<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
F&M BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
F&M BANCORP
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
(LOGO)
110 Thomas Johnson Drive
Frederick, Maryland 21702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of F&M Bancorp ("Bancorp") will be held
at the Corporate Headquarters, 110 Thomas Johnson Drive, Frederick, Maryland,
on Tuesday, April 11, 1995, at 10:00 a.m., for the following purposes:
(1) To elect 13 directors of Bancorp;
(2) To consider and act upon the proposed F&M Bancorp 1995 Stock Option
Plan; and
(3) To consider and act upon such other business as may properly come
before the meeting.
Stockholders of Bancorp of record on January 20, 1995 will be entitled to
notice of and to vote at the meeting or any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Gordon M. Cooley
Secretary
Frederick, Maryland
March 6, 1995
IMPORTANT -- YOUR PROXY IS ENCLOSED
EVEN THOUGH YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND PROMPTLY MAIL IT IN THE RETURN ENVELOPE
PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, OR FOR
ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME PRIOR
TO ITS USE.
<PAGE> 3
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to stockholders of F&M Bancorp
("Bancorp") in connection with the solicitation of proxies by Bancorp's Board
of Directors to be used at the annual meeting of stockholders described in the
accompanying notice and at any adjournments thereof. The purpose of the
meeting is to elect 13 directors of Bancorp, to consider and act upon the
proposed F&M Bancorp 1995 Stock Option Plan and to transact such other business
as may properly come before the meeting. The Proxy Statement and the
accompanying form of proxy are first being sent to stockholders on or about
March 6, 1995.
The accompanying proxy is solicited by the Board of Directors of Bancorp.
The Board of Directors has selected Faye E. Cannon, David R. Stauffer, and
Alice E. Stonebreaker, or any two of them, to act as proxies with full power of
substitution. Any stockholder executing a proxy has the power to revoke the
proxy at any time before it is voted. This right of revocation is not limited
or subject to compliance with any formal procedure. Any stockholder may attend
the meeting and vote in person whether or not he has previously given a proxy.
The record of stockholders entitled to notice of and to vote at the annual
meeting was taken as of the close of business on January 20, 1995. At that
date there were outstanding and entitled to vote 3,947,670 shares of Common
Stock, par value $5.00 per share.
In the election of directors, each share is entitled to one vote for each
director to be elected; cumulative voting is not permitted. For all other
matters each share is entitled to one vote.
The cost of solicitation of proxies and preparation of proxy materials
will be borne by Bancorp. Bancorp does not expect to compensate anyone for the
solicitation of proxies but may reimburse brokers and other persons holding
stock in their names, or in the names of nominees, for expenses they incur in
sending proxy materials to principals and in obtaining proxies. In addition to
solicitation of proxies by mail, proxies may be solicited personally or by
telephone or telegram by directors, officers, and employees of Bancorp or
Farmers and Mechanics National Bank (the "Bank") without additional
compensation to them.
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth alphabetically, as of January 20, 1995, the
amount of the Company's Common Stock beneficially owned by each of its
directors and nominees, each executive officer named in the Summary
Compensation Table, and all directors and executive officers as a group, based
upon information obtained from such persons:
<TABLE>
<CAPTION>
TOTAL SHARES PERCENT
NAME OF INDIVIDUAL BENEFICIALLY OWNED OF CLASS
- ------------------ ------------------ --------
<S> <C> <C>
R. Carl Benna 9,501 *
John D. Brunk 12,535 (1) *
Beverly B. Byron 210 *
Faye E. Cannon 7,612 (2) *
Martha E. Church 1,265 *
Albert H. Cohen 67,916 (3) 1.7
Gordon M. Cooley 16,744 (4) *
George B. Delaplaine, Jr. 60,857 (5) 1.5
Maurice A. Gladhill 34,265 (6) *
Charles W. Hoff, III 25,277 (7) *
Charles A. Nicodemus 17,780 (8) *
David R. Stauffer 5,033 (9) *
H. Deets Warfield, Jr. 9,120 (10) *
John C. Warfield 15,806 (11) *
Thomas R. Winkler 1,045 *
All Executive Officers and
Directors as a group
(27 persons) 332,414 (12) 8.4
</TABLE>
- ------------------------
* Indicates holdings of less than one percent.
(1) Includes 8,777 shares owned by family members and as to which Mr. Brunk
has voting and disposition powers.
(2) Includes 2,194 shares owned jointly with family members and as to which
Ms. Cannon has joint voting and disposition powers and 5,197 shares in the
form of options exercisable within 60 days.
(3) Includes 41,989 shares owned jointly with a family member and as to which
Mr. Cohen has joint voting and disposition powers, and 17,929 shares owned by
family members and as to which Mr. Cohen has voting and disposition powers.
(4) Includes 7,034 shares owned by family members and 7,204 shares in the form
of options exercisable within 60 days.
(5) Includes 1,675 shares owned by a family member, 33,754 shares owned by a
corporation controlled by Mr. Delaplaine and as to which he has voting and
disposition powers, 10,500 shares owned by a family trust and as to which Mr.
Delaplaine has voting and disposition powers, and 4,292 shares held in the
marital trust of a family member of which Mr. Delaplaine is trustee and as to
which Mr. Delaplaine has voting and disposition powers.
(6) Includes 9,880 shares held jointly with family members and as to which Mr.
Gladhill has voting and disposition powers, 3,635 shares held by Mr. Gladhill
as custodian for his son, and 7,658 shares owned by family members as to which
Mr. Gladhill has voting and disposition powers.
(7) Includes 2,100 shares owned by family members and as to which Mr. Hoff has
voting and disposition powers and 6,677 shares in the form of options
exercisable within 60 days.
(8) Includes 3,137 shares owned by a family member and as to which Mr.
Nicodemus has voting and disposition powers. Does not include 18,378 shares
owned by a mutual corporation of which Mr. Nicodemus is Chairman of the Board
of Directors and as to which Mr. Nicodemus has shared voting and disposition
powers but disclaims beneficial ownership.
(9) Includes 3,939 shares in the form of options exercisable within 60 days.
(10) Includes 2,739 shares owned by family members and as to which Mr. H.
Warfield has voting and disposition powers.
(11) Includes 1,050 shares owned jointly with a family member and as to which
Mr. J. Warfield has joint voting and disposition powers and 12,872 shares owned
by family members as to which Mr. J. Warfield has voting and disposition
powers.
(12) Includes 60,751 shares in the form of options exercisable within 60 days.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of Bancorp, no person beneficially owns more than 5% of
the outstanding Common Stock of Bancorp, except the Trust Department of the
Bank which, according to a report filed with the Securities and Exchange
Commission on Schedule 13G, beneficially held as of December 31, 1994, 266,392
shares of Bancorp Common Stock representing 6.7% of the outstanding shares.
These shares are held in multiple accounts, no one of which represents more
than 5% of the outstanding Common Stock of Bancorp, where the Bank acts as
agent, trustee, or personal representative for others, and were acquired in the
normal course of its trust business and not for the purpose of acquiring
control of Bancorp.
