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 [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
COLUMBIA BANCORP
(Name of Registrant as Specified in Its Charter)
John A. Scaldara, Jr., Corporate Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies: ___________
(2) Aggregate number of securities to which transaction applies: ______________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
----------
(4) Proposed maximum aggregate value of transaction: __________
(5) Total fee paid: __________
[ ] Fee paid previously with preliminary materials.
[ ] 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: __________
<PAGE>
[GRAPHIC OMITTED]
10480 Little Patuxent Parkway
Columbia, Maryland 21044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 28, 1997
Notice is hereby given that the Annual Meeting of Stockholders
of Columbia Bancorp will be held at The Columbia Inn, Wincopin Circle, Columbia,
Maryland 21044 on Monday, April 28, 1997, at 5:30 p.m. for the following
purposes:
1. To elect five directors to serve until their terms of office
expire and until their successors are duly elected and
qualified.
2. To adopt the 1997 Stock Option Plan, attached hereto as
Exhibit A.
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
March 14, 1997 as the record date for the determination of stockholders entitled
to notice of and to vote at the meeting or any adjournments or postponements
thereof.
Your Proxy is enclosed. You are encouraged to complete, date,
sign and return promptly the Proxy in the envelope provided even though you may
plan to attend the meeting. No postage is necessary for mailing in the United
States. Returning the Proxy will not limit your right to vote in person or to
attend the Annual Meeting, but will insure your representation if you cannot
attend. If you attend the meeting, you may revoke your Proxy and vote in person.
By Order of the Board of Directors
JOHN A. SCALDARA, JR.
Corporate Secretary
Columbia, Maryland
March 25, 1997
<PAGE>
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished on or about March 25, 1997 to
stockholders of Columbia Bancorp (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors to be used at the
annual meeting of stockholders described in the accompanying notice and at any
adjournments or postponements thereof. The purposes of the meeting are set forth
in the accompanying notice of annual meeting of stockholders.
Proxies and Voting
The accompanying proxy is solicited by the Board of Directors of the
Company. The Board of Directors has selected James R. Moxley, Jr. and Herschel
L. Langenthal, or either 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 or she 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 March 14, 1997. At that
date there were outstanding and entitled to vote 2,148,312 shares of Common
Stock, par value $.01 per share. In the election of directors each share is
entitled to one vote for each director to be elected; however, cumulative voting
is not permitted. For all matters except the election of directors, each share
is entitled to one vote.
The cost of solicitation of proxies and preparation of proxy materials
will be borne by the Company. The solicitation of proxies will generally be by
mail and by directors, officers and employees of the Company and its subsidiary,
The Columbia Bank (the "Bank"), without additional compensation to them. In some
instances solicitation may be made by telephone or telegraph, the costs of which
will be borne by the Company. The Company may also reimburse brokers,
custodians, nominees and other fiduciaries for reasonable out-of-pocket and
clerical expenses for forwarding proxy materials to principals.
The Annual Report of the Company, including financial statements for
the fiscal year ended December 31, 1996, has been mailed to all stockholders
with this Proxy Statement.
PROPOSAL 1 - ELECTION OF DIRECTORS
The charter and by-laws of the Company provide that the directors shall
be classified into three classes as equal in number as possible, with each
director serving a three year term.
Directors are elected by a plurality of the votes cast by the holders
of shares of Common Stock present in person or represented by proxy at the
meeting with a quorum present. Abstentions and broker non-votes are not
considered to be votes cast.
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Nominees
Unless otherwise indicated in the enclosed proxy, the persons named in
such proxy intend to nominate and vote for the election of the following five
nominees for the office of director of the Company, to serve as directors for
three years or until their respective successors have been duly elected and
qualified. All such nominees, with the exception of Mr. Simpkins, are currently
serving as directors. The Board of Directors is not aware that any nominee named
herein will be unable or unwilling to accept nomination or election. Should any
nominee for the office of director become unable to accept nomination or
election, the persons named in the proxy will vote for the election of such
other persons, if any, as the Board of Directors may recommend.
The names and ages (as of March 15, 1997) of persons nominated by the
Board of Directors, their principal occupations and business experience for the
past five years, and certain other information are set forth below. Unless
otherwise noted, and with the exception of Mr. Simpkins, each has served as
director of the Company and the Bank since inception of the Company in 1987 and
the Bank in 1988.
<TABLE>
<CAPTION>
Name of Nominee Information Regarding Nominee
- --------------- -----------------------------
Nominees for Directors to be elected at the 1997 Annual Meeting
to serve until the 2000 Annual Meeting (Class I)
<S> <C>
Anand S. Bhasin Mr. Bhasin is 59 years old. He is President of Gemini Ventures Corporation,
an international trading company. Mr. Bhasin has served as a director of the
Company since November, 1990 and the Bank since April, 1992.
Garnett Y. Clark, Jr. Mr. Clark is 54 years old. He is President of GYC Group Ltd., a building and
development company. He is also President of Clark & Associates Realtors, Inc.
Robert J. Gaw Mr. Gaw is 63 years old. He is the retired President of Ryland Mortgage
Company and is a founding director of The Ryland Group, Inc., a residential
home builder and mortgage finance company.
Maurice M. Simpkins Mr. Simpkins is 51 years old. He is Vice President for Public Affairs at The
Ryland Group, Inc., a residential home builder and mortgage finance company,
and has been with Ryland since 1971. Mr. Simpkins is involved in various
community activities in Howard County, including the Columbia Foundation, the
Howard County Economic Development Authority, Columbia Housing Corporation and
the United Way Community Partnership Board. Mr. Simpkins has also served as a
member of the Bank's Columbia Advisory Board. He is a graduate of Morgan
State University and is a resident of Columbia, Maryland.
Robert N. Smelkinson Mr. Smelkinson is 67 years old. He is Chairman of Smelkinson Sysco, a
distribution company.
</TABLE>
3
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Continuing Directors
The following information is provided with respect to directors who
will continue to serve as directors of the Company until the expiration of their
terms at the times indicated. Unless otherwise noted, each has served as a
director of the Company and the Bank since inception of the Company in 1987 and
the Bank in 1988.
<TABLE>
<CAPTION>
Name of Director Information Regarding Director
- ---------------- ------------------------------
Directors to serve until the 1998 Annual Meeting (Class II)
<S> <C>
Senator James Clark, Jr. Sen. Clark is 78 years old. He is a retired President of the Maryland State
Senate and is currently a farmer.
Hugh F.Z. Cole, Jr. Mr. Cole is 55 years old. He is Chairman and CFO of Brantly Development
Group, Inc., a real estate development company. Mr. Cole has served as a
director of the Company and Bank since July, 1988.
G. William Floyd Mr. Floyd is 65 years old. He is a general partner of Venture Associates, a
commercial real estate investment firm,
Mary T. Gould Mrs. Gould is 71 years old. She is a community volunteer and homemaker.
