<PAGE>
<PAGE>
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
[x] Definitive Proxy Statement of the Commission Only
[ ] Definitive Additional Materials (as permitted by Rule
[ ] Soliciting Material Pursuant 14a-6(e)(2))
to Rule 14a-11(c) or Rule 14a-12
GLEN BURNIE BANCORP
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
------------------------------------------------------
2. Aggregate number of securities to which transaction
applies:
------------------------------------------------------
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
------------------------------------------------------
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>
<PAGE>
[GLEN BURNIE BANCORP LETTERHEAD]
February 10, 1999
Dear Fellow Stockholder:
You are cordially invited to attend the 1999 Annual Meeting
of Stockholders of Glen Burnie Bancorp (the "Company") to be
held at La Fontaine Bleu, 7514 Ritchie Highway, Glen Burnie,
Maryland on Thursday, March 11, 1999 at 2:00 p.m.
The accompanying notice and proxy statement describe the
formal business to be transacted at the meeting which includes
the election of directors and authorization for the Board of
Directors to select the Company's auditors for the 1999 fiscal
year. Stockholders are also being asked to approve several
proposals to amend the Articles of Incorporation and Bylaws of
the Company. The Board of Directors believes that the proposals
to amend the Articles of Incorporation and Bylaws are critical
to the future of the Company and the Board of Directors
unanimously recommends that stockholders approve these
amendments. The proposals to amend the Articles of Incorpora-
tion and Bylaws will require the approval of 80% of the shares
outstanding. Your vote on these proposals is particularly
important since an abstention or failure to vote is
equivalent to a vote against the proposed amendments to the
Articles of Incorporation and Bylaws.
Enclosed with this proxy statement are a proxy card and an
Annual Report to Stockholders for the 1998 fiscal year. During
the meeting, we will report on the operations of the Company's
wholly-owned subsidiary, The Bank of Glen Burnie. Directors and
officers of the Company as well as representatives of Trice &
Geary LLC, the Company's independent auditors, will be present
to respond to any questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD AS SOON AS POSSIBLE
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. This
will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the meeting.
Your vote is important, regardless of the number of shares you
own. If you plan to attend the meeting, please check the box on
the enclosed form of proxy.
Sincerely,
/s/ John E. Demyan /s/F. William Kuethe, Jr.
John E. Demyan F. William Kuethe, Jr.
Chairman President and Chief
Executive Officer<PAGE>
<PAGE>
- ----------------------------------------------------------------
GLEN BURNIE BANCORP
101 CRAIN HIGHWAY, S.E.
GLEN BURNIE, MARYLAND 21061
(410) 766-3300
- ----------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 11, 1999
- ----------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") of Glen Burnie Bancorp (the
"Company") will be held at La Fontaine Bleu, 7514 Ritchie
Highway, Glen Burnie, Maryland on Thursday, March 11, 1999 at
2:00 p.m., Eastern Time.
A proxy statement and proxy card for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and
acting upon the following matters:
1. To elect a Board of Directors for the ensuing
year;
2. To authorize the Board of Directors to select an
outside auditing firm for the 1999 fiscal year;
3. To approve an amendment to the Articles of
Incorporation to eliminate preemptive rights;
4. To approve an amendment to the Articles of
Incorporation and Bylaws to provide for a
classified board of directors and to make
certain conforming amendments to the Bylaws;
5. To approve an amendment to the Bylaws to change
the date fixed for the annual meeting of
stockholders;
6. To approve an amendment to the Bylaws to reduce
the stockholder vote required to amend the
Bylaws from 80% to 66 2/3% of all votes entitled
to be cast; and
7. To transact such other business as may properly
come before the Annual Meeting or any
adjournments thereof.
Any action may be taken on any one of the foregoing
proposals at the Annual Meeting on the date specified above or
on any date or dates to which, by original or later adjournment,
the Annual Meeting may be adjourned. Stockholders of record at
the close of business on February 3, 1999 are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to complete and sign the accompanying
proxy card which is solicited by the Board of Directors and to
mail it promptly in the accompanying envelope. The proxy card
will not be used if you attend and vote at the Annual Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Dorothy A. Abel
DOROTHY A. ABEL
SECRETARY
Glen Burnie, Maryland
February 10, 1999
- ----------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
- ----------------------------------------------------------------<PAGE>
<PAGE>
PROXY STATEMENT
OF
GLEN BURNIE BANCORP
101 Crain Highway, S.E.
Glen Burnie, Maryland 21061
ANNUAL MEETING OF STOCKHOLDERS
March 11, 1999
- ----------------------------------------------------------------
GENERAL
- ----------------------------------------------------------------
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Glen Burnie
Bancorp (the "Company") to be used at the 1999 Annual Meeting of
Stockholders of the Company and any adjournments or
postponements thereof (hereinafter called the "Annual Meeting")
which will be held at La Fontaine Bleu, 7514 Ritchie Highway,
Glen Burnie, Maryland on Thursday, March 11, 1999 at 2:00 p.m.,
Eastern Time. The accompanying Notice of Annual Meeting and
form of proxy and this Proxy Statement are being first mailed to
stockholders on or about February 10, 1999.
- ----------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- ----------------------------------------------------------------
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTOR NAMED BELOW AND FOR THE OTHER
PROPOSALS DESCRIBED HEREIN. The proxy confers discretionary
authority on the persons named therein to vote with respect to
the election of any person as a director where the nominee is
unable to serve or for good cause will not serve, and with
respect to matters incident to the conduct of the Annual
Meeting. If any other business is presented at the Annual
Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as
votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted will not
be counted as votes cast. Proxies marked as abstentions or as
broker no votes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting
and all adjournments thereof. Proxies may be revoked by written
notice to Dorothy A. Abel, the Secretary of the Company, at the
address above or by the filing of a later dated proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
A proxy will not be voted if a stockholder attends the Annual
Meeting and votes in person. The presence of a stockholder at
the Annual Meeting will not revoke such stockholder's proxy.
- ----------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- ----------------------------------------------------------------
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, par value $10.00 per
share (the "Common Stock"). Stockholders of record as of the
close of business on February 3, 1999 (the "Record Date") are
entitled to one vote for each share then held. At the Record
Date, the Company had 896,507 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of at least a
majority of the total number of shares of Common Stock
outstanding and entitled to vote will be necessary to constitute
a quorum at the Annual Meeting.