ELECTION OF DIRECTORS
The entire Board of Directors of Bancorp will be elected to hold office
until the next annual meeting of stockholders and until their respective
successors are elected and have qualified. Thirteen persons, all of whom are
currently directors of Bancorp, are nominated as directors.
It is the Board of Directors' intention that proxies not limited to the
contrary will be voted for the following nominees, or, in the event that any of
the nominees should be unable to serve or for good cause will not serve, for
the election of such other persons as may be nominated by the Board of
Directors. A plurality of votes is required to elect directors. Abstentions
and broker non-votes generally will be treated as shares not voted and will
have no effect.
INFORMATION CONCERNING NOMINEES
The following table presents information concerning persons nominated by
the Board of Directors for election as directors of Bancorp. Except as
indicated, the nominees have been officers of the organizations named below as
their principal occupations or of affiliated organizations for more than five
years. Information is reported as of January 20, 1995.
<TABLE>
<CAPTION>
Name of nominee Age, principal occupations, and
directorships with public companies
- -----------------------------------------------------------------------------------------------------------
<S> <C>
R. Carl Benna Mr. Benna is 47 years old and has served as a director of Bancorp and of the Bank
since January 1989. He is President of the North American Housing Corp., a
modular housing manufacturer. (1) (2) (3)
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
John D. Brunk Mr. Brunk is 57 years old and has served as a director of Bancorp since 1983 and
of the Bank since 1975. He is President of Frederick Produce Co., Inc., a
wholesale produce distributor. (2) (4) (5)
- -----------------------------------------------------------------------------------------------------------
Beverly B. Byron Ms. Byron is 62 years old and has served as a director of Bancorp and of the Bank
since 1993. She is a former member of the U.S. House of Representatives for the
6th District of Maryland. She is a member of the Boards of Directors of the
Baltimore Gas and Electric Company, UNC, Inc., McDonnell Douglas Corp., and
BlueCross BlueShield of Maryland. (1) (5)
- -----------------------------------------------------------------------------------------------------------
Faye E. Cannon Ms. Cannon is 45 years old and has served as a director of Bancorp and of the Bank
since 1993. She is President and Chief Operating Officer of Bancorp and the Bank.
(3) (5) (6) (7)
- -----------------------------------------------------------------------------------------------------------
Martha E. Church Dr. Church is 64 years old and has served as a director of Bancorp since 1983 and
of the Bank since 1982. She is President of Hood College, an undergraduate
liberal arts college for women, with a graduate school which meets area education
needs, located in Frederick, Maryland. (1) (5)
- -----------------------------------------------------------------------------------------------------------
Albert H. Cohen Mr. Cohen is 72 years old and has served as a director of Bancorp since
1983 and of the Bank since 1968. He is an investor and building
consultant. (3) (5) (6) (7)
- -----------------------------------------------------------------------------------------------------------
George B. Mr. Delaplaine is 68 years old and has served as a director of Bancorp
Delaplaine, Jr. since 1983 and of the Bank since 1979. He is President of Great
Southern Printing and Manufacturing Company, publisher of the Frederick
News-Post. (1) (3) (6) (7)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Maurice A. Gladhill Mr. Gladhill is 44 years old and has served as a director of Bancorp and the Bank
since 1985. He is President of Gladhill Tractor Mart, Inc., a farm equipment
dealership in Frederick, Maryland. (3) (4) (5) (6)
- -----------------------------------------------------------------------------------------------------------
Charles W. Hoff, III Mr. Hoff is 60 years old and has served as a director of Bancorp since
1983 and of the Bank since 1980. He is Chairman of the Board and Chief
Executive Officer of Bancorp and the Bank. (3) (5) (6) (7)
- -----------------------------------------------------------------------------------------------------------
Charles A. Nicodemus Mr. Nicodemus is 65 years old and has served as a director of Bancorp
since 1983 and of the Bank since 1973. He is Chairman of the Board of
Frederick Mutual Insurance Company, a property insurance company. (3)
(4) (5) (6) (7)
- -----------------------------------------------------------------------------------------------------------
H. Deets Warfield, Jr. Mr. Warfield is 63 years old and has served as a director of Bancorp
since 1983 and of the Bank since 1974. He is President of the Damascus
Motor Co., Inc., an automobile dealership. He is a member of the Board
of Directors of First Citizens Financial Corporation. (2) (4) (6) (7)
(8)
- -----------------------------------------------------------------------------------------------------------
John C. Warfield Mr. Warfield is 65 years old and has served as a director of Bancorp since 1983
and of the Bank since 1969. He is President of The Frederick Motor Co., an
automobile dealership. (1) (2) (3) (5) (6) (8)
- -----------------------------------------------------------------------------------------------------------
Thomas R. Winkler Mr. Winkler is 52 years old and has served as a director of Bancorp and of the
Bank since 1992. He is Executive Vice President and Chief Operating Officer of
Bio Whittaker, Inc. (2) (4)
</TABLE>
<PAGE> 8
(1) Member of the Audit Committees of Bancorp and the Bank.
(2) Member of the Personnel, Compensation and Stock Option Committees of
Bancorp and the Bank.
(3) Member of the Planning Committee of the Bank.
(4) Member of the Trust Investment Committee of the Bank.
(5) Member of the Investment Committees of Bancorp and the Bank.
(6) Member of the Executive Committees of Bancorp and the Bank.
(7) Member of the Nominating Committees of Bancorp and the Bank.
(8) The Messrs. Warfield are not related. Mr. H. Warfield is the
father-in-law of Gordon M. Cooley, Bancorp's Secretary and Legal Officer.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During 1994, there were 5 meetings of the Board of Directors of Bancorp
and the average attendance was 94% and there were 24 meetings of the Board of
Directors of the Bank and the average attendance was 92%. Each of the
directors attended at least 75% of the combined total number of meetings of the
Boards of Directors and board committees of which he or she is a member. The
Board of Directors of Bancorp has, among others, a Nominating Committee, an
Audit Committee and a Personnel, Compensation and Stock Option Committee.
The Nominating Committee of Bancorp is responsible for recommending
persons to serve as new directors and met once during 1994. Members of the
Nominating Committee are designated by note (7) above. Nominations for
director which are presented to the Nominating Committee by stockholders are
considered, along with those developed by the Nominating Committee, in light of
the needs of Bancorp, as well as the nominee's individual knowledge, experience
and background.
The Audit Committee of Bancorp meets with Bancorp's internal and
independent auditors to review whether satisfactory accounting procedures are
being followed by Bancorp and whether internal accounting controls are
adequate, to inform itself with regard to non- audit services performed by the
independent auditors and to review fees charged by the independent auditors.
The Audit Committee also recommends to the Board of Directors the selection of
independent auditors. The Audit Committee met six times in 1994, and members
are designated by note (1).
The Personnel, Compensation and Stock Option Committee of Bancorp
establishes the compensation for executive officers of Bancorp and the Bank,
reviews generally all personnel issues, and administers Bancorp's 1983 Stock
Option Plan. During 1994, the directors designated by note (2) above were
members of the Personnel, Compensation and Stock Option Committee of Bancorp.
