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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____________)*
Baltimore Bancorp
(Name of Issuer)
Common Stock, par value $5.00 per share
(Title of Class of Securities)
059029 10 8
(CUSIP Number)
James L. Mitchell, Esq.
Executive Vice President, General Counsel and Secretary
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
(201) 565-3200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
March 22, 1994
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [x]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
( See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
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CUSIP NO. 059029 10 8 Page 2 of 17
Pages
<TABLE>
<S> <C> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
First Fidelity Bancorporation
22-2826775
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ] (b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR
2(e) [x]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
7 SOLE VOTING POWER
NUMBER OF 3,300,000*
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
EACH 0
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 3,300,000*
10 SHARED VOTING POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,300,000*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.5%**
14 TYPE OF REPORTING PERSON*
HC; CO
</TABLE>
________________
* Beneficial ownership of 3,300,000 share of Common Stock reported
hereunder is so being reported solely as a result of the Option
Agreement described in Item 4 hereof. The option granted pursuant to
such Option Agreement has not yet become exercisable. First Fidelity
expressly disclaims beneficial ownership of such shares. See Item 5
hereof.
** Based upon the 16,683,931 shares reported by Baltimore Bancorp to be
outstanding as of March 21, 1994 plus the 3,300,000 shares obtainable by
First Fidelity upon the exercise of the stock option described in Item 4
were such stock option presently exercisable.
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ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $5.00 per
share ("Common Stock" or "Company Common Stock") of Baltimore Bancorp, a
Maryland corporation (the "Company"), the principal executive offices of which
are located at 120 E. Baltimore Street, Baltimore, Maryland 21203.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c), (f) This statement is being filed by First Fidelity
Bancorporation, a New Jersey corporation registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended ("First Fidelity"). The
principal business offices of First Fidelity are located at 2673 Main Street,
Lawrenceville, New Jersey 08648. First Fidelity provides a full range of
banking services in New Jersey, eastern Pennsylvania, Connecticut and
Westchester County and Riverdale, New York through its subsidiary banks, First
Fidelity Bank, National Association, First Fidelity Bank, N.A., New York and
Union Trust Company, and provides services closely related to banking through
its non-bank subsidiaries. The names of the directors and executive officers
of First Fidelity and their respective business addresses, citizenship and
present principal occupations or employment, as well as the names, principal
businesses and addresses of any corporations or other organizations in which
such employment is conducted, are set forth on Schedule I hereto, which
Schedule is incorporated herein by reference.
(d) Neither First Fidelity nor, to the best of its knowledge,
any of the persons listed in Schedule I hereto has during the last five years
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) As previously reported, in January 1992, First Fidelity
Bank, N.A., New Jersey, a bank subsidiary of First Fidelity ("FFBNJ"), which
was a party to the consolidation of which First Fidelity Bank, National
Association was the resulting bank, resolved previously disclosed
investigations and related administrative proceedings regarding its
participation as a selling group member in primary distributions of certain
government-sponsored corporation securities. Without admitting liability and in
order to settle the matter, FFBNJ agreed to pay a civil penalty of $25,000 and
to cease and desist from alleged recordkeeping irregularities. As a result of
the foregoing, all investigations and administrative proceedings pertaining to
FFBNJ's selling group activities were concluded. In addition, FFBNJ decided
not to continue as a member of the selling group for securities issued by the
Federal National Mortgage Association. Except as described
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herein, neither First Fidelity nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4, the Company has granted to
First Fidelity an option pursuant to which First Fidelity has the right, upon
the occurrence of certain events (none of which has occurred), to purchase up
to 3,300,000 shares of Company Common Stock (subject to adjustment in certain
circumstances) at a price of $19.31 per share (the "Option"). Certain terms of
the Option are summarized in Item 4. If the Option were exercisable and First
Fidelity were to exercise the Option on the date hereof, the funds required to
purchase the shares of Company Common Stock issuable upon such exercise would
be $63,723,000. It is currently anticipated that such funds would be derived
from working capital.
ITEM 4. PURPOSE OF THE TRANSACTION.
(a)-(j) First Fidelity is seeking to acquire the entire equity
interest in the Company pursuant to the Merger (as defined below). The
transactions reported hereunder are intended to assist in the achievement of
that purpose.
The Merger Agreement. The Company, First Fidelity and Annabel
Lee Corporation, a Maryland corporation and a wholly- owned direct subsidiary
of First Fidelity ("Merger Sub"), have entered into an Agreement and Plan of
Merger, dated as of March 21, 1994 (the "Merger Agreement"), pursuant to which
Merger Sub will be merged with and into the Company (the "Merger"), with the
Company being the surviving corporation (the "Surviving Company"). At the
effective time of the Merger (the "Effective Time"), each outstanding share of
Common Stock will be converted into the right to receive $20.75 in cash without
interest (the "Merger Consideration"). As of the Effective Time, each share of
Common Stock held directly or indirectly by First Fidelity, other than shares
held in a fiduciary capacity or in satisfaction of a debt previously
contracted, will be cancelled, and no exchange or payment will be made with
respect thereto.
As a result of the Merger, the Company will become a wholly-owned
subsidiary of First Fidelity. The Merger Agree-
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ment also provides that immediately prior to the Merger, the Company shall use
its best efforts (a) to charter, on the Effective Date and prior to the Thrift
Merger (as defined below), a federal savings bank (the "FSB"), (b) to acquire,
on the Effective Date and prior to the Thrift Merger, all issued and
outstanding shares of the FSB, (c) to cause, on the Effective Date and prior
to the Thrift Merger, the FSB to obtain deposit insurance from, and became a
member of, the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation, and (d) to cause the Company's wholly-owned banking
subsidiary, The Bank of Baltimore, to be merged, following completion of (a),
(b), and (c) and prior to the Effective Time, with and into the FSB (the
"Thrift Merger"), with the FSB being the surviving bank (the "Surviving Bank").
The Merger and the Thrift Merger are subject to various
regulatory approvals, the approval of the stockholders of the Company and the
satisfaction of other terms and conditions set forth in the Merger Agreement.
As a result of the Merger, the Company Common Stock will be
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition,
the Company Common Stock will be eligible for delisting from the New York Stock
Exchange where it has been traded under the symbol "BBB". At the Effective
Time, the certificate of incorporation and by-laws and the directors and
officers of Merger Sub shall become the certificate of incorporation and
by-laws and directors and officers of the Surviving Company. At the Effective
Time of the Thrift Merger, the charter and by-laws of the FSB shall be the
charter and by-laws of the Surviving Bank.
The Option Agreement. In connection with the Merger Agreement,
First Fidelity and the Company entered into a Stock Option Agreement, dated as
of March 22, 1994 (the "Option Agreement"). The Option Agreement is designed
to enhance the likelihood that the Merger will be successfully consummated in
accordance with the terms contemplated by the Merger Agreement. Pursuant to
the Option Agreement, the Company granted First Fidelity an option (the
"Option") to purchase, subject to adjustments in certain circumstances, up to
3,300,000 authorized but unissued shares of Common Stock (the "Option Shares")
at a price of $19.31 per share, subject to adjustment.
Subject to applicable law and regulatory restrictions, First
Fidelity may exercise the Option, in whole or in part, if, but only if, a
Purchase Event (as defined below) shall have occurred prior to the occurrence
of an Exercise Termination Event (as defined below).
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As defined in the Stock Option Agreement, "Purchase Event" means
either of the following:
(i) The acquisition by any person other than First Fidelity or
any First Fidelity subsidiary of ownership or control of, or the right
to vote (other than on behalf of the Company), 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described in
(i) below except that the percentage referred to in clause (z) shall be
25%.
"Exercise Termination Event" means the earliest to occur of (i)
the time immediately prior to the Effective Time, (ii) 12 months after the
first occurrence of a Purchase Event, (iii) 12 months after the termination of
the Merger Agreement following the occurrence of a Preliminary Purchase Event,
(iv) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Merger Agreement by First Fidelity pursuant to
Section 6.1(b)(ii) of the Merger Agreement providing for termination of the
Merger Agreement in the event of a material breach by the Company of any
representation, warranty, covenant or agreement contained in the Merger
Agreement or in the Option Agreement which is not cured or curable within 30
days after written notice of such breach, if such breach would have a material
adverse effect upon the financial condition, properties, business or results of
operations of the Company or (v) 12 months after the termination of the Merger
Agreement by First Fidelity pursuant to Section 6.1(b)(ii) thereof as a result
of any willful and material breach of the Merger Agreement by the Company or
(vi) four months after the termination of the Merger Agreement by First
Fidelity otherwise pursuant to Section 6.1(b)(ii) thereof other than as a
result of a willful and intentional breach by the Company.
The term "Preliminary Purchase Event" means any of the following
events or transactions occurring after the date of the Option Agreement:
(i) The Company or any of its subsidiaries (each a "Company
Subsidiary") without having received First Fidelity's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934 (the "Securities Exchange Act"), and the rules and regulations
thereunder) other
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than First Fidelity or any of its subsidiaries (each a "First Fidelity
Subsidiary") or the Board of Directors of the Company shall have
recommended that the shareholders of the Company approve or accept any
Acquisition Transaction with any person other than First Fidelity or any
First Fidelity Subsidiary. For purposes of the Option Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or
any similar transaction, involving the Company or any of the Company's
material subsidiaries ("Material Subsidiaries"), (y) a purchase, lease
or other acquisition of all or substantially all of the assets of the
Company or any Material Subsidiary or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 10% or more of the voting power
of the Company or a Material Subsidiary; provided that the term
"Acquisition Transaction" does not include any internal merger or
consolidation involving only the Company and or its Material
Subsidiaries;
(ii) Any person (other than First Fidelity or any First Fidelity
Subsidiary) shall have acquired ownership or control of, or the right to
vote, 10% or more of the outstanding shares of Common Stock;
(iii) Any person other than First Fidelity or any First Fidelity
Subsidiary shall have made a bona fide proposal to the Company or its
shareholders, by public announcement or written communication that is or
becomes the subject of public disclosure, to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
person other than First Fidelity or any First Fidelity Subsidiary shall
have commenced (as such term is defined in Rule 14d-2 under the
Securities Exchange Act), or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to, a tender offer or exchange offer to purchase any shares
of Common Stock such that, upon consummation of such offer, such person
would own or control 10% or more of the then outstanding shares of
Common Stock of the Company (such an offer being referred to herein as a
"Tender Offer" or an "Exchange Offer", respectively));
(iv) After a bona fide proposal is made by a third party to the
Company or publicly to its shareholders to engage in an Acquisition
Transaction, the Company shall have materially breached any covenant or
obligation contained in the Merger Agreement and such breach would
entitle First Fidelity to terminate the Merger Agreement or the holders
of Company Common Stock shall not have
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approved the Merger Agreement at the meeting of such stockholders held
for the purpose of voting on the Merger Agreement, such meeting shall
not have been held or shall have been canceled prior to termination of
the Merger Agreement or the Company's Board of Directors shall have
withdrawn or modified in a manner adverse to First Fidelity, the
recommendation of the Company's Board of Directors with respect to the
Merger Agreement; or
(v) Any person other than First Fidelity or any First Fidelity
Subsidiary, other than in connection with a transaction to which First
Fidelity has given its prior written consent, shall have filed an
application or notice with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") or other governmental authority or
regulatory or administrative agency or commission (each, a "Governmental
Authority") for approval to engage in an Acquisition Transaction.
As provided in the Option Agreement, in the event that First
Fidelity is entitled to and wishes to exercise the Option, it shall send to the
Company a written notice (the "Option Notice" and the date of which being
hereinafter referred to as the "Notice Date") specifying (i) the total number
of shares of Common Stock it will purchase pursuant to such exercise and (ii)
the time (which shall be on a business day that is not less than three nor more
than ten business days (the "Closing Date") from the Notice Date) on which the
closing of such purchase shall take place; such closing to take place at the
principal office of the Company provided, that, if prior notification to or
approval of the Federal Reserve Board or any other Governmental Authority is
required in connection with such purchase (each, a "Notification" or an
"Approval," as the case may be), First Fidelity shall promptly file the
required notice or application for approval and expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence shall
run from the later of (x) the date on which any required notification periods
have expired or been terminated and (y) the date on which such approval has
been obtained and any requisite waiting period or periods shall have expired.
First Fidelity shall have the right to revoke its exercise of the Option in the
event that the transaction constituting a Purchase Event that gives rise to
such right to exercise shall not have been consummated.
Under applicable law and in connection with the Option Agreement,
First Fidelity may be required to obtain the prior approval of the Federal
Reserve Board prior to acquiring 5% or more of the issued and outstanding
shares of Common
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Stock. Certain other regulatory approvals may also be required before such an
acquisition could be completed.
The Option may not be assigned by First Fidelity to any other
person without the express written consent of the Company, except that First
Fidelity may assign its rights under the Option Agreement in whole or in part
after the occurrence of a Preliminary Purchase Event. However, until the date
at which the Federal Reserve Board has approved the application by First
Fidelity under the Bank Holding Company Act of 1956, as amended, to acquire the
shares of Common Stock subject to the Option, First Fidelity may not assign its
rights under the Option except in (i) a widely dispersed public distribution,
(ii) a private placement in which no one party acquires the right to purchase
in excess of 2% of the voting shares of the Company, (iii) an assignment to a
single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on First Fidelity's behalf or
(iv) any other manner approved by the Federal Reserve Board.
In addition, any shares of Company Common Stock purchased upon
the exercise of the Option may be resold by First Fidelity pursuant to
registration rights under the Stock Option Agreement.