Herschel L. Langenthal Mr. Langenthal is 68 years old. He is the managing partner of Langenmyer
Company, an investment company. Mr. Langenthal is also Vice-Chairman of the
Company.
Richard E. McCready Mr. McCready is 63 years old. He is Chairman and CEO of REM Enterprises,
Inc., a food brokerage company.
James R. Moxley, Jr. Mr. Moxley is 66 years old. He is President of Security Development
Corporation, a real estate development company. Mr. Moxley is also Chairman
of the Company.
Patricia T. Rouse Mrs. Rouse is 70 years old. She is Vice President and Secretary of The
Enterprise Foundation, and director of The Enterprise Development Company.
Directors to serve until the 1999 Annual Meeting (Class III)
John M. Bond, Jr. Mr. Bond, Jr. is 53 years old and has served as director, President, Chief
Executive Officer, and Treasurer of the Company and the Bank since their
inception. He is the son of John M. Bond, Sr.
William L. Hermann Mr. Hermann is 55 years old and is General Manager of the Glenmore office of
the Bank. He is also President of William L. Hermann, Inc., a financial
management company. He has served as a director of the Company and the Bank
since June 1989.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name of Director Information Regarding Director
- ---------------- ------------------------------
Directors to serve until the 1999 Annual Meeting (Class III) continued
<S> <C>
Harry L. Lundy, Jr. Mr. Lundy is 56 years old. He is President and owner of Williamsburg Group,
LLC, Williamsburg Builders, Inc. and Hallmark Builders, Inc. He is Executive
Vice President and owner of Patriot Homes, Inc. Each of the aforementioned
companies is a residential construction company.
Mary S. Scrivener Mrs. Scrivener is 59 years old. She is Secretary of Calvert General Contractors,
a commercial construction company.
Theodore G. Venetoulis Mr. Venetoulis is 62 years old. He is a former Baltimore County Executive,
the County's senior elected official, and has been publisher of the Orioles
Gazette and political analyst for WBAL-TV in Baltimore, Maryland.
</TABLE>
Director Emeritus
Directors Bond, Sr. and Payne have been appointed by the Boards of
Directors of the Company and the Bank, in recognition of their distinguished
service to each organization, to serve in the position of Director Emeritus for
a period of two years upon their retirement effective April 28, 1997. Each has
served as director of the Company and the Bank since inception of the Company in
1987 and the Bank in 1988. As a director emeritus, each is eligible to receive
compensation and perquisites offered to directors generally and may participate
in discussion at Board meetings, but may not vote and may not be counted for
purposes of determining a quorum. Membership on committees of the Boards of
Directors will cease effective with retirement.
Board and Committee Meetings
The Board of Directors held eleven meetings during 1996. Directors
Floyd and McCready attended fewer than 75% of the sum of the total number of
Company meetings of the Board of Directors and of committees of the Board of
Directors on which each served during 1996.
The Board of Directors has five standing committees. The committees are
the Executive, Audit, Asset/Liability Management, Community Reinvestment Act
("CRA") Advisory and Personnel, Compensation and Stock Option committees. In
addition, the Board of Directors, from time to time, establishes special
committees which have a limited duration. Directors are appointed to each
committee for a one-year term. The Chairman and Vice-Chairman of the Board of
Directors are ex-officio members of all committees, with the exception of the
Audit Committee. The President is an ex-officio member of all committees except
the Audit and Personnel, Compensation and Stock Option committees.
The Executive Committee held 47 meetings during 1996. The Executive
Committee consists of Directors Bond, Jr., G. Clark, Gaw, Langenthal (Chairman),
Moxley, Payne, Smelkinson and Venetoulis. The Committee is responsible for
evaluating and approving credits exceeding the lending authority of officers of
the Bank; reviewing on a regular basis financial information, operational
statistics, loan delinquencies and potential problem loans; and taking other
actions as may be required in the absence of the full Board of Directors.
The Audit Committee held two meetings during 1996. The Audit Committee
consists of Directors Bhasin, J. Clark, Cole (Chairman), Floyd, and Rouse. The
Committee is responsible for the oversight of the Company's
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<PAGE>
internal accounting controls; recommending to the Board of Directors the
selection of the Company's independent auditors; reviewing the annual audit
plan, annual report and results of the independent audit; reviewing supervisory
examination reports; and initiating other special reviews when deemed necessary.
The Asset/Liability Management Committee held four meetings during
1996. The Asset/Liability Management Committee consists of Directors Bhasin,
Bond, Jr., Floyd, Gaw (Chairman), Hermann, Langenthal, Moxley, Payne and
Scrivener. The Committee monitors quarterly operating results, liquidity, asset
mix, loan pricing and deposit rate policies of the Company. In addition, the
Committee directs the investment strategies of the Company and makes
recommendations of such to the Board of Directors when strategies are outside
its approval authority.
The CRA Advisory Committee held five meetings during 1996. The CRA
Advisory Committee consists of Directors Bond, Jr., Langenthal, Moxley, Payne
and Rouse and certain officers of the Bank. The Committee provides oversight and
guidance to the development of CRA programs and affordable housing initiatives
of the Company. This includes providing mortgage financing conduits for
low-to-moderate income housing, fair lending policies for minorities,
encouragement for first-time homebuyers, and education to the community to
foster affordable housing opportunities.
The Personnel, Compensation and Stock Option Committee held four
meetings during 1996. The Personnel, Compensation and Stock Option Committee
consists of Directors Bond, Sr., Gaw, Gould, Langenthal, Lundy, McCready,
Moxley, Smelkinson (Chairman), and Venetoulis. The Committee oversees the
compensation of all employees, except the compensation of the President and
directors; reviews the compensation of the President and directors, and makes
recommendations of changes to such compensation to the Board of Directors for
approval; monitors the personnel related matters of the Company; reviews and
authorizes employee related benefit plans; and administers the Company's Stock
Option Programs.
Compensation of Directors
Non-employee directors of the Company and the Bank will receive $150
for each Board and committee meeting attended during 1997. Chairpersons of
committees, other than Mr. Langenthal, will receive an additional $100 for each
committee meeting attended during 1997. Directors Moxley and Langenthal, serving
in the capacities of Chairman and Vice-Chairman of the Company, respectively,
will receive annual fees of $29,000 and $27,000, respectively, in addition to
fees paid for meeting attendance. During 1996, the annual fees were $27,000 and
$25,000, respectively. The Chairman and Vice-Chairman are also eligible for a
bonus to be awarded at the discretion of the Board of Directors, although no
bonus was awarded for 1996. Total director fees paid by the Company and the Bank
for 1996 service were $115,760, inclusive of annual fees paid the Chairman and
Vice-Chairman.