The Personnel, Compensation and Stock Option Committee met on two occasions
during 1994.
<PAGE> 9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Personnel, Compensation and Stock Option Committee of the Board of
Directors (the "Committee") has furnished the following report on executive
compensation.
The Committee establishes the compensation for executive officers of
Bancorp and the Bank (collectively, "the Corporation"), reviews, generally, all
personnel issues and administers Bancorp's 1983 Stock Option and Executive
Supplemental Income Plans. Committee objectives include administration of a
total compensation package that allows the Corporation to attract and retain
qualified persons to fill key executive positions and to effectively utilize
incentive compensation programs which are directly related to executive
officers accomplishing corporate goals and objectives, both operational and
financial, aimed at achieving lasting improvement in the Corporation's
long-term financial performance.
The Committee utilizes the human resources' staff, and, as appropriate,
other qualified consultants to review actual performance of the Chief Executive
Officer and all executive officers and the Corporation's compensation practices
as they compare to industry norms. In 1992 the Corporation undertook a survey
of salary ranges for each position in the Corporation compared with similar
positions both at other employers in each of the communities where the
Corporation does business and at other banking institutions of similar size,
business make-up and performance characteristics outside the Corporation's
market area. In 1994 the survey results were reviewed and they will be
reviewed and revised prospectively when appropriate to reflect market-place
changes and inflation.
Compensation program components include:
1. Base salary - Base pay levels are established based on a range for
each position determined through comparison with other companies of like-size
and performance and also based on the geographic area in which the Corporation
does business. Actual salaries are based on the individual performance and
experience of each executive officer.
2. Annual incentive compensation - Includes payments made under an annual
bonus plan instituted by the Corporation in 1979 which is discretionary and
which provides payments to substantially all officers and employees based on
the Corporation's performance each year. Bonuses under the plan are paid from
a pool representing 5% of corporate earnings for a 12 month period and are
distributed ratably based on individual compensation levels among those persons
eligible under the Plan.
Annual incentive compensation also includes consideration to the award of
an additional merit bonus to executive officers of the Corporation when such a
bonus is warranted. The merit bonus plan was first established in 1982. Merit
bonus awards, if any, are at the discretion of the Committee based on corporate
performance.
<PAGE> 10
3. Stock Option Program - The Corporation maintains a 1983 Stock Option
Plan which provides for the grant of options to executive and other key
officers, in the Committee's discretion, who have substantial responsibility
for the management and growth of the Corporation. The Committee believes that
grants of stock options, which allow employees to purchase shares of the Common
Stock of the Corporation at a specified price in the future, aligns employees'
interests in corporate performance with the interests of all stockholders.
Each year the Committee determines the number of options, if any, to be granted
in order to achieve these objectives.
The Committee established the Chief Executive Officer's base salary in
1994 with reference to the salary ranges determined in the survey for chief
executive officers. The Committee considers the Chief Executive Officer
responsible for overall corporate performance, both operational and financial,
and finds that the Chief Executive Officer's total compensation package in 1994
was justified based on both his personal performance and corporate financial
performance in 1994.
After the review of its existing programs, the Committee believes that the
total compensation awarded to the Chief Executive Officer and executives of the
Corporation is consistent with the Committee's objectives. The amounts paid to
individual executives are consistent with competition within the market and
with banks of similar size (as reflected by the salary survey), individual
performance of each executive, and, for incentive compensation, are rationally
linked with the fulfillment of corporate objectives and corporate financial
performance.
Personnel, Compensation and Stock
Option Committee of the Board of Directors:
Thomas R. Winkler, Chairman
R. Carl Benna
John D. Brunk
H. Deets Warfield, Jr.
John C. Warfield
<PAGE> 11
The following table sets forth information with respect to the Chief
Executive Officer and those executive officers whose total annual salary and
bonus for the fiscal year ended December 31, 1994 exceeded $100,000 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
---------------------- ------------
OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) (SHARES) COMPENSATION(3)
- --------------------------- ---- -------- ------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Charles W. Hoff, III 1994 $164,850 $60,169 3,150 --
Chairman and CEO of 1993 164,850 60,673 3,000 $20,352
Bancorp and of the Bank 1992 157,000 58,015 3,000 14,872
Faye E. Cannon 1994 140,000 47,839 3,150 --
President and Chief Operating 1993 109,667 35,985 2,500 12,569
Officer of Bancorp and of the 1992 80,000 29,201 2,500 6,468
Bank
David R. Stauffer 1994 144,000 38,093 2,625 --
Vice President of Bancorp 1993 138,700 38,739 2,500 15,831
and Executive Vice President 1992 134,000 32,004 2,500 53,153(4)
of the Bank
Gordon M. Cooley 1994 93,500 22,517 1,050 --
Secretary of Bancorp and 1993 90,000 20,015 1,000 8,511
Senior Vice President of 1992 86,900 14,577 800 5,855
the Bank
</TABLE>
(1) No Named Executive Officer received any perquisites in 1992, 1993, or
1994, the aggregate amount of which exceeded 10% of the officer's salary
and bonus.
(2) Includes both annual bonus paid to substantially all employees and merit
bonuses, and, in 1992, a bonus of $175.00 paid to all employees in
recognition of the Bank's 175th Anniversary.
(3) Includes Bancorp's contribution to the account of each Named Executive
Officer in Bancorp's defined contribution Employee Benefit Plan (the
"Plan") qualified under Section 401(k) of the Internal Revenue Code for
both profit-sharing portion and corporate match of Named Executive
Officer's individual contributions to the Plan up to 2% of salary, which
matching contribution program was established in 1993 for all employees
eligible to participate in the Plan. Dollar values of each contribution
for 1994 will not be finally calculated until after mailing date of the
Proxy Statement but will be included in the 1996 Proxy Statement.
(4) The $53,153 represents a payment of $30,832 associated with the sale of
his prior house and relocation to Frederick, Maryland, and a related
one-time tax gross-up payment of $11,342, and Bancorp's contribution of
$10,979 to Mr. Stauffer's account in the Plan.
<PAGE> 12
The following table sets forth information with respect to stock option
grants to the Chief Executive Officer and the Named Executive Officers for the
fiscal year ended December 31, 1994. Bancorp does not grant stock appreciation
rights.
OPTIONS GRANTED IN 1994
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
- ---------------------------------------------------------------------------------------------- ----------------------------------
% of Total Market
Options Price
Options Granted to Exercise on Date
Granted(1) Employees in Price of Grant Expiration
Name (shares) Fiscal 1994 (per share) (per share) Date 0% 5% 10%
- ----------------------- ----------- ------------ ----------- ----------- ---------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles W. Hoff, III 3,150 8.58% $22.38 $22.38 2/08/04 0 $44,335 $112,354
Faye E. Cannon 3,150 8.58 22.38 22.38 2/08/04 0 44,335 112,354
David R. Stauffer 2,625 7.15 22.38 22.38 2/08/04 0 36,946 93,628
Gordon M. Cooley 1,050 2.86 22.38 22.38 2/08/04 0 14,778 37,451
</TABLE>
(1) All options granted on February 8, 1994. Options exercisable to
the extent of 25%, 50%, 75% and 100% on February 8, 1995, 1996, 1997
and 1998 respectively.