1<PAGE>
<PAGE>
Persons and groups beneficially owning in excess of 5% of
the Common Stock are required to file certain reports with
respect to such ownership pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act"). The following table sets
forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by all persons who were known to
the Company to beneficially own more than 5% of the Common Stock
outstanding at the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OF COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP 1 OUTSTANDING
- ------------------- ----------------- ----------------
<S> <C> <C>
John E. and Margarette
Z. Demyan
101 Crain Highway, S.E.
Glen Burnie, Maryland 21061 94,246 2 10.51%
F. William and Beverly
F. Kuethe, Jr.
101 Crain Highway, S.E.
Glen Burnie, Maryland 21061 73,860 3 8.24
Eugene P. Nepa
101 Crain Highway, S.E.
Glen Burnie, Maryland 21061 72,857 4 8.13
Charles L. and Ruth G. Hein
101 Crain Highway, S.E.
Glen Burnie, Maryland 21061 47,148 5 5.26
<FN>
- -------------
1 Rounded to nearest whole share. For purposes of this table,
a person is deemed to be the beneficial owner of any shares
of Common Stock if he or she has or shares voting or invest-
ment power with respect to such Common Stock or has a right
to acquire beneficial ownership at any time within 60 days
from the Record Date. As used herein, "voting power" is the
power to vote or direct the voting of shares and "investment
power" is the power to dispose or direct the disposition of
shares. Except as otherwise noted, ownership is direct, and
the named individuals exercise sole voting and investment
power over the shares of the Common Stock. For information
relating to the number of shares of Common Stock benefi-
cially owned by each director of the Company, see "Proposal
I -- Election of Directors."
2 Includes 125 shares held by Mr. Demyan individually, and
3,822 shares held by Mrs. Demyan individually.
3 Includes 37,883 shares held by Mr. Kuethe individually or
jointly with others and 20,000 shares held by Mrs. Kuethe
individually.
4 Includes 64,882 shares held by the Eugene P. Nepa Revocable
Trust and 7,842 shares held in Mr. Nepa's Individual
Retirement Account ("IRA").
5 Includes 14,317 shares held by Mr. Hein individually or
jointly with others and 16,578 shares owned by Mrs. Hein
individually or jointly with others.
</FN>
</TABLE>
- ----------------------------------------------------------------
PROPOSAL I -- ELECTION OF A BOARD OF DIRECTORS
- ----------------------------------------------------------------
The Company's Bylaws provide that the Board of Directors
shall consist of not less than nine nor more than 16 members as
determined at the Annual Meeting of Stockholders provided that
two directorships may be left vacant to be filled at the
discretion of the Board of Directors. Directors currently serve
for terms of one year and until their successors are elected and
qualified. The Board of Directors proposes to fix the number of
directors for the ensuing year at 12 with two additional vacan-
cies to be filled at the discretion of the Board of Directors
and has nominated each of the current directors to serve as
directors for an additional term and until their successors are
elected and qualified. Under Maryland law, directors are
elected by a plurality of all votes cast at a meeting at which a
quorum is present.
2<PAGE>
<PAGE>
If Proposal IV to classify the Board of Directors is
approved at the Annual Meeting, the Board of Directors will be
divided into three classes and directors will be elected to hold
office for terms of one, two and three years in accordance with
the classifications presented below and until their successors
are elected and qualified. If Proposal IV is not approved,
directors will be elected to serve for a term of one year and
until their successors are elected and qualified.
Class A (term to expire at 2000 Annual Meeting)
- -----------------------------------------------
Charles L. Hein Eugene P. Nepa
Alan E. Hahn Shirley E. Boyer
Class B (term to expire at 2001 Annual Meeting)
- -----------------------------------------------
F. William Kuethe, Jr. William N. Scherer, Sr.
Thomas Clocker Karen B. Thorwarth
Class C (term to expire at 2002 Annual Meeting)
- -----------------------------------------------
John E. Demyan F.W. Kuethe, III
Theodore L. Bertier, Jr. Mary Lou Wilcox
Unless contrary instruction is given, the persons named in
the proxies solicited by the Board of Directors will vote each
such proxy for the election of the named nominees. If any of
the nominees is unable to serve, the shares represented by all
properly executed proxies which have not been revoked will be
voted for the election of such substitute as the Board of
Directors may recommend. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
Set forth below are the names of the Board of Directors'
nominees for election as directors. Also, set forth is certain
other information with respect to each nominee's age as of
December 31, 1998, the year he or she first became a director of
the Company and their business experience. Unless indicated
otherwise, the positions stated are positions which are
currently held and which have been held for at least the past
five years. Each nominee is also a member of the Board of
Directors of the Company's wholly-owned subsidiaries, The Bank
of Glen Burnie (the "Bank") and GBB Properties, Inc.
NAME AGE DIRECTOR SINCE
- ---- --- --------------
Theodore L. Bertier, Jr. 70 1997
Retired since 1993. Manager of design and drafting department
of Westinghouse Electric Corp. prior to retirement. Previously
served as a director of the Bank from 1970 through 1995.
Shirley E. Boyer 62 1995
Owner/Manager of a large number of residential properties in
Anne Arundel County, Maryland. Thirteen years experience in
various banks (1954-1967) in positions from Teller to Assistant
Branch Manager.
3<PAGE>
<PAGE>
Thomas Clocker 64 1995
Owner/Operator of Angel's Food Market in Pasadena, Maryland
since 1960. Charter member of and assisted in founding Pasadena
Business Association. Community involvement including local
charities, schools, church, scout groups and athletic programs.
John E. Demyan 51 1995
Chairman of the Board since 1995. Director of the Company and
the Bank from 1990 through 1994. Completed Maryland Banking
School in 1994 and currently serves on its Board of Trustees.
Owner/Manager of commercial and residential properties in
northern Anne Arundel County, Maryland.
Alan E. Hahn 63 1997
Owner/Manager of residential real estate. Retired information
systems manager. Chairman of Data Processing Committee for the
Bank
Charles L. Hein 77 1997
Retired clergyman. Purchaser and restorer of residential
properties. Mortgagee of residential properties.
F. William Kuethe, Jr. 66 1995
President and Chief Executive Officer of the Company and the
Bank since 1995. Director of the Bank from 1963 through 1989.
Former President - Glen Burnie Mutual Savings Bank from 1960
through 1995. Mr. Kuethe is a former licensed appraiser and
real estate broker. Banking experience from 1960 to present at
all levels. F. William Kuethe, Jr. is the father of Frederick
W. Kuethe, III.
Frederick W. Kuethe, III 39 1992
Vice President of the Company since 1995. Director of the Bank
since 1988. Software design and systems integration - Northrop
Grumman Corp. (formerly Westinghouse Electric Corporation).
Chairman of the Audit Committee. Graduated from Maryland
Banking School. Frederick W. Kuethe, III is the son of F.
William Kuethe, Jr.
Eugene P. Nepa 69 1997
Retired. Mechanical engineer at Premier Rides Incorporated
1992-1997.
William N. Scherer, Sr. 76 1995
Attorney specializing in wills and estates. Formerly accountant
and tax specialist.
Karen B. Thorwarth 41 1995
Independent insurance agent. Formerly, manager, Yacht
Department - Basil-Voges, Inc. of Annapolis, Maryland from 1979
to 1997. Licensed insurance agent specializing in underwriting
and marketing private pleasure yacht insurance. Member -
Annapolis Yacht Club.