Section 16(a) Beneficial Ownership Regarding Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Act") requires that the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
file with the Securities and Exchange Commission (the `SEC") initial reports of
ownership and reports of change in ownership of Common Stock of the Company. The
same persons are also required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to the Company's executive
officers, directors and greater
6
<PAGE>
than 10% beneficial owners were complied with, except that Director Lundy
inadvertently failed to file a report (representing a transaction) required by
Section 16(a) of the Act on a timely basis.
Certain Relationships and Related Transactions
The Bank has made loans to certain of its executive officers, directors
and related parties. These loans were made on substantially the same terms,
including interest rate and collateral requirements, as those prevailing at the
time for comparable transactions with unrelated customers and did not involve
more than the normal risk of collectibility or present other unfavorable
features. At December 31, 1996, these loans totaled $2.3 million, or
approximately 7.7% of the total equity capital of the Bank.
During 1996, 1995 and 1994, the Bank paid $9,000, $149,870 and
$106,751, respectively, to companies controlled by Directors G. Clark and
Moxley, among others, for sales commissions, reimbursement of marketing expenses
and management fees associated with the disposition of real estate owned by the
Bank totaling $1.8 million and representing primarily residential building lots.
PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S COMMON STOCK
Principal Owners
No persons were known by the Company to own beneficially, directly or
indirectly, more than 5% of the Company's Common Stock outstanding on December
31, 1996 except as follows:
Name and Address Shares Beneficially Percentage
of Stockholder Owned of Class
---------------- ------------------- ----------
Corinthian Capital Company 112,600 5.24%
1700 Broadway, Suite 712
Denver, CO 80290
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<PAGE>
Beneficial Ownership of Executive Officers, Directors and Nominees
The following table lists the number of shares of Common Stock of the
Company beneficially owned by directors and executive officers of the Company
and the Bank, directly or indirectly, as of March 14, 1997.
Shares of Stock Options % of
Common Stock and Warrants (1) Class
------------ ---------------- -----
Anand S. Bhasin (2) 23,349 639 1.12
John M. Bond, Sr. 24,364 5,243 1.37
John M. Bond, Jr. (3) 51,682 56,925 4.93
Garnett Y. Clark, Jr. 17,777 5,317 1.07
James Clark, Jr. 18,479 788 *
Hugh F.Z. Cole, Jr. (4) 21,064 1,621 1.06
G. William Floyd (5) 24,750 4,848 1.37
Robert J. Gaw 24,045 5,248 1.36
Mary T. Gould (6)(7) 83,308 14,068 4.50
William L. Hermann (8) 26,980 - 1.26
Herschel L. Langenthal (9) 59,222 6,340 3.04
Harry L. Lundy, Jr. (10) 54,388 4,838 2.75
Richard E. McCready 19,448 4,449 1.11
James R. Moxley, Jr. 20,771 9,887 1.42
Osborne A. Payne (11) 18,479 5,567 1.12
Patricia T. Rouse 28,386 4,374 1.52
Mary S. Scrivener 17,770 8,687 1.23
Robert N. Smelkinson 55,445 5,286 2.82
Theodore G. Venetoulis (12) 12,972 4,362 *
Michael T. Galeone 1,856 12,975 *
Charles C. Holman (13) 4,485 6,437 *
Robert W. Locke (14) 2,768 13,800 *
John A. Scaldara, Jr. (3)(15) 31,301 5,580 1.71
======= ======= ====
All directors and executive
officers (23 persons) (16) 613,211 187,279 34.27
======= ======= =====
Company totals 2,148,312 220,397
========= =======
* Less than 1%
(1) Represents number of shares of Common Stock subject to stock options and
warrants currently exercisable.
(2) Includes 2,044 shares of Common Stock owned by Mr. Bhasin's children.
(3) Includes 29,878 shares of Common Stock held by the Company's 401(k) Plan
and Trust on December 31, 1996 for which Mr. Bond, Jr. and Mr. Scaldara
serve as trustees. Beneficial ownership of such shares is expressly
disclaimed, except as to approximately 7,907 and 3,335 shares held for the
accounts of Messrs. Bond, Jr. and Scaldara, respectively.
(4) Includes 2,090 shares of Common Stock for which Mr. Cole is a trustee.
(5) Includes 5,500 shares of Common Stock for which Mr. Floyd is a trustee.
(6) Includes 27,937 shares of Common Stock and 3,300 warrants owned by a
partnership of which Mrs. Gould is a 5% general partner; the beneficial
ownership of such shares is expressly disclaimed.
(7) Includes 27,434 shares of Common Stock and 6,600 warrants owned by spouse;
the beneficial ownership of such shares is expressly disclaimed.
(8) Includes 2,364 shares of Common Stock owned by a corporation of which Mr.
Hermann owns an interest.
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(9) Includes 24,603 shares of Common Stock for which Mr. Langenthal is a
trustee and 7,000 shares of Common Stock owned by two partnerships of
which Mr. Langenthal owns an interest.
(10) Includes 28,761 shares of Common Stock owned by a corporation and a
limited partnership of which Mr. Lundy owns interests.
(11) Includes 13,695 shares of Common Stock owned by a corporation of which Mr.
Payne owns an interest.
(12) Includes 12,912 shares of Common Stock held by a trust; the beneficial
ownership of such shares is expressly disclaimed.
(13) Includes approximately 813 shares of Common Stock held for the account of
Mr. Holman in the Company's 401(k) Plan and Trust.
(14) Includes approximately 1,153 shares of Common Stock held for the account
of Mr. Locke in the Company's 401(k) Plan and Trust.
(15) Includes 152 shares of Common Stock for which Mr. Scaldara is trustee.
(16) Includes 29,878 shares of Common Stock held by the Company's 401(k) Plan
and Trust on December 31, 1996 for which Messrs. Bond, Jr. and Scaldara
are trustees.
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
The following report is submitted by the Personnel, Compensation and
Stock Option Committee of the Board of Directors (the "Compensation Committee").
The report addresses the executive compensation policies of the Bank and the
Company (collectively, the "Company") for 1996. The Compensation Committee is
composed of the following non-employee directors of the Company:
R. Smelkinson, Chairman H. Lundy
J. Bond, Sr. R. McCready
R. Gaw J. Moxley
M. Gould T. Venetoulis
H. Langenthal
The Compensation Committee establishes the compensation of senior
officers of the Company with the exception of Mr. Bond, Jr., the President and
Chief Executive Officer of the Company. Mr. Bond, Jr.'s compensation is
established by the Board of Directors of the Company based upon data provided
by, and recommendations of, the Compensation Committee. The Board of Directors
also establishes the compensation of the Chairman and Vice-Chairman of the Board
of Directors based on the recommendations of the Compensation Committee. In
addition, the Compensation Committee generally reviews all personnel related
issues, including salary administration related to all other employees, and
administers the Company's 1987 Stock Option Plan, as amended, 1990 Director
Stock Option Plan, 401(k) Plan and Trust, and Deferred Compensation Plan. The
overall goal of the Compensation Committee is the establishment and
administration of compensation policies directly related to attainment of
corporate operational and financial goals which provide the ability to attract,
motivate, reward and retain qualified senior officers.