The following table sets forth information with respect to the value of
all options exercised during the fiscal year ended December 31, 1994 and the
value of all options held on December 31, 1994 by the Chief Executive Officer
and the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
Number of Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options at 12/31/94 Options at 12/31/94(2)
on Value ----------------------------- ---------------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Hoff, III 7,286 $68,074 3,789 7,611 $58,013 $84,982
Faye E. Cannon -0- -0- 3,335 6,692 49,284 71,744
David R. Stauffer -0- -0- 1,708 6,167 25,329 68,137
Gordon M. Cooley -0- -0- 6,311 2,414 65,997 26,278
</TABLE>
(1) Based on the difference between aggregate fair market value on date of
exercise and aggregate exercise price.
(2) Based on the difference between aggregate fair market value at
December 31, 1994 and aggregate exercise price.
<PAGE> 13
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Bancorp provides an Executive Supplemental Income Plan (the "Supplemental
Plan") in which Executive Officers Cannon, Hoff and Stauffer participate. The
Supplemental Plan provides certain benefits which are integrated with the
benefits provided Executive Officers Cannon, Hoff and Stauffer under Bancorp's
defined contribution employee benefit plan qualifying under Section 401(k) of
the Internal Revenue Code. The Supplemental Plan provides for retirement
benefits to Executive Officers Cannon and Stauffer based on 65% (and 75% for
Executive Officer Hoff) of their cash compensation including salary and bonuses
as measured by the greater of (a) compensation paid during the 12 months
immediately preceding retirement or (b) the average compensation paid during
the three consecutive years of employment that yield the highest average.
The Supplemental Plan also provides for benefits upon termination of
employment following a change in control of the Bank or Bancorp. A change in
control is defined as the acquisition of 25% or more of the combined voting
power of the Bank or Bancorp, or a change in the majority of the members of the
Board of Directors of the Bank or Bancorp during any two-year period. In the
event of a termination of employment after a change in control, full
compensation benefits will be paid to a participant in the Supplemental Plan
until the third anniversary of the change in control. Thereafter, benefits
will be based on a fraction of final compensation as detailed above. Assuming
current compensation practices continue to retirement, in conjunction with
current assumptions relating to contributions to and performance of Bancorp's
401(k) Plan and current assumptions relating to future levels of Social
Security benefits, Executive Officers Cannon, Hoff and Stauffer would have
estimated annual benefits under the Supplemental Plan of $114,197, $132,507,
and $121,258, respectively.
The Supplemental Plan also provides for a death benefit equal to 50% of a
participant's final salary if the participant dies while still employed.
DIRECTORS' FEES AND DEFERRED COMPENSATION PLAN
During 1994, each director of Bancorp received a quarterly director's fee
of $250 plus $50 for each board meeting attended. Each director of the Bank
received a quarterly fee of $1,500 plus $200 for each board meeting attended.
Fees for attendance at each committee meeting are $100 for each director except
full-time officers. Each director who is not also an officer of Bancorp or the
Bank may elect to defer all or part of these fees until he or she either
retires from his or her principal occupation or becomes 65 years of age,
whichever occurs first. Interest is earned on the deferred amount at a rate
established from time to time by management, currently 3.00% per annum.
Payment of the deferred amount may be made to the director or his or her
beneficiary in up to ten annual installments.
<PAGE> 14
CERTAIN TRANSACTIONS WITH DIRECTORS AND OFFICERS
During the past year Bancorp and the Bank have had, and expect to have in
the future, banking transactions in the ordinary course of their businesses
with directors and officers of Bancorp and the Bank and with their affiliates
on substantially the same terms, including interest rates, collateral, and
repayment terms on loans, as those prevailing at the same time for comparable
transactions with others. The extensions of credit did not involve and do not
currently involve more than the normal risk of collectibility or present other
unfavorable features.
STOCKHOLDER RETURN PERFORMANCE CHART
The following chart compares the cumulative total return of Bancorp's
Common Stock with that of a broad market index (NASDAQ Stock Market, U.S.
Companies only) and an industry peer group index (NASDAQ Bank Stocks).
Information is provided for the five year period ending December 31, 1994. The
chart assumes that the value of the investment in Bancorp's Common Stock and
each index was $100 on December 31, 1989 and that all dividends were
reinvested.
<PAGE> 15
[CHART -- COMPARISON OF FIVE-YEAR CUMULATIVE RETURN]
<TABLE>
<CAPTION>
DECEMBER 31,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
F&M BANCORP 100 88 79 108 137 184
NASDAQ US COMPANIES 100 85 136 159 181 177
NASDAQ BANK STOCKS 100 73 121 175 199 199
</TABLE>
<PAGE> 16
PROPOSAL TO ADOPT THE 1995 STOCK OPTION PLAN
The Board of Directors proposes that the stockholders of Bancorp approve
the 1995 Stock Option Plan (the "Plan"). The Plan is designed to attract and
retain well-qualified individuals to serve as employees, to enhance the
identity of their interests and the interests of the stockholders, and to
provide additional capital upon the eventual exercise of the options. Approval
of the Plan requires the affirmative vote of a majority of the shares present
or represented and entitled to vote. For purposes of determining the number of
votes present or represented and entitled to vote with respect to the Plan,
abstentions will be counted (and will therefore be equivalent to a vote
against), but broker non-votes will not be counted. The Plan will succeed
Bancorp's 1983 Stock Option Plan (the "1983 Plan") which, although it has not
expired, has only 788 shares available for grant of the 420,493 shares reserved
for issuance. Bancorp may continue to make stock option awards under the 1983
Plan so long as shares remain available for grant. It is the judgment of the
Board of Directors that stock option awards made under the 1983 Plan have been
an effective and efficient means of attracting, retaining and motivating
officers and other key employees. The Plan contains the major features of the
1983 Plan. The following summary description of the Plan is qualified in its
entirety by reference to the full text of the Plan, which is attached to this
Proxy Statement as Exhibit A.
GENERAL
Administration: The Plan operates pursuant to procedures and guidelines
set forth in the Plan itself. The Plan is administered by a committee (the
"Committee") consisting of not less than three directors of Bancorp to be
appointed by and to serve during the pleasure of the Board of Directors. The
Committee consists only of "disinterested persons" as that term is defined in
Rule 16b-3 of the Securities Exchange Act of 1934. None of the Committee
members is eligible to participate in the Plan.
Eligibility: The individuals who shall be eligible to participate in the
Plan shall be key employees (including officers and directors who are
employees) of Bancorp, or of any subsidiary. At present, the Bank is the sole
subsidiary of Bancorp. It has not yet been determined at this time who will be
selected to receive stock option awards or the amount of such awards. The
Committee will make these determinations on the basis of the individual's
responsibilities, his or her present and potential contribution to the success
of Bancorp as indicated by an evaluation of the position occupied and past,
present and expected future performance, and other relevant factors.