In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as a
result of any such change, the number of shares of Common Stock subject to the
Option will be adjusted so that, after such issuance, it equals approximately
19.8% of the number of shares of Common Stock then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to the
Option.
Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, at the request of First Fidelity and upon receipt
of applicable regulatory approvals, the Company will be obligated to repurchase
the Option and any shares of Common Stock theretofore purchased pursuant to the
Option at a price determined as set forth in the Stock Option Agreement.
In the event that First Fidelity exercises the repurchase rights
described above, the Company will thereafter pay the required amount or the
portion thereof that the
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Company is not then prohibited from so delivering under applicable law and
regulation or as a consequence of administrative policy (including policies
relating to the maintenance of capital levels and a sound financial condition).
In the event that prior to an Exercise Termination Event, the
Company shall enter into an agreement (i) to consolidate or merge with any
person, other than First Fidelity or a First Fidelity Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than First Fidelity or a First Fidelity
Subsidiary, to merge into the Company and the Company shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the outstanding shares and share equivalents of the merged company
or (iii) to sell or otherwise transfer all or substantially all of its or any
Material Subsidiary's assets to any person, other than First Fidelity or a
First Fidelity Subsidiary, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of First Fidelity, of either (x) the acquiring
corporation or (y) any person that controls the acquiring corporation. As more
fully described in the Option Agreement, the Substitute Option shall have
substantially the same terms as the Option, with adjustments in the exercise
price as set forth in the Option Agreement.
Copies of the Option Agreement and the Merger Agreement are filed
as exhibits to this Schedule 13D and are incorporated herein by reference. The
foregoing summary is not intended to be complete and is qualified in its
entirety by reference to such exhibits.
Purchases of Common Stock. Subject to market conditions and
developments with respect to the Merger, First Fidelity may purchase shares of
Common Stock in the open market or in privately negotiated transactions, to the
extent permitted by the BHC and federal securities laws.
Other than as described above or in Item 5 below, First Fidelity
does not have any plans or proposals which relate to or would result in any of
the matters listed in Items 4(a)-(j) of Schedule 13D.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Option. First Fidelity may be deemed to be the
beneficial owner of the Option Shares. As provided in the Option Agreement,
First Fidelity may exercise the Option only upon the happening of one or more
events, none of which has occurred. See Item 4 hereof. Since the Option is
not presently exercisable, First Fidelity expressly disclaims beneficial
ownership of any of the Option Shares. If the Option were exercised in full,
the Option Shares would represent approximately 16.5% of the currently
outstanding Common Stock (after giving effect to the issuance of such Option
Shares). First Fidelity has no right to vote or dispose of the shares of
Common Stock subject to the Option unless and until such time as the Option is
exercised. To the best knowledge of First Fidelity, none of the persons listed
on Schedule I hereto beneficially owns any shares of Common Stock.
(b) The Option. If First Fidelity were to exercise the Option,
it would have sole power to vote and, subject to the terms of the Option
Agreement, sole power to direct the disposition of the shares of Common Stock
covered thereby.
(c) The Option. First Fidelity acquired the Option in
connection with the Merger Agreement. See Item 4 hereof.
To the best knowledge of First Fidelity, none of the persons
listed on Schedule I hereto has effected any transactions in Common Stock
during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except as described in Item 4 and Item 5 hereof, neither First
Fidelity nor, to the best of its knowledge, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including
the transfer or voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or losses, or the giving or withholding of proxies.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger, dated as of March 21, 1994, by and among
First Fidelity Bancorporation, Annabel Lee Corporation and Baltimore
Bancorp, excluding the exhibits and annexes thereto.
2. Stock Option Agreement, dated as of March 22, 1994, between Baltimore
Bancorp and First Fidelity Bancorporation.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
Dated: April 1, 1994
FIRST FIDELITY BANCORPORATION
By: /s/ JAMES L. MITCHELL
-------------------------------
Name: James L. Mitchell
Title: Executive Vice President,
General Counsel and
Secretary
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
FIRST FIDELITY BANCORPORATION
The names, business addresses and present principal occupations
of the directors and executive officers of First Fidelity are set forth below.
If no business address is given, the director's or officer's business address
is 2673 Main Street, Lawrenceville, NJ 08648. The business address of each of
the directors of First Fidelity is also the business address of such director's
employer, if any. Directors of First Fidelity are identified by an asterisk.
Unless otherwise indicated, all directors and officers listed below are
citizens of the United States.
Name Present Principal Occupation or
Employment and Address
Jay A. Anglada Executive Vice President and Head of
Trust Activities of First Fidelity.
* Louis E. Azzato Chairman and Chief Executive Officer
of Foster Wheeler Corporation, an
engineering and construction company,
Perryville Corporate Park, Clinton,
New Jersey 08809-4000.
* Edward E. Barr Chairman, President and Chief
Executive Officer and director of Sun
Chemical Corporation, a graphic arts
materials company, 222 Bridge Plaza
South, Fort Lee, New Jersey 07024.
* Roland K. Bullard, II Senior Executive Vice President of
First Fidelity.
Anthony R. Burriesci Executive Vice President and Corporate
Controller of First Fidelity.
* Lee A. Butz President of Alvin H. Butz, Inc., a
construction management firm, Route
309, Box 509, Allentown, Pennsylvania
18105.
* Luther R. Campbell, Jr. Partner, Campbell, Rappold & Yurasits,
certified public accountant, 1033 S.
Cedar Crest Blvd., Allentown,
Pennsylvania 18103.
* John Gilray Christy Chairman of Chestnut Capital
Corporation, a private investment
firm, 125 Stafford Avenue, Suite 200,
Building 3, Wayne, Pennsylvania 19087.
* James G. Cullen President of Bell Atlantic
Corporation, 1310 North Court House
Road, Arlington, Virginia 22201.
* Gonzalo de Las Heras Executive Vice President of Banco
Santander, S.A., a Spanish banking
organization, 45 East 53rd Street, 8th
Floor, New York, New York 10022.
* E. James Ferland Chairman of the Board, President and
Chief Executive Officer of Public
Service Enterprise Group Incorporated,
a public utility holding company, 80
Park Plaza, Newark, New Jersey 07101.
Michael A. Gallagher Executive Vice President of First
Fidelity.
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* Arthur M. Goldberg Chairman, President and Chief
Executive Officer of DiGiorgio
Corporation, a food wholesaler, and
Chairman and Chief Executive Officer
of Bally Manufacturing Corporation, a
diversified holding company engaged in
manufacturing, casino and
entertainment businesses, 2 Executive
Drive, Somerset, New Jersey 08873.
* Leslie E. Goodman Senior Executive Vice President of
First Fidelity.
* Frank M. Henry President of Frank Martz Coach
Company, a transportation company,
Martz Towers, Box 1007, Wilkes-Barre,
Pennsylvania 18773.
* William F. Hyland Of Counsel to Riker, Danzig, Scherer,
Hyland & Perretti, attorneys,
Headquarters Plaza, One Speedwell
Avenue, Morristown, New Jersey 07960.
* Juan Rodriguez Inciarte Executive Vice President of Banco
Santander, S.A., a Spanish banking
organization, Paseo de la Castellana,
24 Madrid, Spain 28046. Citizen of
Spain.
William A. Karmen Executive Vice President, Human
Resources, of First Fidelity.
* John R. Kennedy President and Chief Executive Officer
of Federal Paper Board Company, Inc.,
a manufacturing company, 75 Chestnut
Ridge Road, P.O. Box 357, Montvale,
New Jersey 07645.
Michael L. LaRusso Executive Vice President and Director
of Audit and Policy Development of
First Fidelity.
* Rocco J. Marano Chairman of Blue Cross and Blue Shield
of New Jersey, Inc., a health
insurance company, Three Penn Plaza
East, Newark, New Jersey 07105.
James L. Mitchell General Counsel, Executive Vice
President and Secretary of First
Fidelity.
* James D. Morrissey, Jr. President and Chief Operating Officer
of James D. Morrissey, Inc., a heavy
and highway construction company, 9119
Frankford Avenue, Philadelphia,
Pennsylvania 19114.
* Joseph Neubauer Chairman, President and Chief
Executive Officer of The ARA Group,
Inc., a services management company,
ARA Tower, 1101 Market Street,
Philadelphia, Pennsylvania 19107.
Thomas H. O'Brien, Jr. Executive Vice President of First
Fidelity.
* Peter C. Palmieri Vice Chairman and Chief Credit Officer
of First Fidelity.
Donald C. Parcells Executive Vice President of First
Fidelity.
Frederick H. Pennekamp Executive Vice President and Treasurer
of First Fidelity.
* Wolfgang Schoellkopf Vice Chairman and Chief Financial
Officer of First Fidelity.
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* Robert Montgomery Scott President and Chief Executive Officer
of the Philadelphia Museum of Art, Box
7646, Philadelphia, Pennsylvania
19101.
* Rebecca Stafford President of Monmouth College, West
Long Branch, New Jersey 07764.
* Sefton Stallard General Partner of North American
Venture Capital Fund, L.P., a venture
capital fund, Fawn Hill Drive, P.O.
Box 281, New Vernon, New Jersey 07976.
* Anthony P. Terracciano Chairman of the Board, President and
Chief Executive Officer of First
Fidelity.
Kenneth H. Thorn Executive Vice President of First
Fidelity.
* Bernard C. Watson Chairman of The HMA Foundation, Inc.,
1314 Chestnut Street, Philadelphia,
Pennsylvania 19107.
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<PAGE> 17
EXHIBIT INDEX
1. Agreement and Plan of Merger, dated as of March 21, 1994, by and among
First Fidelity Bancorporation, Annabel Lee Corporation and Baltimore
Bancorp, excluding the exhibits and annexes thereto.
2. Stock Option Agreement, dated as of March 22, 1994, between Baltimore
Bancorp and First Fidelity Bancorporation.
<PAGE> 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 21st DAY OF MARCH, 1994
BY AND AMONG
FIRST FIDELITY BANCORPORATION,
ANNABEL LEE CORPORATION
AND
BALTIMORE BANCORP
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. THE MERGERS
<S> <C> <C>
Section 1.1. Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Effect on Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.3. Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4. Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1.5. Transformation of the Company into a
Savings and Loan Holding Company . . . . . . . . . . . . . . . . . . . . . 5
Section 1.6. Directors of Company Bank . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II. CONDUCT PENDING THE MERGER
Section 2.1. Conduct of the Company's Business Prior to
the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Forbearance by the Company . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2. Representations and Warranties of
Acquiror and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV. COVENANTS
Section 4.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.2. Certain Policies of the Company . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.4. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.5. Certain Filings, Consents and Arrangements . . . . . . . . . . . . . . . . . 25
Section 4.6. Antitakeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.7. Indemnification; Directors'
and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.8. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.9. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.10. Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.11. Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.12. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.13. Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<CAPTION>
Page
----
ARTICLE V. CONDITIONS TO CONSUMMATION
<S> <C> <C>
Section 5.1. Conditions to All Parties' Obligations . . . . . . . . . . . . . . . . . . . 29
Section 5.2. Conditions to Obligations of the
Acquiror and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.3. Conditions to the Obligation of the Company . . . . . . . . . . . . . . . . . 31
ARTICLE VI. TERMINATION
Section 6.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII. OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation . . . . . . . . . . . . . . . . . . . . . 33
Section 8.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.8. Entire Agreement; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.9. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<TABLE>
<CAPTION>
LIST OF ANNEXES
<S> <C> <C>
Annex 1 -- Company Rights (Recital D)
Annex 2 -- Form of Option Agreement (Recital E)
Annex 3 -- Subsidiaries of the Company (Section 3.1(d))
Annex 4 -- Company Benefit Plans (Section 3.1(n))
</TABLE>
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<PAGE> 4
AGREEMENT AND PLAN OF MERGER, dated as of the 21st day of March,
1994 (this "Plan"), by and among First Fidelity Bancorporation (the
"Acquiror"), Annabel Lee Corporation (the "Merger Sub") and Baltimore Bancorp
(the "Company").
RECITALS:
A. The Acquiror. The Acquiror has been duly incorporated and is
an existing corporation in good standing under the laws of the State of New
Jersey, with its principal executive offices located in Lawrenceville, New
Jersey. The Acquiror is a bank holding company duly registered with the
Federal Reserve Board (as defined below) under the Bank Holding Company Act of
1956, as amended (the "BHC Act").
B. Merger Sub. Merger Sub has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Maryland,
with its principal executive offices located in Baltimore, Maryland. All the
outstanding shares of the capital stock of Merger Sub are owned directly by the
Acquiror.
C. The Company. The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Maryland,
with its principal executive offices located in Baltimore, Maryland. As of the
date hereof, the Company has 50,000,000 authorized shares of common stock, par
value $5.00 per share ("Company Common Stock"), of which no more than
16,683,931 shares were outstanding as of the date hereof. The Company is a
bank holding company duly registered with the Federal Reserve Board under the
BHC Act.
D. Rights, Etc. The Company does not have any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to
subscribe for or acquire from it, any shares of its capital stock
(collectively, "Rights"), except (i) pursuant to the Option Agreement (as
defined below), which is expected to be entered into after the execution and
delivery of this Plan; (ii) upon conversion of approximately $5,229,000
principal amount of 6 3/4/% Convertible Subordinated Debentures due April 1,
2011 of the Company (the "Convertible Subordinated Debentures") (convertible
into 200,153 shares of Company Common Stock); (iii) upon exercise of existing
stock options granted to directors and employees of the Company and its
subsidiaries (exercisable for 1,106,033 shares of Company Common Stock at a
weighted average exercise price of $9.00 per share); (iv) pursuant to the
$870,000 principal amount of 10 7/8% Subordinated Capital Notes due December
15, 1999 (the
<PAGE> 5
"Capital Notes") (subject to a commitment to issue at maturity 48,000 shares of
Company Common Stock based on the market price of the Company Common Stock on
March 17, 1994); (v) pursuant to the Company's 401(k) plan, 68,828 shares of
Company Common Stock reserved for issuance; and (vi) as set forth on Annex 1.
