated in the ordinary course of business. Any loans and loan commitments are made in
accordance with all applicable laws. In the opinion of management, these transactions do not and
will not involve more than the normal risk of collectibility or present other unfavorable features.
Directors or officers with any personal interest in any loan application are excluded from
considering any such loan application. The aggregate amount of loans outstanding at December 31,
2005, 2004, and 2003 to Old Line Banks directors, officers and their affiliates was approximately
$4.8 million, $2.9 million, and $2.0 million, respectively.
Old Line Bank has entered into various transactions with firms in which owners are also
members of the Board of Directors. Fees charged for these services are at similar rates charged by
unrelated parties for similar work. We paid to these parties a total of $10,248, $6,886, and
$10,159, during the years ended December 31, 2005, 2004 and 2003, respectively.
On July 22, 2004, Old Line Bancshares, Inc. executed an Operating Agreement as a member to
establish Pointer Ridge Office Investment, LLC (Pointer Ridge). The purpose of Pointer Ridge is
to acquire, own, hold for profit, sell, assign, transfer, operate, lease, develop, mortgage,
refinance, pledge and otherwise deal with property located at the intersection of Pointer Ridge
Road and Route 301 in Bowie, Md. Pointer Ridge has acquired the property and is constructing a
commercial office building. Once completed, Old Line Bancshares, Inc. plans to lease approximately
50% of this building for its main office and a branch of Old Line Bank. Old Line Bancshares, Inc.
has a 50% ownership in Pointer Ridge. On August 26, 2004, Old Line Bancshares, Inc. transferred
its initial $550,000 capital contribution to Pointer Ridge. On September 16, 2005 and December 16,
2005, Old Line Bancshares, Inc. transferred additional capital contributions of $182,500 and
$105,000 respectively, to Pointer Ridge. On December 31, 2005, Old Line Bancshares, Inc.s total
investment in Pointer Ridge was $837,436. Frank Lucente, a director of Old Line Bancshares, Inc.
and Old Line Bank, controls twenty five percent of Pointer Ridge.
16
PROPOSAL II
APPROVING AMENDMENT TO OLD LINE BANCSHARES, INCS CHARTER TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK FROM 5,000,000 TO 15,000,000
Stockholders are being asked to approve Articles of Amendment to Old Line Bancshares, Inc.s
charter to increase the authorized shares of common stock from 5,000,000 to 15,000,000. A copy of
the Articles of Amendment are attached hereto and incorporated by reference herein as Appendix 1.
Assuming approval by the stockholders, the Articles of Amendment will become effective upon
their acceptance for record by the State Department of Assessments and Taxation of Maryland (the
SDAT). Assuming approval of the Articles of Amendment by the stockholders, Old Line Bancshares,
Inc. intends to file the Articles of Amendment with the SDAT as soon as practicable after the
Annual Meeting.
Description of and Reasons for the Amendment
The purpose of the amendment is to permit Old Line Bancshares, Inc.s Board of Directors to
issue common stock for a variety of proper corporate purposes as the Board of Directors may deem
advisable without the consent of Old Line Bancshares, Inc.s stockholders.
The amendment would restate the first two paragraphs of Article SIXTH of the charter to
read as follows:
The total number of shares and the par value of each class of capital stock which the
Corporation is authorized to issue is as follows:
|
|
|
|
|
|
|
|
|
Class of Stock |
|
Number of Shares |
|
|
Par Value |
|
Preferred |
|
|
1,000,000 |
|
|
$ |
0.01 |
|
Common |
|
|
15,000,000 |
|
|
$ |
0.01 |
|
Any and all shares of stock issued, and for which the full consideration has been paid
or delivered, shall be deemed fully paid stock; and the holder of such shares shall
not be liable for any further call or assessment or any other payment thereon. The
aggregate par value of all shares of all classes of stock is $160,000.
The charter currently authorizes the issuance of up to 5,000,000 shares of common stock. As
of the date of this proxy statement, there were 4,248,898.5 shares of common stock issued and
outstanding, leaving a balance of 751,101.5 shares that are authorized and unissued. Of the
751,105.5 shares of authorized and unissued common stock, 15,300 shares are reserved for issuance
pursuant to our 1990 Stock Option Plan, 67,800 shares are reserved for issuance pursuant to our
2001 Stock Option Plan, and 89,520 shares are reserved for issuance pursuant to our 2004 Equity
Incentive Plan. Thus, as of the date of this proxy statement, there are only 578,485.5 shares of
common stock that remain unissued or reserved for issuance.