Shares Available Under the Plan: The Plan authorizes the issuance of up
to 150,000 shares of Bancorp's Common Stock, par value $5.00 per share (the
"Stock"). In addition, any shares of Stock remaining available for grant under
Bancorp's 1983 Plan or that become available for grant under such plan shall be
available for grant under the Plan. The number of shares issuable under the
Plan will be adjusted by the Board of Directors in the event of a stock
dividend, stock split, combination, reclassification, recapitalization or other
capital
<PAGE> 17
adjustment of shares of Stock. Because the value of stock option awards will
be determined based on the value of Bancorp's Stock in the future, as described
below, the amount and value of awards to be received under the Plan by
employees individually or as a group cannot be determined in advance.
STOCK OPTION GRANTS
Number of Options and Price Per Share: No employee may be granted
options for more than 5,000 shares of Stock in any one year. In addition,
there are certain dollar value limits for grants of incentive stock options.
The option price per share will be not less than: (i) for incentive stock
options, 100% of the fair market value of the Stock on the date the option is
granted; and (ii) for non-qualified stock options, 85% of the fair market value
of the Stock on the date the option is granted.
Vesting: No option may be exercised during the first year from the date
of grant. Thereafter, options for 200 shares or less are exercisable in full.
Options for more than 200 shares are exercisable to the extent of 25% after the
expiration of one year from the date of grant, to the extent of 50% after the
expiration of two years from the date of grant, to the extent of 75% after the
expiration of three years from the date of grant, and to the extent of 100%
after the expiration of four years from the date of grant. The Committee may
accelerate the time at which any option may be exercised, and may impose resale
restrictions on all or a portion of the shares delivered upon exercise of any
option.
Termination of Employment: If any option holder's employment with
Bancorp is terminated, each option that has not been exercised shall terminate,
unless the employment terminates because of retirement, whether or not under
Bancorp's retirement plan, voluntary resignation with the consent of the Board
of Directors, death, or total disability. If the employment terminates because
of retirement under the retirement plan, the option shall terminate upon the
expiration of three months after the employment terminates in the case of
incentive stock options and upon the expiration of six months after the
employment terminates in the case of non-qualified stock options. If the
employment terminates because of voluntary resignation with the consent of the
Board of Directors, the option shall terminate upon the expiration of three
months after the employment terminates. If the employment terminates because
of total disability, the option shall terminate upon the expiration of one year
after the employment terminates. If the employment terminates because of
death, the option shall terminate upon its normal expiration date.
TERMINATION AND AMENDMENT OF PLAN
Unless sooner terminated by the Board of Directors, no stock options may
be granted under the Plan after December 31, 2000, although options granted
before the termination date may extend beyond that date. The Board of
Directors may terminate, suspend or amend the Plan, provided that certain
material amendments may be submitted for stockholder approval to the extent
necessary for the Plan to satisfy the requirements of the exemption
<PAGE> 18
from the short-swing profits rules under Section 16 of the Securities Exchange
Act of 1934 or, with respect to incentive stock options, to satisfy applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code").
TAX CONSEQUENCES
The following is a brief summary of the significant aspects of current
federal income tax treatment of the stock options that may be granted under the
Plan. Options granted under the Plan may be incentive stock options within the
meaning of Section 422 of the Code or options that do not qualify as incentive
stock options ("non-qualified options"), as the Committee may determine in its
discretion.
An employee will recognize no income when a stock option is granted.
Upon the exercise of an option and the transfer to the employee of Stock, the
tax treatment depends on whether the option qualifies as an incentive stock
option or is a non-qualified option. If a non-qualified option is exercised,
the employee will recognize ordinary income equal to the difference between the
option price and the fair market value of the Stock on the date of exercise,
and Bancorp will have a deductible expense equal to the amount of such ordinary
income. No amount other than the price paid under the option shall be
considered as received by Bancorp for the Stock so transferred. When the
employee disposes of Stock acquired by the exercise of a non-qualified stock
option, any amount received in excess of the fair market value of the Stock on
the date of exercise will be treated as a long- or short-term capital gain,
depending upon the holding period of the Stock. If the amount received is less
than the fair market value of the Stock on the date of exercise, the loss will
be treated as a long- or short-term capital loss, depending upon the holding
period of the Stock.
For any employee of Bancorp who could be subject to liability under
Section 16(b) of the Securities Exchange Act of 1934, recognition of ordinary
income upon the exercise of a stock option will be deferred until such time as
the employee is no longer subject to liability under Section 16(b) for a sale
at a profit of the shares acquired. Such employee may elect, however, to
recognize income at the time of exercise of a stock option. The amount of such
income will be equal to the excess, if any of the fair market value of the
shares at the time the employee recognizes income over the purchase price.
Regulations promulgated under the Code permit the employee to defer recognition
of income for no more than six months from the date income normally would be
recognized. At the time the employee recognizes income under the rule, Bancorp
will be entitled to a deduction from income in the same amount.
If an incentive stock option is exercised, the employee will recognize
income only upon sale of the Stock that was received as a result of exercising
the option if certain conditions regarding the employee's period of employment
with Bancorp and the holding period of the option and the Stock are met. The
resulting gain or loss, measured by the difference between the sale price and
the option exercise price, is treated as a long- or short-term capital gain or
loss, depending upon the holding period of the Stock. No business expense
deduction will be allowed to Bancorp. If the above-mentioned conditions are
not
<PAGE> 19
met, the employee is taxed as if he or she had exercised a non-qualified
option, and Bancorp will have a deductible expense in an equivalent amount.
Depending upon individual circumstances, the alternative minimum tax may apply
to the exercise of an incentive stock option.
Except as noted below, the exercise of an option by the exchange of
shares of Stock already owned by the optionee will not result in any taxable
gain or loss on the unrealized appreciation of the shares so used. The
Internal Revenue Service has ruled that, if the option exercised is a
non-qualified option (a) a number of shares of the Stock received equal to the
number of shares surrendered will have the same basis as the shares surrendered
(increased by any compensation income recognized by the employee as a result of
such surrender), and (b) the remaining shares received will have a basis equal
to their fair market value on the date of exercise (the sum of the option price
and the compensation income recognized upon exercise). Under proposed income
tax regulations, if the option exercised is an incentive stock option (a) a
number of shares of the Stock received equal to the number of shares
surrendered will have the same basis as the shares surrendered (increased by
any compensation income recognized by the employee as a result of such
surrender), and (b) the remaining shares will have a basis equal to zero. For
purposes of determining whether shares have been held for the long-term capital
gain holding period, the holding period of shares received will generally
include the holding period of the shares surrendered only if the shares
received have the same basis, in whole or in part, in the employee's hands as
the shares surrendered. For purposes of determining whether shares received
through exercise of an incentive stock option have been held for the period
required to avoid recognition of compensation income upon disposition, the
participant will not be allowed to count the period for which any shares
surrendered were held or the period since the grant of any option relating to
the shares surrendered.