In 1993, the Company commissioned an independent consultant to assist
in establishing a company-wide salary administration plan, which included senior
officer positions. Development of the plan included creating job descriptions
for all positions; rating the overall responsibility of each position based on
characteristics including job knowledge, problem-solving, accountability, human
relations, communications, supervision of others and marketing; assigning each
position to a salary grade based on level of overall responsibility; and,
developing salary ranges for each salary grade based on market information
available for similar positions at financial institutions both in the
communities where the Company does business and outside the Company's market
area. These results are
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updated annually by the Company's human resources staff using current market
data which reflect marketplace changes, inflation, and, if applicable, corporate
performance. This information is considered by the Compensation Committee.
The individual components of the Company's compensation program
include:
(a) Base Salary. Base salary levels are established for senior officers
primarily based upon evaluation of historical performance, degree of
responsibility, level of experience and number of years with the Company. In
addition, the Compensation Committee considers compensation data available
through various surveys, including the Sheshunoff Bank Executive and Director
Compensation Survey, SNL Executive Compensation Review, Ben S. Cole Financial
Inc. Annual Survey, Bank Administration Institute Bank Cash Compensation and Key
Executive Compensation Surveys, Chesapeake Human Resources Association Annual
Benefits and Compensation Survey, and Starkey & Beall Regional Financial
Industry Salary Survey.
With respect to the base salary of $200,000 granted to Mr. Bond, Jr. for the
year 1996, the Compensation Committee took into account the Company's
performance during 1995 and survey information referred to above. Particular
emphasis was placed on Mr. Bond, Jr.'s individual performance, including his
leadership role through a period of aggressive growth.
(b) Annual Incentives/Bonuses. Bonuses are generally granted senior
officers based on the extent to which the Company achieves annual performance
objectives, as established by the Board of Directors. Such performance
objectives include net income, earnings per share and return on equity goals.
Bonuses may also be awarded to other officers and employees based on
recommendations by supervisors.
While the Company achieved many operational goals in 1996, financial performance
did not meet internal expectations. As such, no bonuses were awarded senior
officers.
(c) Stock Option Awards. The Compensation Committee believes that the
granting of stock options is the most appropriate form of long term compensation
for senior officers, since awards of equity encourage ownership in the success
of the Company. Stock option grants are discretionary and are limited by the
terms and conditions of the Company's 1987 Stock Option Plan, as amended. No
stock options were granted during 1996.
Compensation Committee Interlocks and Insider Participation
The table below provides the aggregate balance at December 31, 1996 of
loans in excess of $60,000 issued by the Bank to members of the Compensation
Committee. These loans were made in the ordinary course of business, made on
substantially the same terms, including interest rate and collateral
requirements, as those prevailing at the time for comparable transactions with
unrelated customers and did not involve more than a normal risk of
collectibility or present other unfavorable features.
Aggregate Loan
Balance at December 31, 1996
----------------------------
Richard E. McCready $124,602
James R. Moxley, Jr. 74,908
See also "Certain Relationships and Related Transactions" regarding
other transactions with Director Moxley.
In addition, Director Bond, Sr. is the father of Director and Executive
Officer Bond, Jr.
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Summary Compensation Table
The table below presents a summary of compensation for the last three
fiscal years of the chief executive officer of the Company and the other most
highly paid executive officers of the Company and the Bank whose total annual
salary and bonus exceeded $100,000 during the year ended December 31, 1996.
<TABLE>
<CAPTION>
Annual Compensation (a) Shares of Common
Name and ------------------------- Stock Underlying All Other
Principal Position Year Salary Bonus Options Awarded Compensation(b)
- ------------------ ---- ------------------------- ---------------- ---------------
<S> <C>
John M. Bond, Jr. 1996 $200,000 $ - - $19,464
President and CEO 1995 175,000 60,000 - 4,821
1994 160,000 50,000 - 4,845
Michael T. Galeone 1996 $148,000 $ - - $ 4,213
Executive Vice President 1995 143,000 40,000 - 2,754
1994 138,000 33,000 - 2,600
Charles C. Holman 1996 $144,000 $ - - $15,800
Executive Vice President 1995 139,000 50,000 - 9,741
1994 134,000 38,000 - 8,778
Robert W. Locke 1996 $106,000 $ - - $ 9,071
Senior Vice President 1995 103,000 15,000 - 4,821
1994 103,000 12,500 - 4,845
John A. Scaldara, Jr. 1996 $100,000 $ - - $ 9,361
Chief Financial Officer 1995 90,000 25,000 - 4,821
and Corporate Secretary 1994 80,000 25,000 - 4,845
</TABLE>
(a) No officer named above received any perquisites and other personal
benefits the aggregate amount of which exceeded the lesser of $50,000
or 10% of the total annual salary and bonus reported for 1996 for such
officer in the Summary Compensation Table.
(b) Represents discretionary matching contributions made by the Company and
allocated forfeitures resulting from employee terminations as
determined under terms of the Company's 401(k) Plan and Trust. All
employees participating in the Company's 401(k) Plan and Trust receive
matching contributions and forfeitures on equivalent terms. Also
includes discretionary matching contributions made by the Bank as
determined under terms of the Bank's Deferred Compensation Plan.
Amounts for Mr. Holman include $4,999 in 1996, $4,920 in 1995 and
$3,933 in 1994 for the exclusive use of a Bank-owned automobile.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The table below provides an analysis of aggregated stock options
exercised during 1996 and outstanding stock options as of December 31, 1996 for
the named executive officers. There were no adjustments or amendments to the
exercise price of stock options previously awarded to any named Executive
Officer during 1996.
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<TABLE>
<CAPTION>
Shares of
Common Stock Underlying Value of Unexercised
Unexercised Options In-The-Money
Shares of Common at Fiscal Year-End Options at Fiscal Year-End
Stock Acquired Value --------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ---------------- -------- ----------- ------------- ----------- -------------
<S> <C>
John M. Bond, Jr. - $ - 53,625 1,375 $649,770 $15,950
Michael T. Galeone - - 12,975 1,025 151,049 11,890
Charles C. Holman 1,250 8,563 6,438 312 77,755 3,619
Robert W. Locke - - 13,800 200 162,467 2,320
John A. Scaldara, Jr. - - 5,580 1,420 64,466 16,472
</TABLE>
Retirement Plans and Supplemental Compensation Arrangements
Executive Officers, like other employees of the Company, or its
subsidiaries, are eligible to participate in the Columbia Bancorp 401(k) Plan
and Trust adopted January 1, 1989 (the "401(k) Plan"). Under terms of the 401(k)
Plan, eligible employees may defer a portion of their total compensation on a
pretax basis. In order to be eligible to participate in the 401(k) Plan, an
employee must have completed one year of service in which 1,000 hours were
worked. The maximum percentage of total compensation eligible for deferral and
the voluntary matching employer contribution are established annually by the
Board of Directors of the Company and are currently 15% and 50%, respectively.
