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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 21, 1994
Baltimore Bancorp
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Maryland 1-9821 52-1351635
_______________________________________________________________________________
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
120 East Baltimore Street, Baltimore, Maryland 21202
_______________________________________________________________________________
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (410) 244-3360
_________________
Not Applicable
_______________________________________________________________________________
(Former name or former address, if changed since last report)
Page 1 of __ Pages.
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Item 1. Changes in Control of Registrant.
(a) Not applicable.
(b) On March 21, 1994, Baltimore Bancorp (the
"Company" or "Registrant") announced that it had entered into
a definitive Agreement and Plan of Merger (the "Plan") with
First Fidelity Bancorporation ("FFB") and Annabel Lee
Corporation, a wholly-owned subsidiary of FFB (the "Merger
Sub"), pursuant to which FFB will pay approximately $346
million in cash for all of the outstanding shares of the
Company's common stock in a merger of Merger Sub with and into
the Company. Under the terms of the Plan, holders of the
Company's common stock will receive $20.75 in cash for each of
their shares. Alex. Brown & Sons Incorporated advised the
Company and rendered an opinion on the fairness from a
financial point of view of the consideration to be received in
the proposed transaction by the Company's shareholders.
In accordance with the Plan and as a condition to the
acquisition, immediately prior to the closing, the Company's
primary subsidiary, The Bank of Baltimore (the "Bank"), will
be merged into a newly formed federal savings bank subsidiary
of the Company. As a result, the Company will cease to be a
bank holding company under the Bank Holding Company Act of
1956, as amended, and will become a savings and loan holding
company under the Home Owners' Loan Act of 1933, as amended.
The Company has received a copy of a reasoned advice of
counsel of the Assistant Attorney General of the State of
Maryland addressed to the Maryland Bank Commissioner and a
reasoned opinion of FFB's Maryland counsel as to the legality
of the acquisition under Maryland law, when interpreted
consistently with the commerce clause of the United States
Constitution. Both the reasoned advice of counsel and the
reasoned opinion of FFB's Maryland counsel conclude that
certain provisions of Maryland law governing interstate
acquisitions of federal savings banks as applied to the
acquisition are unconstitutional under the commerce clause.
The transaction is subject to various closing
conditions, including the receipt of regulatory approvals of
the Board of Governors of the Federal Reserve System, the
Office of Thrift Supervision, the Federal Deposit Insurance
Corporation and the Maryland Bank Commissioner. The
transaction is also subject to the approval of the Company's
shareholders at a special meeting to be held as promptly as
practical after June 15, 1994. The transaction is expected to
close on the later of (i) October 31, 1994, or (ii) within 10
days after the date of receipt of all regulatory approvals,
expiration of applicable waiting periods and satisfaction of
closing conditions.
In connection with the transaction, the Company has
granted FFB an option to purchase 3,300,000 shares of the
Company's common stock (subject to adjustment in certain
events), or approximately 19.9% of the Company's outstanding
common stock at $19.31 per share (the average of the high and
low sale prices on March 22, 1994). The option is exercisable
in the event of (i) the acquisition by any person other than
FFB or its subsidiary of ownership, control or the right to
vote 25% or more of the Company's outstanding common stock, or
(ii) the Company or any of its subsidiaries entering into, or
the Company's board of directors recommending for shareholder
approval, certain acquisition transactions with any person
other than FFB or any of its subsidiaries). The option is set
forth in the Stock Option Agreement, dated as of March 22,
1994, between the Company and FFB.
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The foregoing summary of the Plan and the Stock Option
Agreement is intended to be read in conjunction with the
specific provisions of the Plan and Stock Option Agreement,
copies of which are included as Exhibits 2 and 99,
respectively, to this Report, and is qualified in its entirety
by reference thereto.
The Company has $2.2 billion in assets and is
primarily engaged in the business of serving as the holding
company for the Bank, which has $2.0 billion in deposits, $1.4
billion in loans and 42 branch offices primarily in Baltimore
City and Baltimore, Montgomery and Anne Arundel counties.
FFB, with $33.8 billion in assets, is among the
nation's 25 largest holding companies. FFB's principal
subsidiaries are First Fidelity Bank, N.A., of New Jersey and
Pennsylvania, First Fidelity Bank, N.A., New York, and Union
Trust Company, of Connecticut.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2 Agreement and Plan of Merger dated as of
March 21, 1994 among Registrant, First
Fidelity Bancorporation and Annabel
Lee Corporation
99 Stock Option Agreement dated as of March
22, 1994 between Registrant and First
Fidelity Bancorporation.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
Baltimore Bancorp
(Registrant)
By: /s/ Joseph A. Cicero
______________________
Joseph A. Cicero
Executive Vice President
and Chief Financial Officer
Date: March 23, 1994
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EXHIBIT INDEX
Exhibit
Number Identity
of Exhibit
2 Agreement and Plan of Merger dated as of March 21, 1994
among Registrant, First Fidelity Bancorporation and Annabel
Lee Corporation.