If an optionee transfers to Bancorp shares of Stock which he originally
acquired through the exercise of an incentive stock option in payment of the
option price of an incentive stock option and such transfer occurs prior to the
expiration of two years from the date of grant or one year from the date of
exercise of the incentive stock option pursuant to which the payment Stock was
acquired, then any unrealized appreciation in the shares so used will be
recognized as taxable gain and treated in the manner prescribed for the
disposition of such payment Stock prior to the expiration of applicable minimum
holding period requirements. If an optionee transfers to Bancorp shares of
Stock which he originally acquired through the exercise of an incentive stock
option in payment of the option price of a non-qualified stock option such
surrender will not be a disqualifying disposition which will require the
employee to recognize income under the statute governing incentive stock
options; however, the number of shares received pursuant to the exercise of a
non-qualified option equal to the number of previously owned incentive stock
option shares surrendered in payment of the option price will be considered,
for purposes of determining the holding period for capital gains treatment and
the disqualifying disposition rules applicable to incentive stock options, as
having been acquired at the time the incentive stock option shares surrendered
were acquired and as being subject generally to the rules governing incentive
stock options.
<PAGE> 20
Section 401(a) of the Code is not applicable to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PLAN.
AUDIT COMMITTEE AND INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Keller Bruner & Company, L.L.C., has acted as
Bancorp's independent public accountants for the year ended December 31, 1994
and has been recommended by the Audit Committee and selected by the Board of
Directors to act as such for the current fiscal year. A partner of Keller
Bruner & Company, L.L.C., is expected to be present at the annual meeting and
will have an opportunity to make a statement if he desires and to respond to
appropriate questions.
OTHER MATTERS
The management of Bancorp knows of no matters to be presented for action
at the annual meeting other than those mentioned above; however, if any other
matters properly come before the annual meeting, it is intended that the
persons named in the accompanying proxy will vote on such other matters in
accordance with their judgment of the best interests of Bancorp. Each such
matter generally requires the affirmative vote of a majority of the shares
voted on the matter. Abstentions and broker non-votes generally will be
treated as shares not voted and will have no effect.
STOCKHOLDER PROPOSALS
Stockholders' proposals intended to be presented at the 1996 Annual
Meeting must be received by Bancorp for inclusion in Bancorp's Proxy Statement
and form of proxy relating to that meeting by November 6, 1995.
<PAGE> 21
ANNUAL REPORT ON FORM 10-K
A COPY OF THE ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO
KENNETH M. SABANOSH, VICE PRESIDENT AND TREASURER, AT CORPORATE HEADQUARTERS.
BY ORDER OF THE BOARD OF DIRECTORS
OF F&M BANCORP
Gordon M. Cooley
Secretary
Frederick, Maryland
March 6, 1995
<PAGE> 22
EXHIBIT A
F&M BANCORP
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN:
To advance the interests of the Corporation and its
subsidiaries by assisting in attracting and retaining qualified employees and
providing them with increased motivation to exert their best efforts on behalf
of the Corporation and its subsidiaries.
2. ADMINISTRATION:
The Plan shall be administered by a committee (the
"Committee") consisting of not less than three directors of the Corporation to
be appointed by and to serve during the pleasure of the Board of Directors.
The Committee shall consist only of "disinterested persons" as that term is
defined in Rule 16b-3 of the Securities Exchange Act of 1934 (the "Exchange
Act"). None of the Committee members shall be eligible to participate in the
Plan nor, during one year prior to service as a member of the Committee, shall
have been granted or awarded equity securities pursuant to the Plan or any
other plan of the Corporation or any of its affiliates except as permitted by
Rule 16b-3 under the Exchange Act. The Committee shall select the particular
employees to receive options from among the senior management of the
Corporation and its subsidiaries and shall make all decisions concerning the
timing, pricing and amount of options to be granted. The Committee shall have
full power to construe and interpret the Plan and to promulgate such
regulations with respect to the Plan as it may deem desirable. The Committee
shall report its deliberations to the Board of Directors.
3. STOCK SUBJECT TO OPTION:
The shares to be issued upon exercise of options to be granted
under the Plan shall be 150,000 shares of the Common Stock (par value $5.00 per
share) of the Corporation (the "Common Stock") to be authorized by stockholders
for issuance under the Plan. In addition, any shares of Common Stock remaining
available for grant under the Corporation's Restated 1983 Stock Option Plan or
that become available for grant under such plan shall be available for grant
under this Plan. If any unexercised option terminates for any reason, the
shares covered thereby shall become available for grant of an option again.
4. ELIGIBILITY:
The individuals who shall be eligible to participate in the
Plan shall be such key employees (including officers and directors who are
employees) of the Corporation, or of any corporation (a "Subsidiary") in an
unbroken chain of corporations if, at the time of the granting of the option,
each of the corporations other than the last corporation in the unbroken chain
owns
- 1 -
<PAGE> 23
stock possessing 50% or more of the total combined voting power of all classes
of stock in one or more of the other corporations in such chain.
5. TERMS AND CONDITIONS OF OPTIONS:
Options under this Plan are intended to be either incentive
options qualifying under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") or nonstatutory options not qualifying under any section
of the Code as the Committee may recommend in its discretion from time to time.
All options granted under this Plan shall be issued upon such terms and
conditions as the Committee may recommend and the Board of Directors may
approve from time to time, subject to the following provisions (which shall
apply to both incentive and non-qualified stock options unless otherwise
indicated):
(a) Option Price. The option price per share
with respect to each option shall be not less than: (i) for
incentive stock options, 100% of the fair market value of the
Common Stock on the date the option is granted; and (ii) for
non-qualified stock options, 85% of the fair market value of
the Common Stock on the date the option is granted.
(b) Number of Options. No employee shall be
granted options for more than 5,000 shares of Common Stock in
any one year. The Corporation can grant an employee incentive
stock options to acquire Common Stock of any value, provided
that the fair market value (determined at the date of grant)
of the stock subject to one or more incentive stock options
(under this Plan and all other plans of the Corporation and
its subsidiaries) first exercisable in any one calendar year
does not exceed $100,000 (determined at the date of grant).
If any incentive stock option granted under this Plan would
cause such dollar limit to be exceeded, then the excess
portion of the incentive stock option shall become exercisable
in the next or succeeding calendar year in which its
excercisability would not violate the dollar limitation. No
options may be granted to any person who directly or
indirectly owns immediately prior to or immediately after the
grant, in excess of 10% of the Corporation's outstanding
Common Stock. No option shall be an incentive stock option
unless so designated by the Committee at the time of grant.
- 2 -
<PAGE> 24
(c) Exercise of Options.