Mary Lou Wilcox 50 1997
Elementary school teacher at Belle Grove Elementary School in
Brooklyn Park, Maryland.
4
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors holds regular monthly meetings and
special meetings as needed. During the year ended December 31,
1998, the Board of Directors met 19 times. No director attended
fewer than 75% of the total number of meetings of the Board of
Directors of the Company or the Bank held during 1998 and the
total number of meetings held by all committees on which the
director served during such year.
The Bank's Audit Committee acts as the audit committee for
the Company and currently consists of Directors Frederick W.
Kuethe, III, William N. Scherer, Sr., Shirley E. Boyer, Karen B.
Thorwarth, Alan E. Hahn and Eugene P. Nepa. The Audit
Committee monitors internal accounting controls and meets with
the Bank's Internal Auditor to review internal audit findings,
and meets with the Company's independent auditors regarding
these internal controls to assure full disclosure of the
Company's financial condition. During the year ended December
31, 1998, the Audit Committee met 12 times.
The Bank's Employee Compensation and Benefits Committee acts
as the compensation committee for the Company and is composed of
Directors Shirley E. Boyer, F. William Kuethe, Jr., John E.
Demyan, Theodore L. Bertier, Jr., Eugene P. Nepa, William N.
Scherer, Sr. and Frederick W. Kuethe, III. The purpose of the
Compensation Committee is to evaluate and ascertain the
appropriateness of compensation levels pertaining to the
officers of the Bank. This Committee met four times during
1998.
The Company's full Board of Directors acts as a nominating
committee for the annual selection of its nominees for election
as directors. While the Board of Directors will consider
nominees recommended by stockholders, it has not actively
solicited recommendations from the Company's stockholders for
nominees, nor established any procedures for this purpose. The
Board of Directors held one meeting during 1998 in order to make
nominations for directors.
DIRECTOR COMPENSATION
DIRECTORS FEES. Currently, all directors are paid a fee
of $700 for each combined regular or special meeting of the
Company and the Bank attended, with fees paid for one excused
absence. In addition to foregoing director's fees, Mr. Demyan
is compensated at the rate of $25,000 per annum for the
additional responsibilities of serving as the Chairman of the
Board. Directors (other than Mr. Demyan and F. William Kuethe,
Jr. who receive no fees for committee meetings) are paid an
additional fee of $100 for each committee meeting attended with
fees paid for up to two excused absences.
DIRECTOR STOCK PURCHASE PLAN. The Company maintains a
Director Stock Purchase Plan (the "Director Plan") pursuant to
which directors may purchase the Common Stock at a price equal
to its fair market value on the date an option is granted. At
December 31, 1998, there were 21,884 shares of Common Stock
reserved for issuance under the Director Plan. The Director
Plan was suspended in 1996 and no options are currently
outstanding under the Director Plan.
5
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth
information regarding the cash and noncash compensation awarded
to or earned during the past three fiscal years by the Company's
Chief Executive Officer and by each executive officer whose
salary and bonus earned in fiscal year 1998 exceeded $100,000
for services rendered in all capacities to the Company and its
subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------- -----------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
- ------------------- ---- ------ ----- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
F. William Kuethe, Jr. 1998 $83,077 $6,000 $ -- -- -- $13,503 1
President and Chief 1997 80,000 -- -- -- -- 14,006
Executive Officer 1996 80,000 -- -- -- -- 35,183
Michael P. Gavin 1998 95,295 7,125 -- -- -- 256 2
Executive Vice 1997 3 -- -- -- -- -- --
President and Chief 1996 3 -- -- -- -- -- --
Operating Officer
<FN>
____________
1 Mr. Kuethe's "Other Compensation" for 1998 consisted of $1,603 in paid insurance premiums and
$11,900 in directors' fees.
2 Mr. Gavin's "Other Compensation" for 1998 consisted of $256 in paid insurance premiums.
3 Mr. Gavin was not employed by the Company or the Bank during 1997 and 1996.
</FN>
</TABLE>
EMPLOYMENT AGREEMENT. The Company and the Bank have
entered into an employment agreement (the "Employment
Agreement") pursuant to which Michael P. Gavin serves as Chief
Operating Officer of the Bank at a base salary of approximately
$95,000. The Employment Agreement became effective on January
12, 1998 and provides for a term of three years. On each
anniversary date of the commencement of the Employment
Agreement, the term of Mr. Gavin's employment will be extended
for an additional one-year period beyond the then-effective
expiration date, upon a determination by the Board of Directors
that the performance of Mr. Gavin has met the required
performance standards and that the Employment Agreement should
be extended. The Employment Agreement provides Mr. Gavin with a
salary review by the Board of Directors not less often than
annually, as well as with inclusion in any discretionary bonus
plans, retirement and medical plans, customary fringe benefits,
vacation and sick leave. The Employment Agreement terminates
upon Mr. Gavin's death, may terminate upon Mr. Gavin's
disability and is terminable by the Bank for "just cause" (as
defined in the Employment Agreement). In the event of
termination for just cause, no severance benefits are available.
If the Company or the Bank terminates Mr. Gavin without just
cause, Mr. Gavin will be entitled to a continuation of his
salary and benefits from the date of termination through the
remaining term of the Employment Agreement plus an additional 12
month's salary (not to exceed 2.99 times his then existing
salary) and, at Mr. Gavin's election, either continued
participation in benefits plans in which Mr. Gavin would have
been eligible to participate through the Employment Agreement's
expiration date or the cash equivalent thereof. If the
Employment Agreement is terminated due to Mr. Gavin's
"disability" (as defined in the Employment Agreement), Mr. Gavin
will be entitled to a continuation of his salary and benefits
through the date of such termination, including any period prior
to the establishment of Mr. Gavin's disability. In the event of
Mr. Gavin's death during the term of the Employment Agreement,
his estate will be entitled to receive his salary through the
last day of the calendar month in which Mr. Gavin's death
occurred. Mr. Gavin may voluntarily terminate his Employment
Agreement by providing 90 days' written notice to the Boards of
Directors of the Bank and the Company, in which case Mr. Gavin
is entitled to receive only his compensation, vested rights and
benefits up to the date of termination.
6
<PAGE>
<PAGE>
In the event of (i) Mr. Gavin's involuntary termination of
employment other than for "just cause" during the period
beginning six months before a change in control and ending on
the later of the second anniversary of the change in control or
the expiration date of the Employment Agreement (the "Protected
Period"), (ii) Mr. Gavin's voluntary termination within 90 days
of the occurrence of certain specified events occurring during
the Protected Period which have not been consented to by Mr.