If the proposed amendment to the charter is approved by the stockholders, upon its
effectiveness, Old Line Bancshares, Inc. will have 15,000,000 shares of common stock. Old Line
Bancshares will be left with a balance of 10,578,485.5 shares authorized and unissued and not
reserved for any specific purpose.
The rights and terms of Old Line Bancshares, Inc.s common stock will not be changed in any
way by the proposed amendment, and the additional shares of common stock, if authorized, would have
the same rights and privileges as the shares of common stock currently outstanding.
The Board of Directors believes the availability of such shares will benefit Old Line
Bancshares, Inc. by providing flexibility to issue stock for a variety of proper corporate purposes
as the Board of Directors may deem advisable without further action by stockholders, except as may
be required by law, regulation or rule. These purposes could include, among other things, the sale
of stock for capital raising purposes, the issuance of stock to persons who provide services to Old
Line Bancshares, Inc., the purchase of property, an acquisition or merger, the use of additional
shares for equity compensation plans, the declaration of stock splits, stock dividends or
distributions and other bona fide corporate purposes.
17
The issuance of additional shares of stock under any of these circumstances could have a
dilutive effect on earnings per share and on a stockholders percentage voting power in our
company. Holders of Old Line Bancshares, Inc.s common stock do not have preemptive rights to
subscribe for additional securities that may be issued by Old Line Bancshares, Inc., which means
that current stockholders do not have a prior right to purchase any new issue of stock in order to
maintain their proportionate ownership interest.
Other than grants pursuant to the 2001 Stock Option Plan and the 2004 Equity Incentive Plan,
management has no present arrangements, agreements, understandings or plans for the issuance of the
additional shares of common stock proposed to be authorized by the amendment to the charter.
Anti-Takeover Effects
Although an increase in the authorized shares of common stock could, under certain
circumstances, have an anti-takeover effect (for example, by diluting the stock ownership of a
person seeking to effect a change in the composition of the Board of Directors or contemplating a
tender offer or other transaction for the combination of Old Line Bancshares, Inc., with another
company), the current proposal to amend the charter is not in response to any effort by any person
or group to accumulate Old Line Bancshares, Inc.s common stock or to obtain control of Old Line
Bancshares, Inc., by means of a merger, tender offer, solicitations in opposition to management or
otherwise.
The proposed increase in the number of authorized shares of common stock is not intended for
anti-takeover purposes. Management is not currently aware of any actions taken by any person or
group to obtain control of Old Line Bancshares or to change its management. In addition, there
have been no proposals to management or the Board of Directors for a merger or the purchase of Old
Line Bancshares, Inc.s securities or assets, and the proposal is not part of any plan by
management to recommend a series of similar amendments to the Board of Directors and the
stockholders. The Board of Directors does not currently contemplate recommending the adoption of
any other amendments to the charter that could be construed to affect the ability of third parties
to take over or change control of our company.
Stockholder Approval
The approval of the Articles of Amendment to increase the number of authorized shares
of common stock from 5,000,000 to 15,000,000 requires the affirmative vote of at least
two-thirds of the total votes entitled to be cast at the Annual Meeting.
The Board of Directors recommends that stockholders vote FOR the Articles of Amendment.
PROPOSAL III
APPROVING AMENDMENT TO OLD LINE BANCSHARES, INCS CHARTER TO EXPRESSLY GRANT THE BOARD
OF DIRECTORS THE POWER TO CHANGE THE LOCATION OF THE PRINCIPAL OFFICE WITHOUT THE
APPROVAL OF THE STOCKHOLDERS
Stockholders are being asked to approve Articles of Amendment to Old Line Bancshares, Inc.s
charter to expressly grant the Board of Directors the power to change the location of the principal
office without the approval of the stockholders. A copy of the Articles of Amendment are attached
hereto and incorporated by reference herein as Appendix 2.
Assuming approval by the stockholders, the Articles of Amendment will become effective upon
their acceptance for record by the SDAT. Assuming approval of the Articles of Amendment by the
stockholders, Old Line Bancshares, Inc. intends to file the Articles of Amendment with the SDAT as
soon as practicable after the Annual Meeting.
