As filed with the Securities and Exchange Commission on July 14, 1999
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TALBOT BANCSHARES, INC.
(Name of Small Business Issuer in its Charter)
<TABLE>
<CAPTION>
Maryland 6712 52-2033630
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
Talbot Bancshares, Inc. 1999 Stock Option Plan
(Full title of the plan)
18 East Dover Street
Easton, Maryland 21601
(410) 822-1400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
W. Moorhead Vermilye
President
Talbot Bancshares, Inc.
18 East Dover Street, Easton, Maryland 21601
(410) 822-1400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Abba David Poliakoff, Esquire
Michael A. Refolo, Esquire
Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC
233 E. Redwood Street
Baltimore, Maryland 21202
(410) 576-4000
<TABLE>
<CAPTION>
===============================================================================================================================
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Proposed Proposed Maximum Amount of
Title of Shares to be Amount to be Maximum Offering Aggregate Offering Registration
Registered Registered Price Per Share(1) Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share 85,000 shares $55.00 $4,675,000 $1,299.65
===============================================================================================================================
</TABLE>
(1) Plus such additional number of Shares as may become issuable by
operation of the anti-dilutional provisions of the plan.
(2) Estimated solely for purposes of determining the registration fee. The
proposed maximum aggregate offering price per Share has been computed
pursuant to Rule 457(h) based upon the market price of the Shares as of
July 8, 1999.
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Omitted pursuant to the instructions and provisions of Form S-8.
Item 2. Registrant Information and Employee Plan Information.
Omitted pursuant to the instructions and provisions of Form S-8.
<PAGE>
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed with the Securities and
Exchange Commission (the "Commission") by Talbot Bancshares, Inc. (the
"Company") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") are, as of their respective dates, hereby incorporated by
reference in this Registration Statement:
(i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (which includes certain information contained in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders on April 28,
1999 and incorporated therein by reference);
(ii) Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
(iii) Description of the Company's Common Stock which appears
at page 1 of the Company's Form 8-A, or any description of the Common Stock
which appears in any prospectus forming a part of any subsequent registration
statement of the Company or in any registration statement filed pursuant to
Section 12 of the Exchange Act, including any amendments or reports filed for
the purpose of updating such description.
All other documents filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the filing of a post-effective amendment which
indicates that all of the Company's shares of common stock, par value $.01 per
share (the "Shares"), offered hereby have been sold or that all Shares then
remaining unsold have been deregistered shall be deemed to be incorporated by
reference in and made a part of this Registration Statement from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in a document subsequently filed modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any and all documents incorporated herein by reference (other than
exhibits to such documents). Written requests should be directed to Talbot
Bancshares, Inc., Secretary, 18 East Dover Street, Easton, Maryland 21601.
Telephone requests may be directed to the Company at (410) 822-1400.
Item 4. Description of Shares.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers.
Under Maryland law, a corporation is permitted to limit, by provision
in its Articles of Incorporation, the liability of directors and officers so
that no director or officer shall be liable to the corporation or to any
shareholder for money damages except (i) for and to the extent of actual receipt
of an improper personal benefit in money, property or services, or (ii) for
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Company's Articles of Incorporation
includes this provision.
The Company's Articles of Incorporation requires the Company to
indemnify its directors and officers to the maximum extent permitted under
Maryland law. As a result, the Company is required to indemnify any present or
former director or officer against any claim or liability, including all
judgments,
II-1
<PAGE>
penalties, fines, settlements and expenses, unless it is established that (i)
his act or omission was committed in bad faith or was the result of active and
deliberate dishonesty, (ii) he actually received an improper personal benefit in
money, property or services or (iii) in the case of a criminal proceeding, he
had reasonable cause to believe that his act or omission was unlawful. In
addition, the Company is required to pay or reimburse, in advance of final
disposition of a proceeding, reasonable expenses incurred by such a person
provided that the Company shall have received (i) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by the Company, and (ii) a written
undertaking by or on his behalf to repay the amount paid or reimbursed by the
Company if it shall ultimately be determined that the standard of conduct was
not met. The Company's Articles of Incorporation also requires the Company to
provide indemnification, payment or reimbursement of expenses to a present or
former director or officer who served a predecessor of the Company in such
capacity, and to any employee or agent of the Company or a predecessor of the
Company.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted of directors and officers of the Company pursuant
to the foregoing provisions or otherwise, the Company has been advised that,
although the validity and scope of the governing statute has not been tested in
court, in the opinion of the SEC, such indemnification is against public policy
as expressed in such Act and is, therefore, unenforceable. In addition,
indemnification may be limited by state securities laws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description of Exhibits
5 Opinion of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC as to legality of Shares to be issued
23.1 Consent of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC (included in their opinion in Exhibit 5)
23.2 Consent of Stegman & Company, independent certified public
accountants
99 1999 Stock Option Plan
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall
II-2
<PAGE>
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Easton, State of Maryland, on the 16th day of June,
1999.