Gavin, or (iii) Mr. Gavin's voluntary termination of employment
for any reason within the 30-day period beginning on the date of
the change in control, Mr. Gavin will be paid within 10 days of
such termination (or the date of the change in control,
whichever is later) an amount equal to the difference between
(i) 2.99 times his "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code, and (ii) the sum of any
other parachute payments, as defined under Section 280G(b)(2) of
the Internal Revenue Code, that Mr. Gavin receives on account of
the change in control. "Change in control" generally refers to
the acquisition, by any person or entity, of the ownership or
power to vote more than 25% of the Bank's or Company's voting
stock, the control of the election of a majority of the Bank's
or the Company's directors, or the exercise of a controlling
influence over the management or policies of the Bank or the
Company. In addition, under the Employment Agreement, a change
in control occurs when, during any consecutive two-year period,
directors of the Company or the Bank at the beginning of such
period cease to constitute two-thirds of the Board of Directors
of the Company or the Bank, unless the election of replacement
directors was approved by a two-thirds vote of the initial
directors then in office. The Employment Agreement provides
that within 10 business days following a change in control, the
Bank shall fund a trust in the amount of 2.99 times Mr. Gavin's
base amount, that will be used to pay Mr. Gavin amounts owed to
him. The aggregate payment that would be made to Mr. Gavin
assuming his termination of employment under the foregoing
circumstances at December 31, 1998 would have been approximately
$307,260. A grantor trust was established in the amount of
$285,000 for Mr. Gavin in 1998. In the event that Mr. Gavin
prevails over the Company and the Bank, or obtains a written
settlement, in a legal dispute as to the Employment Agreement,
he will be reimbursed for his legal and other expenses.
TRANSACTIONS WITH MANAGEMENT
All currently outstanding loans to directors and executive
officers were made in the ordinary course of business of the
Bank and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve
more than the normal risk of collectibility or present other
unfavorable features. In March 1998, the Bank funded a grantor
trust in the amount of $2.0 million to cover possible
indemnification payments that might be owed to directors and
executive officers in the future as a result of litigation in
which they were named in their capacities as directors and
executive officers. No payments were made out of the trust and
it was dissolved effective December 31, 1998 with all funds
reverting to the Bank.
7
<PAGE>
<PAGE>
Security Ownership of Management
The following table provides information as of the Record
Date concerning ownership of the Common Stock by each of the
Company's directors, the individuals listed in the Summary
Compensation Table above and all executive officers and
directors as a group. Each person listed has sole voting and
sole investment power with respect to the shares listed across
from his name except as noted otherwise.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNERSHIP 1 PERCENT OF CLASS
- ---- -------------------------- ----------------
<S> <C> <C>
John E. Demyan 94,426 2 10.51%
F. William Kuethe, Jr. 73,860 3 8.24%
Theodore L. Bertier 8,164 4 *
Shirley E. Boyer 5,571 5 *
Thomas Clocker 3,495 6 *
Alan E. Hahn 5,503 7 *
Charles L. Hein 47,148 8 5.26%
Frederick W. Kuethe, III 12,307 9 1.37%
Eugene P. Nepa 72,857 10 8.13%
William N. Scherer, Sr. 3,071 11 *
Karen B. Thorwarth 632 *
Mary Lou Wilcox 449 *
Michael P. Gavin 666 *
All directors and executive officers as a group 328,545 36.65%
<FN>
_____________
1 Rounded to nearest whole share. For the definition of "beneficial ownership," see footnote
1 to the table in the section entitled "Voting Securities and Principal Holders Thereof."
2 Includes 90,424 shares as to which he shares voting and investment power and 3,822 shares
held by his spouse as to which he disclaims beneficial ownership.
3 Includes 37,883 shares as to which he shares voting and investment power and 20,000 shares
held by his spouse as to which he disclaims beneficial ownership.
4 Includes 253 shares as to which he shares voting and investment power and 604 shares
beneficially owned by his spouse as to which he disclaims beneficial ownership.
5 Includes 5,021 shares as to which she shares voting and investment power.
6 Includes 2,967 shares as to which he shares voting and investment power.
7 Includes 2,283 shares to which he shares voting and investment power and 3,169 shares held
in his IRA.
8 Includes 14,317 shares as to which he shares voting and investment power, 16,253 shares held
as Trustee and 16,578 shares held by his spouse as to which he disclaims beneficial
ownership.
9 Includes 9,903 shares as to which he shares voting and investment power and 2,175 shares
beneficially owned by his spouse as to which he disclaims beneficial ownership.
10 Includes 64,882 shares held by the Eugene P. Nepa Revocable Trust and 7,842 shares held by
his IRA.
11 Includes 2,992 shares as to which he shares voting and investment power.
</FN>
</TABLE>
- ----------------------------------------------------------------
PROPOSAL II -- APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------------------------------
The Board of Directors is seeking stockholder authorization
to select an outside auditing firm for the ensuing year. Trice
& Geary LLC, which was the Company's independent auditing firm
for the 1998 fiscal year, is expected to be retained by the
Board of Directors to be the Company's independent auditors for
the 1999 fiscal year. A representative of Trice & Geary LLC is
expected to be present at the Annual Meeting to respond to
appropriate questions from stockholders and will have the
opportunity to make a statement if he or she so desires. THE
BOARD OF
8
<PAGE>
<PAGE>
DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AUTHORIZE OF THE
BOARD OF DIRECTORS TO SELECT AN OUTSIDE AUDITING FIRM FOR THE
ENSUING YEAR.
- ----------------------------------------------------------------
PROPOSAL III -- APPROVAL OF AN AMENDMENT TO THE
ARTICLES OF INCORPORATION TO ELIMINATE PREEMPTIVE RIGHTS
- ----------------------------------------------------------------
The Board of Directors is seeking stockholder approval of
an amendment to the Articles of Incorporation to eliminate
preemptive rights. Preemptive rights generally entitle
stockholders to subscribe to any and all issuances of the Common
Stock on a proportionate basis and in an amount equal to the
ratio that each individual stockholder's total number of shares
bears to the total number of shares of Common Stock outstanding.
The Board of Directors is seeking stockholder approval of a
new Article Ten to the Articles of Incorporation to eliminate
preemptive rights, which reads as follows:
The holders of the capital stock of the Corporation
shall have no preemptive rights to subscribe for
any shares of any class of stock of the Corporation,
whether now or hereafter authorized.
In accordance with the Maryland General Corporation Law
("MGCL") as in effect at the time of the Company's
incorporation, holders of the Common Stock are entitled to
preemptive rights with respect to any additional shares which
may be issued by the Company since such rights were not
specifically denied in the Articles. Under the MGCL, however,
preemptive rights do not apply to: (1) stock issued to obtain
any of the capital required to initiate the corporate
enterprise; (2) stock issued for at least its fair value in
exchange for consideration other than money; (3) stock remaining
unsubscribed for after being offered to stockholders; (4)
treasury stock sold for at least its fair value; (5) stock
issued or issuable under articles of merger; (6) stock which is
not presently entitled to be voted in the election of directors
issued for at least its fair value; (7) stock, including
treasury stock, issued to an officer or other employee of the
corporation or its subsidiary on terms and conditions approved
by the stockholders by the affirmative vote of two-thirds of all
the votes entitled to be cast on the matter; and (8) any other
issuance of shares if the applicability of preemptive rights is
impracticable. The MGCL further permits the elimination of
preemptive rights through an amendment to the Articles of
Incorporation.