18
Description of and Reasons for the Amendment
The purpose of the amendment is to permit the Board of Directors to change the location of the
principal office without the approval of the stockholders.
The amendment would restate Article TENTH of the charter to read as follows:
The board of directors shall have the power to change the location of the principal office
without the approval of the stockholders.
Currently, Article TENTH of the charter provides that the Board of Directors may change the
location of Old Line Bancshares, Inc.s principal office to within 30 miles of the office in
Waldorf, Maryland without the approval of the stockholders. Old Line Bancshares, Inc. is currently
in the process of moving its principal office to 1525 Pointer Ridge Road, Bowie, Maryland, which is
less than 30 miles from Waldorf, Maryland. However, if the Board of Directors determines that it
should move the principal office again in the future, the Board of Directors believes that it
should have this authority generally without requiring the approval of the stockholders.
Stockholder Approval
The approval of the Articles of Amendment to expressly grant the Board of Directors
the power to change the location of the principal office without the approval of the
stockholders requires the affirmative vote of at least two-thirds of the total votes
entitled to be cast at the Annual Meeting.
The Board of Directors recommends that stockholders vote FOR the Articles of Amendment.
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has ratified and confirmed the Audit Committees selection of
Rowles & Company, LLP as Old Line Bancshares, Inc.s independent public accountants for 2006,
subject to ratification by the stockholders. Rowles & Company, LLP has served as Old Line Banks
independent public accountants since 1995 and the Audit Committee and management consider Rowles &
Company, LLP to be well qualified. They have issued no qualified opinions during such engagement.
A representative of Rowles & Company, LLP will be present at the Annual Meeting to respond to
appropriate questions and to make a statement if he or she desires to do so.
Approval of this proposal requires a majority of votes cast at the Annual Meeting.
Abstentions and broker non-votes will have no effect on the vote for this proposal.
The Board of Directors recommends that stockholders vote FOR the ratification of the
appointment of Rowles & Company, LLP as independent public accountants for 2006.
19
AUDIT COMMITTEE REPORT
The Audit Committee has (1) reviewed and discussed Old Line Bancshares, Inc.s audited
financial statements with Old Line Bancshares, Inc.s management and representatives of Rowles &
Company, LLP, the independent auditors; (2) discussed with Rowles & Company, LLP all matters
required to be discussed by SAS No. 61, as modified or supplemented; and (3) has received the
written disclosures and the letter from Rowles & Company, LLP required by Independence Standards
Board Standard No. 1, as modified or supplemented and has discussed with Rowles & Company, LLP the
independence of Rowles & Company, LLP. Based on its review and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements for the year ended
December 31, 2005 be included in Old Line Bancshares, Inc.s Annual Report on Form 10-KSB for the
last fiscal year.
|
|
|
|
|
|
|
Audit Committee: |
|
|
|
|
|
|
|
By:
|
|
Suhas R. Shah, CPA, Chairman |
|
|
|
|
Craig. E. Clark |
|
|
|
|
James F. Dent |
|
|
|
|
John D. Mitchell, Jr. |
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by Rowles &
Company, LLP for the audit of Old Line Bancshares, Inc.s annual consolidated financial statements
for the years ended December 31, 2005 and December 31, 2004 and fees billed for other services
rendered by Rowles & Company, LLP during those periods.
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2005 |
|
|
2004 |
|
Audit Fees(1) |
|
$ |
50,490 |
|
|
$ |
39,556 |
|
Audit Related Fees(2) |
|
|
12,570 |
|
|
|
|
|
Tax Fees(3) |
|
|
10,527 |
|
|
|
6,292 |
|
All Other Fees(4) |
|
|
|
|
|
|
3,102 |
|
|
|
|
|
|
|
|
Total |
|
$ |
73,227 |
|
|
$ |
48,950 |
|
|
|
|
|
|
|
|
(1) Audit Fees consist of fees billed for professional services rendered for the audit of the Old
Line Bancshares, Inc.s consolidated (or Old Line Banks) annual financial statements and review of
the interim consolidated financial statements included in quarterly reports, and services that are
normally provided by Rowles & Company, LLP in connection with statutory and regulatory filings or
engagements.
(2) Audit-Related Fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of Old Line Bancshares, Inc.s
consolidated (or Old Line Banks) financial statements and are not reported under Audit Fees. In
2005, these fees included costs associated with reviews and advisory services related to the public
offering.