TALBOT BANCSHARES, INC.
By: /s/ W. Moorhead Vermilye
------------------------
W. Moorhead Vermilye, President
By: /s/ Susan E. Leaverton
----------------------
Susan E. Leaverton, Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons as of the date
indicated below.
Signature Title Date
/s/ Herbert L. Andrew Director June 16, 1999
- ------------------------------------
Herbert L. Andrew, III
/s/ Blenda W. Armistead Director June 16, 1999
- ------------------------------------
Blenda W. Armistead
/s/ Lloyd L. Beatty, Jr. Director June 16, 1999
- ------------------------------------
Lloyd L. Beatty, Jr.
/s/ Donald D. Casson Director June 16, 1999
- ------------------------------------
Donald D. Casson
/s/ Gary L. Fairbank Director June 16, 1999
- ------------------------------------
Gary L. Fairbank
/s/ Ronald N. Fox Director June 16, 1999
- ------------------------------------
Ronald N. Fox
/s/ Richard C. Granville Director June 16, 1999
- ------------------------------------
Richard C. Granville
- ------------------------------------ Director
Jerome M. McConnell
/s/ Shari L. McCord Director June 16, 1999
- ------------------------------------
Shari L. McCord
/s/ William H. Myers Director June 16, 1999
- ------------------------------------
William H. Myers
/s/ David L. Pyles Director June 16, 1999
- ------------------------------------
David L. Pyles
/s/ Christopher F. Spurry Director June 16, 1999
- ------------------------------------
Christopher F. Spurry
/s/ W. Moorhead Vermilye Director June 16, 1999
- ------------------------------------
W. Moorhead Vermilye
F7364.641
II-4
<PAGE>
Exhibit Index
Exhibit
Number Description of Exhibits
5 Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC as to legality of Shares to be issued
23.1 Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC (included in their opinion in Exhibit 5)
23.2 Consent of Stegman & Company, independent certified public
accountants
99 1999 Stock Option Plan
<PAGE>
Exhibit 5
<PAGE>
LAW OFFICES
GORDON, FEINBLATT, ROTHMAN, HOFFBERGER & HOLLANDER, LLC
THE GARRETT BUILDING
233 EAST REDWOOD STREET
BALTIMORE, MARYLAND 21202-3332
410-576-4000
------------
Telex 908041 BAL
Fax 410-576-4246
July 14, 1999
Talbot Bancshares, Inc.
18 East Dover Street
Easton, MD 21601
Re: Talbot Bancshares, Inc.
Registration Statement on Form S-8 for the
Talbot Bancshares, Inc. 1999 Stock Option Plan
Ladies and Gentlemen:
We have acted as counsel to Talbot Bancshares, Inc., a Maryland
corporation (the "Company"), in connection with the issuance by the Company of
up to 85,000 shares of common stock, par value $.01 per share (the "Shares"),
under the Company's 1999 Stock Option Plan (the "Plan"), pursuant to the
above-referenced Registration Statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), filed on this date by
the Company with the Securities and Exchange Commission (the "Commission").
We have examined copies of (i) the Articles of Incorporation of the
Company, as amended (the "Charter"), certified by the State Department of
Assessments and Taxation of Maryland, (ii) the Bylaws of the Company, (iii) the
Plan, and (iv) resolutions adopted by the Board of Directors of the Company
relating to the matters referred to herein. We have also examined the
Registration Statement and Exhibits thereto (collectively, with the documents
described in the preceding sentence, referred to as the "Documents").
