UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 2)
[ ] Filed by the Registrant
[ X] Filed by a Party other than the Registrant
Check the Appropriate Box:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
MASON DIXON BANCSHARES, INC.
-------------------------------------------------
(Name of Registrant as Specified in Its Charter)
BARBARA S. FLOYD/CONCERNED SHAREHOLDERS GROUP
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No filing fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and O-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 O-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 O-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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AMENDED PRELIMINARY PROXY STATEMENT
Important: CSG is not currently asking you for a proxy and you
are requested not to send us a proxy at this time!
CONCERNED SHAREHOLDERS GROUP
P.O. Box 1495
Glen Burnie, MD 21060
Telephone: 410-384-7963
Fax: 410-315-6987
Group Members: Hildebert and Mary Ellen Criste, Clarke Langrall,
Julius Zulver, Charles Miller, Daniel and Mary Jane Sheppard,
Alvie, Allan and Jennifer Spencer, Allan Roadcap, Jeffrey, Jan
and Jon Denner, Rudolph and Joanne Linder, Irving Cohen, Barbara
Floyd, and Waisom & Co.
April __, 1997
To Our Fellow Shareholders in Mason-Dixon Bancshares, Inc.:
We, the Concerned Shareholders Group, are a group of your
fellow shareholders in Mason-Dixon Bancshares, Inc. We joined
together last year because we became alarmed upon learning that
at least one inquiry from another banking institution about a
possible acquisition of Mason-Dixon had been conveyed to William
B. Dulany, Chairman of the Board of Directors, without that
inquiry being reported to the full Board of Directors (the
"Board"). Furthermore, we believe the failure to report that
inquiry was part of an intentional strategy. We believe that
such efforts do not enhance shareholder value and show a
disregard for all shareholders as owners of the corporation.
We are seeking your Proxy to elect two new Directors of
Mason-Dixon and to vote for a shareholder proposal (the
"Proposal") which we believe will maximize shareholder value. We
believe that Mason- Dixon's current Board of Directors has failed
to maximize shareholder value. WE ARE SHAREHOLDERS, JUST LIKE
YOU. In fact, all the group's current members were shareholders
of either Mason-Dixon or one of its subsidiaries, Carroll County
Bank and Bank of Maryland, for years before we joined together
last year. We are spending our money in an attempt to help all
shareholders of the Corporation. We have taken these actions
after attempting to express our concerns to the Board of
Directors and officers of the Corporation ("Management") and not
being satisfied with the Corporation's reaction. In fact, the
Board and Management directed the Corporation to institute a
lawsuit against our members seeking, among other things, to
exclude the presentation of the Proposal to you at the 1997
Annual Meeting of Shareholders scheduled for April 19, 1997.
A Board of Directors' primary functions include the
supervision of Management's performance and the representation of
shareholders' interests in development and advancement of the
Corporation's plans and goals. The following summary evidences
the need for a change in the Board of Directors:
* CSG believes the Board is unwilling to explore and
consider acquisition inquiries based on the disposition of the
Dauphin Deposit acquisition inquiry, discussed below. As stated
in a letter to the Securities and Exchange Commission, dated
March 11, 1997, Management believes it is appropriate to "just
say no" to a potential merger without first doing some homework.
Although the directors may legally do this, CSG believes that the
more responsible position - a position that ensures that merger
possibilities will not be causally dismissed and which CSG
believes would ensure the maximization of shareholder value -
would be to fully investigate potential acquisition transactions.
* The acquisition inquiry, referred to above, occurred
in September of 1995, when Dauphin Deposit Corporation, parent of
Dauphin Deposit Bank & Trust Company, ("Dauphin") made a
presentation to Mr. Dulany. Dauphin indicated its interest in
exploring the possibility of acquiring Mason-Dixon, but Mr.
Dulany did not report that interest to the rest of the Board.
Dauphin has since agreed to merge with First Maryland Bancorp, a
subsidiary of Allied Irish Banks, Plc, at a price of
approximately two point four (2.4) times book value. We have
instituted a suit seeking class action status on behalf of all
shareholders against Mr. Dulany and Mr. Ferguson to recover any
loss based upon the failure of Mr. Ferguson and Mr. Dulany to
report the Dauphin Deposit inquiry. These allegations have not
yet been passed on by a court.
* The Board opposes a portion of the Proposal which
advocates a change in Article 7 of the Corporation's Articles of
Incorporation which would require the Board, when evaluating a
potential acquisition, to hold the interests of the shareholders
paramount to any other factors which may legally be considered by
the directors.
* As we have asserted in the claims filed with the
Court, we believe that the Board has engaged in a number of
transactions and activities which have wasted Mason-Dixon's
assets and have damaged the Corporation and us, its shareholders.
CSG has alleged that the Directors have engaged in corporate
waste by bringing the lawsuit, adopting alleged golden parachute
plans and retaining Alex Brown as the Corporation's financial
advisor.
For these reasons, and for the reasons set forth in the
accompanying Proxy Statement dated April __, 1997, We seek your
proxy. If successful, the new directors will commit their best
efforts to improving the Corporation's performance and to
enhancing the value of your investment. We thank you, in
advance, for your support. If you have any questions, please do
not hesitate to contact the undersigned at (410) 315-6987.
Very truly yours,
Barbara S. Floyd
Chairperson, Concerned Shareholders Group
:69368
<PAGE>
AMENDED PRELIMINARY PROXY STATEMENT
Important: CSG is not currently asking you for a proxy and you
are requested not to send us a proxy at this time!
CONCERNED SHAREHOLDERS GROUP
P.O. Box 1495
Glen Burnie, MD 21060
Telephone: 410-384-7963
Fax: 410-315-6987
Group Members: Hildebert and Mary Ellen Criste, Clarke Langrall,
Julius Zulver, Charles Miller, Daniel and Mary Jane Sheppard,
Alvie, Allan and Jennifer Spencer, Allan Roadcap, Jeffrey, Jan
and Jon Denner, Rudolph and Joanne Linder, Irving Cohen, Barbara
Floyd, and Waisom & Co.
PLEASE CALL THE CONCERNED SHAREHOLDERS GROUP
AT 410-384-7963
<PAGE>
CONCERNED SHAREHOLDER GROUP
P.O. Box 1495
Glen Burnie, MD 21060
Telephone: 410 384-7963
Fax: 410-315-6987
AMENDED PRELIMINARY PROXY STATEMENT OF
CONCERNED SHAREHOLDERS GROUP
1997 ANNUAL MEETING OF SHAREHOLDERS
OF MASON-DIXON BANCSHARES, INC.