(3) Tax Fees consist of fees billed for professional services rendered for federal and state tax
compliance, tax advice and tax planning.
(4) All Other Fees in 2004 are for fees billed for training costs.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor
Old Line Bancshares, Inc.s audit committee approves the engagement before Old Line
Bancshares, Inc. or Old Line Bank engages the independent auditor to render any audit or non-audit
services.
20
SHAREHOLDER COMMUNICATIONS
If you would like to contact Old Line Bancshares, Inc.s Board of Directors, including a
committee of the Board of Directors, you can send an email to Crush@oldlinebank.com, or write to
the following address:
Board of Directors
c/o Corporate Secretary
Old Line Bancshares, Inc.
P.O. Box 1890
Waldorf, Md. 20604
The Secretary will compile all communications and submit them to the Board of Directors or the
individual Directors on a periodic basis.
SHAREHOLDER PROPOSALS
In order to be included in the proxy materials for Old Line Bancshares, Inc.s 2007 Annual
Meeting, shareholder proposals submitted to Old Line Bancshares, Inc. in compliance with SEC Rule
14a-8 (which concerns shareholder proposals that are requested to be included in a companys proxy
statement) must be received in written form at Old Line Bancshares, Inc.s executive offices on or
before December 13, 2006. In order to curtail controversy as to compliance with this requirement,
shareholders are urged to submit proposals to the Secretary of Old Line Bancshares, Inc. by
Certified MailReturn Receipt Requested.
In addition to any other applicable requirements, for nominations for election to the board of
directors outside of the procedures established in the charter of the Nominating Committee of Old
Line Bancshares, Inc. and even if the proposal is not to be included in the Proxy Statement,
pursuant to Old Line Bancshares, Inc.s Bylaws, the shareholder must give notice in writing to the
President of Old Line Bancshares, Inc. not less than 14 days nor more than 50 days prior to the
date of the meeting called for the election of directors, provided, however, that if less than 21
days notice of the meeting is given to stockholders, such nomination must be mailed or delivered to
the President not later than the close of business on the fifth business day following the date on
which the notice was mailed. For the 2006 Annual Meeting, such notice would have to be received by
the Secretary of Old Line Bancshares between April 3, 2006 and May 11, 2006.
The notice must contain (i) the name and address of each proposed nominee; (ii) the principal
occupation of each proposed nominee; (iii) the names of any associate or affiliate (as those terms
are defined under the Securities Exchange Act of 1934, as amended) of each proposed nominee which
own shares of capital stock of Old Line Bancshares, Inc. or are beneficial owners of options or
parties to agreements in respect to the capital stock of Old Line Bancshares, Inc.; (iv) the total
number of shares of capital stock of Old Line Bancshares, Inc. that will be voted for each proposed
nominee; (v) the name and residence address of the notifying stockholder and (vi) the number of
shares of capital stock of Old Line Bancshares, Inc. owned by the notifying stockholder and each
proposed nominee. A full description of these notice requirements can be found in Article I,
Section 7 of Old Line Bancshares, Inc.s Amended and Restated Bylaws.
ANNUAL REPORT
The Old Line Bancshares, Inc.s annual report on Form 10-KSB for the year 2005 is included
herein. Copies of the report will also be available at the Annual Meeting on May 25, 2006.
A COPY OF OLD LINE BANCSHARES, INC.S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-KSB FOR THE PERIOD ENDED DECEMBER 31, 2005, INCLUDING FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, WILL BE FURNISHED BY MANAGEMENT TO ANY BENEFICIAL OWNER OF ITS SECURITIES
WITHOUT CHARGE UPON RECEIPT OF A WRITTEN REQUEST FROM SUCH PERSON. REQUESTS IN WRITING SHOULD BE
DIRECTED TO OLD LINE BANCSHARES, INC. C/O CORPORATE SECRETARY, P.O. BOX 1890, WALDORF, MD. 20604.
EACH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT, AS OF APRIL 5, 2006, THE RECORD DATE
FOR THE ANNUAL MEETING, THE PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF SECURITIES ENTITLED
TO VOTE AT SUCH MEETING.
