TALBOT BANCSHARES, INC.
EMPLOYEE STOCK OPTION PLAN
The purposes of this Plan are to encourage stock ownership by key management employees of Talbot Bancshares, Inc. and its subsidiaries, to provide an incentive for such employees to expand and improve the profits and prosperity of the Company, and to assist the Company and its subsidiaries in attracting and retaining key personnel through the grant of options to purchase shares of the Company's common stock.
Unless otherwise required by the context:
1. "Board" shall mean the Board of Directors of Talbot Bancshares, Inc.
2. "Committee" shall mean the Personnel Committee, as described in Section D.
3. "Company" shall mean Talbot Bancshares, Inc.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "Fair Market Value" shall mean the current fair market value of any Stock subject to an Option, as determined by the Committee in good faith.
6. "Incentive Stock Option" shall mean any Option granted under this Plan which qualifies as an incentive stock option, as described in Section 422 of the Code, at the time of its grant.
7. "Nonqualified Option shall mean any Option granted under this Plan which is not an Incentive Stock Option.
8. "Option" shall mean a right to purchase Stock, granted pursuant to the Plan.
9. "Option Price shall mean the purchase price for Stock under an Option, as determined in Section F below.
10. "Participant" shall mean an employee of the Company or any of its subsidiaries, to whom an Option is granted under the Plan.
11. "Plan" shall mean this Talbot Bancshares, Inc. Stock Option Plan.
12. "Restricted Stock" shall mean any stock acquired through the exercise of an Option.
13. "Stock" shall mean the common stock of the Company, par value $.01.
14. "Ten Percent Shareholder" shall mean any individual who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company.
15. "Total and Permanent Disability" shall mean total and permanent disability as defined in Code Section 422(e)(3).
Subject to the provisions of Section L of the Plan, the maximum number of shares of Stock that may be optioned or conveyed under the Plan is 40,000 shares. Such shares shall be authorized, but unissued, shares of Stock of the Company. If any Option under this Plan shall terminate, expire, or be canceled as to any shares, new options may be granted covering those shares.
The Plan shall be administered by the Committee. The Committee shall be composed of three members of the Board and shall be appointed by the Board. Vacancies occurring in the membership of the Committee shall be filled by appointment by the Board. Every member of the Committee shall be a "disinterested person" within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934.
The Committee shall be responsible to the Board for the operation of the Plan. The interpretation and construction of any provision of the Plan by the Committee shall be final, unless otherwise determined by the Board. No member of the Board or the Committee shall be liable for any action or determination made by him in good faith with respect to the Plan.
Notwithstanding anything in this Plan to the contrary, the Board reserves the right to terminate, by written resolution duly adopted by the Board, any and all powers delegated to the Committee in this Plan. In that event, those Committee powers so terminated by the Board shall revert to and be fully exercisable by the Board to the same extent as they were exercisable by the Committee, provided that no termination of the Committee's powers shall be retroactively effective. Any termination of the Committee's powers shall not be deemed to be a Plan amendment.
The Committee may grant Options at any time to any key management employee (including an employee who is an officer) of the Company or any of its subsidiaries. However, in no event shall Options be granted to any employee if that grant would cause the aggregate fair market value (determined as of the date the option is granted) of the stock for which incentive stock options (as that term is defined in Code Section 422) will become exercisable for the first time by that employee in any calendar year under all stock option plans of the Company and its subsidiaries to exceed $100,000.
Options granted pursuant to the Plan shall be authorized by the Board, upon recommendation of the Committee, and shall be evidenced by agreements in such form as the Committee shall from time to time adopt. Every option agreement shall be subject to the following terms and conditions, and may also contain the terms and conditions described in Sections G and H, and any other terms and conditions as the Committee deems appropriate:
1. Time of Payment. Each Option agreement shall state that the Option Price shall be paid in full, in cash or other valuable consideration as the Committee deems acceptable, at the time an Option is exercised under the Plan.
Promptly after the exercise of an Option and the payment of the full Option Price, the Participant shall be entitled to the issuance of a certificate evidencing his ownership of such Restricted Stock. A Participant shall have none of the rights of a shareholder until shares are issued to him, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such certificate is issued.
2. Number of Shares. Each Option agreement shall state the total number of shares of Stock to which it pertains. No Option may be exercised for a fractional share of stock.