E. The Option Agreement. As an inducement to the willingness of
the Acquiror and Merger Sub to enter into this Plan, the Company expects to
enter into a Stock Option Agreement with the Acquiror in the form set forth in
Annex 2 (the "Option Agreement"), pursuant to which the Company will grant to
the Acquiror an option to purchase authorized but unissued shares of Company
Common Stock equal to 19.9% of the outstanding shares of Company Common Stock
upon the terms and conditions therein contained.
F. Intention of the Parties. It is the intention of the parties
to this Plan that immediately prior to the Effective Time (as defined below)
the Company will cease to be a bank holding company under the BHC Act and
become a savings and loan holding company.
G. Board Approvals. The respective Boards of Directors of the
Acquiror, Merger Sub and the Company have duly approved the Plan and have duly
authorized its execution and delivery.
NOW, THEREFORE, in consideration of their mutual promises and
obligations hereunder, the parties hereto adopt and make this Plan and
prescribe the terms and conditions hereof and the manner and basis of carrying
it into effect, which shall be as follows:
ARTICLE I. THE MERGERS
SECTION 1.1. Structure of the Merger. At the Effective Time, the
Merger Sub will merge (the "Merger") with and into the Company, with the
Company being the surviving corporation (the "Surviving Corporation"), pursuant
to the provisions of, and with the effect provided in, the Maryland General
Corporation Law ("MGCL"). The separate existence of Merger Sub shall thereupon
cease. The Surviving Corporation shall continue to be governed by the laws of
the State of Maryland and its separate corporate existence with all of its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger. At the Effective Time (as defined in Section 7.1), the articles
of incorporation and by-laws of the Company shall be amended in their entirety
to conform to the articles of incorporation and by-laws of Merger Sub in effect
immediately prior to the Effective Time and shall become the articles of
incorporation and by-laws of the Surviving Corporation. At the Effective Time,
the
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<PAGE> 6
directors and officers of Merger Sub shall be the directors and officers of the
Surviving Corporation.
SECTION 1.2. Effect on Outstanding Shares. (a) By virtue of the
Merger, automatically and without any action on the part of the holder thereof,
each share of Company Common Stock issued and outstanding at the Effective Time
(except shares held directly or indirectly by the Acquiror other than shares
held by Acquiror in a fiduciary capacity or in satisfaction of a debt
previously contracted) shall be cancelled and become and be converted into the
right to receive $20.75 in cash without interest (the "Merger Consideration").
As of the Effective Time, each share of Company Common Stock held directly or
indirectly by the Acquiror, other than shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted, shall be cancelled and retired
and cease to exist, and no exchange or payment shall be made with respect
thereto.
(b) The shares of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall become shares of the
Surviving Corporation after the Merger and shall thereafter constitute all of
the issued and outstanding shares of the capital stock of the Surviving
Corporation.
SECTION 1.3. Exchange Procedures. (a) At and after the
Effective Time, each certificate (each a "Certificate") previously representing
shares of Company Common Stock shall represent only the right to receive the
Merger Consideration in cash without interest.
(b) As of the Effective Time, the Acquiror shall deposit, or
shall cause to be deposited, with such bank or trust company as the Acquiror
shall elect (which may be a subsidiary of the Acquiror) (the "Exchange Agent"),
for the benefit of the holders of shares of Company Common Stock, for exchange
in accordance with this Section 1.3, the Merger Consideration to be paid
pursuant to Section 1.2 and deposited pursuant to this Section 1.3 in exchange
for outstanding shares of Company Common Stock.
(c) As promptly as possible after the Effective Time, the
Acquiror shall cause the Exchange Agent to mail to each holder of record of a
Certificate or Certificates the following: (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, which shall be in a form and contain any other provisions as the
Acquiror may reasonably determine; and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
Upon proper surrender of a Certificate to the Exchange Agent, together with a
properly
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<PAGE> 7
completed and duly executed letter of transmittal, the holder of such
Certificate shall thereupon be entitled to receive in exchange therefor a check
representing the Merger Consideration which such holder has the right to
receive in respect of the Certificate surrendered pursuant to the provisions
hereof, and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the Merger Consideration payable to holders
of Certificates. In the event of a transfer of ownership of any shares of
Company Common Stock not registered in the transfer records of the Company, a
check for the Merger Consideration may be issued to the transferee if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent, accompanied by documents sufficient, in the discretion of the Acquiror,
(i) to evidence and effect such transfer and (ii) to evidence that all
applicable stock transfer taxes have been paid.
(d) From and after the Effective Time, there shall be no
transfers on the stock transfer records of the Company of any shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If
after the Effective Time Certificates are presented to the Acquiror or the
Surviving Corporation, they shall be cancelled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Plan in
accordance with the procedures set forth in this Section 1.3.
(e) Any portion of the aggregate Merger Consideration (including
the proceeds of any investments thereof) that remains unclaimed by the
shareholders of the Company for one year after the Effective Time shall be
repaid by the Exchange Agent to the Acquiror. Any shareholders of the Company
who have not theretofore complied with this Section 1.3 shall thereafter look
only to the Acquiror for payment of their Merger Consideration deliverable in
respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Plan without any interest thereon. If outstanding
certificates for shares of Company Common Stock are not surrendered or the
payment for them not claimed prior to the date on which such payments would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent permitted by abandoned property and
any other applicable law, become the property of the Acquiror (and to the
extent not in its possession shall be paid over to it), free and clear of all
claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, none of the Acquiror, Merger Sub, the Exchange
Agent or any other person shall be liable to any former holder of Company
Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
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<PAGE> 8
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Acquiror, the posting by such person of a bond in such amount as the Acquiror
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration deliverable in
respect thereof pursuant to this Plan.
SECTION 1.4. Options. At the Effective Time, each option granted
by the Company to purchase shares of Company Common Stock, which is outstanding
and unexercised immediately prior to the Effective Time, shall be converted
into the right to receive, in cancellation thereof, an amount in cash computed
by multiplying (i) the difference between (x) the per share amount of the
Merger Consideration and (y) the per share exercise price applicable to such
option by (ii) the number of such shares of Company Common Stock subject to
such option. The Company agrees to take or cause to be taken all action
necessary under its 1984 Stock Option Plan, 1988 Stock Incentive Plan and 1992
Stock Option Plan, as amended prior to the date hereof (the "Company Stock
Option Plans"), to provide for such adjustment. At the Effective Time (or by
the first business day thereafter), the Acquiror will make the payments
required to be made to grantees of options under this Section 1.4.
SECTION 1.5 Transformation of the Company into a Savings and Loan
Holding Company. Prior to the Effective Time, the Company shall use its best
efforts to take all action necessary and appropriate (a) to charter, on the
Effective Date and prior to the Thrift Merger (as defined below), a federal
savings bank (the "FSB") having its main office in Baltimore, Maryland and
having a charter and by-laws acceptable in form and substance to the Acquiror,
(b) to acquire, on the Effective Date and prior to the Thrift Merger, all
issued and outstanding shares of the FSB, (c) to cause, on the Effective Date
and prior to the Thrift Merger (as defined below), the FSB to obtain deposit
insurance from, and to become a member of, the Savings Association Insurance
Fund of the Federal Deposit Insurance Corporation (the "FDIC") and (d) to cause
The Bank of Baltimore (the "Company Bank") to be merged, following completion
of (a), (b) and (c) and prior to the Effective Time, with and into the FSB,
with (i) the FSB being the surviving entity, (ii) all shares of the Company
Bank being cancelled and (iii) the corporate existence of the Company Bank
ceasing, on such additional terms and conditions as are acceptable in form and
substance to the Acquiror (the "Thrift Merger").
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<PAGE> 9
SECTION 1.6. Directors of Company Bank. Acquiror intends to
invite the directors of the Company Bank serving on the Effective Date and
prior to the Thrift Merger, who do not become employees of the FSB, to become
directors of the FSB subsequent to the Thrift Merger for a period of not less
than two years, with such directors to be compensated at not less than the
annual retainer and meeting attendance fees being paid to non-employee
directors of the Company Bank on the date hereof. Acquiror also intends, in
consultation with the board of directors of the Company Bank, to select from
among such directors or other prominent business leaders in the Maryland
community a person to become a director of Acquiror on the Effective Date, to
serve for not less than two years.
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1. Conduct of the Company's Business Prior to the
Effective Time. Except as expressly provided in this Plan, during the period
from the date of this Plan to the Effective Time, the Company shall, and shall
cause its subsidiaries to, (i) conduct its business in the usual, regular and
ordinary course consistent with past practice, (ii) use its best efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees, (iii) take no action which would adversely affect or delay the
ability of the Company, the Acquiror, Merger Sub or the FSB to obtain any
necessary approvals, consents or waivers of any governmental authority required
for the transactions contemplated hereby or to perform its covenants and
agreements on a timely basis under this Plan and (iv) take no action that is
reasonably likely to have a Material Adverse Effect (as defined in Section 8.1
hereof) on the Company.
SECTION 2.2. Forbearance by the Company. During the period from
the date of this Plan to the Effective Time, the Company shall not, and shall
not permit any of its subsidiaries, without the prior written consent of the
Acquiror, to:
(a) other than in the ordinary course of business consistent with
past practice, make any advance or incur any indebtedness for borrowed
money, assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person;
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into or
exchangeable
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<PAGE> 10
for any shares of its capital stock (except pursuant to Section 4.13 or
as provided in the letter pursuant to Section 3.1 or through the trustee
for the 401(k) Plan), or grant any stock appreciation rights or grant any
person any right to acquire any shares of its capital stock, except for
regular quarterly cash dividends at a rate per share of Company Common
Stock not in excess of $0.05 per share with declaration, record and
payment dates coinciding with the schedule for such dates relating to the
two most recently declared dividends prior to the date hereof; or issue
any additional shares of capital stock (including pursuant to any
dividend reinvestment or other similar type of plan) except pursuant to
(i) the exercise of stock options outstanding as of the date hereof as
set forth in Annex 1 and on the terms in effect on the date hereof, (ii)
the Option Agreement, (iii) the conversion of the Convertible
Subordinated Debentures, or (iv) as provided in the letter pursuant to
Section 3.1;
(c) other than in the ordinary course of business consistent with
past practice, sell, transfer, mortgage, encumber or otherwise dispose of
any of its material properties or assets to any individual, corporation
or other entity other than a direct or indirect wholly owned subsidiary
of the Company, or cancel, release or assign any indebtedness of any such
person or any claims held by any such person, except pursuant to
contracts or agreements in force at the date of this Plan or as provided
in the letter pursuant to Section 3.1;
(d) increase in any manner the compensation or fringe benefits of
any of its employees or directors or pay any pension or retirement
allowance not required by any existing plan or agreement to any such
employees or directors, or become a party to, amend or commit itself to
any pension, retirement, profit-sharing or welfare benefit plan or
agreement or employment agreement with or for the benefit of any employee
or director, other than general increases in compensation in the ordinary
course of business consistent with past practice not in excess of 4% in
any 12-month period, or voluntarily accelerate the vesting of any stock
options or the funding or vesting of other compensation or benefit;
provided, however, that the foregoing shall not apply to prohibit any
increase or acceleration disclosed in writing by the Company to the
Acquiror prior to the execution hereof pursuant to a plan, program,
arrangement or agreement in effect on the date hereof which results from
the execution of this Plan or the consummation of any transaction
contemplated hereby;
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(e) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1993, except as required by
changes in generally accepted accounting principles as concurred in by
the Company's independent auditors; or
(f) amend its articles of incorporation (or equivalent) or its
by-laws.
SECTION 2.3. Cooperation. The Company shall, and shall cause its
subsidiaries to, cooperate with Acquiror and Merger Sub in completing the
transactions contemplated hereby and shall not intentionally take, cause to be
taken or agree or make any commitment to take any action: (i) that is
reasonably likely to cause any of the representations or warranties of it that
are set forth in Article III hereof not to be true and correct, or (ii) that is
inconsistent with or prohibited by Section 2.1 or Section 2.2. The Acquiror
and Merger Sub shall, and shall cause their subsidiaries to, cooperate with the
Company in completing the transactions contemplated hereby and shall not
intentionally take, cause to be taken or agree to make any commitment to take
any action that is reasonably likely to cause any of their representations or
warranties set forth in Article III hereof not to be true and correct.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The
Company represents and warrants to the Acquiror and Merger Sub, that, except as
specifically disclosed in a letter of the Company delivered to the Acquiror
prior to the execution hereof (and making specific reference to the Section of
this Plan for which an exception is taken) or as disclosed herein or in any
Annex hereto:
(a) Recitals True. The facts set forth in the Recitals of this
Plan with respect to the Company are true and correct.
(b) Capital Stock. All outstanding shares of capital stock of the
Company and its subsidiaries, are duly authorized, validly issued and
outstanding, fully paid and non-assessable, and subject to no preemptive
rights.