In expressing the opinions set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent therewith, that all Documents
submitted to us as originals are authentic, all documents submitted to us as
certified or photostatic copies conform to the original documents, all
signatures on all such Documents are genuine, all public records reviewed or
relied upon by us or on our behalf are true and complete, and all statements and
information contained in the Documents are true and complete.
Based on the foregoing, it is our opinion that Shares sold by the
Company to participants under the Plan, upon receipt of the consideration
required to be paid therefor, will be duly and validly issued, fully paid and
nonassessable.
The foregoing opinion is limited to the laws of the State of Maryland
and of the United States of America and we do not express any opinion herein
concerning any other law. We assume no obligation to supplement this opinion if
any applicable law changes after the date hereof or if we become aware of any
fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for your benefit, and may not be
relied upon by any other person without our prior written consent.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm therein. In giving
this opinion, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933.
Very truly yours,
GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, LLC
<PAGE>
Exhibit 23.2
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of Talbot Bancshares, Inc. (the "Company") of
our report dated January 15, 1999, on the 1998 consolidated financial statements
of the Company and related notes, which appear on pages 16-36 of the 1998 Annual
Report to Stockholders of the Company that is included in the Company's annual
report on Form 10-K for the year ended December 31, 1998.
/s/Stegman & Company
Baltimore, Maryland
July 2, 1999
F7364.641
<PAGE>
Exhibit 99
<PAGE>
TALBOT BANCSHARES, INC.
1999 STOCK OPTION PLAN
1. Purpose. The purpose of this 1999 STOCK OPTION PLAN
("Plan") is to further the interests of TALBOT BANCSHARES, INC., a Maryland
corporation, and its subsidiaries (collectively referred to as the "Company") by
providing incentives for executive officers and key employees of the Company who
may be designated for participation in the Plan, and to provide additional means
of attracting and retaining competent personnel.
2. Administration. The Plan shall be administered by the
Company's Board of Directors (the "Board"). Subject to the provisions of the
Plan and applicable law, the Board is authorized to interpret the Plan and to
prescribe, amend and rescind rules and regulations relating to the Plan and to
any options granted under the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. No member of the
Board shall vote upon or decide any matter relating to himself or a member of
his immediate family or to any of his rights or benefits (or rights or benefits
of a member of his immediate family) under the Plan, and in such case, shall
instead abstain from voting.
3. Limitation on Aggregate Shares; Adjustments. The Company
has reserved 85,000 shares of common stock, par value $.01 per share (the
"Shares"), for issuance upon the exercise of options granted under the Plan. If
any option granted under the Plan shall terminate, be forfeited or expire
unexercised, in whole or in part, the Shares so released from option may be made
the subject of additional options granted under the Plan. The Company shall
reserve and keep available such number of Shares as will satisfy the
requirements of all outstanding options granted under the Plan. Appropriate
adjustment shall be made to the number of Shares available for the grant of
options and the number of Shares which are subject to outstanding options
granted under the Plan to give effect to any stock splits, stock dividends, or
other relevant changes in the capitalization of the Company occurring after the
adoption of the Plan by the Board. The decision of the Board as to the amount
and timing of any such adjustment shall be conclusive.
4. Accelerated Exercise.
(a) Anything in the Plan or in any Option Agreement to the
contrary notwithstanding, in the event of the commencement of a tender offer
(other than by the Company) for any Shares of the Company, or a sale or
transfer, in one or a series of transactions, of assets having a fair market
value of 50% or more of the fair market value of all assets of the Company, or a
merger, consolidation or share exchange pursuant to which the Shares of the
Company are or may be exchanged for or converted into cash, property or
securities of another issuer, or the liquidation of the Company (an
"Extraordinary Event"), then regardless of whether any option granted pursuant
to the Plan has vested or become fully exercisable, all options granted pursuant
to the Plan shall immediately vest and become fully exercisable for the full
number of Shares subject to any such option.
(b) The accelerated exercise right pursuant to subsection (a)
shall be effective on and at all times after the "Event Date" of the
Extraordinary Event. The "Event Date" is the date of the commencement of a
tender offer, if the Extraordinary Event is a tender offer, and in the case of
any other Extraordinary Event, the day preceding the record date in respect of
such Extraordinary Event, or if no record date is fixed, the day preceding the
date as of which shareholders of record become entitled to the consideration
payable in respect of such Extraordinary Event.