TO BE HELD APRIL 19, 1997
To our fellow Mason-Dixon Bancshares, Inc. Shareholders:
This Proxy Statement and the enclosed BLUE Proxy Card are
furnished by the members (the "Members") of the Concerned
Shareholder Group ("CSG") to holders of the common stock, par
value $1.00 per share (the "Common Stock"), of Mason-Dixon
Bancshares, Inc., a Maryland corporation (the "Corporation" or
"Mason-Dixon"), in connection with the solicitation of proxies
for use at the 1997 Annual Meeting of Shareholders and at any and
all adjournments or postponements thereof (the "Meeting").
According to management's proxy statement ("Management's Proxy
Statement"), dated March 17, 1997, the Meeting will be held on
Saturday, April 19, 1997, at 10:00 a.m., at Wakefield Valley Golf
Club, 100 Fenby Farm Road, Westminster, Maryland 21158, and the
record date for determining shareholders of the Corporation (the
Shareholders") who are entitled to notice of and to vote at the
Meeting is February 28, 1997 (the "Record Date").
THIS SOLICITATION IS MADE BY CSG AND NOT ON BEHALF OF THE
BOARD OF DIRECTORS OF THE CORPORATION. This Proxy Statement and
the BLUE Proxy Card are first being mailed or furnished to
Shareholders on or about April __, 1997.
Important: CSG is not currently asking you for a proxy and
you are requested not to send us a proxy at this time!
At the Meeting, four (4) Class II directors will be elected
to hold office for a three year term, expiring in 2000, and until
the successor of each has been elected and qualified. In
opposition to the solicitation of proxies by the Board of
Directors of the Corporation (the "Board"), CSG is proposing a
slate of two nominees for election as directors of the
Corporation (the "Shareholder Nominees"), and is seeking your
vote for such nominees. CSG is also soliciting your proxy to
vote in favor of the approval and adoption of a shareholder
proposal (the "Proposal"), attached hereto as Exhibit A. The
reasons for our solicitation of your proxy are explained in
further detail in this Proxy Statement.
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YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES
YOU OWN. In order to vote in favor of the matters set forth
herein, please sign and date the enclosed proxy/ revocation.
Your proxy/ revocation allow CSG to vote your shares of Common
Stock as set forth herein and revokes any earlier dated and any
undated proxy that you may have previously granted to the
Corporation or another person.
If you change your mind and want to revoke a proxy granted
in favor of either CSG or the Corporation, you may revoke that
proxy by (i) delivering written notice of revocation to the
Secretary of the Corporation, or (ii) executing a later dated
proxy, or (iii) attending the meeting and voting in person. If
you decide to revoke a proxy granted to CSG, please call Barbara
S. Floyd, Chairperson of CSG, at (410) 384-7963.
If your shares of Common Stock are registered in your own
name, please sign, date and mail the enclosed BLUE Proxy Card to
CSG in the post-paid envelope provided for that purpose. If your
shares are held in the name of a brokerage firm, bank nominee,
trustee or other institution, only that firm or institution can
sign a proxy card with respect to your shares and only upon
receipt of specific instructions from you. Accordingly, please
contact the person responsible for your account immediately, and
give instructions for the signing of a proxy card with respect to
your shares. CSG urges you to confirm your instructions, in
writing, to the person responsible for your account and to
provide CSG a copy of your instructions, at the address indicated
below, so that CSG will be aware of all instructions given and
can attempt to ensure that such instructions are followed. If
you have any questions about executing your BLUE Proxy Card or
require assistance, please contact CSG or Barbara S. Floyd,
Chairperson: Phone: (410) 384-7963; Fax: (410) 315-6987; Address:
P.O. Box 1495, Glen Burnie, MD 21060.
REASONS FOR THE SOLICITATION
BACKGROUND AND SUMMARY
CSG is fully and unequivocally committed to maximizing
Shareholder value and to providing means to realize that value.
In CSG's opinion, and in the opinion of the Shareholder Nominees,
the present Directors are not representing the interests of the
Shareholders in a manner that will maximize the Shareholders'
return on their share ownership.
On November 8, 1996, Barbara Floyd met with Thomas K.
Ferguson, President, Chief Executive Officer and a Director of
the Corporation, and expressed some of the group's concerns.
Ms. Floyd and the group have not been satisfied with the
Corporation's reactions to those concerns.
On December 9, 1996, the Corporation, through its Board,
filed suit against CSG and the Members in the United States
District Court for the District of Maryland (the "Court"),
alleging violations of federal securities laws and Maryland law.
The Corporation asked the Court to award preliminary and
permanent injunctive and declaratory relief. The Corporation
sought to have the Court, among other things, prohibit CSG from
soliciting proxies for the annual meeting and declare that CSG's
shareholders proposal did not have to be placed before
shareholders. The Court did not grant those requests, though it
did decide that other actions should be taken.
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In that litigation, the Board specifically alleged that CSG
had violated federal securities law by filing a Schedule 13D that
contained allegedly false and misleading statements. On December
31, 1996, CSG informed the Court and the Board that it would
voluntarily file an amended 13D. CSG filed an amended 13D on
January 3, 1997. A hearing was held in the Maryland District
Court on this matter on February 21 , 1997. The Judge found that
no statements made by CSG in the original 13D were false and that
two of the statements which the Board had challenged were neither
false nor misleading. The Court did decide, however, that three
statements made by CSG in the original 13D were misleading unless
some additional information was provided and that a shareholder
could be mislead. A letter from the Court providing that
additional information was previously sent to you.
The Board also alleged that CSG had violated Maryland law by
failing to disclose the acquisition of 5.1% of the Corporation's
stock to the Maryland Commissioner of Financial Regulations and
that CSG should have disclosed that a possibility existed that
such a violation could have occurred in its Schedule 13D. CSG
has always maintained that the Maryland law in question does not
apply to their activities. If the Commissioner determines that
CSG has violated Maryland law, the penalty could be revocation of
voting rights of the common stock for a period of five (5) years.
The Court has not determined that CSG violated Maryland law;
however, it did determine that the possibility that such a
violation had occurred should be disclosed and, therefore, the
Court did disclose that possibility in the letter previously sent
to you.
CSG initiated its own claims against the Corporation and its
directors on March 13, 1997. CSG alleged that the directors
breached their fiduciary duty by not reporting inquiries
regarding possible interest in the acquisition of the
Corporation, and have engaged in corporate waste by bringing the
lawsuit, adopting alleged golden parachute plans and retaining
Alex Brown as the Corporation's financial advisor. The Members
also instituted an action which seeks class action status for a
claim on behalf of all Shareholders against Mr. Ferguson and Mr.
Dulany. Shareholders will receive more information about that
lawsuit in the future.