Reasons for Eliminating Preemptive Rights. The Board of
Directors believes that eliminating preemptive rights will
remove an unnecessary impediment to the Company's ability to
raise capital. The Board of Directors notes that few, if any,
publicly held companies confer preemptive rights on their
stockholders and believes that the elimination of preemptive
rights is necessary to ensure that the Company has the
flexibility to raise capital in an efficient manner. The Board
of Directors also believes that eliminating preemptive rights
will allow the Company to more easily implement stock-based
compensation and other programs which will allow the Company to
remain competitive with other banking institutions in retaining
and attracting experienced personnel to serve the Company and
its stockholders.
Because of preemptive rights, the Company generally cannot
issue additional shares of Common Stock unless the shares are
first offered to existing stockholders. Accordingly, the
Company is effectively prevented from raising capital through an
underwritten public offering or by issuing a block of shares to
new investors. While the Company does not currently have plans
for any such issuance, the Board of Directors believes that the
Company needs the flexibility to undertake such offerings in the
future if market conditions make an underwritten public offering
attractive or if the Company's need for capital requires it to
raise capital quickly through individual investors. The
elimination of preemptive rights will also give the Company more
flexibility in structuring its stock-based benefit plans since
it will no longer be required to obtain the approval of
two-thirds of the outstanding shares for such plans. The
Company will also be able to restructure its Stockholder
Purchase Plan to offer shares on an ongoing basis rather than in
quarterly offerings made to stockholders generally as is
currently the case.
9<PAGE>
<PAGE>
Certain Effects of the Amendment. If Proposal III is
adopted, the Board of Directors will have the ability to issue
additional shares of the Common Stock without first offering
them to existing stockholders. Accordingly, the Company may in
the future issue Common Stock on terms that dilute the voting
and other interests of existing stockholders. Stockholders who
desire to maintain their percentage ownership would be required
to purchase shares on the open market. The elimination of
preemptive rights could also under certain circumstances have an
anti-takeover effect since it would allow the Board of Directors
to issue additional shares in a manner that could impede an
unsolicited takeover attempt. For example, the Company would
have the ability to issue a block of shares directly to a
favored acquiror in order to dilute the ownership interests of a
hostile bidder. The Board of Directors, however, does not have
any current plans for such an issuance and is proposing the
elimination of preemptive rights solely in order to enhance the
Company's future flexibility in capital raising and in other
areas requiring the issuance of Common Stock.
Stockholder Vote Required to Approve the Amendment.
Approval of this amendment to the Articles of Incorporation will
require the affirmative vote of not less than 80% of the
outstanding shares of Common Stock. Since the required vote is
based on the number of shares outstanding, an abstention,
failure to vote or broker non-vote has the same effect as a vote
against Proposal III. The Board of Directors has unanimously
approved the proposed amendment to the Articles of
Incorporation. THE BOARD OF DIRECTORS BELIEVES THAT THE
ELIMINATION OF PREEMPTIVE RIGHTS IS IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE
FOR THIS AMENDMENT TO ARTICLES OF INCORPORATION.
- ----------------------------------------------------------------
PROPOSAL IV -- APPROVAL OF AMENDMENTS TO THE ARTICLES OF
INCORPORATION AND BYLAWS TO PROVIDE FOR A CLASSIFIED BOARD
OF DIRECTORS AND TO MAKE CERTAIN CONFORMING AMENDMENTS TO
THE BYLAWS
- ----------------------------------------------------------------
The Board of Directors is seeking stockholder approval of
an amendment to the Articles of Incorporation and conforming
amendments to the Bylaws to provide for a classified board of
directors. The following is a discussion of and the reasons for
the amendments, the anti-takeover effects and the stockholder
vote required.
Under the proposed amendments, the Board of Directors will
be divided into three classes which shall be as nearly equal in
number as possible. The directors in each class will hold
office following their initial classification for terms of one
year, two years and three years, respectively, and, upon
reelection will serve for terms of three years thereafter. Each
director will continue to serve until his or her successor is
elected and qualified.
To effect the classification, the Board of Directors
proposes to add a new Article Eleven to the Articles of
Incorporation to read as follows:
At the 1999 Annual Meeting of Stockholders, the
Directors elected by the Stockholders shall be
divided into three classes (denominated as Class A,
Class B and Class C), as nearly equal in number
as reasonably possible, with the term of office
of the Class A Directors to expire at the year
2000 Annual Annual Meeting of Stockholders,
the term of office of the Class B Directors
to expire at the year 2001 Annual Meeting of
Stockholders, and the term of office of the
Class C Directors to expire at the year 2002
Annual Meeting of Stockholders. At each Annual
Meeting of Stockholders following such initial
classification and election, Directors elected
to succeed those Directors whose terms expire
shall be elected for a three (3) year term of
office, provided that the Stockholders electing
new or replacement Directors may from time to
time specify a term of less than three years
in order to maintain the number of Directors
in each class as nearly equal as possible.
In order to implement a classified Board of Directors, it
will also be necessary to make certain conforming amendments to
the Bylaws. Specifically, the Board of Directors proposes to
amend Article III, Section 3 of the Bylaws to read the same as
proposed Article Eleven, and that the first sentence of Article
III, Section 2, of the Bylaws will be amended to remove the
reference to the one year term of office of directors to read as
follows:
10<PAGE>
<PAGE>
The property, business and affairs of this
corporation shall be managed by a Board of
not less than nine (9) Directors, nor more
than sixteen (16).
In addition, the Board of Directors proposes to amend the
Bylaws to make clear, as required by the MGCL, that a director
appointed to the Board of Directors to fill a vacancy will only
serve until the next annual meeting of stockholders and until
his successors are elected and qualified. Specifically, the
Board of Directors proposes to amend Article III, Section 4, of
the Bylaws to read as follows:
Any vacancy on the Board of Directors may be
filled by the Board of Directors. A Director
elected by the Board of Directors to fill a
vacancy shall be elected to hold office until
the next Annual Meeting of Stockholders and
until his successor has been elected and
qualified.