21
OTHER BUSINESS
The management of the Old Line Bancshares, Inc. does not intend to present any other matters
for action at the Annual Meeting, and the Board of Directors has not been informed that other
persons intend to present any matters for action at the Annual Meeting. However, if any other
matter should properly come before the Annual Meeting, the persons named in the accompanying form
of proxy intend to vote thereon, pursuant to the proxy, in accordance with their judgment of the
best interests of Old Line Bancshares, Inc.
|
|
|
|
|
By order of the Board of Directors |
|
|
|
|
|
/s/ Craig E. Clark |
|
|
|
April 14, 2006
|
|
Craig E. Clark, Chairman of the Board |
22
Appendix 1
ARTICLES OF AMENDMENT
OF
OLD LINE BANCSHARES, INC.
OLD LINE BANCSHARES, INC., a Maryland corporation (which is hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of Maryland (which is
hereinafter referred to as the SDAT) that:
FIRST: The Charter of the Corporation is hereby amended by increasing the number of
authorized shares of common stock from five million (5,000,000) to fifteen million (15,000,000),
and from and after the acceptance of these Articles of Amendment by the SDAT, the first two
paragraphs of Article SIXTH of the Charter is deleted in its entirety and replaced with the
following:
The total number of shares and the par value of each class of capital stock which the
Corporation is authorized to issue is as follows:
|
|
|
|
|
|
|
|
|
Class of Stock |
|
Number of Shares |
|
|
Par Value |
|
Preferred |
|
|
1,000,000 |
|
|
$ |
0.01 |
|
Common |
|
|
15,000,000 |
|
|
$ |
0.01 |
|
Any and all shares of stock issued, and for which the full consideration has been paid
or delivered, shall be deemed fully paid stock; and the holder of such shares shall
not be liable for any further call or assessment or any other payment thereon. The
aggregate par value of all shares of all classes of stock is $160,000.
SECOND: Prior to the filing of these Articles of Amendment, the Corporation had the
authority to issue six million (6,000,000) shares of capital stock, comprised of one million
(1,000,000) shares of preferred stock, $0.01 par value per share, and five million (5,000,000)
shares of common stock, $0.01 par value per share, for an aggregate par value of Sixty Thousand
Dollars ($60,000). Subsequent to the filing of these Articles of Amendment, the Corporation will
have the authority to issue to issue sixteen million (16,000,000) shares of capital stock,
comprised of one million (1,000,000) shares of preferred stock, $0.01 par value per share, and
fifteen million (15,000,000) shares of common stock, $0.01 par value per share, for an aggregate
par value of One Hundred Sixty Thousand Dollars ($160,000).
THIRD: The Board of Directors of the Corporation, pursuant to and in accordance with the
Charter and Bylaws of the Corporation and the Maryland General Corporation Law (the MGCL), duly
advised the foregoing amendments and the shareholders of the Corporation entitled to vote on the
foregoing amendment, pursuant to and in accordance with the Charter and Bylaws of the Corporation
and the MGCL, duly approved the foregoing amendment.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name
and on its behalf by a President and attested to by its Secretary as of this ___day of May, 2006;
and its President acknowledges that these Articles of Amendment are the act of the Corporation, and
he further acknowledges that, as to all matters or facts set forth herein which are required to be
verified under oath, such matters and facts are true in all material respects to the best of his
knowledge, information and belief, and that this statement is made under the penalties for perjury.
|
|
|
|
|
|
|
ATTEST: |
|
OLD LINE BANCSHARES, INC. |
|
|
|
|
|
|
|
|
|
By
|
|
|
|
(SEAL) |
|
|
|
|
|
|
|
Christine M. Rush, Secretary
|
|
|
|
James W. Cornelsen, President |
|
|
23
Appendix 2
ARTICLES OF AMENDMENT
OF
OLD LINE BANCSHARES, INC.
OLD LINE BANCSHARES, INC., a Maryland corporation (which is hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of Maryland (which is
hereinafter referred to as the SDAT) that:
FIRST: The Charter of the Corporation is hereby amended by deleting Article TENTH in its
entirety and replacing said article with the following:
TENTH: The board of directors shall have the power to change the location of the
principal office without the approval of the stockholders.