3. Time of Exercise. Each Option agreement shall specify the period during which the Option thereunder may be exercised and provide that the Option shall expire at the end of that period. No Option may be exercised later than ten years from the date on which it is granted; provided, however that in the case of an Incentive Stock Option granted to an individual who, at the time of grant, is a Ten Percent Shareholder, the Option may not be exercised more than five years after the date on which it was granted. In addition, no Option may be exercised prior to the approval of this Plan by the stockholders of the Company, as described in Section O.
4. Option Price. Each Option agreement shall state the purchase price for the Stock underlying that Option (the "Option Price"). In the case of an Incentive Stock Option granted to a Ten Percent Shareholder, the Option Price shall not be less than one hundred and ten percent (110%) of the Fair Market Value of the Stock at the time of the grant and, in the case of any other Participant. The Option Price shall not be less than one hundred percent (100%) of the Fair Market Value of the Stock at the time of the grant, except where an option of the Company is being substituted for an option to Purchase shares of a subsidiary, in accordance with the requirements of Code Section 424. In no event shall the option price be less than the par value of the Stock.
5. Alienation. Each Option agreement shall state that the Option shall not be transferable other than by will or by the laws of descent and distribution, and that during the Participant's lifetime may only be exercised by that Participant.
6. Stock Appreciation Right. Each Option agreement may provide that upon the exercise of all or any part of the Option, the Participant shall receive the payment of an amount of cash with a value equivalent to a multiplier, determined by the Committee at the time of the Option's grant, times the excess of the aggregate Fair Market Value at the time of the Option exercise of the shares subject to the Option exercise over the aggregate purchase price for those shares (i.e., the Option Price times the number of shares subject to the Option exercise).
The Committee may, in its discretion, include in any Option agreement a condition that the person exercising any portion of that Option shall represent and warrant at the time of the exercise that any shares of Stock acquired upon exercise are being acquired only for investment and without any present intention to sell or distribute those shares.
The Committee may, in its discretion, include in any Option agreement restrictions on the disposition of any shares of Stock acquired through the exercise of that Option; provided, however, that such restrictions shall not limit the transfer of those shares of Stock by will or by the laws of descent or distribution. Each certificate representing shares of Stock acquired through the exercise of an Option granted under this Plan shall bear a legend indicating any such restrictions.
Except as provided in Section J below, if a Participant ceases to be employed by the Company, his Options shall terminate immediately; provided, however, that if a Participant's cessation of employment is due to Total and Permanent Disability or his retirement with the consent of the Company, or one year after his Total and Permanent Disability, the Participant may, at any time within three months after the retirement with consent of his employment, or one year after his disability, exercise his Options to the extent that he was entitled to exercise them on the date of his cessation of employment, but in no event shall any Option be exercisable more than ten years after the date upon which it was granted.
The Committee shall determine in each case whether a termination of employment shall be considered to be due to Total and Permanent Disability or retirement with the consent of the Company and, subject to applicable law, whether a leave of absence shall constitute a termination of employment. Any such determination of the Committee shall be final and conclusive.
If a Participant dies without having fully exercised his Options, the executors, administrators, legatees or heirs of his estate shall have the right to exercise those Options, subject to the terms and to the same extent as the deceased Participant was on the date of his death.
The aggregate number of shares of Stock available for Options under the Plan, the shares subject to any Option, and the Option Price provided for in any Option agreement then outstanding, shall be proportionately adjusted to reflect any change in the number or kind of shares of Stock subsequent to the effective date of the Plan resulting from (1) a subdivision or consolidation of shares or any other capital adjustment, (2) the payment of a dividend, (3) an increase or decrease in the number of shares of issued Stock effected without receipt of consideration by the Company (other than as a result of contributions of Stock by the Company to any employee benefit plan), or (4) any other transaction or occurrence which, in the judgment of the Committee, has a similar effect upon the Stock. Such an adjustment shall be made in any manner deemed by the Committee to equitably prevent the substantial dissolution or enlargement of the rights granted to, or available for, Participants in the Plan.
Upon dissolution or liquidation of the Company, or upon a merger or consolidation in which the Company is not the surviving corporation, all Options outstanding under the Plan shall terminate; provided, however, that each Participant (and each other person entitled under Section J to exercise an Option) shall have the right, immediately prior to any such dissolution, liquidation, merger or consolidation, to exercise his Options, notwithstanding that such Options may not have vested, but only to the extent that his Options are otherwise exercisable under the terms of the Plan.
This Plan, and the obligations of any party hereunder are subject to federal and state laws, rules and regulations. The inability of the Company to fulfill its obligations under this Plan because, in the opinion of counsel to the Company, those obligations are in conflict with any applicable law shall relieve the Company of its obligation(s) to the extent necessary to avoid that conflict.