CSG determined to solicit proxies for the election of the
Shareholder Nominees because it is convinced that the Corporation
must develop a better business plan to increase Shareholder
value, and because it believes that the Corporation's financial
performance under the current Board and management has not been
satisfactory. CSG believes that the Corporation's business plan
should consider and study a number of alternatives, including,
but not limited to, the sale or merger of the Corporation or the
Bank to or with an unaffiliated third party.
CSG believes, due to the significant and unprecedented
consolidation trend the banking industry currently experiences,
that now is the time to actively consider and pursue such
alternatives, and that to ignore such alternatives is to risk
missing possible opportunities to realize the value of your
shares. Because of the current level of interest on the part of
potential acquirors, recent bank acquisitions have been announced
and completed at attractive earnings and book value multiples.
CSG is concerned that the Corporation's ability to effect a
transaction on such attractive terms may diminish as the
consolidation trend matures or if Mason-Dixon's financial
performance deteriorates in the hands of current management.
Additionally, as a result of industry consolidation, CSG believes
the Bank may, in the future, be competing against financial
institutions with larger assets, higher levels of service, more
attractive products and more experienced management.
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Any sale of the Bank or merger or consolidation of the
Corporation would be subject to regulatory approvals from the
appropriate regulatory agencies. In addition, such a transaction
would be subject to your approval as a Shareholder of the
Corporation. CSG's intent is to make it possible to explore the
possibilities of a merger or sale transaction and, if
appropriate, to cause such a transaction to be submitted to you
for your consideration. CSG's nominees will also urge the Board
to develop and implement both short-term and long-term strategies
to make the Bank a significant competitor and to strengthen its
financial performance, thus benefitting all Shareholders,
regardless of whether a potential sale or merger is being
investigated.
Additional Information - Potential Conflicts of Interest
Ms. Floyd entered into a service agreement with the other
members of CSG (the "Agreement") whereby she will be compensated
for providing general administrative services as follows: 5% of
the difference between the acquisition price per share and $17.50
upon acquisition of Mason-Dixon by any acquiror or 5% of the
difference between the stock price on the date the Service
Agreement is terminated and $17.50. Also, CSG will reimburse her
for her reasonable out-of-pocket expenses incurred in performing
her duties. This agreement only exists between the Members and
Ms. Floyd - this Agreement does not affect any other
shareholders. The service agreement gives Ms. Floyd a personal
financial stake in the event that the company is sold or acquired
by a third party over and above her interest as a shareholder.
Her personal financial interest in such a transaction may create
a conflict of interest that may preclude her from voting on or
participating in any discussion of such a transaction, so long as
the Service Agreement remains in effect. This agreement only
exists between the Members and Ms. Floyd - this Agreement does
not affect any other shareholders.
During the last quarter of 1996, Ms. Floyd was granted
proxies giving her the power to vote the shares of each of the
Members. However, as reported by CSG in the amended 13D, these
proxies were revoked as of January 4, 1997, and the Court ordered
recision of any Proxy or Power of Attorney not previously
rescinded. Furthermore, Ms. Floyd and the members of CSG were
ordered to make future solicitations in full conformity with
applicable federal securities laws and regulations.
In September 1992, Ms. Floyd filed a claim against the
Corporation with the Equal Employment Opportunity Commission
based on pay discrimination. The EEOC found no cause for Ms.
Floyd's claim. Thereafter, Ms. Floyd instituted a lawsuit
against Mason-Dixon seeking $300,000 in damages. The matter was
concluded with an offer of judgment under the Federal Rules of
Civil Procedure and the payment of $6,000 by the Corporation to
Ms. Floyd.
CSG STRATEGIC PLAN
CSG believes Shareholder interests will be maximized, and
the financial condition of the Corporation will be improved, by
implementing certain actions. If the Shareholder Nominees are
elected, such nominees intend to:
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(i) encourage management to develop a comprehensive
strategic business plan which may include the sale of the Bank,
or some other strategic action, so that Shareholders may realize
the value of their holdings;
(ii) appoint a committee of the Board composed of
independent directors to actively explore and consider
acquisition and merger proposals for the Corporation and the
Bank;
(iii) explore all available options to enhance Shareholder
value and provide a means for Shareholders to realize such value;
and
(iv) strengthen existing management in order to improve
financial performance.
CSG CONCERNS WITH CURRENT MANAGEMENT
CSG believes, as stated in the Proposal, that the Board
should investigate all potential sale or merger inquiries from
appropriate, financially capable entities. The Maryland
District Court found that Mr. Ferguson's statements have
indicated that the Corporation intends to remain independent.
CSG believes that the election of the Shareholder Nominees
would increase the likelihood that elements of the CSG strategic
plan would be implemented. CSG's nominees, if elected, would be
only 2 directors out of 12, and there can be no assurance that
the Shareholder Nominees will succeed in persuading the Board to
implement the CSG strategic plan referred to above. Neither CSG
nor the Shareholder Nominees are working on behalf of or as
representatives of any potential acquiror of the Corporation or
the Bank. CSG and the Shareholder Nominees are only committed to
maximizing the value of the investments of all of the
Shareholders of the Corporation.
CSG alleges that the Board has engaged in a number of
transactions and activities which have wasted Mason-Dixon's
assets and have damaged the Corporation and us, its shareholders.
As asserted by CSG in its lawsuit, CSG alleges that the
Corporation and the Board engaged in Corporate Waste by bringing
the lawsuit, adopting alleged golden parachute plans and
retaining Alex Brown as the Corporation's financial advisor.
GENERAL PROXY INFORMATION
PROXY CARD VOTING
The enclosed BLUE Proxy Card may be executed only by holders
of record at the close of business on the record date, February
28, 1997. As of the Record Date, CSG and the Shareholder
Nominees were the owners of an aggregate of 239,118 shares of
Common Stock, representing approximately 4.5% of the Common Stock
outstanding on the Record Date. According to Management's Proxy
Statement, as of the Record Date, there were 5,306,851 shares of
Common Stock outstanding.
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The shares of Common Stock represented by each BLUE Proxy
Card which is properly executed and returned to CSG will be voted
at the Meeting in accordance with the instructions marked
thereon. Executed but unmarked BLUE Proxy Cards will be voted
FOR the election of the Shareholder Nominees and FOR the approval
and adoption of the Proposal, attached hereto as Exhibit A.
With the exception of the election of directors and approval
of the Proposal, CSG is not aware, at the present time, of any
other matter which is scheduled to be voted upon by Shareholders
at the Meeting. However, if any other matter properly comes
before the Meeting, the persons named as proxies on the enclosed
BLUE Proxy Card will vote all shares covered by such proxies in
accordance with what they consider to be the best interest of the
Shareholders and the Corporation.