(i) Except as provided in paragraph (ii)
below, full payment for shares acquired shall be made in cash
or by certified check at or prior to the time that an option,
or any part thereof, is exercised. The participant will have
no rights as a stockholder until the certificate for those
shares as to which the option is exercised has been issued by
the Corporation. No option may be exercised during the first
year from the date of grant. Thereafter, options for 200
shares or less shall be exercisable in full. Options for more
than 200 shares shall be exercisable to the extent of 25%
after the expiration of one year from the date of grant, to
the extent of 50% after the expiration of two years from the
date of grant, to the extent of 75% after the expiration of
three years from the date of grant, and to the extent of 100%
after the expiration of four years from the date of grant.
The Committee may accelerate the time at which any option may
be exercised, and may impose resale restrictions on all or a
portion of the shares delivered upon exercise of any option.
(ii) In the discretion of the Committee, the
option price of an option may be payable through the delivery
of shares of Common Stock with a value equal to the option
price or in a combination of cash and Common Stock with a
value equal to the option price.
(d) Term of Option.
(i) No incentive stock option shall be
granted for a term of more than 10 years from the date such
option is granted.
(ii) No non-qualified stock option shall be
granted for a term of more than 10 years from the date such
option is granted.
(e) Termination of Employment. Each option, to
the extent that it shall not have been exercised, shall
terminate when the employment of the participant by the
Corporation terminates, unless the employment terminates
because of retirement, voluntary resignation with the consent
of the Board of Directors or because of death or total
disability or because of retirement under the Corporation's
retirement plan. If the employment terminates because of
retirement under the retirement plan of the Corporation
- 3 -
<PAGE> 25
or a subsidiary, the option shall terminate upon the
expiration of three months after the employment terminates in
the case of incentive stock options and upon the expiration of
six months after the employment terminates in the case of
non-qualified stock options. If the employment terminates
because of voluntary resignation with the consent of the Board
of Directors, the option shall terminate upon the expiration
of three months after the employment terminates. If the
employment terminates because of total disability, the option
shall terminate upon the expiration of one year after the
employment terminates. If the employment terminates because
of death, the option shall terminate upon its normal
expiration date. Nothing in this paragraph shall operate to
extend the term of the option beyond the term stated in the
agreement granting the option or to accelerate the period
during which portions of the option may be exercised.
(f) Option Nonassignable and Nontransferable.
Each option and all rights thereunder, including the right to
surrender the option, shall be nonassignable and
nontransferable other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. The
designation of a beneficiary by a participant in the Plan does
not constitute a transfer. Options shall be exercisable
during the optionee's lifetime only by the optionee or his or
her guardian or legal representative. Notwithstanding the
foregoing restrictions, in the event that Rule 16b-3
promulgated under the Securities Exchange Act of 1934 is
amended to permit further assignment or transfer of options,
such assignments or transfers shall be permissible under the
Plan.
6. SURRENDER OF OPTIONS FOR CASH:
Any option granted under the Plan may include a right to
surrender to the corporation up to 50% of the option to the extent then
exercisable and receive in exchange a cash payment equal to the excess of the
fair market value of the shares covered by the option or portion thereof
surrendered over the aggregate option price of such shares. For the purposes
of this paragraph, fair market value shall be determined by the Committee.
Such right may be granted by the Board of Directors upon recommendation of the
Committee concurrently with the option or thereafter by amendment upon such
terms and conditions as the Committee may recommend. Shares subject to an
option or portion thereof that have been so surrendered shall not thereafter be
available for option grants under the Plan. The Committee may from time to
time recommend to the Board of Directors the maximum amount of cash that may be
paid upon
- 4 -
<PAGE> 26
surrender of options in any year, may determine that, if the amount to be
received by any optionee is reduced in any year because of such limitation, all
or a portion of the amount not paid may be paid in any subsequent year or
years, and may limit the right of surrender to certain periods during the year.
7. PAYROLL DEDUCTIONS:
In the discretion of the Committee, there may be made
available to optionees an election for the payroll deduction each pay period
over the term of the option of amounts equal to the aggregate exercise price of
any or all of such options (and estimated federal income taxes thereon).
Interest will be paid on payroll deductions at rates prescribed from time to
time by the Board of Directors upon recommendation of the Committee.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:
If the outstanding shares of the Common Stock are increased,
decreased, or changed into, or exchanged for a different number or kind of
shares or securities of the Corporation, without receipt of consideration by
the Corporation, through reorganization, merger, statutory share exchange,
recapitalization, reclassification, stock split-up, stock dividend, stock
consolidation, or otherwise, an appropriate and proportionate adjustment shall
be made in the number and kind of shares as to which options may be granted. A
corresponding adjustment in the price per share allocated to unexercised
options, or portions thereof, which shall have been granted prior to any such
change shall likewise be made. Any such adjustment, however, in an outstanding
option shall be made without change in the total price applicable to the
unexercised portion of the option but with a corresponding adjustment in the
price for each share subject to the option. Adjustments under this section
shall be made by the Board of Directors, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of Common Stock shall be issued under the
Plan on account of any such adjustment.
In the event of a reorganization, merger, consolidation, share
exchange, sale of substantially all of the assets, or any other form of
corporate reorganization in which the Corporation is not the surviving entity,
all options in effect at the time will terminate as of the effective date of
the transaction. The surviving entity in its absolute and uncontrolled
discretion, may tender an option or options to purchase shares on its terms and
conditions, both as to the number of shares or otherwise, which shall
substantially preserve the rights and benefits of any option then outstanding
hereunder.
- 5 -
<PAGE> 27
9. OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS:
Options may be granted under the Plan from time to time in
substitution for stock options held by employees of corporations who become or
are about to become key employees of the Corporation or a subsidiary of the
Corporation as the result of a merger or consolidation of the employing
corporation with the Corporation or a subsidiary, or the acquisition by the
Corporation or a subsidiary of the assets of the employing corporation, or the
acquisition by the Corporation or a subsidiary of stock of the employing
corporation as the result of which it becomes a subsidiary of the Corporation.
The terms and conditions of the substitute options so granted may vary from the
terms and conditions set forth in paragraph 5 of this Plan to such extent as
the Board of Directors at the time of grant may deem appropriate to conform, in
whole or in part, to the provisions of the options in substitution for which
they are granted.
10. EFFECTIVE DATE OF THE PLAN:
The Plan shall become effective upon approval by the Board of
Directors, subject to approval by the stockholders of the Corporation.
11. TERMINATION DATE:
No options may be granted under the Plan after December 31,
2000. Subject to Section 5(d), options granted before the termination date for
the Plan may extend beyond that date.
12. STOCK OPTION AGREEMENTS AND COMMON STOCK RECEIVED UPON EXERCISE:
(a) STOCK OPTION AGREEMENT. Options awarded to
participants under the Plan shall be evidenced by a stock option agreement (the
"Agreement"). Each Agreement shall designate the number of shares of Common
Stock to be acquired by the participant upon exercise of the stock option and
the price per share at which the option may be exercised, subject To any
adjustment as provided herein. Each Agreement shall be executed by the
Corporation and by the participant, shall be binding upon each of them, and may
be executed in separate counterparts, each of which shall be deemed to be an
original and all of which taken together constitute one and the same agreement.