(c) If in the case of an Extraordinary Event other than a
tender offer, notice that is given by an optionee of the exercise of an option
pursuant to this Section 4 prior to the Event Date shall be effective on and as
of the Event Date. Upon the exercise of an option after the occurrence of an
Extraordinary Event, the Company shall issue, on and as of the effective date of
such exercise, all Shares with respect to which the option shall have been
exercised.
(d) If an optionee fails to exercise his or her option, in
whole or in part, pursuant to this Section upon an Extraordinary Event, or if
there shall be any capital reorganization or reclassification of the Shares, the
Company shall take such action as may be necessary to enable each optionee to
receive such options upon any subsequent exercise of his or her options, in
whole or in part, in lieu of Shares, securities or other assets as were issuable
or payable upon such Extraordinary Event in respect of, or in exchange for, such
Shares.
<PAGE>
5. Participants; Grant of Options.
(a) The Board shall determine and designate from time to time
those executive officers and key employees of the Company to whom options are to
be granted and who thereby become participants in the Plan. The Board may grant
to such executive officers and key employees options to purchase Shares in such
amounts as the Board shall from time to time determine. Participation in the
Plan shall not confer any right of continuation of service as an employee of the
Company.
(b) The granting of an option shall take place only when an
appropriate written Option Agreement substantially in the form of Exhibit A or
Exhibit B attached to the Plan is executed by the Company and the optionee and
delivered to the optionee. All options under the Plan shall be evidenced by such
written Option Agreement between the Company and the optionee. Such Option
Agreement shall contain such further terms and conditions, not inconsistent with
the Plan, related to the grant or the time or times of exercise of options as
the Board shall prescribe.
(c) An option granted under the Plan may be a non-qualified
stock option or an "incentive stock option" ("Incentive Stock Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and, if not otherwise specified, shall be deemed to be an Incentive
Stock Option unless it does not meet the requirements of the Code.
(d) An Incentive Stock Option shall not result in income upon
the receipt of the shares subject to the option to the extent that (i) the
aggregate fair market value (determined at the time the option is granted) of
the Shares that may be purchased by the optionee during any calendar year (under
the Plan and all other plans of the Company) does not exceed $100,000; and (ii)
the optionee (other than the optionee's estate where the optionee is deceased)
does not dispose of the Shares (A) two years from and after the date the option
is granted, and (B) one year after the date the Shares are issued to the
optionee. In the event of a disposition of Shares received upon exercise of an
Incentive Stock Option where the disposition occurs within two years from the
date the option is granted or one year from the receipt of the shares, the
optionee shall notify the Secretary of the Company in writing promptly as to the
date of such disposition, the sale price (if any), and the number of Shares
involved.
6. Option Price; Fair Market Value.
(a) The price at which Shares may be purchased upon exercise of
an Option shall be equal to the "Fair Market Value" (as hereinafter defined) on
the date the option is granted; provided, however, that in the case of Incentive
Stock Options, if at the time the option is granted the participant owns Shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (a "10% Shareholder"), then the option price shall be not
less than 110% of the Fair Market Value of the Shares on the date the option is
granted.
(b) The "Fair Market Value" per Share as of any particular date
shall be the closing market price per Share on the trading day immediately
preceding such date, as reported on the principal securities exchange or market
on which the Shares are then listed or admitted to trading, or if not so
reported, the average of the bid and asked prices on the trading date
immediately preceding such date as reported by Nasdaq, or if not so reported, as
determined by the Board in good faith.
7. Exercise Period. Except as otherwise specified by the Board
in the Option Agreement, each option granted under the Plan will expire on the
tenth anniversary of the date the option was granted; provided, however, that an
Incentive Stock Option granted to a 10% Shareholder shall in no event be
exercisable after the expiration of five years from the date it is granted.
8. Exercise of Options. Unless otherwise provided by the Board
and specified in the Option Agreement (and except as otherwise stated in Section
4 of the Plan), any option granted under the Plan will become exercisable with
respect to 20% of the Shares subject to such option on each anniversary date of
the grant of the option, plus in each case the number of Shares that previously
became eligible for purchase under the Plan, so that the option shall become
fully exercisable on the fifth anniversary of the date the option was granted.