The Company, during the term of this Plan, will at all times reserve and keep available, and will seek or obtain from any regulatory body having jurisdiction any requisite authority necessary to issue and to sell, the number of shares of Stock that shall be sufficient to satisfy the requirements of this Plan. The inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed necessary by counsel for the Company for the lawful issuance and sale of its Stock hereunder shall relieve the Company of any liability in respect of the failure to issue or sell Stock as to which the requisite authority has not been obtained.
The Board, by resolution, may terminate, amend, or revise the Plan. Any such revisions shall apply equally to all Participants. Except as otherwise provided by this Plan, neither the Board nor the Committee may, without the consent of the holder of an Option, alter or impair any Option previously granted under the Plan. Unless sooner terminated, the Plan shall remain in effect for a period of ten years from time date of the Plan's adoption by the Board. Termination of the Plan shall not affect any Option previously granted.
The Plan shall be effective from the date that the Plan is adopted by the Board, subject, however, to the Plan's approval by the Company's stockholders within twelve (12) months before or after that date. If stockholder approval is not obtained within 12 months of the Board's adoption of the Plan, then this Plan, and all Stock Options and Option agreements granted under this Plan, shall automatically be null and void, ab initio.
SIGNATURES
The Company has caused this Plan to be executed, effective this 9 day of April, 1997.
ATTEST: TALBOT BANCSHARES, INC.
/s/ Susan E. Leaverton By: /s/ W. Moorhead Vermilye
----------------------------- -----------------------------
W. Moorhead Vermilye
President
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CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of Shore Bancshares, Inc. (the "Company") of our report dated January 19, 2001, on the 2000 consolidated financial statements of the Company, which appears on page 40 of the 2000 Annual Report to Stockholders of the Company that is included in the Company's annual report on Form 10-K for the year ended December 31, 2000.
/s/ Stegman & Company
-------------------------
Baltimore, Maryland
May 1, 2001
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SHORE BANCSHARES, INC.
(Name of Small Business Issuer in its Charter)
Maryland 6712 52-1974638 (State or other (Primary Standard Industrial (I.R.S. Employer jurisdiction of Classification Code Number) Identification Number) incorporation or organization) |
Talbot Bancshares, Inc. Employee Stock Option Plan
(Full title of the plan)
18 East Dover Street
Easton, Maryland 21601
(410) 822-1400
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
(1) Calculated by multiplying 40,000, the number of shares authorized under the Talbot Bancshares, Inc. Employee Stock Option Plan, by 2.85, the multiple by which such shares were exchanged for shares of Shore Bancshares, Inc. common stock pursuant to a Plan and Agreement to Merge dated July 25, 2000.
(2) Plus such additional number of Shares as may become issuable by operation of the anti-dilutional provisions of the plan.
(3) Estimated solely for purposes of determining the registration fee. The proposed maximum aggregate offering price per Share has been computed pursuant to Rule 457(h) based upon the market price of the Shares as of April 30, 2001.
PART I. INFORMATION REQUIRED IN THE PROSPECTUS
Item 1. Plan Information.
Omitted pursuant to the instructions and provisions of Form S-8.
Item 2. Registrant Information and Employee Plan Information.
Omitted pursuant to the instructions and provisions of Form S-8.
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 3. Incorporation of Certain Documents by Reference.
The following documents previously filed with the Securities and Exchange Commission (the "Commission") by Shore Bancshares, Inc. (the "Company") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") are, as of their respective dates, hereby incorporated by reference in this Registration Statement:
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 2000 (which includes certain information contained in the Company's definitive Proxy Statement for the Annual Meeting of Shareholders on April 25, 2001 and incorporated therein by reference);
(ii) Current Report on Form 8-K/A filed on February 9, 2001, amending Current Report on Form 8-K filed on December 14, 2000.
(iii) Description of the Company's Common Stock which appears at page 28 of the Company's Registration Statement on Form 10, or any description of the Common Stock which appears in any prospectus forming a part of any subsequent registration statement of the Company or in any registration statement filed pursuant to Section 12 of the Exchange Act, including any amendments or reports filed for the purpose of updating such description.
All other documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the filing of a post-effective amendment which indicates that all of the Company's shares of common stock, par value $.01 per share (the "Shares"), offered hereby have been sold or that all Shares then remaining unsold have been deregistered shall be deemed to be incorporated by reference in and made a part of this Registration Statement from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in a document subsequently filed modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.