Purpose and Effects of Proposal. The Board of Directors
believes that a classified board of directors will promote
continuity and stability in the Company's management and
policies since a majority of the Company's directors at any
given time will have prior experience as directors. The Board
of Directors further believes that such continuity and stability
will facilitate long-range planning and will have a beneficial
effect on employee loyalty and customer confidence. Under the
current Bylaws, the entire Board of Directors must stand for
election each year. Accordingly, it is possible that all or a
majority of the current directors could be replaced at any given
Annual Meeting. If Proposal IV is approved, the Board of
Directors will be divided into three classes effective with the
1999 Annual Meeting, only one of which classes will stand for
election at each Annual Meeting thereafter. For a description
of the composition of proposed classes, see "Proposal I
Election of Directors." This system of classification will have
the effect of making it more difficult to change the composition
of the Board of Directors since at least two stockholder
meetings will be required, instead of one, to effect a change in
a majority of the Board of Directors.
The need for additional continuity and stability has been
illustrated by recent events. At the last Annual Meeting, First
Mariner Bancorp ("First Mariner") financed a proxy contest by
certain former directors to unseat the entire Board of
Directors. The First Mariner slate included few individuals
with any experience in banking. If First Mariner's slate had
been elected, the Board of Directors believes that the Bank's
efforts to satisfy the Memorandum of Understanding with federal
and state bank regulators would have been dealt a setback.
Subsequently, First Mariner disclosed in public statements and
filings with the Board of Governors of the Federal Reserve
System (the "FRB") that it intended to run a slate at the
current Annual Meeting with the goal of acquiring control of the
Board of Directors and running the Company as a subsidiary of
First Mariner. In this manner, First Mariner could have
acquired effective control of the Company without paying stock-
holders anything for their shares. First Mariner has since sold
its shares back to the Company and agreed not to seek control of
the Company and the Board of Directors is not aware of any other
attempts to acquire the control of the Company at this time. The
Board of Directors, however, continues to believe that a
classified board of directors is desirable to deter possible
future attempts to acquire control of the Company without paying
stockholders a premium.
The Board of Directors believes that a classified board of
directors will ensure that the Board will be able to negotiate
with potential acquirors to obtain a fair price for stockholders
in any change of control transaction. For a discussion of other
provisions of the Articles of Incorporation and Bylaws which
could forestall a change of control which has not been
negotiated with the Board of Directors, see "Certain Provisions
of the Articles of Incorporation and Bylaws." It should be
noted that the classification of directors will apply to every
election of directors. Accordingly, the classified board will
make it more difficult to change the composition of the Board
even if the reason for the change is dissatisfaction with the
performance of the incumbent board. In addition, the MGCL
provides that, unless the charter provides otherwise, if the
directors have been divided into classes, a director may not be
removed without cause. The Board of Directors, however,
believes that the increased management stability and continuity
fostered by the classified board of directors outweighs any
detriment attributable to the reduced ability of stockholders to
change the composition of the Board of Directors.
11<PAGE>
<PAGE>
In connection with the proposal to classify the board of
directors, the Board of Directors is seeking stockholder
approval of certain conforming amendments to the Bylaws.
Article III, Section 2 of the Bylaws would be amended to remove
the current reference to one-year terms for directors. Article
III, Section 3 would be amended to read the same as proposed
Article Eleven of the Articles of Incorporation. In addition,
Article III, Section 4 of the Bylaws which currently authorizes
the Board of Directors to fill vacancies caused by resignation,
death or removal for the unexpired term of the predecessor would
be amended to provide that any director appointed by the Board
of Directors must stand for election at the next annual meeting
of stockholders as required by the MGCL.
Stockholder Vote Required to Approve the Amendments.
Approval of each of these amendments to the Articles of
Incorporation and the Bylaws will require the affirmative vote
of not less than 80% of the outstanding shares of Common Stock.
Since the required vote is based on the number of shares out-
standing, an abstention, failure to vote or broker non-vote has
the same effect as a vote against Proposal IV. The Board of
Directors has unanimously approved the proposed amendments. THE
BOARD OF DIRECTORS BELIEVES THAT THE CLASSIFICATION OF THE BOARD
OF DIRECTORS IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE ABOVE AMENDMENTS TO THE ARTICLES OF INCORPORATION AND THE
BYLAWS.
- ----------------------------------------------------------------
PROPOSAL V -- APPROVAL OF AN AMENDMENT
TO THE BYLAWS TO CHANGE THE DATE OF THE ANNUAL
MEETING OF STOCKHOLDERS
- ----------------------------------------------------------------
The Board of Directors is proposing an amendment to the
first sentence of Article II, Section 2 of the Bylaws, to change
the date of the Annual Meeting of Stockholders from the month of
March to May, which will read as follows:
The Annual Meeting of the Stockholders shall
be held on the second Thursday of May at
2:00 p.m. in each year if not a legal holiday,
and, if a legal holiday, then on the next
business day following at the same hour, when
the stockholders shall elect a board and
transact such other business as may properly
come before the meeting.
Purpose and Effect of Proposal. The Board of Directors is
proposing to amend the Bylaws to move the Annual Meeting of
Stockholders to the second Thursday in May in order to allow
more time to prepare the proxy statement and Annual Report to
Stockholders. The Company is now subject to the proxy rules of
the Securities and Exchange Commission which require the Company
to send each stockholder an Annual Report when it solicits
proxies for the Annual Meeting of Stockholders. In addition,
the Annual Report must now contain more extensive information
than previous Annual Reports. In order to hold the meeting on
the second Thursday in March as required by the current Bylaws,
these documents must be substantially complete by the end of
January. Accordingly, the Company's annual audit must be
conducted on an accelerated schedule. The Company believes that
a later Annual Meeting will reduce auditing costs and allow the
Company to provide stockholders with improved information.
Stockholder Vote Required to Approve the Amendment.
Approval of this amendment to the Bylaws will require the
affirmative vote of not less than 80% of the outstanding shares
of Common Stock. Since the required vote is based on the number
of shares outstanding, an abstention, failure to vote or broker
non-vote has the same effect as a vote against Proposal V. The
Board of Directors has unanimously approved the proposed
amendment. THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED
CHANGE IN THE ANNUAL MEETING DATE IS IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A
VOTE FOR THIS AMENDMENT TO THE BYLAWS.
12
<PAGE>
<PAGE>
- ----------------------------------------------------------------
PROPOSAL VI -- APPROVAL OF AN AMENDMENT TO THE BYLAWS
TO REDUCE THE STOCKHOLDER VOTE REQUIRED TO AMEND THE BYLAWS
- ----------------------------------------------------------------
The Board of Directors proposes to amend the Bylaws to
lower the stockholder vote required to amend the Bylaws from 80%
to 66 2/3%. Specifically, the Board of Directors proposes that
stockholders approve an amendment to Article XII, Section 1 of
the Bylaws so that the first sentence will read as follows:
Except as otherwise provided in the Articles of
Incorporation, the Bylaws may be amended by the
stockholders of the Corporation by an affirmative
vote of 66 2/3% of all the votes entitled to be cast
on the matter.