9. Limitation Upon Transfer of Options. No option shall be
transferable by an optionee other than by will and the laws of descent and
distribution. Options shall be exercisable only by the optionee during his or
her lifetime and only in the manner set forth in the Plan. Options may not be
assigned, pledged or hypothecated, and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer an option, or to
assign, pledge, hypothecate or otherwise dispose of an option
<PAGE>
in violation of this provision, or upon the levy of any attachment or similar
process upon such option or such rights, the option shall immediately lapse and
become null and void.
10. Termination and Forfeiture of Options. In the event of
termination of an optionee of employment for cause, all unexercised options of
the optionee shall immediately terminate. In the event of the termination of
employment of an optionee for any other reason, except the death or disability
of the optionee, all unexercised options of the optionee will terminate, be
forfeited and will lapse, provided that the optionee, within three months after
the optionee's termination of employment with the Company, may exercise the
option to purchase that number of Shares that were purchasable by the optionee
at the time of his or her termination of employment.
11. Death or Disability of Optionee. In the event of the death
of an optionee, or if an optionee's employment is terminated because of
permanent and total disability, the option may be exercised by the personal
representative, administrator or a person who acquired the right to exercise any
such option by bequest, inheritance or death of the optionee, or by the disabled
optionee, as the case may be, within one year after the death of the optionee or
termination of his or her employment, as the case may be, to purchase that
number of Shares that were purchasable by the optionee at the time of his or her
death or disability.
12. Leaves of Absences. The Board shall determine such rules,
regulations, and determinations as it deems appropriate with respect to leaves
of absences taken by any optionee. Without limiting the generality of the
foregoing, the Board shall determine whether any such leave of absence shall
constitute a termination of employment for purposes of the Plan.
13. Method of Exercise. To exercise an option, the optionee
(or his or her successor) shall give written notice to the Company's Secretary
at the Company's principal place of business accompanied by full payment for the
Shares being purchased and a written statement that the Shares are purchased for
investment and not with a view toward distribution; however, this statement will
not be required in the event the Shares subject to the option are registered
under the Securities Act of 1933, as amended. If the option is exercised by the
successor of an optionee following his or her death, proof shall be submitted,
satisfactory to the Board, of the right of the successor to exercise such
deceased optionee's option.
14. Manner of Payment. An optionee may pay the exercise price
for the Shares being purchased either (i) in cash or by check made payable to
the order of the Company, (ii) with Shares of the Company, to the extent of
their Fair Market Value on the date of exercise (iii) by surrender to the
Company of options to purchase Shares, to the extent of the difference between
the exercise price of such options and the Fair Market Value of the Shares
subject to such options (the "spread"), or (iv) a combination of (i), (ii) and
(iii) above. The Company shall have the right, and the optionee may require the
Company, to withhold and deduct from the number of Shares deliverable upon the
exercise of any options under the Plan a number of Shares having an aggregate
Fair Market Value equal to the amount of any taxes and other charges that the
Company is obligated to withhold or deduct from amounts payable to the
participant.
15. Share Certificates. Certificates representing Shares
issued pursuant to the Plan which have not been registered under the Securities
Act of 1933 shall bear a legend to the following effect:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and any state
securities laws, and may not be assigned, transferred, pledged
or otherwise disposed of without registration except upon
presentation of evidence satisfactory to the Company that an
exemption from registration is available."
The Company shall not be required to transfer or deliver any
certificate or certificates for Shares purchased upon any exercise of an option:
(i) until after compliance with all then applicable requirements of law; and
(ii) prior to admission of such Shares to listing on any stock exchange on which
the Company's outstanding Shares may then be listed. In no event shall the
Company be required to issue fractional Shares to an optionee.
16. Registration. If the Company shall be advised by its
counsel that Shares deliverable upon any exercise of an option are required to
be registered under the Securities Act of 1933, or that the consent of any other
authority is required for their issuance, the Company may effect such
<PAGE>
registration or obtain such consent, and delivery of the Shares by the Company
may be deferred until registration is effected or consent obtained.
17. Issuance of Shares. No Shares will be issued until full
payment for such Shares has been made. An optionee shall have no rights as a
shareholder with respect to optioned Shares until the date the option shall have
been properly exercised and all conditions to the exercise of the option and
purchase of Shares shall have been complied with in all respects to the
satisfaction of the Company. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such option is exercised, except as otherwise provided in the Plan.