If your shares of Common Stock are held in the name of one
or more brokerage firms, banks or nominees, only the bank or firm
can vote your shares and only upon receipt of your specific
instructions. Accordingly, you should contact the person
responsible for your shares or account and give instructions for
the signing and return of the BLUE Proxy Card.
PROXY REVOCATION
Whether or not you plan to attend the Meeting, CSG urges you
to vote FOR the Shareholder Nominees and FOR the Proposal by
signing, dating and returning the BLUE Proxy Card in the
enclosed, self-addressed and stamped envelope. You can do this
even if you have already signed and returned the proxy card
solicited by the Board, because the enclosed Proxy also revokes
any proxy that you may have previously granted.
Execution of a proxy card will not affect your right to
attend the Meeting and to vote in person. Any Shareholder
granting a proxy (including a proxy given to CSG or the
Corporation) may revoke it at any time before it is voted by (i)
submitting a duly executed new proxy bearing a later date, (ii)
attending and voting at the Meeting in person, or (iii) at any
time before a previously executed proxy is voted, by giving
written notice of revocation to the Corporation, Mason-Dixon
Bancshares, Inc., Attention: Corporate Secretary. Merely
attending the Meeting will not revoke any previous proxy which
has been duly executed by you; you must also vote at such
Meeting. The BLUE Proxy Card furnished to you by CSG, if
properly executed and delivered, will revoke all undated and all
earlier dated proxies.
IF YOU PREVIOUSLY EXECUTED AND RETURNED A PROXY CARD TO THE
CORPORATION, CSG URGES YOU TO REVOKE IT BY SIGNING, DATING AND
MAILING THE BLUE PROXY CARD IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED FOR MAILING WITHIN THE UNITED STATES.
CORPORATION'S ANNUAL REPORT AND MANAGEMENT'S PROXY STATEMENT
An Annual Report to Shareholders (the "Annual Report")
covering the Corporation's fiscal year ended December 31, 1996,
is required to be furnished to Shareholders by the Corporation.
Such Annual Report to Shareholders does not form any part of the
material for the solicitation of proxies by CSG.
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Neither CSG nor any of its affiliates is presently an
officer or director, or otherwise engaged in the management, of
Mason-Dixon. Consequently, CSG does not have current information
concerning the committee and Board meetings of the Corporation,
the beneficial ownership of the Corporation's stock by the
principal holders thereof, other information concerning the
Corporation's management, the procedures and deadline for
submitting proposals for consideration at the next Annual Meeting
of Shareholders of the Corporation and certain other matters
regarding the Corporation and the Meeting required by the rules
of the Securities and Exchange Commission to be included in a
proxy statement. Accordingly, reference is made to Management's
Proxy Statement for such information.
CSG does not make any representation as to the accuracy or
completeness of the information contained in the Annual Report
and Management's Proxy Statement.
QUORUM AND VOTING
Management's Proxy Statement is required to provide
information about the number of shares of the Corporation's
Common Stock outstanding and entitled to vote, the number of
record holders thereof, the Record Date for the Meeting, quorum,
and the effect of broker non-votes and abstentions. Reference is
made thereto for such information. Only Shareholders of record
at the close of business on the Record Date are entitled to
notice of and to vote on matters that come before the Meeting.
CSG, through its members, has only nominated two persons for
election to the Board. According to Management's Proxy
Statement, the Board has nominated four persons for the four
positions being filled at the Meeting. Therefore, there will be
six nominees for four seats on the Board, and the four nominees
who receive the greatest number of votes will be elected.
Shareholders who use the BLUE Proxy Card furnished by CSG will be
able to vote for the two Shareholder Nominees. Shareholders who
use the Corporation's proxy card will not be able to vote for any
of the Shareholder Nominees. Shareholders are not permitted to
use both proxy cards. Any Shareholder who wishes to vote for one
or more of the Shareholder Nominees and one or more of the
company's nominees will be required to vote by ballot at the
Meeting. Shareholders using the BLUE Proxy Card will lose the
chance to vote for four (4) Directors and will only be able to
elect two (2) Directors unless they attend the Meeting and vote
by ballot.
ITEM ONE -ELECTION OF DIRECTORS
The Corporation's Articles of Incorporation and By-laws
authorize the Board of Directors, with the approval of the
Shareholders, to amend the Articles of Incorporation to fix the
number of Board members at a number not less than twelve (12) nor
more than fifteen (15). Each director belongs to one of three
classes, and serves for a term of three years. The term of one
class of directors expires in each year. Therefore, the
Corporation has a staggered Board of Directors. Class II
directors will be elected at the Meeting for a term of three
years and until their successors have been elected and qualified.
CSG proposes that the Shareholders elect the Shareholder Nominees
as Class II directors of the Corporation at the Meeting.
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The nominees of the CSG members for election by the
Shareholders to the Board at the Meeting are Barbara S. Floyd and
Clarke Langrall. Both of these nominees have consented to serve
as a director if elected, and it is not contemplated that either
of them will be unavailable for election as a director. If any
nominee at the time of election is unable to serve or is
otherwise unavailable for election, the persons named as
proxyholders on the enclosed BLUE Proxy Card will vote for one of
the Corporation's nominee(s) as selected by CSG.
The information below is provided with respect to the
Shareholder Nominees for directors of the Corporation. Each
Shareholder Nominee is a United States citizen. Unless otherwise
indicated, each nominee has been engaged in his or her current
principal occupation for more than the past five years.
Barbara S. Floyd, CPA, age 41, is currently the President of
Anthony Investments, Inc., of Severna Park, Maryland, where she
provides business consulting services. She is also the owner and
sole proprietor of Property Tax Reduction Specialists, of Glen
Burnie, Maryland, through which she conducts property tax
assessment appeals. She is a Certified Public Accountant and a
Licensed Real Estate Appraiser. Until September 1992, Ms. Floyd
was Senior Vice President, Chief Financial Officer and Treasurer
of the Carroll County Bank and Trust Company, a wholly-owned
subsidiary of the Corporation, and was also Vice President, Chief
Financial Officer, and Treasurer of the Mason-Dixon. She is the
Chairperson of CSG. In addition, Ms. Floyd entered into a
service agreement with the other members of CSG (the "Agreement")
whereby she will be compensated for providing general
administrative services as follows: 5% of the difference between
the acquisition price per share and $17.50 upon acquisition of
Mason-Dixon by any acquiror or 5% of the difference between the
stock price on the date the Service Agreement is terminated and
$17.50. Also, CSG will reimburse her for her reasonable
out-of-pocket expenses incurred in performing her duties. This
agreement only exists between the Members and Ms. Floyd - this
Agreement does not affect any other shareholders. The service
agreement gives Ms. Floyd a personal financial stake in the event
that the company is sold or acquired by a third party over and
above her interest as a shareholder. Her personal financial
interest in such a transaction may create a conflict of interest
that may preclude her from voting on or participating in any
discussion of such a transaction, so long as the Service
Agreement remains in effect. This agreement only exists between
the Members and Ms. Floyd -this Agreement does not affect any
other shareholders.