(c) Authority. Each of the Company and its subsidiaries, has the
power and authority, and is duly qualified in all jurisdictions (except
for such qualifications the absence of which, individually or in the
aggregate, would not have a Material Adverse Effect (as defined in
Section 8.1)) where such qualification is required, to carry on its
business as
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it is now being conducted and to own all its material properties and
assets, and it has all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets
and to carry on its business as it is now being conducted, except for
such powers and authorizations the absence of which, either individually
or in the aggregate, would not have a Material Adverse Effect.
(d) Subsidiaries. A list of the Company's subsidiaries is
contained in Annex 3. The shares of capital stock of each of the
Company's subsidiaries are owned by it free and clear of all liens,
claims, encumbrances and restrictions on transfer and there are no Rights
with respect to such capital stock.
(e) Shareholder Approvals. (i) Subject to the receipt of the
required shareholder approval of this Plan, each of this Plan and the
Option Agreement has been authorized by all necessary corporate action of
the Company. The Company has received the written opinion of Alex. Brown
& Sons Incorporated to the effect that the consideration to be received
by the shareholders of the Company pursuant to this Plan is fair to such
shareholders from a financial point of view. Subject to receipt of (A)
such shareholder approval and (B) the required approvals, consents or
waivers of governmental authorities referred to in Section 5.1(b), this
Plan is, and upon its execution and delivery the Option Agreement will
be, a valid and binding agreement of the Company enforceable against it
in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(ii) The affirmative vote of two-thirds (2/3) of the outstanding
stock of the Company entitled to vote on the Plan is the only shareholder
vote of the Company's shareholders required for approval of this Plan and
consummation of the Merger and the other transactions contemplated
hereby.
(f) No Violations. The execution, delivery and performance of
this Plan by the Company do not, the execution, delivery and performance
of the Option Agreement by the Company will not, and the consummation of
the transactions contemplated hereby or thereby by the Company will not,
constitute (i) a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of the Company or its
subsidiaries or to which the
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<PAGE> 13
Company or its subsidiaries (or any of their respective properties) is
subject, except for any of the foregoing that would not have a Material
Adverse Effect on the Company or enable any person to enjoin the Merger,
(ii) a breach or violation of, or a default under, the articles of
incorporation or by-laws of the Company or any of its subsidiaries or
(iii) a breach or violation of, or a default under (or an event which
with due notice or lapse of time or both would constitute a default
under), or result in the termination of, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or obligation to which the
Company or any of its subsidiaries is a party, or to which any of their
respective properties or assets may be bound or affected, except for any
of the foregoing that, individually or in the aggregate, would not have a
Material Adverse Effect. The consummation of the transactions
contemplated hereby or, upon its execution and delivery, by the Option
Agreement will not require any approval, consent or waiver under any such
law, rule, regulation, judgment, decree, order, governmental permit or
license or the approval, consent or waiver of any other party to any such
agreement, indenture or instrument, other than (i) the required
approvals, consents and waivers of governmental authorities referred to
in Section 5.1(b), (ii) the approval of the shareholders of the Company
referred to in Section 3.1(e), (iii) such approvals, consents or waivers
as are required under the federal and state securities or "Blue Sky" laws
in connection with the transactions contemplated by the Option Agreement,
and (iv) any other approvals, consents or waivers the absence of which,
individually or in the aggregate, would not result in a Material Adverse
Effect or enable any person to enjoin the Merger.
(g) Reports. (i) As of their respective dates or, if amended, as
of the respective dates of the latest amendments thereto, neither the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, nor any other document filed by the Company subsequent to
December 31, 1992 under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act"), each in the form (including exhibits) filed with the Securities
and Exchange Commission (the "SEC") (collectively, the "Reports"),
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were
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<PAGE> 14
made, not misleading. Each of the balance sheets or statements of
condition contained or incorporated by reference in the Company's Reports
(including in each case any related notes and schedules) fairly presented
the financial position of the entity or entities to which it relates as
of its date and each of the statements of operations and retained
earnings and of cash flows and changes in financial position or
equivalent statements contained or incorporated by reference in the
Company's Reports (including in each case any related notes and
schedules), fairly presented the results of operations, retained earnings
and cash flows and changes in financial position, as the case may be, of
the entity or entities to which it relates for the periods set forth
therein (subject, in the case of unaudited interim statements, to normal
year-end audit adjustments that are not material in amount or effect), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein.
(ii) The Company and each of its subsidiaries have timely filed
all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
since December 31, 1992 with (i) the SEC, (ii) the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), (iii) the FDIC,
(iv) any state banking commission or other regulatory authority ("State
Regulator") (collectively, "Regulatory Agencies"), and (v) the National
Association of Securities Dealers, Inc. and any other self- regulatory
organization ("SRO"), and all other reports and statements required to be
filed by them since December 31, 1992, including, without limitation, any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, the SEC, the Federal Reserve Board, the
FDIC, any State Regulator or any SRO, and have paid all fees and
assessments due and payable in connection therewith, except where the
failure to make any such filing or to pay any such fees or assessments or
the timing of such filing would not have a Material Adverse Effect.
(h) Absence of Certain Changes or Events. Since December 31,
1993, the Company and its subsidiaries have not incurred any material
liability, except in the ordinary course of their business consistent
with past practice, nor has there been any change, or any event involving
a prospective change, which, individually or in the aggregate, has had,
or is reasonably likely to have, a Material Adverse Effect on the Company
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<PAGE> 15
(i) Taxes. Except as otherwise would not have a Material Adverse
Effect, all federal, state, local, and foreign tax returns required to be
filed by or on behalf of the Company or any of its subsidiaries have been
timely filed or requests for extensions have been timely filed and any
such extension shall have been granted and not have expired, and all such
filed returns are complete and accurate in all material respects. All
taxes shown on such returns, and all taxes required to be shown on
returns for which extensions have been granted, have been paid in full or
adequate provision has been made for any such taxes on the Company's
statement of financial condition (in accordance with generally accepted
accounting principles). As of the date of this Plan, there is no audit
examination, deficiency, or refund litigation with respect to any taxes
of the Company that could result in a determination that would have a
Material Adverse Effect on the Company. All taxes, interest, additions,
and penalties due with respect to completed and settled examinations or
concluded litigation relating to the Company have been paid in full or
adequate provision has been made for any such taxes on the Company's
balance sheet (in accordance with generally accepted accounting
principles). Except as otherwise would not have a Material Adverse
Effect, the Company and its subsidiaries have not executed an extension
or waiver of any statute of limitations on the assessment or collection
of any material tax due that is currently in effect.
(j) Absence of Claims. No litigation, proceeding or controversy
before any court or governmental agency is pending, and there is no
pending claim, action or proceeding against the Company or any of its
subsidiaries, which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect or to materially hinder or
delay consummation of the transactions contemplated hereby, and, to the
Company's knowledge, no such litigation, proceeding, controversy, claim
or action has been threatened or is contemplated.
(k) Absence of Regulatory Actions. Except with respect to the
Order to Cease and Desist, dated July 21, 1992, between the Company, the
FDIC and the Bank Commissioner for the State of Maryland (the
"Commissioner") and the Agreement, dated July 21, 1992, between the
Company, the Federal Reserve Bank of Richmond and the Commissioner,
neither the Company nor any of its subsidiaries is a party to any cease
and desist order, written agreement or memorandum of understanding with,
or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board
resolutions at the request of,
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<PAGE> 16
federal or state governmental authorities charged with the supervision or
regulation of banks, savings banks or bank holding companies or engaged
in the insurance of bank and/or savings and loan deposits ("Government
Regulators") nor has the Company been advised by any Government Regulator
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, directive,
written agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter, board resolutions or similar undertaking.
(l) Agreements. Except for the Option Agreement and arrangements
made in the ordinary course of business, the Company and its subsidiaries
are not bound by any material contract (as defined in Item 601(b)(10) of
Regulation S-K) to be performed after the date hereof that has not been
filed with or incorporated by reference in the Company's Reports filed
prior to the date hereof or as disclosed in the Company's audited
consolidated financial statements as of December 31, 1993 (as furnished
to the Acquiror prior to the date hereof). Except as disclosed in the
Company's Reports filed prior to the date of this Plan or as disclosed in
such financial statements as of December 31, 1993, as of the date of this
Plan, neither the Company nor any of its subsidiaries is a party to a (i)
consulting agreement (other than data processing, software programming
and licensing contracts entered into in the ordinary course of business)
not terminable on 90 days' or less notice involving the payment of more
than $100,000 per annum, in the case of any such agreement with an
individual, or $100,000 per annum, in the case of any other such
agreement, (ii) agreement with any executive officer or other key
employee of the Company or any of its subsidiaries the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any of its
subsidiaries of the nature contemplated by this Plan or the Option
Agreement and which provides for the payment of in excess of $100,000,
(iii) agreement with respect to any executive officer of the Company or
any of its subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than one year and for the payment
of in excess of $100,000 per annum, (iv) agreement or plan (other than
the Company Stock Option Plans), including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Plan or the Option Agreement or the
value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Plan or the Option Agreement
or (v)
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<PAGE> 17
agreement containing covenants that limit the ability of the Company or
any of its subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which,
or method by which, the Company or any of its subsidiaries may carry on
its business (other than as may be required by law or any regulatory
agency).
(m) Labor Matters. Neither the Company nor any of its
subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract, or other agreement or understanding with a labor
union or labor organization, nor is the Company or any of its
subsidiaries the subject of any proceeding asserting that the Company or
any such subsidiary has committed an unfair labor practice or seeking to
compel the Company or such subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any
strike, other labor dispute or organizational effort involving the
Company or any of its subsidiaries pending or threatened.
(n) Employee Benefit Plans. All benefit plans, contracts,
agreements, arrangements, including, but not limited to, "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and employment
contracts and deferred compensation plans and agreements (as set forth in
Annex 4 hereto), that cover any of the Company's or its subsidiaries'
employees or directors (hereinafter referred to collectively as the
"Employee Plans"), comply in all material respects with all applicable
requirements of ERISA, the Internal Revenue Code of 1986, as amended (the
"Code"), and other applicable laws; neither the Company nor any of its
subsidiaries nor any Employee Plan subject to ERISA, nor any trust
thereunder, nor, to the best of the Company's knowledge, any trustee or
fiduciary thereof, has engaged in a "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) with respect to any
Employee Plan which is likely to result in any material penalties or
taxes under Section 502(i) of ERISA or Section 4975 of the Code; no
liability to the Pension Benefit Guaranty Corporation has been or is
expected by the Company or any of its subsidiaries to be incurred with
respect to any Employee Plan which is subject to Title IV of ERISA
("Pension Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or formerly maintained
by the Company or any of its subsidiaries or any entity which is
considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"); no Pension Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA
(whether or
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<PAGE> 18
not waived)) as of the last day of the end of the most recent plan year
ending prior to the date hereof; the fair market value of the assets of
each Pension Plan exceeds the accumulated benefit obligation (as
determined under Statement of Financial Accounting Standards No. 87)
under such Pension Plan as of the end of the most recent plan year with
respect to the respective Pension Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most
recent actuarial valuation for such Pension Plan as of the date hereof;
no notice of a "reportable event" (as defined in Section 4043 of ERISA)
for which the 30-day reporting requirement has not been waived has been
required to be filed for any Pension Plan within the 12-month period
ending on the date hereof; and neither the Company nor any of its
subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code; and the Company and its
subsidiaries have not contributed to any "multiemployer plan", as defined
in Section 3(37) of ERISA, on or after September 26, 1980. Each Employee
Plan which is an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) and which is intended to be qualified under Section 401(a)
of the Code (a "Qualified Plan") has received a favorable determination
letter from the Internal Revenue Service ("IRS") (other than the
Company's 401(k) plan; provided that the Company's 401(k) plan was
established after 1987, and provided further that the Company is not
aware of any circumstances that would prevent the issuance of a favorable
determination letter or that would cause the IRS to determine that the
Company's 401(k) plan in operation was not tax qualified) and the Company
and its subsidiaries are not aware of any circumstances likely to result
in revocation of any such favorable determination letter; each Qualified
Plan which is an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code) has satisfied all of the applicable requirements
of Sections 409 and 4975(e)(7) of the Code and the regulations
thereunder; there is no pending or threatened litigation relating to any
Employee Plan; there has been no announcement or legally binding
commitment by the Company or its subsidiaries to create an additional
Employee Plan, or to amend an Employee Plan except for amendments
required by applicable law which do not materially increase the cost of
such Employee Plan; and the Company and its subsidiaries do not have any
obligations for retiree health and life benefits under any Employee Plan
that cannot be amended or terminated without incurring any liability
thereunder, except continuation coverage required under Sections 601
through 608 of ERISA. Except as specifically identified on Annex 4 and
subject to the conditions, limitations and assumptions specified therein,
the execution and delivery of this Agreement
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<PAGE> 19
and the consummation of the transactions contemplated hereby will not
result in any payment or series of payments by the Company or its
subsidiaries to any person which is an "excess parachute payment" (as
defined in Section 280G of the Code) under any Employee Plan, increase
any benefits payable under any Employee Plan, or accelerate the time of
payment or vesting of any such benefit. With respect to each Employee
Plan, the Company has supplied to the Acquiror and Merger Sub a true and
correct copy of (i) the most recent annual report on the applicable form
of the Form 5500 series filed with the "IRS", (ii) such Employee Plan,
including amendments thereto, (iii) each trust agreement and insurance
contract relating to such Plan, including amendments thereto, (iv) the
most recent summary plan description for such Employee Plan, including
amendments thereto, if the Employee Plan is subject to Title I of ERISA,
(v) the most recent actuarial report or valuation if such Employee Plan
is a Pension Plan and (vi) the most recent determination letter issued by
the IRS if such Company Benefit Plan is a Qualified Plan. Annex 4
contains a complete list of the Employee Plans.