SECOND: The Board of Directors of the Corporation, pursuant to and in accordance with the
Charter and Bylaws of the Corporation and the Maryland General Corporation Law (the MGCL), duly
advised the foregoing amendments and the shareholders of the Corporation entitled to vote on the
foregoing amendment, pursuant to and in accordance with the Charter and Bylaws of the Corporation
and the MGCL, duly approved the foregoing amendment.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name
and on its behalf by a President and attested to by its Secretary as of this ___day of May, 2006;
and its President acknowledges that these Articles of Amendment are the act of the Corporation, and
he further acknowledges that, as to all matters or facts set forth herein which are required to be
verified under oath, such matters and facts are true in all material respects to the best of his
knowledge, information and belief, and that this statement is made under the penalties for perjury.
|
|
|
|
|
|
|
ATTEST: |
|
OLD LINE BANCSHARES, INC |
|
|
|
|
|
|
|
|
|
By
|
|
|
|
(SEAL) |
|
|
|
|
|
|
|
Christine M. Rush, Secretary
|
|
|
|
James W. Cornelsen, President |
|
|
24
REVOCABLE PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
OLD
LINE BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2006
KNOW ALL MEN BY THESE PRESENT, that the undersigned stockholder of Old Line Bancshares, Inc.
(the Company) hereby appoints Mr. Daniel W. Deming and Mr. James F. Dent, and each of them acting
singly, with full power of substitution, the attorneys and proxies of the undersigned and
authorizes them to represent and vote on behalf of the undersigned as designated all of the shares
of Common Stock of the Company that the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on May 25, 2006, and at any adjournment or postponement of
such meeting for the purposes identified below and with discretionary authority as to any other
matters that may properly come before the Annual Meeting. Any and all proxies heretofore given are
hereby revoked. The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement and Annual Report.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE
NOMINEES FOR DIRECTOR AND FOR EACH OF THE PROPOSALS DESCRIBED ON THE REVERSE SIDE. IF ANY OTHER
BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED IN THE DISCRETION OF THE
PROXIES.
(Continued and to be signed on the reverse side)
ANNUAL
MEETING OF STOCKHOLDERS OF
OLD LINE BANCSHARES, INC.
May 25, 2006
Please date, sign and mail
Your proxy card in the envelope provided as soon
As possible
Please detach along perforated line and mail in the envelope provided.
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS 2, 3 AND 4.
|
|
|
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE: x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN |
1.
Proposal 1 - Election of Directors For Term to Expire 2009 and 2008:
|
|
|
|
|
2. |
|
Proposal 2 - To amend Old Line Bancshares. Inc.s charter to Increase the authorized shares of
Old Line Bancshares. Inc.s common stock from 5,000,000 shares to 15,000,000 shares. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES: |
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
FOR
ALL NOMINEES
|
|
¡ |
|
Charles A. Bongar. Jr.
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¡ |
|
Nancy L. Gasparovic
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
o
|
|
WITHHOLD
AUTHORITY FOR ALL NOMINEES
|
|
¡ ¡
|
|
Frank Lucente. Jr. Suhas R. Shah
|
2009 2008 |
|
|
|
3. |
|
Proposal 3 - To amend Old Line Bancshares. Inc.s charter to expressly grant the Board of Directors the power to change
the location of the principal office without the approval of the stockholders.
|
|
o
|
|
o
|
|
o |
o
|
|
FOR
ALL EXCEPT (See Instructions below)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. |
|
Proposal 4 - To ratify the appointment of Rowles & Company, LLP as independent public accountants to audit the financial
statements of Old Line Bancshares, Inc. for 2006.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This proxy may be revoked at any time prior to its exercise by written notice to the Company by executing a proxy
bearing a later date or by attending the meeting and voting in person. |
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION:
To withhold authority to vote for any individual nominee(s),
mark FOR ALL EXCEPT and fill in the circle next to each
nominee
you with to
withhold, as shown here: = |
|
Please vote, date and sign this proxy and return it promptly In the enclosed
postage prepaid envelope. Prompt return of your proxy will assure that your vote will be counted if you are unable to attend the annual
meeting, but will no prevent you from voting in person. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If you plan to attend the meeting, please so Indicate by checking the box so that we may
make appropriate arrangements for the meeting.
|
o |
To change the address on your account, please check the box
at right and indicate your new address in the address space
above. Please note that changes to the registered name(s)
on the account may not be submitted
via this method. |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
of Shareholder
|
|
Date:
|
|
Signature
of Shareholder
|
|
Date:
|
|
Note:
Please sign exactly as your name or names appear on this
Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.