The Company will provide without charge to each person to whom this Prospectus is delivered, on the written or oral request of any such person, a copy of any and all documents incorporated herein by reference (other than exhibits to such documents). Written requests should be directed to Shore Bancshares, Inc., Secretary, 18 East Dover Street, Easton, Maryland 21601. Telephone requests may be directed to the Company at (410) 822-1400.
Item 4. Description of Shares.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Maryland General Corporation Law permits a corporation to indemnify its present and former directors, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their services in those capacities, unless it is established that:
(1) the act or omission of the director was material to the matter giving rise to such proceeding and
(A) was committed in bad faith or
(B) was the result of active and deliberate dishonesty;
(2) the director actually received an improper personal benefit in money, property, or services; or
(3) in the case of any criminal proceeding, the director had reasonable cause to believe that the act or omission was unlawful.
Maryland law permits a corporation to indemnify a present and former officer to the same extent as a director.
In addition to the foregoing, a court of appropriate jurisdiction may under certain circumstances order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances, whether or not the director or officer has met the standards of conduct set forth in the preceding paragraph or has been declared liable on the basis that a personal benefit improperly received in a proceeding charging improper personal benefit to the director or the officer. If the proceeding was an action by or in the right of the corporation or involved a determination that the director or officer received an improper personal benefit, however, no indemnification may be made if the individual is adjudged liable to the corporation, except to the extent of expenses approved by a court of appropriate jurisdiction.
In addition, the Maryland General Corporation Law permits a corporation to pay or reimburse, in advance of the final disposition of a proceeding, reasonable expenses incurred by a present or former director or officer made a party to the proceeding by reason of his service in that capacity, provided that the corporation shall have received
(1) a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation; and
(2) a written undertaking by or on behalf of the director to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was not met.
The Company has provided for indemnification of directors, officers, employees and agents in Article Seventh, Section (a)(5) of its charter, as amended and restated. This provision reads as follows:
(5) The Corporation shall indemnify (A) its directors and officers, whether serving the Corporation or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law and (B) other employees and agents to such extent as shall be authorized by the Board of Directors or the Corporation's By-Laws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such by-laws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by its is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The Maryland General Corporation Law authorizes a Maryland corporation to limit by provision in its charter the liability of directors and officers to the corporation or to its stockholders for money damages except to the extent:
(1) the director or officer actually receives an improper benefit or profit in money, property, or services, for the amount of the benefit or profit actually received, or
(2) a judgment or other final adjudication adverse to the director or officer is entered in a proceeding based on a finding in the proceeding that the director's or officer's action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.
The Company has limited the liability of its directors and officers for money damages in Article Seventh, Section (a)(6) of its charter. This provision reads as follows:
(6) To the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for money damages. No amendment of the Charter of the Corporation or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to directors and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.
As permitted under Section 2-418(k) of the Maryland General Corporation Law, the Company has purchased and maintains insurance on behalf of its directors and officers against any liability asserted against such directors and officers in their capacities as such, whether or not the Company would have the power to indemnify such persons under the provisions of Maryland law governing indemnification.
Section 8(k) of the Federal Deposit Insurance Act (the "FDI Act") provides that the Federal Deposit Insurance Corporation (the "FDIC") may prohibit or limit, by regulation or order, payments by any insured depository institution or its holding company for the benefit of directors and officers of the insured depository institution, or others who are or were "institution-affiliated parties," as defined under the FDI Act, in order to pay or reimburse such person for any liability or legal expense sustained with regard to any administrative or civil enforcement action which results in a final order against the person. The FDIC has adopted regulations prohibiting, subject to certain exceptions, insured depository institutions, their subsidiaries and affiliated holding companies from indemnifying officers, directors or employees for any civil money penalty or judgment resulting from an administrative or civil enforcement action commenced by any federal banking agency, or for that portion of the costs sustained with regard to such an action that results in a final order or settlement that is adverse to the director, officer or employee.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description of Exhibits
------ -----------------------
5 Opinion of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC as to legality of Shares to be issued
10 Talbot Bancshares, Inc. Employee Stock Option Plan
23.1 Consent of Gordon, Feinblatt, Rothman, Hoffberger &
Hollander, LLC (included in their opinion in Exhibit 5)
23.2 Consent of Stegman & Company, independent certified public
accountants
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Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4) Not applicable.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) - (g) Not applicable.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(i) - (j) Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Easton, State of Maryland, on the 2nd day of May, 2001.