(o) Title to Assets. Each of the Company and its subsidiaries has
good and marketable title to its properties and assets (other than (i)
property as to which it is lessee and (ii) real estate owned as a result
of foreclosure, transfer in lieu of foreclosure or other transfer in
satisfaction of a debtor's obligation previously contracted), except for
such defects in title which would not, individually or in the aggregate,
have a Material Adverse Effect.
(p) Knowledge as to Conditions. The Company knows of no reason
why the approvals, consents and waivers of governmental authorities
referred to in Section 5.1(b) should not be obtained without the
imposition of any condition of the type referred to in the proviso
thereto.
(q) Compliance with Laws. The Company and each of its
subsidiaries has all permits, licenses, certificates of authority, orders
and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit it to carry on its
business as it is presently conducted and the absence of which could,
individually or in the aggregate, have a Material Adverse Effect on the
Company; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect, and, to the best knowledge of
the Company, no suspension or cancellation of any of them is threatened.
(r) Fees. Other than financial advisory services performed for
the Company by Alex. Brown & Sons Incorporated (in
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<PAGE> 20
an amount and pursuant to an agreement both previously disclosed to the
Acquiror), neither the Company nor any of its subsidiaries, nor any of
their respective officers, directors, employees or agents, has employed
any broker or finder or incurred any liability for any financial advisory
fees, brokerage fees, commissions, or finder's fees, and no broker or
finder has acted directly or indirectly for the Company or any of its
subsidiaries, in connection with the Plan or the transactions
contemplated hereby.
(s) Environmental Matters. (i) Except to the extent that the
following, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:
(A) Each of the Company and its subsidiaries, the Participation
Facilities, and the Loan Properties (each as defined below) are in
compliance with all Environmental Laws (as defined below);
(B) To the knowledge of any employee of the Company or any of its
subsidiaries, there is no suit, claim, action, demand, order, directive,
investigation or proceeding pending or threatened, before any court,
governmental agency or board or other forum against the Company or any of
its subsidiaries, any Participation Facility or any Loan Property with
respect to any Environmental Law or relating to the release or threatened
release into the environment of any Hazardous Substance (as defined
below);
(C) To the knowledge of any employee of the Company or any of its
subsidiaries, there is no reasonable basis for any suit, claim, action,
demand, directive or proceeding of a type described in Section
3.1(s)(i)(B);
(D) To the knowledge of any employee of the Company or any of its
subsidiaries, the properties currently or formerly owned or operated by
the Company are not contaminated with Hazardous Substances (as defined
below); provided, however, that with respect to properties formerly owned
or operated by the Company, such representation is limited to the period
the Company owned or operated such properties; and
(E) To the knowledge of any employee of the Company or any of its
subsidiaries, neither the Company nor any of its subsidiaries has
received any notice, demand letter, order, directive or request for
information from any governmental entity or any third party indicating
that it may be in violation of, or liable under, any Environmental Law
and there are no circumstances involving the Company, any of its
subsidiaries, any Loan Property or any Participation Facility
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<PAGE> 21
which will result in liability to the Company or its subsidiaries under
any Environmental Law.
(ii) The following definitions apply for purposes of this Section
3.1(s): (w) "Loan Property" means any property in which the Company (or
a subsidiary of the Company) holds a security interest or is an owner or
operator of such property; (x) "Participation Facility" means any
facility in which the Company (or a subsidiary of the Company)
participates in the management (including all property held as trustee or
in any other fiduciary or agency capacity) and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property; (y) "Environmental Law" means any law,
regulation, agency requirement, government interpretation, policy, order,
decree, judgment, or judicial opinion as presently in effect relating to
(A) the manufacture, transport, use, treatment, storage, recycling,
disposal, release, threatened release or presence of Hazardous Substances
or (B) relating to the preservation, restoration, or protection of the
environment, natural resources or human health; and (z) "Hazardous
Substances" means substances which are either: (A) listed, classified or
regulated pursuant to any Environmental Law; (B) any petroleum products
or by-products, asbestos containing material, polychlorinated biphenyls,
radioactive materials or radon gas; or (C) any other matter to which
exposure is prohibited, limited or regulated by any Environmental Law.
(t) Allowance. The allowance for possible loan losses shown on
the Company's audited statement of financial condition as of December 31,
1993 was, and the allowance for possible loan losses shown on the
statements of financial condition in the Company's Reports for periods
ending after the date of this Plan will be, adequate, as of the date
thereof, under generally accepted accounting principles applicable to
banks and bank holding companies. The Company has disclosed to the
Acquiror in writing prior to the date hereof the amounts of all loans,
leases, advances, credit enhancements, other extensions of credit,
commitments and interest-bearing assets of the Company and its
subsidiaries that have been classified by any bank examiner (whether
regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized",
"Credit Risk Assets", "Concerned Loans" or words of similar import, and
the Company shall promptly after the end of any month inform the Acquiror
of any such classification arrived at any time after the date hereof.
The Other Real Estate Owned ("OREO") included in any non-performing
assets of the Company or any of its subsidiaries is carried net of
reserves at the lower of cost or fair
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<PAGE> 22
value based on current independent appraisals or current management
appraisals provided however that "current" shall mean within the past 24
months, except, where the Company was not the lead participant, "current"
shall mean appraisals provided as of the date selected by the lead
participant.
(u) Antitakeover Provisions Inapplicable. (i) The Board of
Directors of the Company has duly adopted an irrevocable and binding
resolution as follows:
"RESOLVED, that pursuant to Section 3-603(c)(1)(ii) of the
Maryland General Corporation Law ("MGCL"), the Board of Directors
of the Corporation for the specific purpose of establishing an
irrevocable exemption from Section 3-602 of the MGCL hereby
irrevocably exempts therefrom, and hereby approves thereunder, the
entering into, and all of the transactions relating to and
contemplated by, the agreement and plan of merger and the stock
option agreement in substantially the form presented to this
meeting of the Board of Directors of the Corporation to be entered
into between First Fidelity Bancorporation, Annabel Lee
Corporation and the Corporation."
(ii) The resolution referred to in subsection (i) is effective to
exempt the Plan, the Option Agreement, the Merger and the transactions
contemplated hereby and thereby from the provisions of the MGCL referred
to therein and the Company has taken all action required to exempt each
of the foregoing from any other Maryland antitakeover laws.
(v) Insurance. The Company and its subsidiaries are presently
insured, and since December 31, 1992, have been insured, for reasonable
amounts with financially sound and reputable insurance companies, against
such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of
the insurance policies and bonds maintained by the Company and its
subsidiaries are in full force and effect, the Company and its
subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. In the best
judgment of the Company's management, such insurance coverage is
adequate.
(w) Books and Records. The books and records of the Company and
each of its subsidiaries are maintained in accordance with applicable
legal and accounting requirements and reflect in all material respects
the substance of events and transactions that should be included therein.
(x) Corporate Documents. The Company has delivered to the
Acquiror true and complete copies of (i) its articles of
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<PAGE> 23
incorporation and by-laws and (ii) the articles and by-laws of the
Company Bank.
(y) Liquidation Account. Neither the Thrift Merger nor the Merger
will result in any payment or distribution payable out of the Liquidation
Account of the Company Bank.
SECTION 3.2. Representations and Warranties of Acquiror and
Merger Sub. Acquiror represents and warrants to the Company that, except as
specifically disclosed in a letter of the Acquiror delivered to the Company
prior to the execution hereof (and making specific reference to the Section of
this Plan for which an exception is taken) or as disclosed herein or in any
Annex hereto:
(a) Recitals True. The facts set forth in the Recitals of this
Plan with respect to the Acquiror and the Merger Sub are true and
correct.
(b) Corporate Organization and Qualification. Each of Acquiror
and Merger Sub is a corporation duly incorporated, validly existing and
in good standing under the laws of the States of New Jersey and Maryland,
respectively, and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it requires such qualification, except for such
failure to qualify or be in such good standing which, when taken together
with all other such failures, would not have a Material Adverse Effect
(as defined in Section 8.1). Acquiror and Merger Sub each has the
requisite corporate and other power and authority (including all federal,
state, local and foreign governmental authorizations) to carry on its
respective businesses as they are now being conducted and to own their
respective properties and assets, except for such powers and
authorizations the absence of which, either individually or in the
aggregate, would not have a Material Adverse Effect.
(c) Corporate Authority. Each of Acquiror and Merger Sub has the
requisite corporate power and authority and has taken all corporate
action necessary in order to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a
valid and binding agreement of Acquiror and Merger Sub enforceable
against Acquiror and Merger Sub in accordance with its terms.
(d) No Violations. The execution, delivery and performance of
this Agreement by Acquiror and Merger Sub do not, and the consummation of
the transactions contemplated hereby will not, constitute (i) a breach or
violation of, or a default under, any law, rule or regulation or any
judgment,
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<PAGE> 24
decree, order, governmental permit or license, or agreement, indenture or
instrument of Acquiror and Merger Sub or to which Acquiror and Merger Sub
(or any of their respective properties) is subject, which breach,
violation or default would have a Material Adverse Effect on Acquiror, or
enable any person to enjoin the Merger or the Thrift Merger, (ii) a
breach or violation of, or a default under, the certificate or articles
of incorporation or by-laws of Acquiror or Merger Sub or (iii) a breach
or violation of, or a default under (or an event which with due notice or
lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the properties or assets of Acquiror or Merger
Sub under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument
or obligation to which Acquiror or Merger Sub is a party, or to which any
of their respective properties or assets may be bound or affected, except
for any of the foregoing that, individually or in the aggregate, would
not have a Material Adverse Effect on Acquiror; and the consummation of
the transactions contemplated hereby will not require any approval,
consent or waiver under any such law, rule, regulation, judgment, decree,
order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, indenture or instrument, other
than (i) the required approvals, consents and waivers of governmental
authorities referred to in Section 5.1(b), (ii) any such approval,
consent or waiver that already has been obtained, and (iii) any other
approvals, consents or waivers the absence of which, individually or in
the aggregate, would not result in a Material Adverse Effect on Acquiror
or enable any person to enjoin the Merger or the Thrift Merger.
(e) Access to Funds. Acquiror has, or on the Closing Date will
have, all funds necessary to consummate the Merger and pay the aggregate
Merger Consideration.
(f) Knowledge as to Conditions. Acquiror knows of no reason why
the approvals, consents and waivers of governmental authorities referred
to in Section 5.1(b) should not be obtained without the imposition of any
condition of the type referred to in the provisos thereto.
(g) Banco Santander S.A. As of the date hereof, Banco Santander,
S.A. is a bank holding company under the BHC Act and, immediately prior
to the Effective Time, Banco Santander, S.A. will be a bank holding
company under the BHC Act. As of the date hereof, Banco Santander, S.A.
is not a savings and loan holding company under HOLA (as herein
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defined) and, immediately prior to the Effective Time, Banco Santander,
S.A. will not be a savings and loan holding company under HOLA.
ARTICLE IV. COVENANTS
SECTION 4.1. Acquisition Proposals. The Company agrees that
neither it nor any of its subsidiaries nor any of the respective officers and
directors of the Company or its subsidiaries shall, and the Company shall
direct and use its best efforts to cause its employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any enquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
stockholders of the Company) with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or, except to the extent legally required for the discharge by the
board of directors of its fiduciary duties as advised in writing by such
board's counsel, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. The Company will
immediately cease and cause to be terminated any existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company will take the necessary steps to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 4.1. The Company will notify the
Acquiror immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Company and will enforce the terms
of any confidentiality agreement with any other party.
SECTION 4.2. Certain Policies of the Company. At the request of
the Acquiror prior to the Effective Time, the Company shall modify and change
its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) after the later of (i)
the date on which all required approvals referred to in Section 5.1(b) are
received and all applicable waiting periods in connection with such approvals
expire and (ii) the date on which the Company receives the approval of its
shareholders on the Merger and this Plan, so that such policies and practices
will be consistent on a mutually
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satisfactory basis with those of the Acquiror and generally accepted accounting
principles. The Company's representations, warranties and covenants contained
in this Plan shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 4.2. Acquiror agrees promptly to indemnify the
Company for any losses or damages which it may incur as a result of the actions
taken by the Company pursuant to this Section 4.2 in the event the Merger is
not consummated, unless the failure to so consummate is primarily due to a
material breach of any representation, warranty or covenant contained in this
Plan by the Company.
SECTION 4.3. Employees. (a) Acquiror or any of its affiliates
(including, without limitation, the Surviving Corporation) shall have the right
(but not the obligation) to offer employment, as officers and employees of
Acquiror, the Surviving Corporation or other affiliates of Acquiror immediately
following the Effective Time, to any persons who are officers and employees of
the Company immediately before the Effective Time. Acquiror or its affiliates,
as the case may be, shall use their best efforts to identify, and offer
employment opportunities to qualified, satisfactorily performing employees of
the Company in positions for which such employees are qualified. Acquiror
shall give, and shall cause its affiliates to give, priority consideration to
all such employees vis-a-vis all individuals other than current employees of
Acquiror and Acquiror's affiliates; provided, however, that employees of the
Company and its subsidiaries shall rank on an equal footing with the current
employees of Acquiror and its affiliates and any other entities that may in the
future be acquired by Acquiror or its affiliates. To the extent that the
employment of any employee of the Company is involuntarily terminated within
six months after the Effective Time for any reason other than cause, such
employee shall be entitled to receive outplacement services in accordance with
Acquiror's normal practices and a severance payment equal to two weeks' pay for
each full year of service with the Company and the Surviving Corporation,
provided, however, that except as may be specifically provided in (d), below,
under no circumstances shall any employee be entitled to more than a total of
26 weeks' pay in respect of such severance payment. For purposes for this
Section 4.3, the determination of whether the employment of any employee is
terminated for cause shall be made in accordance with Acquiror's or Acquiror's
affiliates' normal employment practices.