For purposes of clarifying a possible ambiguity in the
Bylaws, the Board of Directors also proposes to amend paragraph
c) of Article II, Section 10 (which states that corporate
actions may generally be approved by a majority of the votes
cast) to include a general exception for actions for which a
higher vote is specified in the Bylaws. As amended, paragraph
c) of Article II, Section 10 would read as follows: "All other
corporate actions, unless otherwise indicated herein, shall be
authorized by a majority of the votes cast."
Purpose and Effect of Proposal. The proposed amendment
would reduce the vote required to amend the Bylaws from the
current 80% of shares outstanding to 66 2/3% of shares out-
standing. The Board of Directors is proposing the amendment in
order to make it less difficult to amend the Bylaws. With the
Company's broad stockholder base, it is becoming increasingly
difficult to obtain the 80% vote required to amend the Bylaws.
As noted in the discussions of the prior proposals, the Bylaws
require the Company to follow certain procedures that have
become difficult to implement in a corporation with a diffuse
stockholder base. In order to ensure that the Company is able
to amend its Bylaws in the future to keep pace with the evolving
nature of the Company, the Board of Directors is seeking to
reduce the vote required for amendments to a level that it
believes will be easier to obtain. It should be noted that the
Board of Directors does not currently have, and is not seeking
stockholder approval for, the authority to amend the Bylaws by
action of the Board of Directors alone. If Proposal VI is
adopted, future amendments to the Bylaws will remain subject to
stockholder approval. In addition, amendments to the Articles
of Incorporation will continue to require the approval of 80% of
the outstanding shares.
Stockholder Vote Required to Approve the Amendment.
Approval of these amendments to the Bylaws will require the
affirmative vote of not less than 80% of the outstanding shares
of Common Stock. Since the required vote is based on the number
of shares outstanding, an abstention, failure to vote or broker
non-vote has the same effect as a vote against Proposal VI. The
Board of Directors has unanimously approved these proposed
amendments to the Bylaws. THE BOARD OF DIRECTORS BELIEVES THAT
THE REDUCTION IN THE VOTE REQUIRED TO AMEND THE BYLAWS IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS A VOTE FOR THIS AMENDMENT TO THE BYLAWS.
- ----------------------------------------------------------------
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
- ----------------------------------------------------------------
In certain circumstances, the amendments to the Articles of
Incorporation and Bylaws described in Proposals III and IV could
hinder or delay a change in control of the Company and accor-
dingly could have the effect of protecting current management.
Certain existing provisions of the Articles of Incorporation and
Bylaws and contractual obligations may also have the effect of
discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual stockholders may
deem to be in their best interests or in which stockholders may
receive a substantial premium for their shares over then current
market prices. As a result, stockholders who might desire to
participate in such a transaction may not have an opportunity to
do so. Such provisions also will render the removal of the
current Board of Directors or management of the Company more
difficult.
13
<PAGE>
<PAGE>
The following discussion is a general summary of certain
material provisions of the Articles of Incorporation and Bylaws
of the Company and certain other provisions of the MGCL, which
may be deemed to have such an "anti-takeover" effect.
Voting Requirements for Approval of Certain Business
Combinations and Other Transactions. The Articles of
Incorporation provide that the affirmative vote of 80% of the
outstanding shares of stock of the Company entitled to vote
shall be required to approve the following transactions: (a) the
consolidation of the Company with one or more corporations to
form a new consolidated corporation; (b) the merger of the
Company with another corporation or the merger of one or more
corporations into the Company; (c) the sale, lease or exchange
or other transfer of all or substantially all, of the property
and assets of the Company, including its goodwill; (d) the
participation of the Company in a share exchange, the stock of
which is to be acquired; or (e) the voluntary liquidation,
dissolution or winding up of the Company. Although the Bylaws
may currently only be amended by the stockholders by an
affirmative vote of 80% of the votes entitled to be cast on the
matter, this percentage would be reduced to 66 2/3% if Proposal
VI is approved. These provisions of the Articles of Incor-
poration may have the effect of foreclosing mergers and other
business combinations and place the power to prevent such a
merger or combination in the hands of a minority of stock-
holders.
Removal of Directors. The Company's Bylaws require the
affirmative vote of 80% of the votes entitled to be cast at an
election of directors in order to remove a director. In
addition, if Proposal IV relating to the classification of the
Board of Directors is approved, directors may not be removed
without cause. This provision may, under certain circumstances,
impede the removal of a director of the Company thus precluding
a person or entity from immediately acquiring control of the
Company's Board of Directors through the removal of existing
directors.
Severance Arrangements. The Company has adopted a
Change-in-Control Severance Plan (the "Severance Plan") pursuant
to which eligible employees may receive severance payments if
their employment terminates following a change-in-control of the
Company. Under the Severance Plan, a Change-in-Control is
defined as the acquisition of more than 25% of the Company's
voting stock, the ability to elect a majority of the Company's
directors, the acquisition of a controlling influence over the
management or policies of the Company or when during a period of
one year, the individuals who constituted the Board of Directors
at the beginning of the period cease to constitute at least
two-thirds of the Board of Directors. Eligible employees
include any person employed by the Company or its subsidiaries
who is not party to an employment or severance agreement.
Participants are eligible to receive severance benefits if their
employment is terminated for a reason other than cause within
one year of a Change-in-Control or if they voluntarily terminate
their employment within 90 days of an event that qualifies as
"good reason" occurring within one year of a Change-in-Control.
Good reason includes a material reduction in compensation,
requiring the participant to perform their principal functions
more than 30 miles from their office at the date of the
Change-in-Control, the failure to maintain the participant's
benefits, the assignment of materially different responsi-
bilities, or a material diminution of responsibilities. Under
the Severance Plan, executive officers are eligible to receive a
severance benefit equal to nine months' base pay plus one month
of base pay for each full year of employment up to 20 months.
Other officers may receive four weeks' base pay plus two weeks
of base pay for each full year of employment up to a maximum of
52 weeks. All other employees receive two weeks base pay plus
two weeks of base pay for each full year of employment (with a
minium of four weeks) up to a maximum of 52 weeks. The Company
has also entered into an employment agreement with Executive
Vice President Michael P. Gavin which provides for severance
payments in the event of a change-in-control as defined in the
employment agreement. For a description of these arrangements,
see "Proposal I Election of a Board of Directors Executive
Compensation."