During the last quarter of 1996, Ms. Floyd was granted
proxies giving her the power to vote the shares of each of the
Members. However, as reported by CSG in the amended 13D, these
proxies were revoked as of January 4, 1997, and the Court ordered
recision of any Proxy or Power of Attorney not previously
rescinded. Furthermore, Ms. Floyd and the members of CSG were
ordered to make future solicitations in full conformity with
applicable federal securities laws and regulations.
In September 1992, Ms. Floyd filed a claim against the
Corporation with the Equal Employment Opportunity Commission
based on pay discrimination. The EEOC found no cause for Ms.
Floyd's claim. Thereafter, Ms. Floyd instituted a lawsuit
against Mason-Dixon seeking $300,000 in damages. The matter was
concluded with an offer of judgment under the Federal Rules of
Civil Procedure and the payment of $6,000 by the Corporation to
Ms. Floyd.
8
<PAGE>
Clarke Langrall, age 72, is Chairman of Hay and Langrall
Insurance, LLC of Towson, Maryland, an Insurance Agency. He is
an insurance advisor, broker and agent. Mr. Langrall, a founder
of the Bank of Maryland, was a director of that Bank, prior to
the acquisition of Bank of Maryland by Mason-Dixon. After the
acquisition, Mr. Langrall served on the Bank of Maryland advisory
board. He resigned from this board in October, 1996, because he
felt the role of the advisory board was not meaningful and
because he disagreed with the direction in which the Bank was
headed. Thereafter, Mr. Langrall became a CSG member.
If the two Shareholder Nominees are elected to the Board,
ten of the twelve members of the Board will be management
nominees, and CSG will not be in control of the Board. Since
Mason-Dixon's bylaws provide that action by the Board requires a
majority vote of the directors present at a meeting at which a
quorum is present, the Shareholder nominees ordinarily will not
be able to cause any action to be taken or not taken by the Board
unless at least five (assuming all directors are present at a
meeting of the Board) other directors agree with the position of
the Shareholder Nominees. Nevertheless, the Shareholder Nominees
may, because of their different backgrounds, expertise and prior
experience with the Corporation, be able to sufficiently inform
and persuade other directors to cause the Board to take or not
take various actions.
If elected, the Shareholder Nominees intend to seek to
persuade the Board to take actions aimed at maximizing
Shareholder value, which may include the sale or merger of the
Corporation or the Bank to or with another financial institution.
However, the Shareholder Nominees will seek to persuade the Board
to approve such a transaction only if they believe that the value
of the transaction is fair to the Shareholders. CSG and the
Shareholder Nominees believe that the election of the Shareholder
Nominees would send a strong message to the Board that the
Shareholders want to maximize the value of their investment in
the Corporation, and would make it likely that a strategic plan
to maximize Shareholder value will be implemented by the
Corporation. However, because the Shareholder Nominees would
fill only two of the twelve seats on the Board if elected, there
can be no assurance that the Board will seek to implement a
strategic plan to increase Shareholder value, including the sale
or merger of the Corporation or the Bank, even if the Shareholder
Nominees are elected. Neither CSG nor either of the Shareholder
Nominees is working on behalf of or as a representative of any
potential acquiror of the Corporation or of the Bank. CSG and
the Shareholder Nominees are only committed to maximizing the
value of the investment of all of the Shareholders of
Mason-Dixon.
CSG recommends a vote FOR the election of these two persons
as directors.
ITEM TWO -APPROVAL AND ADOPTION OF PROPOSAL
The Proposal, attached hereto as Exhibit A, is the proposal
of Barbara S. Floyd, and was submitted by her to the Corporation.
The Proposal promotes the basic goal of CSG: the maximization of
Shareholder value through the exploration and consideration of
merging or selling the Corporation. Therefore, the Members
support the Proposal. Shareholders are urged to read the
Proposal, in its entirety. Following is an outline of the terms
of the Proposal. The information provided in this outline is
qualified, in its entirety, by reference to the Proposal itself.
9
<PAGE>
NOTE: Stockholder proposals, by law, express only the
recommendation of a stockholder, and, therefore, are usually
stated in terms that express the desire of the stockholder that
the Board of Directors consider the resolution, if it is passed.
You should be aware that, although the Proposal is stated in
mandatory terms, under Maryland law, such a proposal cannot bind
the Board of Directors to take the actions desired by the
proposal. In effect, the Proposal is more properly read as a
recommendation that the Board "should" take the outlined actions
as opposed to the Board "shall".
Approval and adoption of the Proposal by the shareholders
may result in the Board taking the Proposal under advisement,
however, the Board will be under no obligation to do so.
The Proposal advocates the following:
- Sharing of Information among Directors. Directors who
become aware of an expression of interest by a financially
capable Potential Acquiror or of a Potential Acquisition (as
these terms are defined in the Proposal) should supply such
information to the rest of the Board of Directors so that the
entire Board may consider such information.
Investigations of Expressions of Interest. Although the
Board may legally "just say no," CSG believes that prudence
dictates that the Board should fully examine Acquisition
opportunities or indications of interest so that directors have
the maximum amount of information at their disposal when
determining whether or not such a Proposed Acquisition is in the
Corporation's best interests.
Accordingly, the Board should attend presentations given by
Potential Acquirors, communicate with Potential Acquirors and
request details as well as written confirmation from Potential
Acquirors concerning their interest in the Corporation or the
Bank.
- Considering the Interests of Shareholders of Paramount
Importance. Article 7 of the Articles of Incorporation of
Mason-Dixon permits the Board, in evaluating a Proposed
Acquisition, to consider the best interests of the Shareholders, as well
as other factors it deems to be relevant. Shareholders previously
approved an amendment to the Articles of Incorporation allowing
the Board to consider such additional factors. CSG believes that
the Board should consider the interests of Shareholders paramount
to any other factors the Board may also legally consider.
10
<PAGE>
The members of CSG recommend a vote FOR the shareholder
Proposal.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
The Board sent you a proxy statement ("Management's Proxy
Statement") discussing the election of directors, the Proposal
and any other matters that may properly come before the Annual
Meeting. With the exception of the election of directors and
approval of the Proposal, CSG is not aware at the present time of
any other matter which is scheduled to be voted upon by
Shareholders at the Meeting. However, if any other matter
properly comes before the Meeting, the persons named as proxies
on the enclosed BLUE Proxy Card will vote all shares covered by
such proxies in accordance with their best judgment with respect
to such matter.