(b) Each person employed by the Company prior to the Effective
Time who remains an employee of the Surviving Corporation or its subsidiaries
following the Effective Time (each a "Continued Employee") shall be entitled,
as an employee of a subsidiary of Acquiror, to participate in whatever employee
benefit plans, as defined in Section 3(3) of ERISA, or whatever
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nonqualified employee benefit plans or deferred compensation, stock option,
bonus or incentive plans or other employee benefit or fringe benefit programs
that may be in effect generally for employees of Acquiror's subsidiaries from
time to time ("Acquiror's Plans"), if such Continued Employee shall be eligible
or selected or selected for participation therein and otherwise shall not be
participating in a similar plan which continues to be maintained by the
Surviving Corporation and its subsidiaries. Continued Employees will be
eligible to participate on the same basis as similarly situated employees of
Acquiror or Acquiror's subsidiaries. All such participation shall be subject
to such terms of such plans as may be in effect from time to time.
(c) Acquiror or Acquiror's subsidiaries shall, for purposes of
vesting and for purposes of eligibility to begin participation with respect to
Acquiror's Plans, cause each of Acquiror's Plans to be amended to recognize
credit for each Continued Employee's terms of service with the Company and the
Company's subsidiaries. Upon the Effective Time, or as soon as practicable
thereafter, no further benefit accruals shall be provided under the Company's
defined benefit pension plan, and each Continued Employee shall begin to accrue
a benefit under Acquiror's defined benefit pension plan according to its terms.
The Company agrees to assist with whatever action (not involving the payment of
money) that is reasonably required (including issuance of a timely notice to
employees under Section 204(h) of ERISA) to effectuate the foregoing.
(d) Acquiror agrees to cause Surviving Corporation to honor and
continue to perform, without modification, all severance contracts for senior
management employees of Company authorized and entered into by Company prior to
the date of this Agreement and which have been provided by Company to Acquiror
prior to the date of this Agreement and listed on Annex 4.
SECTION 4.4. Access and Information. Upon reasonable notice, the
Company shall (and shall cause its subsidiaries to) afford to the Acquiror and
its representatives (including, without limitation, directors, officers and
employees of the Acquiror and its affiliates, and counsel, accountants and
other professionals retained) such access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including, without limitation, tax returns and work papers of independent
auditors), properties and personnel and to such other information as the
Acquiror may reasonably request; provided, however, that no investigation
pursuant to this Section 4.4 shall affect or be deemed to modify any
representation or warranty made herein. The Acquiror will not, and will cause
its representatives not to, use any information obtained pursuant to this
Section 4.4 for any purpose unrelated to the consummation of
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the transactions contemplated by this Plan. Subject to the requirements of
law, the Acquiror will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 4.4 unless such information (i) was already known to the Acquiror, (ii)
becomes available to the Acquiror from other sources not known by the Acquiror
to be bound by a confidentiality obligation, (iii) is disclosed with the prior
written approval of the Company or (iv) is or becomes readily ascertainable
from published information or trade sources. In the event that this Plan is
terminated or the transactions contemplated by this Plan shall otherwise fail
to be consummated, each party shall promptly cause all copies of documents or
extracts thereof containing information and data as to another party hereto to
be returned to the party which furnished the same.
SECTION 4.5. Certain Filings, Consents and Arrangements. The
Acquiror, Merger Sub and the Company shall, and the Company shall cause the
Bank and the FSB to, (a) as soon as practicable make any filings and
applications required to be filed in order to obtain all approvals, consents
and waivers of governmental authorities necessary or appropriate for the
consummation of the transactions contemplated hereby or by the Option
Agreement, (b) cooperate with one another (i) in promptly determining what
filings are required to be made or approvals, consents or waivers are required
to be obtained under any relevant federal, state or foreign law or regulation
and (ii) in promptly preparing any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such
approvals, consents or waivers and (c) deliver to the other copies of the
publicly available portions of all such filings and applications in preliminary
form for comment prior to their filing and in final form promptly after they
are filed. The Acquiror shall use its best efforts to cause Banco Santander,
S.A. to comply with the provisions of Section 6.05 of the Investment Agreement,
dated as of March 18, 1991, between the Acquiror and Banco Santander, S.A. to
participate and join with Acquiror in taking the action required thereunder,
and Acquiror will seek specific performance thereof pursuant to Section 12.08
thereof, and in the event that the Merger is not consummated primarily as a
result of a failure by Banco Santander, S.A. to join with Acquiror in any
action required under Section 6.05 thereof, Acquiror shall seek to be
compensated for the amount of Acquiror's damages resulting from such failure
and shall pay over to the Company the amount of any payment for such damages
actually received by the Acquiror from Banco Santander, S.A.
SECTION 4.6. Antitakeover Statutes. The Company shall take all
reasonable steps requested by the Acquiror (i) to exempt the Company and the
Plan from the requirements of any state antitakeover law by action of its board
of directors or otherwise
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and (ii) to assist at the Acquiror's expense in any challenge by the Acquiror
to the applicability to the Merger of any state antitakeover law.
SECTION 4.7. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time through the sixth anniversary of the
Effective Date, the Acquiror and the Surviving Corporation agree to indemnify
and hold harmless each present and former director and officer of the Company
or its subsidiaries and each officer or employee of the Company or its
subsidiaries who is serving or has served as a director or trustee of another
entity expressly at the Company's request or direction, determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring
at or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the Company would have
been permitted under Maryland law and its articles of incorporation or by-laws
in effect on the date hereof to indemnify such person (and the Acquiror or the
Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under applicable law and its articles of incorporation and
by-laws provided the person to whom expenses are advanced provides a written
affirmation of the person's good faith belief that the standard of conduct
necessary for indemnification by the Company pursuant to the MGCL has been met
and the person's undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
Section 4.7(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Acquiror and the Surviving Corporation
thereof, but the failure to so notify shall not relieve the Acquiror or the
Surviving Corporation of any liability it may have to such Indemnified Party if
such failure does not materially prejudice the indemnifying party. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Acquiror or the Surviving
Corporation shall have the right to assume the defense thereof and neither the
Acquiror nor the Surviving Corporation shall be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if neither the Acquiror nor the Surviving
Corporation elects to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of
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interest between the Acquiror or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
the Acquiror or the Surviving Corporation shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that the Acquiror and the Surviving
Corporation shall be obligated pursuant to this paragraph (b) to pay for only
one firm of counsel for all Indemnified Parties in any jurisdiction unless the
use of one counsel for such Indemnified Parties would present such counsel with
a conflict of interest (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) neither the Acquiror nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent; and provided further that neither the Acquiror nor the
Surviving Corporation shall have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(c) For a period of six years after the Effective Time, the
Acquiror shall use all reasonable efforts to cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company (provided that the Acquiror may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events which
occurred before the Effective Time); provided, however, that in no event shall
the Acquiror be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Subsection 4.7(c), any amount per annum in excess of
200% of the amount of the annual premiums paid as of the date hereof by the
Company for such insurance (the "Maximum Amount"). If the amount of the annual
premiums necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, the Acquiror shall use all reasonable efforts to maintain the
most advantageous policies of directors' and officers' insurance obtainable for
an annual premium equal to the Maximum Amount.
SECTION 4.8. Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Plan as promptly as
practicable, including using efforts to obtain all necessary actions or non-
actions, extensions, waivers, consents and approvals from all applicable
governmental entities, effecting all necessary registrations, applications and
filings (including, without
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limitation, filings under any applicable state securities laws) and obtaining
any required contractual consents and regulatory approvals.
SECTION 4.9. Publicity. The initial press release announcing
this Plan shall be a joint press release and thereafter the Company and the
Acquiror shall consult with each other in issuing any press releases with
respect to the other or the transactions contemplated hereby and in making any
filings with any governmental entity or with any national securities exchange
with respect thereto.
SECTION 4.10. Proxy Statement. As soon as practicable after the
date hereof, the Company shall prepare a proxy statement to take shareholder
action on the Merger and this Agreement (the "Proxy Statement"), file it with
the SEC, respond to comments of the Staff of the SEC, clear the Proxy Statement
with the Staff of the SEC and promptly thereafter mail the Proxy Statement to
all holders of record (as of the applicable record date) of shares of Company
Common Stock. The Company represents and covenants that the Proxy Statement
and any amendment or supplement thereto (other than as to information furnished
by the Acquiror for inclusion therein), at the date of mailing to shareholders
of the Company and the date of the meeting of the Company's shareholders to be
held in connection with the Merger, will be in compliance with all relevant
rules and regulations of the SEC and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Acquiror and the
Company shall cooperate with each other in the preparation of the Proxy
Statement.
SECTION 4.11. Shareholders' Meeting. The Company shall take all
action necessary, in accordance with applicable law and its articles of
incorporation and by-laws, to convene a meeting of the holders of Company
Common Stock (the "Company Meeting") as promptly as practicable after June 15,
1994 for the purpose of considering and taking action required by this Plan.
Except to the extent legally required for the discharge by the board of
directors of its fiduciary duties as advised in writing by such board's
counsel, the board of directors of the Company shall recommend that the holders
of the Company Common Stock vote in favor of and approve the Merger and adopt
this Plan at the Company Meeting.
SECTION 4.12. Notification of Certain Matters. Each party shall
give prompt notice to the others of: (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its subsidiaries subsequent to
the date
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of this Plan and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of the
Company and its subsidiaries taken as a whole to which the Company or any of
its subsidiaries is a party or is subject; and (b) any change which has a
Material Adverse Effect. Each of the Company, the Acquiror and Merger Sub
shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
SECTION 4.13. Outstanding Debt. Prior to the Effective Date, the
Company shall (i) effect the redemption of the entire outstanding principal
amount of the Convertible Subordinated Debentures pursuant to the terms of the
related indenture and (ii) seek to repurchase the entire outstanding principal
amount of Capital Notes of the Company on such terms and conditions as shall be
acceptable to the Acquiror. Prior to the Company effecting such redemption or
making such repurchase, Acquiror, upon request of the Company, shall extend a
loan to the Company in an amount sufficient to cover such redemption and
repurchase, for three years at a 6 3/4% annual interest rate on an unsecured
basis and with and upon such other commercially reasonable terms to be
determined by the Acquiror and the Company at the time of the borrowing.
ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1. Conditions to All Parties' Obligations. The
respective obligations of the Acquiror, Merger Sub and the Company to effect
the transactions referred to in Section 1.5 and the Merger shall be subject to
the satisfaction or waiver prior to the Effective Time of the following
conditions:
(a) The Plan and the transactions contemplated hereby shall have
been approved by the requisite vote of the shareholders of the Company in
accordance with applicable law.
(b) Banco Santander, S.A., the Acquiror, Merger Sub, the Company,
the Bank and the FSB shall have procured the required approvals, consents
or waivers for the transactions contemplated hereby (i) by the Office of
Thrift Supervision (the "OTS"), (ii) by the FDIC, (iii) by the Federal
Reserve Board and (iv) by the Commissioner, and all applicable statutory
waiting periods shall have expired; and the parties and other
participants in the transactions contemplated hereby shall have procured
all other regulatory approvals, consents or waivers of governmental
authorities or other persons that are necessary or appropriate to the
consummation
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of the transactions contemplated by the Plan; provided, however, that no
approval, consent or waiver referred to in this Section 5.1(b) shall be
deemed to have been received if it shall include any condition or
requirement that, individually or in the aggregate, would (i) result in a
Material Adverse Effect on the Acquiror or (ii) would reduce the benefits
of the transactions contemplated by the Plan to the Acquiror in so
significant and material a manner that the Acquiror, in its good faith
reasonable judgment, would not have entered into this Plan had such
condition or requirement been known at the date hereof.
(c) All other requirements prescribed by law which are necessary
to the consummation of the transactions contemplated by this Plan shall
have been satisfied.
(d) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins
or prohibits the consummation of the Merger or any other transaction
contemplated by this Plan, and no litigation or proceeding shall be
pending against the Acquiror or the Company or any of their subsidiaries
brought by any governmental agency seeking to prevent consummation of the
transactions contemplated hereby.
(e) No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated, interpreted or enforced by
any governmental authority or court which prohibits, restricts or makes
illegal consummation of the Merger or any other transaction contemplated
by this Plan.
SECTION 5.2. Conditions to Obligations of the Acquiror and Merger
Sub. The obligations of the Acquiror and Merger Sub to effect the Merger shall
be subject to the satisfaction or waiver prior to the Effective Time of the
following additional conditions:
(a) The Acquiror shall have received from the Company's
independent certified public accountants "cold comfort" letters, dated
(i) within five business days prior to the date of the mailing of the
Proxy Statement to the Company's shareholders and (ii) shortly prior to
the Effective Date, with respect to certain financial information
regarding the Company in the form customarily issued by such accountants
at such time in transactions of this type.