(b) RESTRICTION ON EXERCISE: The stock options granted
hereunder may not be exercised if the issuance of the Common Stock upon such
exercise or the method of payment of consideration for such Common Stock would
constitute a violation of any applicable federal or state securities or other
law or regulation. As a condition to the exercise of any stock option granted
hereunder, the Corporation may require the participant to make any
representation and
- 6 -
<PAGE> 28
warranty to the Corporation as may be required or advisable under any
applicable law or regulation.
(c) RESTRICTED STOCK. If the shares of Common Stock that
will be received upon the exercise of stock options granted under the Plan have
not been registered under the Securities Act of 1933 or any applicable state
securities laws they will be restricted stock. The certificates representing
such shares of Common Stock will bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE (THE
"SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") AND HAVE BEEN ISSUED PURSUANT TO EXCEPTIONS
UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS. THEY MAY
NOT BE SOLD, OFFERED FOR SALE. PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO AND IN COMPLIANCE
WITH RULE 144 OF SUCH ACT.
13. COMPLIANCE WITH LAWS AND REGULATIONS:
The grant, holding and vesting of all options under the Plan
shall be subject to any and all requirements and restrictions that may, in the
opinion of the Committee, be necessary or advisable for the purposes of
complying with any statute, rule or regulation of any governmental authority,
or any agreement, policy or rule of any stock exchange or other regulatory
organization governing any market on which the Common Stock is traded. The
Corporation may withhold or require payment for income and/or employment taxes
as required by law.
14. AMENDMENT OF THE PLAN:
The Plan may be amended by the Board of Directors; however, no
amendment to the Plan materially increasing the benefits accruing to
participants or materially increasing the number of shares of Common Stock that
may be issued upon the exercise or surrender of stock options under the Plan
(except adjustments pursuant to the first paragraph of Section 8) or materially
modifying any requirements as to eligibility for participation in the Plan
shall be effective unless approved by the stockholders of the Corporation. No
amendment shall become effective without the prior approval of the stockholders
of the Corporation if stockholder approval would be required for continued
compliance with Rule 16b-3 of the Exchange Act or, with respect to incentive
stock options, with applicable provisions of the Code.
- 7 -
<PAGE> 29
15. MISCELLANEOUS:
(a) EXPENSES. The Corporation shall bear all expenses
and costs in connection with the administration of the Plan.
(b) DESIGNATION OF BENEFICIARIES. A participant may
designate a beneficiary to receive any distribution under the Plan upon his or
her death.
(d) APPLICABLE LAW. The validity, interpretation and
administration of this Plan and any rules, regulations, determinations or
decisions made hereunder, and the rights of any and all persons having or
claiming to have any interest herein or hereunder, shall be determined
exclusively in accordance with the laws of the State of Maryland, without
regard to the choice of laws provisions thereof.
(e) HEADINGS. The headings herein are for reference
purposes only and shall not affect the meaning or interpretation of the Plan.
(f) NOTICES. All notices or other communications made or
given pursuant to this Plan shall be in writing and shall be sufficiently made
or given if hand-delivered or mailed by certified mail, addressed to any
participant at the address contained in the records of the Corporation or to
the Corporation at its principal office.
(g) FEDERAL SECURITIES LAW REQUIREMENT. Awards granted
hereunder shall be subject to all conditions required under Rule 16b-3 to
qualify the award for any exception from the provisions of Section 16(b) of the
Securities Exchange Act of 1934 available under that Rule.
- 8 -
<PAGE> 30
F&M BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER of F&M Bancorp hereby appoints Faye E.
Cannon, Alice E. Stonebreaker, and David R. Stauffer, or any two of them, the
lawful attorneys and proxies of the undersigned with full power of substitution
to vote, as designated below, all shares of Common Stock of the Corporation
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
called to convene at 10:00 a.m. on April 11, 1995, and at any and all
adjournments thereof with respect to the matters set forth below and described
in the Notice of Annual Meeting and Proxy Statement dated March 6, 1995,
receipt of which is hereby acknowledged.
(1) ELECTION OF 13 DIRECTORS
<TABLE>
<S> <C>
/ / FOR all nominees listed below as / / WITHHOLD AUTHORITY to vote for all
recommended by the Board of Directors nominees listed below
(except as marked to the contrary)
</TABLE>
R. Benna, J. Brunk, B. Byron, F. Cannon, M. Church, A. Cohen, G. Delaplaine,
M. Gladhill, C. Hoff, C. Nicodemus, H. Warfield, J. Warfield and T. Winkler.
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE)
(2) ADOPTION OF PROPOSED F&M BANCORP 1995 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) IN THEIR DISCRETION, on such other matters as may properly come before
the meeting.
(Please mark, date and sign the reverse side)
<PAGE> 31
Shares represented by all properly executed proxies will be voted (or
the vote an such matters will be withheld on specific matters) in accordance
with instructions appearing on the proxy. In the absence of specific
instructions, proxies will be voted FOR proposals 1 and 2 and in the best
discretion of the proxy holders as to any other matters.
Dated __________________________________, 1995
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
(Please date and sign exactly as name(s)
appears at left. If joint account, both
owners should sign.)
(Proxy information appears on the reverse side. Please mark, date, sign, and
return the proxy card promptly using the enclosed envelope.)
<PAGE> 32
F&M BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER of F&M Bancorp hereby appoints Faye E.
Cannon, Alice E. Stonebreaker, and David R. Stauffer, or any two of them, the
lawful attorneys and proxies of the undersigned with full power of substitution
to vote, as designated below, all shares of Common Stock of the Corporation
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
called to convene at 10:00 a.m. on April 11, 1995, and at any and all
adjournments thereof with respect to the matters set forth below and described
in the Notice of Annual Meeting and Proxy Statement dated March 6, 1995,
receipt of which is hereby acknowledged.
(1) ELECTION OF 13 DIRECTORS
<TABLE>
<S> <C>
/ / FOR all nominees listed below as / / WITHHOLD AUTHORITY to vote for all
recommended by the Board of Directors nominees listed below
(except as marked to the contrary)
</TABLE>
R. Benna, J. Brunk, B. Byron, F. Cannon, M. Church, A. Cohen,
G. Delaplaine, M. Gladhill, C. Hoff, C. Nicodemus, H. Warfield,
J. Warfield and T. Winkler.
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE)
(2) ADOPTION OF PROPOSED F&M BANCORP 1995 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) IN THEIR DISCRETION, on such other matters as may properly come before
the meeting.
(Please mark, date and sign the reverse side)
<PAGE> 33
Shares represented by all properly executed proxies will be voted (or
the vote on such matters will be withheld on specific matters) in accordance
with instructions appearing on the proxy. In the absence of specific
instructions, proxies will be voted FOR proposals 1 and 2 and in the best
discretion of the proxy holders as to any other matters.
Dated ________________________________, 1995
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
(Please date and sign exactly as name(s)
appears at left. If joint account, both
owners should sign.)
(Proxy information appears on the reverse side. Please mark, date, sign, and
return the proxy card promptly using the enclosed envelope.)