18. Amendments and Termination. The Board may amend, suspend,
discontinue or terminate the Plan, but no such action may, without the consent
of the holder of any option granted under the Plan, alter or impair such option.
19. Period of Plan. The Plan has been adopted by the Board of
the Company on March 17, 1999 subject to approval of the Plan by the
stockholders of the Company within 12 months of the date the Plan was adopted.
The stockholders of the Company approved the Plan on, and the effective date of
the Plan is, April 28, 1999. No option shall be granted on or after the tenth
anniversary of the date of adoption of the Plan by the Board of the Company.
f7063.600
<PAGE>
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
under the
TALBOT BANCSHARES, INC.
1999 STOCK OPTION PLAN
THIS AGREEMENT is made this ____________________, ____, by and between
Talbot Bancshares, Inc., a Maryland corporation (the "Company"), and
___________________________ (the "Optionee").
WHEREAS, the Board of Directors of the Company (the "Board") considers
it desirable and in the Company's interest that the Optionee be given an
opportunity to purchase its shares of common stock, par value $.01 per share
("Shares"), pursuant to the terms and conditions of the Company's 1999 Stock
Option Plan (the "Plan"), to provide an incentive for the Optionee and to
promote the interests of the Company.
NOW, THEREFORE, it is agreed as follows:
1. Grant of Option. The Company hereby grants to the Optionee an option
to purchase from the Company ________________ Shares ("Option Shares") at the
exercise price per Share set forth below. Subject to earlier expiration or
termination of the option granted under this Agreement, this option shall expire
on the 10th anniversary of the date hereof.
2. Period of Exercise of Option. The Optionee shall be entitled to
exercise the option granted under this Agreement to purchase Option Shares:
______ immediately; or
______ subject to the following vesting requirements:
Exercise
Exercise Date No. of Shares Price Per Share
First Anniversary of Grant Date ___________ __________
Second Anniversary of Grant Date ___________ __________
Third Anniversary of Grant Date ___________ __________
Fourth Anniversary of Grant Date ___________ __________
Fifth Anniversary of Grant Date ___________ __________
in each case, together with the number of Option Shares which the Optionee was
theretofore entitled to purchase. Appropriate adjustment shall be made to the
number of Shares available for the grant of options and the number of Shares
which are subject to outstanding options granted under the Plan to give effect
to any stock splits, stock dividends, or other relevant changes in the
capitalization of the Company occurring after the adoption of the Plan by the
Board. The decision of the Board as to the amount and timing of any such
adjustment shall be conclusive.
3. Accelerated Exercise. In the event of an Extraordinary Event (as
defined in the Plan) involving the Company, then regardless of whether any
option granted pursuant to the Plan has vested or become fully exercisable, all
Option Shares granted under this Agreement shall immediately vest and become
fully exercisable for the full number of Shares subject to such option on and at
all times after the "Event Date" (as defined in the Plan) of the Extraordinary
Event, in accordance with the terms and conditions described in the Plan.
4. Exercise Periods. In the event of termination of employment of the
Optionee for cause, all unexercised options shall immediately lapse and be
forfeited. In the event of the death or disability
<PAGE>
of the Optionee, or in the event of termination of his or her employment other
than for cause, the Plan permits certain extended exercise periods.
5. Method of Exercise. In order to exercise the Option Shares granted
under this Agreement, the Optionee must give written notice to the Secretary of
the Company at the Company's principal place of business, substantially in the
form of Exhibit 1 attached to this Agreement, accompanied by full payment of the
exercise price for the Option Shares being purchased, in accordance with the
terms and provisions of the Plan.
6. Manner of Payment. An Optionee may pay the exercise price for Option
Shares purchased under this Agreement either (i) in cash or by check payable to
the order of the Company, (ii) with Shares of the Company, to the extent of
their Fair Market Value on the date of exercise, (iii) by surrender to the
Company of Options to purchase Shares, to the extent of the difference between
the exercise price of such Options and the Fair Market Value of the Shares
subject to such options (the "spread"), or (iv) a combination of (i), (ii) and
(iii) above. The Company shall have the right, and the Optionee may require the
Company, to withhold and deduct from the number of Option Shares deliverable
upon the exercise of the option a number of Option Shares having an aggregate
Fair Market Value equal to the amount of taxes and other charges that the
Company is obligated to withhold or deduct from amounts payable to the
participant.