An employee is vested in the matching employer contribution as follows: (i) 20%
after three years of service, (ii) 40% after four years of service, (iii) 60%
after five years of service, (iv) 80% after six years of service and (v) 100%
after seven years of service. Employees can direct the investment of their
contribution and the matching employer contribution into any one or more of
seven investment options which include a Bank money market account, five mutual
funds managed by Fidelity Investments, or Common Stock of the Company.
The vested portion of matching employer contributions made to the
401(k) Plan during 1996 for the named Executive Officers were as follows: Mr.
Bond, Jr., $4,750; Mr. Galeone, $4,213; Mr. Holman, $4,750; Mr. Scaldara, Jr.,
$4,750; and Mr. Locke, $4,750.
Effective September 27, 1996, the Bank also established a nonqualified
deferred compensation arrangement (the "Deferred Compensation Plan") for
selected senior officers, including the named Executive Officers, of the Bank
and the Company or subsidiaries thereof (the "Senior Officers"). The Deferred
Compensation Plan provides supplemental retirement benefits for the Senior
Officers restricted from receiving further benefits under the 401(k) Plan as a
result of the limitations on pretax contributions imposed by the Internal
Revenue Code. Under the Deferred Compensation Plan, Senior Officers can continue
to make pretax contributions in excess of the IRS limits imposed on the 401(k)
Plan and receive matching employer contributions identical to what they would
have received in the 401(k) Plan if there were no IRS limitations. The maximum
amount that a Senior Officer may defer under the Deferred Compensation Plan,
when added to that deferred under the 401(k) Plan cannot exceed the maximum
percentage compensation deferral (currently 15%) as established by the Board of
Directors. Senior Officers may direct earnings on their contributions. The
matching employer contributions may be calculated based on (i) the Bank's prime
rate of interest in effect as of December 15 of the preceding year, (ii) the
performance of the Company's Common Stock, as if contributions and matching
employer contributions were used to purchase shares of the Company's Common
Stock and dividends were reinvested, or (iii) a combination of (i) and (ii).
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<PAGE>
The vested portion of the matching employer contributions made to the
Deferred Compensation Plan during 1996 for named Executive Officers were as
follows: Mr. Bond, Jr., $14,714; Mr. Holman, $6,051; Mr. Scaldara, Jr., $4,611;
and Mr. Locke, $4,321. Mr. Galeone did not participate during 1996.
The Deferred Compensation Plan may also provide for payment of a death
benefit in the event that a Senior Officer dies while in active service. At
January 1, 1997, the death benefit for each of the named Executive Officers was
as follows: Mr. Bond, Jr., $825,000; Mr. Holman, $61,000; Mr. Scaldara, Jr.,
$675,000; and Mr. Locke, $283,000. Mr. Galeone did not qualify for the death
benefit at January 1, 1997.
In order to partially offset the costs associated with the Deferred
Compensation Plan, the Bank has purchased life insurance contracts on the lives
of the participating Senior Officers, with the Bank as beneficiary.
Employment Contracts and Change in Control Agreements
The Company and the Bank (collectively, the "Companies") entered into
an employment agreement dated February 26, 1996 with John M. Bond, Jr. (the
"Agreement"). The Agreement supersedes the prior employment agreement. The terms
of the Agreement continue until the earlier of (i) the close of business on the
date which is three years after the date on which either party provides written
notice of termination, other than for "cause", as defined in the Agreement, but
no later than the close of business on the sixty-fifth birthday of Mr. Bond,
Jr., or (ii) the date on which Mr. Bond, Jr.'s employment is otherwise
terminated pursuant to the provisions of the Agreement. Under terms of the
Agreement, Mr. Bond, Jr. serves as President and Chief Executive Officer of the
Companies with a minimum annual base compensation of $215,000, which is subject
to normal periodic review, at least annually, for increases based on the salary
policies of the Companies and Mr. Bond, Jr.'s contributions to the Companies.
Mr. Bond, Jr. is also entitled to participate in all incentive and benefit
programs offered by the Companies. If Mr. Bond, Jr.'s employment is terminated,
other than for "cause", the Companies are required to continue to provide
benefits to him and pay his salary for a predetermined period plus, under
certain circumstances, pay an annual bonus as determined in accordance with the
terms of the Agreement. The Agreement also contains a non-competition provision
which prohibits Mr. Bond, Jr., during his employment with the Companies, or for
a period of three years following voluntary resignation or termination for
"cause", from directly or indirectly engaging in activities competitive with the
business of the Companies.
The Agreement also provides that in the event of (i) termination, other
than for "cause", (ii) resignation due to a significant change in the nature or
scope of authority and duties, or (iii) resignation as a result of not having
been offered a new employment agreement with similar terms, 90 days prior to, or
within one year after, any "change in control" (as defined in the Agreement) of
the Companies, Mr. Bond, Jr., within 15 days of termination, will be paid a lump
sum payment equal to three times the sum of his annual base compensation and the
average of the bonuses paid to him over the past three years. In the event of
voluntary resignation 90 days prior to, or within one year after, any "change in
control" of the Companies, Mr. Bond, Jr., within 15 days of resignation, will be
paid a lump sum payment equal to the sum of his annual base salary and the
average of the bonuses paid to him over the past three years. Any payments made
in connection with a "change in control" of the Companies after Mr. Bond, Jr.
reaches 62 years of age will be pro-rated to age 65.
Messrs. Galeone, Holman and Scaldara also have employment agreements
specifying minimum annual base compensation of $154,000, $152,000 and $120,000,
respectively. The other terms of these agreements are similar to those of the
Agreement, except that the duration is a two-year continuous period and the lump
sum payment payable in the event of (i) termination other than for "cause", (ii)
resignation due to a significant change in the nature and scope of authorities
and duties, or (iii) resignation as a result of not having been offered a new
employment agreement with similar terms, 90 days prior to, or within one year
after, any "change in control" of the Companies is equal to two times the sum of
the applicable officer's base annual compensation and the average of
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<PAGE>
such officer's bonuses for the past three years. In addition, any payments made
in connection with a "change in control" of the Companies after reaching 63
years of age will be pro-rated to age 65.
The Companies entered into a change in control agreement dated February
26, 1996 with Mr. Locke. The change in control agreement provides that in the
event of (i) termination, other than for "cause", or (ii) resignation due to a
significant change in the nature or scope of authority and duties, 90 days prior
to, or within one year after, any "change in control" of the Companies, Mr.