(b) Each of the representations and warranties of the Company
contained in this Plan and the Option Agreement shall have been true and
correct on the date hereof and shall be true and correct on the Effective
Date (or on the date when
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made in the case of any representation or warranty which specifically
relates to an earlier date or period); provided, however, that for
purposes of this Section 5.2(b) a representation or warranty shall only
fail to be true and correct on the Effective Date if it has not been
waived and if the failure of any such representation or warranty to be
true and correct has or constitutes, or is likely to have or constitute,
either individually or in the aggregate with other representations or
warranties, a Material Adverse Effect; the Company shall have performed,
in all material respects, each of its covenants and agreements contained
in this Plan and the Option Agreement; and the Acquiror shall have
received a certificate signed by the Chief Executive Officer and the
Chief Financial Officer of the Company, dated the Effective Date, to the
foregoing effect.
(c) The Company shall have effected the redemption of the entire
outstanding principal amount of its Convertible Subordinated Debentures.
(d) The Thrift Merger shall have occurred, the Company shall no
longer be a bank holding company for purposes of the BHC Act and the
Company shall have become a savings and loan holding company under the
Home Owners' Loan Act of 1933, as amended ("HOLA").
SECTION 5.3. Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the following additional
conditions:
(a) Each of the representations, warranties and covenants of the
Acquiror and Merger Sub contained in this Plan shall have been true and
correct on the date hereof and shall be true and correct on the Effective
Date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); provided,
however, that for purposes of this Section 5.3(a) a representation or
warranty shall only fail to be true and correct on the Effective Date if
the failure of any such representation or warranty to be true and correct
has or constitutes, or is likely to have or constitute, either
individually or in the aggregate with other representations or
warranties, a Material Adverse Effect; the Acquiror and Merger Sub shall
have performed, in all material respects, each of its covenants and
agreements contained in this Plan; and the Company shall have received
certificates signed by the Vice Chairman and Chief Financial Officer of
the Acquiror, dated the Effective Date, to the foregoing effect.
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ARTICLE VI. TERMINATION
SECTION 6.1. Termination. This Plan may be terminated, and the
Merger abandoned, prior to the Effective Date, either before or after its
approval by the shareholders of the Company and the Acquiror:
(a) by the mutual consent of the Acquiror and the Company, if the
board of directors of each so determines by vote of a majority of the
members of its entire board;
(b) by the Acquiror or the Company, if its board of directors so
determines by vote of a majority of the members of its entire board, in
the event of (i) the failure of the shareholders of the Company to
approve the Plan at its meeting called to consider such approval, or (ii)
a material breach by the other party hereto of any representation,
warranty, covenant or agreement contained herein (or, in the case of the
Company, in the Option Agreement) which is not cured or not curable
within 30 days after written notice of such breach is given to the party
committing such breach by the other party, if such breach would have a
Material Adverse Effect;
(c) by the Acquiror or the Company by written notice to the other
party if either (i) any approval, consent or waiver of a governmental
authority required to permit consummation of the transactions
contemplated hereby shall have been denied or (ii) any governmental
authority of competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Plan;
(d) by the Acquiror or the Company, if its board of directors so
determines by vote of a majority of the members of its entire board, in
the event that the Merger is not consummated by March 31, 1995, unless
the failure to so consummate by such time is primarily due to a material
breach of any representation, warranty or covenant contained in this Plan
by the party seeking to terminate; or
(e) by the Acquiror by written notice to the Company before the
close of business on the day immediately following the date hereof, if
the Option Agreement shall not yet have been entered into.
SECTION 6.2. Effect of Termination. In the event of the
termination of this Plan by either the Acquiror or the Company, as provided
above, this Plan shall thereafter become void and, subject to the provisions of
Section 8.2, there shall be no liability on the part of any party hereto or
their respective
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officers or directors, except that any such termination shall be without
prejudice to the rights of any party hereto arising out of any willful and
material breach by any other party of any covenant or any willful and material
misrepresentation contained in this Plan.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. Effective Date and Effective Time. On the later of
(i) October 31, 1994, (ii) a business day designated by the Acquiror within ten
business days after the receipt of all required regulatory approvals and the
expiration of all applicable waiting periods in connection with such approvals
occurs and all conditions to the consummation of this Plan are satisfied or
waived, or (iii) on such later date as may be agreed by the parties, articles
of merger shall be executed in accordance with all appropriate legal
requirements and shall be filed as required by law, and the Merger provided for
herein shall become effective upon such filing or on such date as may be
specified in such articles of merger. The date of such filing or such later
effective date is herein called the "Effective Date". The "Effective Time" of
the Merger shall be as set forth in or provided by such articles of merger.
ARTICLE VIII. OTHER MATTERS
SECTION 8.1. Certain Definitions; Interpretation. As used in
this Plan, the following terms shall have the meanings indicated:
"material" means material to the Acquiror or the Company (as the
case may be) and its respective subsidiaries, taken as a whole.
"Material Adverse Effect", with respect to a person, means any
condition, event, change or occurrence that is reasonably likely to have
a material adverse effect upon (A) the financial condition, properties,
business or results of operations of such person and its subsidiaries,
taken as a whole (other than as a result of (i) changes in laws or
regulations or accounting rules of general applicability or
interpretations thereof, (ii) decreases in capital under Financial
Accounting Standards No. 115 attributable to general increases in
interest rates or (iii) any reclassification of loans, write downs of
real estate owned or loan loss reserves taken pursuant to a specific
written request of Acquiror (which Company agrees to comply with) or (B)
the ability of such person to perform its obligations under, and to
consummate the transactions contemplated by,
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this Plan and, in the case of the Company, the Option Agreement.
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
"Subsidiary", with respect to a person, means any other person
controlled by such person.
When a reference is made in this Plan to Sections or Annexes, such reference
shall be to a Section of, or Annex to, this Plan unless otherwise indicated.
The table of contents, tie sheet and headings contained in this Plan are for
ease of reference only and shall not affect the meaning or interpretation of
this Plan. Whenever the words "include", "includes", or "including" are used
in this Plan, they shall be deemed followed by the words "without limitation".
Any singular term in this Plan shall be deemed to include the plural, and any
plural term the singular.
SECTION 8.2. Survival. Only those agreements and covenants of
the parties that are by their terms applicable in whole or in part after the
Effective Time shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Plan and shall not survive the Effective Time. If the Plan shall be
terminated, the agreements of the parties in the last three sentences of
Section 4.4, the last sentence of Section 4.5, Section 6.2 and Section 8.6
shall survive such termination.
SECTION 8.3. Waiver. Prior to the Effective Time, any provision
of this Plan may be: (i) waived by the party benefitted by the provision; or
(ii) amended or modified at any time (including the structure of the
transaction) by an agreement in writing between the parties hereto authorized
by their respective boards of directors, except that, after the vote by the
shareholders of the Company, no amendment may be made that would contravene any
applicable law.
SECTION 8.4. Counterparts. This Plan may be executed in
counterparts each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
SECTION 8.5. Governing Law. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of Maryland.
SECTION 8.6. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Plan and the transactions contemplated
hereby, except printing expenses which shall be shared equally.
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<PAGE> 38
SECTION 8.7. Notices. All notices, requests, acknowledgements
and other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, telecopy, telegram or
telex (confirmed in writing) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to the Company, to:
Baltimore Bancorp
120 E. Baltimore Street
(25th Floor)
Baltimore, Maryland 21203
Telecopy: (410) 576-0695
Attention: James A. Gast, Esq.
Vice President and Corporate Counsel
With copies to:
Charles E. Allen, Esq.
Hogan & Hartson L.L.P.
Columbia Square
555 13th Street, N.W.
Washington D.C. 20004
Telecopy: (202) 637-5910
If to the Acquiror or Merger Sub, to:
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Telecopy: (201) 565-2985
Attention: Wolfgang Schoellkopf
Vice-Chairman and Chief
Financial Officer
With copies to:
James L. Mitchell, Esq.
First Fidelity Bancorporation
550 Broad Street
Newark, New Jersey 07102
Telecopy: (201) 565-2985
and
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<PAGE> 39
H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
SECTION 8.8. Entire Agreement; Etc. This Plan, together with the
Option Agreement, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of the Plan shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as to Section 4.7,
nothing in this Plan is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Plan.
SECTION 8.9. Assignment. This Plan may not be assigned by any
party hereto without the written consent of the other parties.
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
executed by their duly authorized officers as of the day and year first above
written.
FIRST FIDELITY BANCORPORATION
By: /S/ JAMES L. MITCHELL
---------------------------------------
James L. Mitchell
Executive Vice President, General
Counsel and Secretary
ANNABEL LEE CORPORATION
BY: /S/ JAMES L. MITCHELL
--------------------------------------
James L. Mitchell
President
BALTIMORE BANCORP
By: /S/ EDWIN F. HALE, SR.
--------------------------------------
Edwin F. Hale, Sr.
Chairman and Chief Executive Officer
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<PAGE> 1
CONFORMED COPY
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS
SUBJECT TO RESALE RESTRICTIONS ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of the 22nd day of March,
1994 (this "Agreement"), between First Fidelity Bancorporation, a New Jersey
corporation ("Grantee"), and Baltimore Bancorp, a Maryland corporation
("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger, dated as of the 21st day of March, 1994 (the "Plan"), which was
executed by the parties hereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant Grantee
the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the parties
hereto agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 3,300,000 fully paid and nonassessable shares of Common Stock, par value
$5.00 per share ("Common Stock"), of Issuer at a price per share equal to the
average of the low and high reported sale prices per share on the New York
Stock Exchange Composite Transactions Tape (the "Tape") on the first full
trading day after the announcement of the Plan (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue (other than
pursuant to options or other agreements to issue Common Stock in effect as of
the date hereof and employee and director stock options issued in the ordinary
course of business) any shares of Common Stock at a price less than the Initial
Price (as adjusted pursuant to Section 5(b)), such price shall be equal to such
lesser price (such price, as adjusted as hereinafter provided, the "Option
Price"). The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or
part, at any time and from time to time following the occurrence of a Purchase
Event (as defined below); provided that the Option shall terminate and be of no
further force and effect upon the earliest to occur of
<PAGE> 2
(i) the time immediately prior to the Effective Time, (ii) 12 months after the
first occurrence of a Purchase Event, (iii) 12 months after the termination of
the Plan following the occurrence of a Preliminary Purchase Event (as defined
below), (iv) termination of the Plan in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Plan by Grantee pursuant to Section 6.1(b)(ii)
thereof), (v) 12 months after the termination of the Plan by Grantee pursuant
to Section 6.1(b)(ii) thereof as a result of any willful and material breach of
the Plan or (vi) 4 months after the termination of the Plan by Grantee
otherwise pursuant to Section 6.1(b)(ii) thereof other than as a result of a
willful and intentional breach. The events described in clauses (i) - (vi) in
the preceding sentence are hereinafter collectively referred to as an "Exercise
Termination Event."
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary") without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
(the "Securities Exchange Act"), and the rules and regulations
thereunder) other than Grantee or any of its subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any person other than Grantee or any
Grantee Subsidiary. For purposes of this Agreement, "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any similar
transaction, involving Issuer or any of Issuer's material subsidiaries
("Material Subsidiaries"), (y) a purchase, lease or other acquisition
of all or substantially all of the assets of Issuer or any Material
Subsidiary or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or a Material
Subsidiary; provided that the term "Acquisition Transaction" does not
include any internal merger or consolidation involving only Issuer
and/or Issuer Subsidiaries;
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<PAGE> 3
(ii) Any person (other than Grantee or any Grantee
Subsidiary) shall have acquired ownership or control of, or the right
to vote, 10% or more of the outstanding shares of Common Stock;
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by
public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any person
other than Grantee or any subsidiary of Grantee shall have commenced
(as such term is defined in Rule 14d-2 under the Exchange Act), or
shall have filed a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to, a tender
offer or exchange offer to purchase any shares of Issuer Common Stock
such that, upon consummation of such offer, such person would own or
control 10% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or
an "Exchange Offer", respectively));
(iv) After a bona fide proposal is made by a third party to
Issuer or publicly to its shareholders to engage in an Acquisition
Transaction, Issuer shall have materially breached any covenant or
obligation contained in the Plan and such breach would entitle Grantee
to terminate the Plan or the holders of Issuer Common Stock shall not
have approved the Plan at the meeting of such stockholders held for
the purpose of voting on the Plan, such meeting shall not have been
held or shall have been canceled prior to termination of the Plan or
Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan; or
(v) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") or other governmental authority or regulatory
or administrative agency or commission (each, a "Governmental
Authority") for approval to engage in an Acquisition Transaction.
-3-
<PAGE> 4
(c) The term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of ownership or control of, or the right to vote
(other than on behalf of the Issuer), 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of a Preliminary Purchase Event described
in Section 2(b)(i) except that the percentage referred to in clause
(z) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) the time (which shall be on a
business day that is not less than three nor more than ten business days from
the Notice Date) on which the closing of such purchase shall take place (the
"Closing Date"); such closing to take place at the principal office of the
Issuer; provided, that, if prior notification to or approval of the Federal
Reserve Board or any other Governmental Authority is required in connection
with such purchase (each, a "Notification" or an "Approval," as the case may
be), (a) Grantee shall promptly file the required notice or application for
approval ("Notice/Application"), (b) Grantee shall expeditiously process the
Notice/Application and (c) for the purpose of determining the Closing Date
pursuant to clause (ii) of this sentence, the period of time that otherwise
would run from the Notice Date shall instead run from the later of (x) in
connection with any Notification, the date on which any required notification
periods have expired or been terminated and (y) in connection with any
Approval, the date on which such approval has been obtained and any requisite
waiting period or periods shall have expired. For purposes of Section 2(a),
any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. On or prior to the Closing Date, Grantee shall have the right to
revoke its exercise of the Option in the event that the transaction
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<PAGE> 5
constituting a Purchase Event that gives rise to such right to exercise shall
not have been consummated.