7. Limitation upon Transfer. This option may not be transferred by the
Optionee other than by will and the laws of descent and distribution, may not be
assigned, pledged or hypothecated, and shall not be subject to execution,
attachment or similar process. This option is exercisable only by the Optionee
during his or her lifetime, and only in the manner set forth in this Agreement.
Upon any attempt to transfer this option, or to assign, pledge, hypothecate or
otherwise dispose of this option in violation of this provision, or upon the
levy of any attachment or similar process upon this option or any rights under
this Agreement, this option shall immediately lapse and become null and void.
8. Incentive Stock Option. This option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
9. Disposition of Shares. In the event of a disposition of the Option
Shares received under this Agreement where the disposition occurs within two
years after the date of this Agreement or one year after the receipt of the
Shares, the Optionee shall notify the Secretary of the Company in writing
promptly as to the date of such disposition, the sale price (if any), and the
number of Shares involved.
10. Plan; Applicable Law. This Agreement is subject in all respects to
the provisions of the Plan, a copy of which has been provided to the Optionee.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Maryland, excluding its provisions relating to conflicts of laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal, intending this to be a sealed instrument, as of the date
first above written.
ATTEST: TALBOT BANCSHARES, INC.
______________________________ By:_____________________________(SEAL)
WITNESS: OPTIONEE:
______________________________ ________________________________(SEAL)
f7063.600
<PAGE>
EXHIBIT 1
Date:_____________________
Corporate Secretary
TALBOT BANCSHARES, INC.
To the Secretary:
I hereby exercise my option to purchase ______________ shares
of common stock, par value $.01 per share ("Shares"), of Talbot Bancshares, Inc.
(the "Company") in accordance with the terms set forth in the Incentive Stock
Option Agreement under the Company's 1999 Stock Option Plan.
In full payment for such exercise, please find enclosed
|_| check in the amount of $____________
|_| Shares having a Fair Market Value of $__________
|_| Options having an exercise price of $__________, to purchase
______ Shares having a Fair Market Value of $_________,
resulting in a "spread" of $-----------.
I represent that I am obtaining these shares for my own account and not with a
view to distribution within the meaning of Section 2(11) of the Securities Act
of 1933.
I authorize the Company/|_| direct the Company to withhold a number of Shares
equal to any withholding obligation applicable to me.
Very truly yours,
-----------------------------------
-----------------------------------
Print Name
f7063.600
<PAGE>
EXHIBIT B
AGREEMENT FOR NON-QUALIFIED STOCK OPTION
under the
TALBOT BANCSHARES, INC.
1999 STOCK OPTION PLAN
THIS AGREEMENT is made this ____________________, ____, by and between
Talbot Bancshares, Inc., a Maryland corporation (the "Company"), and
___________________________ (the "Optionee").
WHEREAS, the Board of Directors of the Company (the "Board") considers
it desirable and in the Company's interest that the Optionee be given an
opportunity to purchase its shares of common stock, par value $.01 per share
("Shares"), pursuant to the terms and conditions of the Company's 1999 Stock
Option Plan (the "Plan"), to provide an incentive for the Optionee and to
promote the interests of the Company.
NOW, THEREFORE, it is agreed as follows:
1. Grant of Option. The Company hereby grants to the Optionee an option
to purchase from the Company ________________ Shares ("Option Shares") at the
exercise price per Share set forth below. Subject to earlier expiration or
termination of the option granted under this Agreement, this option shall expire
on the 10th anniversary of the date hereof.
2. Period of Exercise of Option. The Optionee shall be entitled to
exercise the option granted under this Agreement to purchase Option Shares:
______ immediately; or
______ subject to the following vesting requirements:
Exercise
Exercise Date No. of Shares Price Per Share
First Anniversary of Grant Date ___________ __________
Second Anniversary of Grant Date ___________ __________
Third Anniversary of Grant Date ___________ __________
Fourth Anniversary of Grant Date ___________ __________
Fifth Anniversary of Grant Date ___________ __________
in each case, together with the number of Option Shares which the Optionee was
theretofore entitled to purchase. Appropriate adjustment shall be made to the
number of Shares available for the grant of options and the number of Shares
which are subject to outstanding options granted under the Plan to give effect
to any stock splits, stock dividends, or other relevant changes in the
capitalization of the Company occurring after the adoption of the Plan by the
Board. The decision of the Board as to the amount and timing of any such
adjustment shall be conclusive.