99 Stock Option Agreement dated as of March 22, 1994
between Registrant and First Fidelity Bancorporation.
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Exhibit 2
Agreement and Plan of Merger dated as of March 21, 1994 among
Registrant, First Fidelity Bancorporation and Annabel Lee
Corporation
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EXECUTION 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
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TABLE OF CONTENTS
Page
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. THE MERGERS
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
ARTICLE V. CONDITIONS TO CONSUMMATION
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
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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
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LIST OF ANNEXES
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))
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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 (collec-
tively, "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
"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.
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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
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") previous-
ly 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
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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
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 thereto-
fore 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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(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").
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.
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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
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
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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;
(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
it is now being conducted and to own all its material
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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 perform-
ance 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, con-
stitute (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
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 incor-
poration 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
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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
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 finan-
cial 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
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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 pro-
spective change, which, individually or in the aggregate, has
had, or is reasonably likely to have, a Material Adverse
Effect on the Company
(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 pend-
ing, 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 under-
standing 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,
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
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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)
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.
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(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 subsidi-
aries 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 Sec-
tion 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
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
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or legally binding commitment by the Company or its subsidi-
aries 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 speci-
fied therein, the execution and delivery of this Agreement
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, individ-
ually 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, certifi-
cates 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 per-
formed for the Company by Alex. Brown & Sons Incorporated (in
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
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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
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;
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(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 subsidi-
aries is carried net of reserves at the lower of cost or fair
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
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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
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,
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
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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 govern-
mental 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
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
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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 imple-
ment 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
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
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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
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
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
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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
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
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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 indemnifica-
tion 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
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 Indemni-
fied 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
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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 prac-
ticable, 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
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 there-
after 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
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.
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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
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 contem-
plated 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 liti-
gation 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 consum-
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mation 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
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
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Chairman and Chief Financial Officer of the Acquiror, dated
the Effective Date, to the foregoing effect.
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
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
<PAGE>
<PAGE>
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,
this Plan and, in the case of the Company, the Option
Agreement.
"person" includes an individual, corporation, partner-
ship, 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, agree-
ments 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 bene-
fitted by the provision; or (ii) amended or modified at any time
<PAGE>
<PAGE>
(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 share-
holders 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.
SECTION 8.7. Notices. All notices, requests, acknowl-
edgements 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>
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 contem-
plated 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.
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:
___________________________________
James L. Mitchell
Executive Vice President, General
Counsel and Secretary
ANNABEL LEE CORPORATION
By:
____________________________________
James L. Mitchell
President
BALTIMORE BANCORP
By:
_____________________________________
Edwin F. Hale, Sr.
Chairman and Chief Executive Officer
<PAGE>
<PAGE>
Exhibit 99
Stock Option Agreement dated as of March 22, 1994
between Registrant and First Fidelity Bancorporation
<PAGE>
<PAGE>
EXECUTION 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
(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 termina-
tion 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
<PAGE>
<PAGE>
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 Securi-
ties 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 Sub-
sidiary. 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 Subsidi-
aries"), (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 acquisi-
tion (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;
(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 Trans-
action (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 Securi-
ties 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
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<PAGE>
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.
(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 notif-
ication 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
<PAGE>
<PAGE>
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 certifi-
cate(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 Securi-
ties 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
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 represent-
ing such shares of Common Stock shall not then actually be
<PAGE>
<PAGE>
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 author-
ized, validly issued, fully paid, nonassessable, and deli-
vered 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
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 sub-
ject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock pur-
chasable 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 muti-
lation 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 muti-
lated, 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, conver-
sions, exchanges of shares or the like, the type and
number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and
<PAGE>
<PAGE>
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
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 adjust-
ment 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 regis-
tration 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 under-
written 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
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
<PAGE>
<PAGE>
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, warran-
ties, 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
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
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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 contem-
plated by this Section 7. Nonetheless, to the extent that
Issuer 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 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
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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
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
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).
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(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 consolida-
tion, 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 con-
trolled 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 deter-
mined 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
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
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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 execu-
tion 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 contem-
plated. 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, mora-
torium and other similar laws affecting the enforcement of
creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunc-
tive relief is subject to the discretion of the court before
which any proceeding may be brought.
(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 termina-
tion 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 obliga-
tions 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
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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
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 assign-
ments 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 trans-
actions 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 provi-
sion 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 juris-
diction to be invalid, void or unenforceable, the remainder
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 invali-
dated. 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 Sec-
tion 1(a) (as adjusted pursuant hereto), it is the express
intention of Issuer to allow Grantee to acquire or to
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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 consul-
tants, 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.
SECTION 20. Capitalized terms used in this Agree-
ment 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 here-
under 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 exer-
cises 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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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:
_____________________________
James L. Mitchell
Executive Vice President,
General Counsel and
Secretary
BALTIMORE BANCORP
By:
_____________________________
Edwin F. Hale, Sr.
Chairman and Chief
Executive Officer