SHAREHOLDINGS OF CSG AND THE SHAREHOLDER NOMINEES
The following table sets forth, as of February 28, 1997, the
number and percent of outstanding shares of Common Stock
beneficially owned by CSG and of its Shareholder Nominees.
Unless otherwise noted, these shares are held individually.
<TABLE>
<CAPTION>
Principal Amount and
Name and Principal Occupation Nature of
Business Address of for Past Beneficial Percent of
Beneficial Owner Five Years Ownership<F10> Class<F17>
- ------------------ ---------- -------------- ----------
<S> <C> <C> <C>
Barbara S. Floyd, Assessment 8,173<F11> --
CPA Appeals;
Property Tax Sr. Vice
Reduction Specialists President,
P.O. Box 1691 CFO and
Glen Burnie, MD Treasurer
21060-1691 Carroll County
Bank, until 1992
Vice President, CFO
and Treasurer, Mason-
Dixon until 1992
Clarke Insurance 15,679<F12> --
Langrall<F1> agent, broker
Hay & Langrall and advisor
Insurance LLC
606 Providence Road
Towson, MD 21286
Hildebert F. Retired 52,119<F13> --
Criste<F2>
Mary Ellen
Criste<F2>
P. O. Box 710
Riderwood, MD 21139
(Residence)
Jennifer M. Homemaker 928 --
Spencer<F3>
Homemaker
11
<PAGE>
Alvie G. Spencer, Asset 30,783<F14> --
Jr.<F3><F4> Management
Aegis Asset
Management Group
Allan W. Roadcap<F4> Retired
27 Smith Avenue
Westminster, MD 21157
Alan C. Spencer<F3> Sales 2,022 --
Landmark Enterprises
201 Railroad Avenue
Westminster, MD 21157
Charles A. Miller, Retired 20,369 --
Jr.
306 Chapelwood Lane
Lutherville, MD 21093
(Residence)
Daniel H. Sheppard, Real Estate 13,400<F15> --
Jr. <F5> Retired
Mary Jane Sheppard
<F5>
Lincoln Associates
409 Washington Avenue
Towson, MD 21204
Jeffrey S.A. Research and 16,200 --
Denner <F6> Development
Aerospace Corp.
200 North Aviation
Blvd.
El Segundo, CA 90245
Jan Carleton Manufacturing 16,200 --
Denner<F6>
Black & Decker
E. Joppa Rd.
Towson, MD 21204
Jon C. Denner<F6> Surveyor 16,200 --
U.S. Geologic Survey
Courthouse, State Street
Montpelier, VT 05602
Rudolph E. Linder Retired 8,832<F16> --
<F7>
Joanne M. Linder
<F7>
519 St. Francis Road
Towson, MD 21286
(Residence)
Waisom & Co.<F8> Charitable 5,124 --
7 St. Paul Street Remainder
Baltimore, MD 21202 Foundation
Irving Cohen Retired 4,270 --
2305 Velvet Valley
Way
Owings Mills, MD 21117
(Residence)
12
<PAGE>
Julius Zulver<F9> Hardware 28,819 --
Walbrook Mill & Sales
Lumber Co.
2636 W. North Avenue
Baltimore, MD 21216
Concerned 239,118 4.5%
Shareholders Group
(19 persons)
________________________
<FN>
<F1> Former Bank of Maryland Director
<F2> Hildebert F. Criste and Mary Ellen Criste are husband and
wife. Mr. Criste is the former Chairman of the Bank of Maryland
Board of Directors.
<F3> Alvie G. Spencer, Jr. is the father of Jennifer M. Spencer
and of Alan C. Spencer.
<F4> Alvie G. Spencer is authorized by a power of attorney to
vote Allan W. Roadcap's shares. Mr. Spencer is a former director
of Mason-Dixon.
<F5> Daniel H. Sheppard, Jr. and Mary Jane Sheppard are husband
and wife.
<F6> These persons are siblings.
<F7> Rudolph E. Linder and Joanne M. Linder are husband and wife.
<F8> Waisom & Co. is represented by John H. Somerville, general
partner.
<F9> Mr. Zulver is a former Bank of Maryland Director.
<F10> Information relating to beneficial ownership of Common
Stock is based upon "beneficial ownership" concepts set forth in
rules of the SEC under Section 13(d) of the Exchange Act. Under
such rules, a person is deemed to be "beneficial owner" of a
security if that person has or shares "voting power," which
includes the power to dispose of, or to direct the disposition
of, such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to
acquire beneficial ownership within sixty (60) days of February
28, 1997. Under the rules, more than one person may be deemed to
be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he has
no beneficial interest. For instance, beneficial ownership
includes spouses, minor children and other relatives residing in
the same household, and trusts, partnership, corporations or
deferred compensation plans which are affiliated with the
principal.
<F11> 69 shares are held for the benefit of Ms. Floyd's minor
children.
<F12> 1,227 shares are held by Mr. Langrall as custodian for his
son.
<F13> 45,369 shares are held jointly by Mr. and Mrs. Criste.
6,750 shares are held individually by Mr. Criste.
<F14> 27,283 shares are held individually by Alvie Spencer. Mr.
Roadcap shares voting and dispositive power over 3,500 shares
with Alvie Spencer via a power of attorney granted by Mr. Roadcap
to Mr. Spencer.
<F15> 5,282 shares are held jointly by Mr. and Mrs. Sheppard, and
8,118 shares are held individually by Mr. Sheppard.
<F16> 2,000 shares are held jointly by Mr. and Ms. Linder. 6,832
shares are held by Mr. Linder individually.
<F17> Less than 1% unless otherwise indicated.
</FN>
</TABLE>
13
<PAGE>
INFORMATION ABOUT PARTICIPANTS
IN THE CONCERNED SHAREHOLDERS GROUP
PROXY SOLICITATION
The proxies solicited hereby are sought by the Members of
CSG. The Shareholder Nominees may also be deemed "participants"
in this solicitation, as that term is defined in Schedule 14A
under the Securities and Exchange Act of 1934, as amended. The
number of shares held beneficially by the participants as well as
each person's respective business address and principal
occupation is described in the "Shareholdings of CSG and the
Shareholder Nominees" section, above.
For transactions made in the Corporation's Common Stock by
the participants in the past two years, see Exhibit B.