Stockholder Rights Plan. The Board of Directors declared a
dividend distribution of one right ("Right") for each out-
standing share of Common Stock to stockholders of record at the
close of business on February 13, 1998 pursuant to the terms of
the Stockholder Rights Plan entered into between the Company and
the rights agent. Each Right entitles the registered holder to
purchase from the Company one share of Common Stock on the date
of exercise, at a purchase price of $100.00 on the distribution
date (the "Distribution Date"), subject to adjustment. The
Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person (other than an
exempt person under the Rights Plan) or group of affiliated or
associated persons has acquired, or obtained the rights to
acquire,
14
<PAGE>
<PAGE>
beneficial ownership of 10% or more of the outstanding shares of
Common Stock or (ii) 10 business days following the commencement
of a tender offer or exchange offer that would result in a
person or group beneficially owning 10% or more of the
outstanding shares of Common Stock. In the event that a person
becomes the beneficial owner of 10% or more of the outstanding
Common Stock (except an offer for all outstanding shares of
Common Stock approved by a majority of continuing outside
directors) each holder of a Right, except such person holding in
excess of 10% of outstanding Common Stock, will have the right
to receive upon exercise Common Stock having a value equal to
two times the exercise price of the Right. There is no mone-
tary value presently assigned to the Rights, except for a
redemption value of $.01 per share, and the Rights do not trade
separately from the share of the Common Stock. The Rights Plan
may have a certain anti-takeover effect, although it is not
intended to preclude any prospective offer for all outstanding
shares of Common Stock at a fair price and otherwise in the best
interest of the Company and its stockholders as determined by
the Board of Directors. The Rights Agreement will expire in
February 2008.
- ----------------------------------------------------------------
OTHER MATTERS
- ----------------------------------------------------------------
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this proxy statement and matters incident to the
conduct of the Annual Meeting. However, if any other matters
should properly come before the Annual Meeting, it is intended
that proxies in the accompanying form will be voted in respect
thereof in accordance with the determination of a majority of
the named proxies.
- ----------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- ----------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act,
the Company's officers, directors and persons who own more than
ten percent of the outstanding Common Stock ("Reporting Person")
are required to file reports detailing their ownership and
changes of ownership in such Common Stock, and to furnish the
Company with copies of all such reports. Based on the Company's
review of such reports which the Company received during the
last fiscal year, or written representations from Reporting
Persons that no annual report of change in beneficial ownership
was required, the Company believes that, with respect to the
last fiscal year, all persons subject to such reporting require-
ments have complied with the reporting requirements, except for
Ms. Shirley E. Boyer, Mr. Eugene P. Nepa and Mr. Charles L. Hein
who each failed to timely file a Form 4 and Mrs. Ethel Webster
who failed to file a Form 3 Initial Statement of Beneficial
Ownership upon becoming a Reporting Person or a Form 4 Statement
of Changes in Beneficial Ownership to report her disposition of
shares.
- ----------------------------------------------------------------
MISCELLANEOUS
- ----------------------------------------------------------------
The cost of soliciting proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation therefor.
The Company's 1998 Annual Report to Stockholders, including
financial statements, has been mailed to all stockholders of
record as of the close of business on the Record Date with this
Proxy Statement. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary
of the Company. Such Annual Report is not to be treated as a
part of the proxy solicitation material or as having been
incorporated herein by reference. A COPY OF THE COMPANY'S FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO TREASURER, GLEN BURNIE BANCORP, 101 CRAIN HIGHWAY,
S.E., GLEN BURNIE, MARYLAND 21061.
15
<PAGE>
<PAGE>
- ----------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ----------------------------------------------------------------
In order to be eligible for inclusion in the Company's
proxy materials for next year's Annual Meeting of Stockholders,
any stockholder proposal to take action at such meeting must be
received at the Company's executive office at 101 Crain Highway,
S.E., Glen Burnie, Maryland 21061 no later than November 12,
1999. Any such proposals shall be subject to the requirements
of the proxy rules adopted by the Securities and Exchange
Commission under the Exchange Act. Stockholder proposals, other
than those submitted pursuant to the Exchange Act, may be
introduced at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Dorothy A. Abel
DOROTHY A. ABEL
SECRETARY
Glen Burnie, Maryland
February 10, 1999
16
<PAGE>
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REVOCABLE PROXY
GLEN BURNIE BANCORP 1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints John E.
Demyan, F. William Kuethe, Jr. and William N. Scherer, Sr., or a
majority of them, with full powers of substitution, as
attorneys-in-fact and agents for the undersigned, to vote all
shares of Common Stock of Glen Burnie Bancorp which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held at La Fontaine Bleu, 7514 Ritchie
Highway, Glen Burnie, Maryland on Thursday, March 11, 1999 at
2:00 p.m., Eastern Time (the "Annual Meeting"), and at any and
all adjournments thereof, as indicated below and as determined
by a majority of the named proxies with respect to any other
matters presented at the Annual Meeting.
VOTE
FOR WITHHELD
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1. To fix the number of directors
at twelve plus two additional
vacancies which may be filled
at the discretion of the Board
of Directors and to elect as
directors all nominees listed
below. [ ] [ ]
Theodore L. Bertier, Jr. F. William Kuethe, Jr.
Shirley E. Boyer Frederick W. Kuethe, III
Thomas Clocker Eugene P. Nepa
John E. Demyan William N. Scherer, Sr.
Alan E. Hahn Karen B. Thorwarth
Charles L. Hein Mary Lou Wilcox
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, INSERT THAT
NOMINEE'S NAME ON THE LINES PROVIDED BELOW.
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FOR AGAINST ABSTAIN
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2. To authorize the Board of Directors to
select an outside auditing firm for the
1999 fiscal year. [ ] [ ] [ ]
3. To approve an amendment to the Articles
of Incorporation to eliminate preemptive
rights. [ ] [ ] [ ]
4. To approve an amendment to the Articles
of Incorporation to provide for a classified
board of directors and make certain
conforming amendments to the Bylaws. [ ] [ ] [ ]
5. To approve an amendment to the Bylaws
to change the date fixed for the Annual
Meeting of Stockholders. [ ] [ ] [ ]
6. To approve an amendment to the Bylaws to
reduce the stockholder vote required to
amend the Bylaws from 80% to 66 2/3% of all
votes entitled to be cast. [ ] [ ] [ ]
The Board of Directors recommends a vote "FOR" each of the listed
propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES AND
FOR EACH OF THE OTHER PROPOSALS LISTED ABOVE. IF ANY OTHER
BUSINESS IS PROPERLY PRESENTED AT THE ANNUAL MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH
THE DETERMINATION OF A MAJORITY OF THE NAMED PROXIES. THIS
PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO
VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR
WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
*** PLEASE SIGN AND DATE ON THE BACK ***
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after
notification to the Secretary of the Company at the Annual
Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect. The undersigned
hereby revokes any and all proxies heretofore given with respect
to the shares of Common Stock held of record by the undersigned.
The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of notice and a proxy statement and
a 1998 Annual Report to stockholders for the annual meeting.
Dated:________ , 1999 ____________________________________
PRINT NAME OF STOCKHOLDER
______________________________________
SIGNATURE OF STOCKHOLDER
______________________________________
PRINT NAME OF STOCKHOLDER
______________________________________
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in
which this proxy was mailed. When signing as attorney,
executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should
sign.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE CHECK
THIS BOX. [ ]
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ACCOMPANYING POSTAGE-PREPAID ENVELOPE.