(f) At the closing referred to in Section 2(e), Grantee shall
pay to Issuer the aggregate purchase price for the number of shares of Common
Stock specified in the Option Notice in immediately available funds by wire
transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not
preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f), Issuer shall deliver
to Grantee a certificate or certificates representing the number of shares of
Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof
to purchase the balance of the shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities
Act of 1933, as amended, and applicable state securities laws
and to certain provisions of an agreement between First
Fidelity Bancorporation and Baltimore Bancorp ("Issuer") dated
as of the 22nd day of March, 1994. A copy of such agreement
is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by
Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC") or Governmental Authority responsible for
administering any applicable state securities laws or an opinion of counsel, in
form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act or applicable state securities
laws; (ii) the reference to the provisions of this Agreement in the above
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<PAGE> 6
legend shall be removed by delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may
be required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available funds
on the Closing Date, Grantee shall be deemed to be the holder of record of the
number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of Grantee.
SECTION 3. Issuer agrees: (i) that it shall at all times
until the termination of this Agreement have reserved for issuance upon the
exercise of the Option that number of authorized and reserved shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid, nonassessable,
and delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all reasonable action as may from time to time
be requested by the Grantee, at Grantee's expense (including (x) complying with
all premerger notification, reporting and waiting period requirements specified
in 15 U.S.C. Section 18a and regulations promulgated thereunder and (y) in
the event, under the Bank Holding Company Act of 1956, as amended ("BHC Act"),
or the Change in Bank Control Act of 1978, as amended, or any state banking
law, prior approval of or notice to the Federal Reserve Board or to any other
Governmental Authority is necessary before the Option may be exercised,
cooperating with Grantee in preparing such applications or notices and
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<PAGE> 7
providing such information to each such Governmental Authority as it may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Common Stock pursuant hereto; and (iv) to take
all action provided herein to protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new
Agreement of like tenor and date.
SECTION 5. The number of shares of Common Stock purchasable
upon the exercise of the Option shall be subject to adjustment from time to
time as follows:
(a) In the event of any change in the Common Stock by reason
of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the
like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to
the Option shall be increased so that, after such issuance and
together with shares of Common Stock previously issued pursuant to the
exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares
of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as
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<PAGE> 8
provided in this Section 5, the Option Price shall be adjusted by
multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to
the number of shares of Common Stock purchasable after the adjustment.
SECTION 6. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee (whether on its own behalf or on behalf of any subsequent holder of the
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a shelf registration statement
under the Securities Act covering any shares issued and issuable pursuant to
the Option and shall use its best efforts to cause such registration statement
to become effective, and to remain current and effective for a period not in
excess of 180 days from the day such registration statement first becomes
effective, in order to permit the sale or other disposition of any shares of
Common Stock issued upon total or partial exercise of the Option ("Option
Shares") in accordance with any plan of disposition requested by Grantee;
provided, however, that Issuer may postpone filing a registration statement
relating to a registration request by Grantee under this Section 6 for a period
of time (not in excess of 30 days) if in its judgment such filing would require
the disclosure of material information that Issuer has a bona fide business
purpose for preserving as confidential. Grantee shall have the right to demand
two such registrations. The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of Option Shares as provided above, Issuer
is in the process of registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole
underwriter or underwriters, of such offering the offering or inclusion of the
Option Shares would interfere materially with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of Grantee shall
constitute at least 20% of the total number of shares of Grantee and Issuer
covered in such registration statement; provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6(a) shall be permitted
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<PAGE> 9
or occur and the Grantee shall thereafter be entitled to one additional
registration statement. Grantee shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration, Issuer and Grantee shall
provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registrations. If
requested by Grantee in connection with such registration, Issuer and Grantee
shall become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating themselves in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Notwithstanding the foregoing, if
Grantee revokes any exercise notice or fails to exercise any Option with
respect to any exercise notice pursuant to Section 2(e), Issuer shall not be
obligated to continue any registration process with respect to the sale of
Option Shares issuable upon the exercise of such Option and Grantee shall not
be deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval required to
exercise the Option as described in Section 9, the closing of the sale or other
disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
SECTION 7. (a) Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, (i) at the request (the date of
such request being the "Option Repurchase Request Date") of Grantee, Issuer
shall repurchase the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of
such request being the "Option Share Repurchase Request Date") of the owner of
Option Shares from time to time (the "Owner"), Issuer shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Option Repurchase Request Date or
the Option Share Repurchase Request Date, as the case may be, (ii) the price
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<PAGE> 10
per share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the average of the 20 highest last sale prices for shares of Common Stock
within the 90-day period ending on the Option Repurchase Request Date or the
Option Share Repurchase Request Date, as the case may be, quoted on the Tape
(as reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee
or the Owner, as the case may be, divided by the number of shares of Common
Stock of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be the
value determined by a nationally-recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, and reasonably acceptable
to the Issuer, which investment banking firm's determination shall be
conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and/or any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that Grantee
or the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within 15 business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to Grantee the Option Repurchase Price or to
the Owner the Option Share Repurchase Price or the portion thereof that Issuer
is not then prohibited from so delivering under applicable law and regulation
or as a consequence of administrative policy (including policies relating to
the maintenance of capital levels and a sound financial condition).
(c) Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish any repurchase
contemplated by this Section 7. Nonetheless, to the extent that Issuer is
prohibited under applicable law or regulation, or
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<PAGE> 11
as a consequence of administrative policy (including policies relating to the
maintenance of capital levels and a sound financial condition), from
repurchasing any Option and/or any Option Shares in full, Issuer shall promptly
so notify Grantee and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to Grantee and/or the Owner, as appropriate, the
portion of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to Section 7(b) is prohibited under applicable law or
regulation, or as a consequence of administrative policy (including policies
relating to the maintenance of capital levels and a sound financial condition),
from delivering to Grantee and/or the Owner, as appropriate, the Option
Repurchase Price or the Option Share Repurchase Price, respectively, in full,
Grantee or the Owner, as appropriate, may revoke its notice of repurchase of
the Option or the Option Shares either in whole or in part whereupon, in the
case of a revocation in part, Issuer shall promptly (i) deliver to Grantee
and/or the Owner, as appropriate, that portion of the Option Purchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering
after taking into account any such revocation and (ii) deliver, as appropriate,
either (A) to Grantee, a new Agreement evidencing the right of Grantee to
purchase that number of shares of Common Stock equal to the number of shares of
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Common Stock covered by the portion of
the Option repurchased or (B) to the Owner, a certificate for the number of
Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any
party (other than Grantee or a Grantee Subsidiary) for an Acquisition
Transaction unless the other party thereto assumes all the obligations of
Issuer pursuant to this Section 7 in the event that Grantee or the Owner
elects, in its sole discretion, to require such other party to perform such
obligations.
SECTION 8. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any person, other than Grantee or a Grantee Subsidiary, and shall
not be the continuing or surviving corporation of such consolidation or merger,
(ii) to permit any person, other than Grantee or a Grantee Subsidiary, to merge
into Issuer and Issuer shall be the continuing or surviving corporation, but,
in connection
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<PAGE> 12
with such merger, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or cash or
any other property or the then outstanding shares of Common Stock shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer all
or substantially all of its or any Material Subsidiary's assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, of either (x) the
Acquiring Corporation (as defined below) or (y) any person that controls the
Acquiring Corporation (the Acquiring Corporation and any such controlling
person being hereinafter referred to as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such
number of shares of the Substitute Common Stock (as is hereinafter defined) as
is equal to the market/offer price (as defined in Section 7) multiplied by the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable, divided by the Average Price (as is hereinafter
defined). The exercise price of the Substitute Option per share of the
Substitute Common Stock (the "Substitute Purchase Price") shall then be equal
to the Option Price multiplied by a fraction in which the numerator is the
number of shares of the Issuer Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Grantee, provided further that
the terms of the Substitute Option shall include (by way of example and not
limitation) provisions for the repurchase of the Substitute Option and
Substitute Common Stock by the Substitute Option Issuer on the same terms and
conditions as provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation
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or merger with Issuer (if other than Issuer), (ii) Issuer in a merger
in which Issuer is the continuing or surviving person, and (iii) the
transferee of all or any substantial part of the Issuer's assets (or
the assets of Issuer's Material Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Average Price" shall mean the average closing price of
a share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merging person, as
Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding immediately prior to
the issuance of the Substitute Option. In the event that the Substitute Option
would be exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for this clause (e), the Substitute Option Issuer
shall make a cash payment to Grantee equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in the clause (e). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee and the
Substitute Option Issuer. In addition, the provisions of Section 5(a) shall
not apply to the issuance of any Substitute Option and for purposes of applying
Section 5(a) thereafter to any Substitute Option the percentage referred to in
Section 5(a) shall thereafter equal the percentage that the percentage of the
shares of Substitute Common Stock subject to the Substitute Option bears to the
number of shares of Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7, if Grantee
has given the notice referred to in one or more of such Sections, the exercise
of the rights specified in any such Section shall be extended (a) if the
exercise of
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<PAGE> 14
such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Securities Exchange Act by reason of such exercise;
provided that in no event shall any closing date occur more than 18 months
after the related Notice Date, and, if the closing date shall not have occurred
within such period due to the failure to obtain any required approval by the
Federal Reserve Board or any other Governmental Authority despite the best
efforts of Issuer or the Substitute Option Issuer, as the case may be, to
obtain such approvals, the exercise of the Option shall be deemed to have been
rescinded as of the related Notice Date. In the event (a) Grantee receives
official notice that an approval of the Federal Reserve Board or any other
Governmental Authority required for the purchase and sale of the Option Shares
will not be issued or granted or (b) a closing date has not occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise the Option in
connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative means of exercising rights
pursuant to Sections 2, 6 or 7 hereof in the event that the exercising of any
such rights shall not have occurred due to the failure to obtain any required
approval referred to in this Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee
as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly approved by
the Board of Directors of Issuer and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly executed and
delivered by, and constitutes a valid and binding obligation of, Issuer,
enforceable against Issuer in accordance with its terms, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought.
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<PAGE> 15
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
non-assessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
SECTION 11. (a) Neither of the parties hereto may assign any
of its rights or delegate any of its obligations under this Agreement or the
Option created hereunder to any other person without the express written
consent of the other party, except that Grantee may assign this Agreement to a
wholly owned subsidiary of Grantee and Grantee may assign its rights hereunder
in whole or in part after the occurrence of a Preliminary Purchase Event;
provided, however, that until the date at which the Federal Reserve Board has
approved an application by Grantee under the BHC Act to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf, or (iv) any other manner approved by
the Federal Reserve Board. The term "Grantee" as used in this Agreement shall
also be deemed to refer to Grantee's permitted assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the
beginning thereof substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions
arising under the Securities Act of 1933, as amended, and
applicable state securities laws and to certain provisions of
an agreement between First Fidelity Bancorporation and
Baltimore Bancorp, ("Issuer") dated as of the 22nd day of
March, 1994. A copy of such agreement is on file at the
principal office of Issuer and will be provided to any
permitted assignee of the
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<PAGE> 16
Option without change upon receipt by Issuer of a written
request therefor.
It is understood and agreed that (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC or Governmental
Authority responsible for administering any applicable state securities laws,
or an opinion of counsel, in form and substance satisfactory to Issuer, to the
effect that such legend is not required for purposes of the Securities Act or
applicable state securities laws; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
assignments without such reference if the Option has been sold or transferred
in compliance with the provisions of this Agreement and under circumstances
that do not require the retention of such reference; and (iii) the legend shall
be removed in its entirety if the conditions in the preceding clauses (i) and
(ii) are both satisfied. In addition, such assignments shall bear any other
legend as may be required by law.
SECTION 12. Each of Grantee and Issuer will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application, if necessary, for quotation of the shares of Common Stock
issuable hereunder on the Tape and applying to the Federal Reserve Board under
the BHC Act and to state banking authorities for approval to acquire the shares
issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would
be an inadequate remedy for a breach of this Agreement by either party hereto
and that the obligations of the parties shall hereto be enforceable by either
party hereto through injunctive or other equitable relief. Both parties
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto may
have for any failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder
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<PAGE> 17
of the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) (as adjusted pursuant hereto), it is the
express intention of Issuer to allow Grantee to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan.
SECTION 16. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
SECTION 17. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution and delivery.
SECTION 18. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
SECTION 19. Except as otherwise expressly provided herein or
in the Plan, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
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<PAGE> 18
SECTION 20. Capitalized terms used in this Agreement and not
defined herein but defined in the Plan shall have the meanings assigned thereto
in the Plan.
SECTION 21. Nothing contained in this Agreement shall be
deemed to authorize or require Issuer or Grantee to breach any provision of the
Plan or any provision of law applicable to the Grantee or Issuer or their
subsidiaries.
SECTION 22. In the event that any selection or determination
is to be made by Grantee or the Owner hereunder and at the time of such
selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by
Grantee, Issuer and such Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the
Option, Grantee shall have no rights to vote or receive dividends or have any
other rights as a shareholder with respect to shares of Common Stock covered
hereby.
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<PAGE> 19
IN WITNESS WHEREOF, each of the parties has caused this Stock
Option Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
FIRST FIDELITY BANCORPORATION
BY: /S/ JAMES L. MITCHELL
----------------------------------------
James L. Mitchell
Executive Vice President,
General Counsel and
Secretary
BALTIMORE BANCORP
BY: /S/ EDWIN F. HALE, SR.
-----------------------------------------
Edwin F. Hale, Sr.
Chairman and Chief
Executive Officer
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