Except as set forth in this Proxy Statement, to the best
knowledge of CSG, the Members, the Shareholder Nominees or any of
their respective affiliates or associates, none of them, directly
or indirectly, beneficially own any shares of Common Stock or any
securities of any subsidiary of the Corporation, has had any
relationship with the Corporation in any capacity other than as a
Shareholder, nor is or has been a party to any transactions or
series of similar transactions since January 1, 1996, nor knows
of any currently proposed transaction, or series of similar
transactions, to which the Corporation or any of its subsidiaries
was or is to be a party, in which the amount involved exceeds
$60,000 and in which any of them or their respective affiliates
or associates had, or will have, a direct or indirect interest,
nor has either Shareholder Nominee, nor CSG, nor any of their
respective affiliates or associates, entered into any agreement
or understanding with any person respecting any future employment
by the Company or its affiliates or any future transactions to
which the Corporation or any of its affiliates will or may be a
party. Other than the agreements by the Shareholder Nominees to
serve as directors of the Corporation if elected and the
Agreement, described above, there are no contracts, arrangements
or understandings by the Shareholder Nominees, CSG or any of
their respective affiliates or associates within the past year
with any person with respect to the Corporation's securities.
PROXY SOLICITATION EXPENSES
CSG will bear the entire expense of preparing, assembling,
printing and mailing this Proxy Statement and the Proxy Card and
the cost of soliciting proxies. CSG does not plan to seek
reimbursement of these expenses from the Corporation.
The total cost of this proxy solicitation (including fees of
attorneys, solicitors and advertising and printing expenses) is
estimated to be approximately $150,000. CSG has incurred to date
approximately $110,000 in proxy solicitation expenses.
In addition to this initial solicitation by mail, proxy
solicitations may be made by phone, telecopier, mail or in person
by CSG members and the Shareholder Nominees without compensation,
except for reimbursement of reasonable out-of-pocket expenses.
CSG will
14
<PAGE>
reimburse banks, brokers and other fiduciaries their reasonable
charges and expenses incurred in forwarding proxy materials to
their principals and in obtaining authorization of execution of
proxies.
15
<PAGE>
EXHIBIT A
SHAREHOLDER PROPOSAL
RESOLVED, that any director of Mason-Dixon who is or becomes
aware of any expression of interest by any financially capable
person or entity ("Potential Acquiror") in a potential merger,
consolidation or share exchange with, or transfer of all or
substantially all (as defined in the articles of incorporation)
of the assets of Mason-Dixon to, such Potential Acquiror
("Proposed Acquisition") shall promptly disclose any known
details to Mason-Dixon's board of directors ("Board"), and the
Board, upon learning of Proposed Acquisition through a director
or otherwise, shall (a) attend presentations given by the
Potential Acquiror or invite the Potential Acquiror to make a
presentation to the Board, (b) communicate with the Potential
Acquiror and request details of the proposed Acquisition, the
proposed structure of the transaction and amount and type of
consideration offered, (c) request that written confirmation of
the Proposed Acquisition be sent to the Board for consideration,
(d) report the terms of any Proposed Acquisition, the status of
negotiations and recommendation of the Board to the shareholders
at each meeting of shareholders (unless confidentiality is
legally required), and (e) hold the interests of Mason-Dixon's
shareholders paramount to any other factors considered by the
Board in evaluating any Acquisition Proposal pursuant to Article
7 of Mason-Dixon's articles of Incorporation or otherwise.
This Proposal is the proposal of Barbara S. Floyd, and was
submitted by her to the Corporation. The Proposal promotes the
basic goal of CSG: the maximization of Shareholder value through
the exploration and consideration of merging or selling the
Corporation. Therefore, the Members support the Proposal.
Shareholders are urged to read the Proposal, in its
entirety. Following is an outline of the terms of the Proposal.
The information provided in this outline is qualified, in its
entirety, by reference to the Proposal itself.
NOTE: Stockholder proposals, by law, express only the
recommendation of a stockholder, and, therefore, are usually
stated in terms that express the desire of the stockholder that
the Board of Directors consider the resolution, if it is passed.
You should be aware that, although the Proposal is stated in
mandatory terms, under Maryland law, such a proposal cannot bind
the Board of Directors to take the actions desired by the
proposal. In effect, the Proposal is more properly read as a
recommendation that the Board "should" take the outlined actions
as opposed to the Board "shall".
Approval and adoption of the Proposal by the shareholders
may result in the Board taking the Proposal under advisement,
however, the Board will be under no obligation to do so.
The Proposal advocates the following:
- Sharing of Information among Directors. Directors who
become aware of an expression of interest by a financially
capable Potential Acquiror or of a Potential Acquisition (as
these terms are defined in the Proposal) should supply such
information to the rest of the Board of Directors so that the
entire Board may consider such information.
<PAGE>
EXHIBIT A
- Investigation of Expressions of Interest. Although
the Board may legally "just say no," CSG believes that prudence
dictates that the Board should fully examine Acquisition
opportunities or indications of interest so that directors have
the maximum amount of information at their disposal when
determining whether or not such a Proposed Acquisition is in the
Corporation's best interests. Accordingly, the Board should
attend presentations given by Potential Acquirors, communicate
with Potential Acquirors and request details as well as written
confirmation from Potential Acquirors concerning their interest
in the Corporation or the Bank.
- Considering the Interests of Shareholders of Paramount
Importance. Article 7 of the Articles of Incorporation of
Mason-Dixon permits the Board, in evaluating a Proposed
Acquisition, to consider the best interests of the Shareholders,
as well as, other factors it deems to be relevant. Shareholders
previously approved an amendment to the Articles of Incorporation
allowing the Board to consider such additional factors. CSG
believes that the Board should consider the interests of
Shareholders paramount to any other factors the Board may also
legally consider.
The members of CSG recommend a vote FOR the shareholder
Proposal.
Due to the insufficient time to undertake a cost-effective
and meaningful proxy solicitation, CSG has decided not to
undertake a proxy solicitation in connection with the 1997
Mason-Dixon Annual Meeting of Shareholders. However, the
shareholder proposal will still appear on the Mason-Dixon
Bancshares, Inc. Proxy Card and will be presented at the Annual
Meeting. CSG does not intend to nominate persons as directors
from the floor of the Annual Meeting.
<PAGE>
EXHIBIT B
<TABLE>
STOCK TRANSACTIONS OF PARTICIPANTS
February 28, 1995 - February 28, 1997
<CAPTION>
BUY/ PURCHASE
NAME DATE SELL PRICE # SHARES
- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C>
Barbara S. Floyd 11-13-96 Buy 20 1/8 2,000
10-30-96 Buy 17 3/4 3,000
10-24-96 Buy 17 5/8 890
1-31-95 Sell 15 1/2 273
Hildebert Criste 11-12-96 Buy 21 1/2 250
10-28-96 Buy 17.56 3,000
10-8-96 Buy 17 3,000
10-4-96 Buy 17 1/4 500
Alvie Spencer, Jr. 4-24-96 Buy 18 1/2 300
3-27-96 Buy 18 1/4 800
Charles Miller 11-11-96 Buy 20.75 2,000
Rudolph & Joanne 11-6-96 Buy 19.25 1,000
Linder 11-6-96 Buy 19.50 1,000
Clarke Langrall 10-96 Buy 17.50 2,000
9-96 Buy 17.50 500
800
17.75 2,500
8-96 Buy 17.50 1,000
</TABLE>
<PAGE>
AMENDED PRELIMINARY FORM OF PROXY CARD [BLUE]
Important: CSG is not currently asking you for a proxy and you
are requested not to send us a proxy at this time!