3. Accelerated Exercise. In the event of an Extraordinary Event (as
defined in the Plan) involving the Company, then regardless of whether any
option granted pursuant to the Plan has vested or become fully exercisable, all
Option Shares granted under this Agreement shall immediately vest and become
fully exercisable for the full number of Shares subject to any such option on
and at all times after the "Event Date" (as defined in the Plan) of the
Extraordinary Event, in accordance with the terms and conditions described in
the Plan.
<PAGE>
4. Exercise Periods. In the event of termination of employment of the
Optionee for cause, all unexercised options shall immediately lapse and be
forfeited. In the event of the death or disability of the Optionee, or in the
event of termination of his or her employment other than for cause, the Plan
permits certain extended exercise periods.
5. Method of Exercise. In order to exercise the Option Shares granted
under this Agreement, the Optionee must give written notice to the Secretary of
the Company at the Company's principal place of business, substantially in the
form of Exhibit 1 attached to this Agreement, accompanied by full payment of the
exercise price for the Option Shares being purchased, in accordance with the
terms and provisions of the Plan.
6. Manner of Payment. An Optionee may pay the exercise price for Shares
purchased under this Agreement either (i) in cash or by check payable to the
order of the Company, (ii) with Shares of the Company, to the extent the Fair
Market Value of such Shares on the date of exercise equals the exercise price
for the Option Shares purchased, (iii) by surrender to the Company of options to
purchase Shares, to the extent of the difference between the exercise price of
such options and the Fair Market Value of the Shares subject to such options
(the "spread"), or (iv) a combination of (i), (ii) and (iii) above. The Company
shall have the right, and the Optionee may require the Company, to withhold and
deduct from the number of Option Shares deliverable upon the exercise hereof a
number of Option Shares having an aggregate Fair Market Value equal to the
amount of taxes and other charges that the Company is obligated to withhold or
deduct from amounts payable to the participant.
7. Limitation upon Transfer. The Option Shares may not be transferred
by the Optionee other than by will and the laws of descent and distribution, may
not be assigned, pledged or hypothecated, and shall not be subject to execution,
attachment or similar process. This option is exercisable only by the Optionee
during his or her lifetime, and only in the manner set forth in this Agreement.
Upon any attempt to transfer any Option Share, or to assign, pledge, hypothecate
or otherwise dispose of this option in violation of this provision, or upon the
levy of any attachment or similar process upon this option or any rights under
this Agreement, this option shall immediately lapse and become null and void.
8. Plan; Applicable Law. This Agreement is subject in all respects to
the provisions of the Plan, a copy of which has been provided to the Optionee.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Maryland, excluding its provisions relating to conflicts of laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal, intending this to be a sealed instrument, as of the date
first above written.
ATTEST: TALBOT BANCSHARES, INC.
______________________________ By:_____________________________(SEAL)
WITNESS: OPTIONEE:
______________________________ ________________________________(SEAL)
f7063.600
<PAGE>
EXHIBIT 1
Date:_____________________
Corporate Secretary
TALBOT BANCSHARES, INC.
To the Secretary:
I hereby exercise my option to purchase ______________ shares
of common stock, par value $.01 per share ("Shares"), of Talbot Bancshares, Inc.
(the "Company") in accordance with the terms set forth in the Agreement for
Non-Qualified Stock Option under the Company's 1999 Stock Option Plan.
In full payment for such exercise, please find enclosed
|_| check in the amount of $____________
|_| Shares having a Fair Market Value of $__________
|_| Options having an exercise price of $__________, to purchase
______ Shares having a Fair Market Value of $_________,
resulting in a "spread" of $-----------.
I represent that I am obtaining these shares for my own account and not with a
view to distribution within the meaning of Section 2(11) of the Securities Act
of 1933.
I authorize the Company/|_| direct the Company to withhold a number of Shares
equal to any withholding obligation applicable to me.
Very truly yours,
-----------------------------------
-----------------------------------
Print Name
f7063.600
<PAGE>