SHORE BANCSHARES, INC.
By: /s/ W. Moorhead Vermilye
--------------------------------------
W. Moorhead Vermilye, President
By: /s/ Susan E. Leaverton
--------------------------------------
Susan E. Leaverton, Treasurer
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Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons as of the date indicated below.
Signature Title Date
--------- ----- ----
/s/ Herbert L. Andrew, III
----------------------------- Director May 2, 2001
Herbert L. Andrew, III
/s/ Lloyd L. Beatty, Jr.
----------------------------- Director May 2, 2001
Lloyd L. Beatty, Jr.
/s/ Paul M. Bowman
----------------------------- Director May 2, 2001
Paul M. Bowman
/s/ David C. Bryan
----------------------------- Director May 2, 2001
David C. Bryan
/s/ Daniel T. Cannon
----------------------------- Director May 2, 2001
Daniel T. Cannon
/s/ B. Vance Carmean, Jr.
----------------------------- Director May 2, 2001
B. Vance Carmean, Jr.
/s/ Ronald N. Fox
----------------------------- Director May 2, 2001
Ronald N. Fox
/s/ Richard C. Granville
----------------------------- Director May 2, 2001
Richard C. Granville
/s/ Neil R. LeCompte
----------------------------- Director May 2, 2001
Neil R. LeCompte
/s/ David L. Pyles
----------------------------- Director May 2, 2001
David L. Pyles
/s/ W. Moorhead Vermilye
----------------------------- Director May 2, 2001
W. Moorhead Vermilye
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Exhibit Index
Exhibit
Number Description of Exhibits
------ -----------------------
5 Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC as to legality of Shares to be issued
10 Talbot Bancshares, Inc. Employee Stock Option Plan
23.1 Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC (included in their opinion in Exhibit 5)
23.2 Consent of Stegman & Company, independent certified public
accountants
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LAW OFFICES
GORDON, FEINBLATT, ROTHMAN, HOFFBERGER & HOLLANDER, LLC
THE GARRETT BUILDING
233 EAST REDWOOD STREET
BALTIMORE, MARYLAND 21202-3332
Telex 908041 BAL Fax 410-576-4246
May 4, 2001
Shore Bancshares, Inc.
18 East Dover Street
Easton, MD 21601
Re: Shore Bancshares, Inc. Registration Statement on Form S-8 for the Talbot Bancshares, Inc. Employee Stock Option Plan
Ladies and Gentlemen:
We have acted as counsel to Shore Bancshares, Inc., a Maryland corporation (the "Company"), in connection with the issuance by the Company of up to 114,000 shares of common stock, par value $.01 per share (the "Shares"), under the Talbot Bancshares, Inc. Employee Stock Option Plan (the "Plan"), pursuant to the above-referenced Registration Statement (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), filed on this date by the Company with the Securities and Exchange Commission (the "Commission"). Talbot Bancshares, Inc. ("Talbot") merged with and into the Company on December 1, 2000 pursuant to a Plan and Agreement to Merge dated July 25, 2000 (the "Merger Agreement"), pursuant to which the Plan was assumed by the Company with respect to shares of the Company in lieu of shares of Talbot common stock.
We have examined copies of (i) the Articles of Incorporation of the Company, as amended and restated (the "Charter"), certified by the State Department of Assessments and Taxation of Maryland, (ii) the Bylaws of the Company, as amended and restated, (iii) the Plan, (iv) resolutions adopted by the Board of Directors of the Company relating to the matters referred to herein, and (v) the Merger Agreement. We have also examined the Registration Statement and Exhibits thereto (collectively, with the documents described in the preceding sentence, referred to as the "Documents").
In expressing the opinions set forth below, we have assumed, and so far as is known to us there are no facts inconsistent therewith, that all Documents submitted to us as originals are authentic, all Documents submitted to us as certified or photostatic copies conform to the original documents, all signatures on all such Documents are genuine, all public records reviewed or relied upon by us or on our behalf are true and complete, and all statements and information contained in the Documents are true and complete.
Based on the foregoing, it is our opinion that Shares sold by the Company to participants under the Plan, upon receipt of the consideration required to be paid therefor, will be duly and validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the laws of the State of Maryland and of the United States of America, and we do not express any opinion herein concerning any other law. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for your benefit, and may not be relied upon by any other person without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein. In giving this opinion, we do not admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Gordon, Feinblatt, Rothman, Hoffberger
& Hollander, LLC
------------------------------------------
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GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, LLC