PROXY SOLICITED BY THE CONCERNED SHAREHOLDER GROUP ("CSG")
IN OPPOSITION TO THE BOARD OF DIRECTORS
OF MASON-DIXON BANCSHARES, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 19, 1997
The undersigned hereby appoints Barbara S. Floyd, Charles Miller
and Clarke Langrall, and each or any of them, the proxy or
proxies of the undersigned, with full power of substitution, to
vote all shares of Common Stock, par value $1.00 per share, of
Mason-Dixon Bancshares, Inc. (the "Corporation") which the
undersigned would be entitled to vote if personally present at
the Annual Meeting of Shareholders (the "meeting") of the
Corporation to be held on April 19, 1997, and at any and all
adjournments or postponements thereof.
1. Election of Shareholder Nominees to the Board of Directors
of Corporation (check one box only)
Barbara S. Floyd, Clarke Langrall
/ / FOR / / WITHHOLD / / AGAINST
AUTHORITY
(If you wish to withhold authority to vote for one of the
nominees listed above, please write that nominee's name on the
line below.)
CSG RECOMMENDS A VOTE FOR THE ELECTION OF THESE TWO PERSONS
AS DIRECTORS.
2. Approval and adoption of the Shareholder Proposal, attached
hereto as Exhibit A
/ / FOR / / WITHHOLD AUTHORITY / / AGAINST
CSG RECOMMENDS A VOTE FOR PROPOSAL TWO.
<PAGE>
3. The proxies are hereby authorized to vote in their
discretion upon all other matters which may properly come
before the Meeting or any adjournments of postponements
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
SHAREHOLDER, BUT IF NO DIRECTION IS INDICATED, IT WILL BE VOTED
FOR THE ELECTION OF THE SHAREHOLDER NOMINEES LISTED IN ITEM 1 AND
FOR THE SHAREHOLDER PROPOSAL SET FORTH IN ITEM 2.
THIS PROXY CARD HEREBY REVOKES ANY PROXY DATED PRIOR TO THE DATE
HEREOF, OR NOT DATED AND GRANTED IN FAVOR OF BARBARA S. FLOYD,
CHARLES MILLER AND CLARKE LANGRALL, AND EACH OR ANY OF THEM, OR
GRANTED TO ANY PERSON WHO SERVES AS A PROXY PURSUANT TO A
SOLICITATION BY OR ON BEHALF OF THE CORPORATION.
The undersigned hereby acknowledges receipt of the Proxy
Statement of CSG dated April __, 1997.
DATED: __________________________, 1997
Signature: _______________________
Co-owner's
Signature, if
held jointly:__________________________
Title or Authority______________________
Please sign exactly as your name appears on this proxy.
Joint owners should each sign personally. If signing as
attorney, executor, administrator, trustee or guardian, please
include your full title. Corporate proxies should be signed by
an authorized officer.
PLEASE SIGN, DATE AND RETURN THIS BLUE PROXY CARD PROMPTLY USING
THE ENCLOSED SELF-ADDRESSED AND STAMPED ENVELOPE.
<PAGE>
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
CHAMBERS OF U.S. COURTHOUSE
CATHERINE C. BLAKE 101 WEST LOMBARD STREET
UNITED STATES DISTRICT JUDGE BALTIMORE, MARYLAND 21201
(410) 962-3220
FAX: (410) 962-6836
April 9, 1997
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Concerned Shareholders Group - Proxy Materials
Dear Sir/Madam:
In the matter of MASON-DIXON BANCSHARES, INC. v. ANTHONY
INVESTMENTS, INC. ET AL., Civil No. CCB 96-3836, United States
District Court for the District of Maryland, this court has
ordered changes to the original preliminary proxy materials
submitted by the Concerned Shareholders Group ("CSG"), a group of
stockholders of registrant Mason-Dixon Bancshares Inc.,
("Mason-Dixon"), who are defendants in the pending litigation.
Enclosed are the revised and amended preliminary proxy materials
of CSG.
CSG filed its preliminary proxy materials with the
Commission through the EDGAR system on March 31, 1997. On April
2, 1997, Mason-Dixon filed a motion for injunctive relief based
on alleged false and misleading statements contained in CSG's
proxy materials.
A hearing was held on Mason-Dixon's motion on April 7, 1997.
The court found that statements concerning two issues in CSG's
proxy materials were misleading. The court ordered that certain
statements be omitted or changed and that this letter be made a
part of the public filing of CSG's revised and amended proxy
materials. Other changes were voluntarily made to the proxy
materials by CSG in agreement with Mason-Dixon.
The first issue relates to statements in CSG's original
proxy materials that Mason-Dixon had received an acquisition
inquiry that, if pursued, could have resulted in a "significant
gain" for
<PAGE>
shareholders "in excess of . . . $97,000,000." The court and the
parties agree that the inquiry was not a firm offer.
Speculation, prediction, and conjecture about the value of a
possible acquisition not the subject of a firm offer is
misleading to shareholders. Accordingly, CSG was ordered to
delete references to the value of the inquiry from its proxy
materials.
The second issue relates to CSG's claim that it "complied
with Maryland law [Section 3-314] by contacting the
Commissioner's office, which informed them that they did not have
to file any report." Section 3-314 of the Maryland Financial
Institutions Article requires persons acquiring greater than 5%
of voting stock in a bank holding company to obtain prior
approval from the Commissioner of Financial Regulation of
Maryland. In the event that CSG is found to have violated the
statute, the penalty may include a conversion of the stock to
non-voting for a period of five years. The Commissioner's office
did not give prior approval for CSG's acquisition of voting stock
in Mason-Dixon. Neither the Commissioner, nor this court, has
yet determined whether CSG violated Section 3-314. Accordingly,
statements that CSG complied with Section 3-314 and that no
report was required to be filed have been deleted from CSG's
proxy materials.
The Amended Preliminary Proxy Statement attached reflects
all of the changes made to the materials and supersedes the
original preliminary filing. This ruling does not in any way
reflect the court's opinion of the merits of the proposals of
CSG.
Sincerely,
/s/ Catherine C. Blake
---------------------------
Catherine C. Blake
United States District Judge