Locke, within 15 days of termination, will be paid a lump sum payment equal to
two times the sum of his annual base compensation and the average of the bonuses
paid to him over the past three years. In the event of voluntary resignation 90
days prior to, or within one year after, any "change in control" of the
Companies, Mr. Locke, within 15 days of resignation, will be paid a lump sum
payment equal to the sum of his annual base salary and the average of the
bonuses paid to him over the past three years. Any payments made in connection
with a "change in control" after Mr. Locke reaches 63 years of age will be
pro-rated to age 65.
The Company's 1987 Stock Option Plan, as amended, and 401(k) Plan, and
the Bank's Deferred Compensation Plan, all provide that in the event of a
"change in control" (as defined by each of the plans), all amounts not fully
vested become immediately 100% vested.
Stockholder Return Performance Graph
The following graph compares the cumulative total return on the
Company's Common Stock during the five years ended December 31, 1996 with that
of a broad market index (Nasdaq, U.S. Companies) and an industry peer group
index (all publicly traded banks in Maryland, Pennsylvania, Virginia and the
District of Columbia with total assets of less than $1 billion). The graph
assumes $100 was invested on December 31, 1991 in the Company's Common Stock and
in each of the indices and assumes reinvestment of dividends.
Five Year Cumulative Total Return
[GRAPHIC OMITTED]
Index Data:
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Columbia Bancorp 100 157.87 214.12 315.92 409.91 516.16
Nasdaq, US Companies 100 116.38 133.59 130.59 184.67 227.16
Peer Group 100 140.95 187.51 206.09 260.03 310.92
14
<PAGE>
PROPOSAL 2 - ADOPTION OF THE 1997 STOCK OPTION PLAN
On February 24, 1997, the Board of Directors of the Company unanimously
approved and adopted the 1997 Stock Option Plan (the "Plan"). The purpose of the
Plan is to align the interests of key employees, directors and consultants ("Key
Persons") with the interests of shareholders, by encouraging and creating
ownership of Common Stock of the Company and to provide meaningful long-term
incentive opportunities. The Plan is intended to enable the Company to attract
and retain qualified Key Persons who contribute to its success.
A copy of the Plan is attached to this Proxy Statement as Exhibit A.
The following is a summary of the principal terms of the Plan; it is qualified
in its entirety by reference to the full text of the Plan.
The Plan is administered by the Board of Directors or, to the extent
determined by the Board of Directors, a committee consisting of not less than
two non-employee directors of the Company to be appointed by and to serve at the
pleasure of the Board of Directors (referred to hereafter collectively as the
"Administrator"). The Board of Directors has appointed the Personnel,
Compensation and Stock Option Committee to serve as the Administrator. Subject
to the limitations set forth in the Plan, the Administrator has complete
discretion to determine the time or times, if any, when options will be granted
under the Plan, the number of shares to be optioned, the eligible Key Persons to
whom options will be granted, the number of shares to be optioned to each
eligible Key Person, whether an option will be a non-qualified stock option or
an incentive stock option, and any other provisions relating to the granting of
options. As of February 24, 1997, approximately 50 Key Persons were eligible to
participate in the Plan. Because participation and the amount of options to be
granted under the Plan are subject to the discretion of the Administrator, the
benefits or amounts that will be received by any participant or groups of
participants if the Plan is approved are not currently determinable.
The Plan initially provides for 150,000 shares of Common Stock of the
Company to be reserved and available for issuance. From and after such time as
the number of outstanding shares of Common Stock as reflected on the Company's
quarterly or year-end balance sheet exceeds 2,148,000, the total number of
shares of Common Stock reserved and available under the Plan shall automatically
be increased so as to equal seven (7) percent of the number of shares of Common
Stock then outstanding. However, no more than 150,000 shares of Common Stock of
the Company shall be cumulatively available for issuance pursuant to incentive
stock options granted under the Plan. In addition, no participant may receive
options during the life of the Plan covering or representing more than 100,000
shares. Shares subject to an option which expires without being exercised or
which is otherwise forfeited, terminated, surrendered or canceled, and shares of
Common Stock that are surrendered to the Company in connection with any option
(whether or not such surrendered shares were acquired pursuant to the Plan),
shall be available for further award under the Plan.
In general, the option price per share for an incentive stock option
issued pursuant to the Plan shall not be less than the fair market value per
share on the date the option is granted and the option price per share for a
non-qualified stock option shall not be less than 50% of the fair market value
per share on the date the option is granted. During the time that the Company's
Common Stock is listed on the National Association of Securities Dealers, Inc.
Automated Quotations System ("Nasdaq"), the fair market value per share on a
particular date shall be the closing sale price per share on such date. As of
March 19, 1997, the fair market value of a share of Common Stock of the Company
was $22 31/32 per share. When an option is exercised, the option price may be
paid in cash, by tendering shares of Common Stock (including shares issuable
pursuant to exercise of the option) having a fair market value as of the date of
exercise equal to the total purchase price, by any combination of these methods
of payment, or by any method established by the Administrator. An option granted
under the Plan may include a right to surrender up to 100% of the option to the
extent exercisable in exchange for receipt by the participant of cash or shares
equal to the excess of the fair market value of the shares covered by the option
or portion so surrendered over the aggregate exercise price for such shares.
15
<PAGE>
The Administrator shall determine the date on which an option shall
expire; provided, however, that options shall terminate not later than ten years
after the date of grant.
Options granted under the Plan may be either incentive stock options or
non-qualified stock options. The federal income tax consequences to a
participant and the Company will differ depending upon whether an option is an
incentive stock option or a non-qualified stock option.
A participant who is granted an incentive stock option generally will
not recognize any taxable income, nor will the Company deduct any compensation
expense, upon either the grant or the exercise of such incentive stock option,
provided that the participant is an employee of the Company or its subsidiary
throughout the period commencing on the date of grant of the option and ending
three months prior to exercise of the option. An incentive stock option is
subject to a holding period, defined in the Internal Revenue Code of 1986, as
amended (the "Code"), as the later of two years from the date of the grant of
the option or one year from the date the stock is transferred to the participant
upon exercise of the option. If a participant disposes of stock acquired
pursuant to an incentive stock option after expiration of the holding period,
the participant must recognize as capital gains income the difference between
the option price paid and the amount received upon disposition of the stock. If
a participant disposes of the stock prior to the expiration of the holding
period, the participant must recognize as compensation income the lesser of (i)
the difference between the option price paid and the fair market value of the
stock at the time of exercise, or (ii) the difference between the amount
realized upon such disposition and the option price paid. Any additional gain
realized will be recognized as capital gain, either long-term or short-term,
depending upon how long the shares were held by the participant. In the event of
such a disqualifying disposition, the Company generally may deduct an amount
equal to such difference as compensation expense.
A participant who receives a non-qualified stock option generally must
recognize compensation income upon exercise of the option in an amount equal to
the difference between the option price paid and the fair market value of the
stock received upon exercise. Such amount generally may be deducted from income
by the Company. When the participant subsequently sells or disposes of the
stock, the participant will recognize as capital gains income or loss the
difference between the fair market value of the stock at the time of exercise
and the amount received upon disposition. Such capital gain or loss will be
either long-term or short-term depending upon how long the shares were held by
the participant.
The Board of Directors of the Company may terminate the Plan or amend
it in any way; provided, however, that the Board may not, without the consent of
the shareholders of the Company, make any amendment which increases the maximum
number of shares as to which options may be granted under the Plan (other than
certain adjustments specified in the Plan to reflect changes in capitalization
of the Company), increases the number of shares for which a Key Person may be
granted options, or extends the term of the Plan. Unless previously terminated
by the Board of Directors, the Plan shall terminate on, and no options shall be
granted after February 23, 2007. The Plan shall become effective on the date on
which it was adopted by the Board of Directors, provided that the Plan is
approved by the shareholders of the Company.
The Board of Directors recommends that the shareholders vote FOR approval of the
adoption of the Plan.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected KPMG Peat Marwick LLP,
independent public accountants, to audit the Company's financial statements for
the year ending December 31, 1997. KPMG Peat Marwick LLP has performed the
annual audits of the Company since its inception. Representatives of KPMG Peat
Marwick LLP plan to attend the Annual Meeting and will be available to answer
appropriate questions. The representatives will have the opportunity to make a
statement at the meeting if they so desire.
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OTHER MATTERS
The Board of Directors of the Company 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 the
Company. Other than the election of directors, each matter to be submitted to
the stockholders requires the affirmative vote of a majority of all the shares
voted at the meeting or a majority of all the shares outstanding and entitled to
be voted. Abstentions and broker non-votes are treated as shares not voted.
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company not later than November
27, 1997 for inclusion in the Company's proxy statement and proxy relating to
that meeting.
REPORT ON FORM 10-K
The Annual Report on Form 10-K and applicable exhibits are available to
stockholders free of charge upon written request. Requests should be sent to
Columbia Bancorp, 10480 Little Patuxent Parkway, Columbia, Maryland 21044,
Attention: John A. Scaldara, Jr.
By Order of the Board of Directors
John A. Scaldara, Jr.
Corporate Secretary
March 25, 1997
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<PAGE>
EXHIBIT A
COLUMBIA BANCORP
1997 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN:
The purpose of the Plan is to advance the interests of Columbia Bancorp
(the "Corporation") by assisting in attracting and retaining selected employees,
directors and consultants ("Key Persons") and providing them with increased
motivation to exert their best efforts on behalf of the Corporation.
2. ADMINISTRATION:
The Plan shall be administered by the Board of Directors or, to the
extent determined by the Board of Directors, a committee consisting of not less
than two non-employee directors of the Corporation (within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934 (the "Exchange Act")) to be
appointed by and to serve at the pleasure of the Board of Directors (the Board
of Directors and/or such Committee, as applicable, referred to herein as the
"Administrator"). The Administrator shall have full power to construe and
interpret the Plan and promulgate such regulations with respect to the Plan as
may be deemed desirable, to determine the terms and conditions of options
granted under the Plan and to amend any option previously granted under the
Plan, provided that no such amendment shall materially adversely affect any
outstanding option without the consent of the grantee.
3. STOCK SUBJECT TO OPTION:
The total number of shares of common stock of the Corporation (par
value $.01 per share) ("Common Stock") reserved and available for issuance under
the Plan shall be 150,000; provided, however, that from and after such time as
the number of outstanding shares of Common Stock as reflected on the
Corporation's quarterly or year-end balance sheet exceeds 2,148,000, the total
number of shares of Common Stock reserved and available for issuance under the
Plan shall automatically be increased so as to equal seven (7) percent of the
number of then outstanding shares of Common Stock, provided, further, that no
more than 150,000 shares of Common Stock shall be cumulatively available for
incentive stock options qualifying under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). If any option, or portion of an option,
under the Plan expires or terminates unexercised, becomes unexercisable or is
forfeited or otherwise terminated, surrendered or canceled as to any shares of
Common Stock, or if any shares of Common Stock are surrendered to the
Corporation in connection with any option or the exercise thereof (whether or
not such surrendered shares of Common Stock were acquired pursuant to the Plan),
the shares of Common Stock subject to such option and the surrendered shares of
Common Stock shall thereafter be available for further options under the Plan;
provided, however, that any such shares of Common Stock that are surrendered to
the Corporation in connection with any option or that are otherwise forfeited
after issuance shall not be available for purchase pursuant to any incentive
stock option qualifying under Section 422 of the Code.
4. ELIGIBILITY:
The individuals who shall be eligible to participate in the Plan shall
be the Key Persons of the Corporation, or of any corporation (a "Subsidiary") in
which the Corporation has a proprietary interest by reason of stock ownership,
including any corporation in which the Corporation acquires a proprietary
interest after the adoption of this Plan, but only if the Corporation owns or
controls, directly or indirectly, stock possessing not less than 50% of
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<PAGE>
the total combined voting power of all classes of stock in such corporation, as
determined and selected by the Administrator from time to time.
5. TERMS AND CONDITIONS OF OPTIONS:
Options under the Plan are intended to be either incentive stock
options qualifying under Section 422 of the Code, or non-statutory stock options
not qualifying under any section of the Code as the Administrator may determine
in its discretion from time to time, provided, however, that only Key Persons
who are employees of the Corporation or a Subsidiary shall be eligible to
receive incentive stock options. All options granted under the Plan shall be
issued upon such terms and conditions as the Administrator may determine 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 exercise 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 nonqualified stock options, 50% of the
Fair Market Value of the Common Stock on the date the option is
granted. "Fair Market Value" of a share of Common Stock for any purpose
on a particular date shall mean the last reported sale price per share
of Common Stock, regular way, on such date or, in case no such sale
takes place on such date, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq-National Market, or if the Common
Stock is not so listed or admitted to trading or included for
quotation, the last quoted price, or if the Common Stock is not so
quoted, the average of the high bid and low asked prices, regular way,
in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotations
system that may then be in use or, if the Common Stock is not quoted by
any such organization, the average of the closing bid and asked prices,
regular way, as furnished by a professional market maker making a
market in the Common Stock as selected in good faith by the
Administrator or by such other source or sources as shall be selected
in good faith by the Administrator. If, as the case may be, the
relevant date is not a trading day, the determination shall be made as
of the next preceding trading day. As used herein, the term "trading
day" shall mean a day on which public trading of securities occurs and
is reported in the principal consolidated reporting system referred to
above, or if the Common Stock is not listed or admitted to trading on a
national securities exchange or included for quotation on the
Nasdaq-National Market, any business day.
(b) Individual Limit on Number of Options. Subject to
adjustments as provided in Section 8 of the Plan, the maximum number of
shares of Common Stock subject to options that may be granted under
this Plan to any one employee shall be limited to 100,000.
(c) Change in Control. Except as otherwise provided in an
option agreement, unexercised options shall immediately become
exercisable if: (A) Any person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act and the regulations promulgated
thereunder) is or becomes the beneficial owner, directly or indirectly,
of 25% or more of the voting equity stock of the Corporation, or any
person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act and the regulations promulgated thereunder) other than the
Corporation is or becomes the beneficial owner, directly or indirectly,
of 25% or more of the Common Stock of The Columbia Bank, or (B) Any
person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act and the regulations promulgated thereunder) gains
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control of the election of a majority of the Board of Directors of the
Corporation, or any person (as such term is used in Sections 13(d) and
14(d) of the Exchange Act and the regulations promulgated thereunder)
other than the Corporation gains control of the election of a majority
of the Board of Directors of The Columbia Bank, or (C) Any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act and
the regulations promulgated thereunder) gains control of the management
or policies of either of the Corporation or The Columbia Bank, or (D)
Either the Corporation or The Columbia Bank consolidates with, or
merges with or into, another entity (including a corporation, bank,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity
not specifically listed herein) or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets,
or another such entity consolidates with, or merges with or into, the
Corporation or The Columbia Bank in any such event pursuant to a
transaction in which the issued and outstanding shares of the voting
equity stock of the Corporation or The Columbia Bank are to be
converted into or exchanged for cash, securities or other property, or
(E) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of either
the Corporation or The Columbia Bank (together with any directors who
are members of such Board of Directors on the effective date hereof and
any new directors whose election or whose nomination for election was
approved by a vote of 66-2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of either the
Corporation or The Columbia Bank then in office.
(d) Term of Option. No stock option may be exercisable after
the expiration of 10 years after the date such option was granted.
(e) Options Nonassignable and Nontransferable. Each incentive
stock option and all rights thereunder, including the right to
surrender the option, shall not be assignable or transferable other
than by will or the laws of descent and distribution, and shall be
exercisable during the employee's lifetime only by the employee or his
or her guardian or legal representative. Except to the extent provided
by the Administrator, each non-statutory stock option and all rights
thereunder, including the right to surrender the option, shall not be
assignable or transferable other than by will or the laws of descent
and distribution or pursuant to a domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act
("DRO"), or the rules thereunder, and shall be exercisable during the
optionee's lifetime only by the optionee or his or her guardian or
legal representative or transferee under a DRO.
6. SURRENDER OF OPTIONS FOR CASH OR STOCK:
Any option granted under the Plan may include a right to surrender to
the Corporation up to 100% of the option to the extent then exercisable and
receive in exchange a cash payment or a payment in stock or a combination of
cash and stock, in each case equal to the excess of the Fair Market Value of the
shares covered by the option or portion thereof surrendered (determined as of
the date the option is surrendered) over the aggregate exercise price for such
shares. Such right may be granted by the Administrator concurrently with the
option or thereafter by amendment upon such terms and conditions as the
Administrator may determine.
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7. PAYROLL DEDUCTIONS:
In the discretion of the Administrator, there may be made available to
employee 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
Administrator.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION:
If the shares of the Common Stock outstanding 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, recapitalization, reclassification,
stock split-up, stock dividend, stock consolidation, or otherwise, an
appropriate and proportionate adjustment shall be made in the number or kind of
shares as to which options have been or may be granted (in the aggregate and to
any individual). Any such adjustment in an outstanding option shall be made
without change in the aggregate purchase price to be paid upon the exercise
thereof. Adjustments under this paragraph 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, sale of
substantially all of the assets, or any other form of corporate reorganization
in which the Corporation is not the surviving entity or a statutory share
exchange in which the Corporation is not the issuer, all options then
outstanding under the Plan 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, as shall substantially preserve
the rights and benefits of any option then outstanding under the Plan.
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 Key Persons of corporations who become or are about to
become Key Persons of the Corporation or a Subsidiary as the result of (i) a
merger or consolidation of the employing corporation with the Corporation or a
Subsidiary, (ii) the acquisition by the Corporation or a Subsidiary of the
assets of the employing corporation, or (iii) the acquisition by the Corporation
or a Subsidiary of stock of the employing 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 Administrator at the
time of the 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 be effective February 24, 1997, provided it is approved
within one year of such date by a majority of the total votes eligible to be
cast at a meeting of the stockholders of the Corporation.
21
<PAGE>
11. TERMINATION DATE:
No options may be granted under the Plan after February 23, 2007.
Subject to paragraph 5(d), options granted before the termination date for the
Plan may extend beyond that date.
12. AMENDMENT:
The Plan may be amended, suspended, terminated or reinstated, in whole
or in part, at any time by the Board of Directors; provided, however, that none
of the following changes may be made without the approval of the stockholders of
the Corporation:
(i) an increase in the number of shares of Common Stock
available under the Plan, other than adjustments pursuant to paragraph
8;
(ii) an increase in the number of shares for which a Key
Person may be granted options under the Plan; or
(iii) an extension of the term of the Plan.
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 Administrator, 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.
14. EXPENSES:
The Corporation shall bear all expenses and costs in connection with
the administration of the Plan.
22
<PAGE>
REVOCABLE PROXY
COLUMBIA BANCORP
[ ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<S> <C>
With- For All
For hold Except
THIS PROXY IS SOLICITED ON BEHALF OF 1. Election of Directors [ ] [ ] [ ]
THE BOARD OF DIRECTORS
The undersigned stockholder of Columbia A. Bhasin, G. Clark, R. Gaw, M. Simpkins, R. Smelkinson
Bancorp hereby appoints James R. Moxley, Jr.
and Herschel L. Langenthal, or either of them, INSTRUCTION: To withhold authority to vote for any individual
the lawful attorneys and proxies of the nominee, mark "For All Except" and write the nominee's name
undersigned, with several powers of in the space provided below:
substitution, to vote all shares of Common
Stock of Columbia Bancorp which the under- ______________________________________________________________
signed is entitled to vote at the Annual
Meeting of Stockholders to be held
April 28, 1997, and at any and all With-
adjournments and postponements thereof. For hold
Any and all proxies heretofore given are 2. Adoption of the 1997 Stock Option Plan [ ] [ ]
hereby revoked.
3. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before
the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1 AND FOR PROPOSAL 2 AND IN THE BEST JUDGMENT
OF THE PROXY HOLDERS ON ALL OTHER MATTERS.
---------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------
</TABLE>
Stockholder sign above___ Co-holder (if any) sign above
................................................................................
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
COLUMBIA BANCORP
- --------------------------------------------------------------------------------
The above signed acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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