EXHIBIT 99(a)
This Agreement and Plan of Merger (the "Agreement"), made as of this
22nd day of December 1995, by and between FCNB Corp ("FCNB"), a corporation
organized and existing under the laws of the State of Maryland and having its
principal office at Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, and Harbor
Investment Corporation ("Harbor"), a corporation organized and existing under
the laws of the State of Maryland and having its principal office at 0000
Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx.
WHEREAS, the respective Boards of Directors of FCNB and Harbor each
deem it advisable and in the best interest of their respective shareholders that
Harbor be acquired by FCNB through the merger of Harbor with and into FCNB
substantially on the terms, and subject to the conditions, set forth in this
Agreement; and
WHEREAS, as soon as practicable after the merger of Harbor with and
into FCNB it is anticipated that Harbor's wholly-owned subsidiary, Odenton
Federal Savings & Loan Association, Odenton, Maryland ("Odenton") shall be
merged with and into FCNB's wholly-owned subsidiary, Elkridge Bank, Elkridge,
Maryland (" Elkridge");
WHEREAS, the respective Boards of Directors of FCNB and Harbor have
each approved the merger of Harbor with and into FCNB, substantially on the
terms, and subject to the conditions, hereinafter set forth (the "Merger");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. Subject to the terms and conditions hereafter set forth,
Harbor shall be merged with and into FCNB, in accordance with the applicable
provisions of the Maryland General Corporation Law, as amended (the "MGCL").
1.2 Name. The name of the surviving corporation (the "Surviving
Corporation" when reference is made to it after the Effective Time (hereinafter
defined)) shall be "FCNB Corp".
1.3 Certificate of Incorporation; Bylaws. The Articles of Incorporation
of FCNB in effect at the Effective Time, and the Bylaws of FCNB in effect at the
Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation.
1.4 Board of Directors; Officers. (a) The Board of Directors of FCNB at
the Effective Time shall serve as the Board of Directors of the Surviving
Corporation until their successors are duly elected and qualified.
(b) The Officers of FCNB at the Effective Time shall serve as the officers of
the Surviving Corporation until their successors are duly appointed by the Board
of Directors.
1.5 Effect of the Merger. At the Effective Time, the separate corporate
existence of Harbor shall cease and FCNB as the Surviving Corporation shall
succeed to and possess all of the properties, rights, powers, privileges,
franchises, patents, trademarks, licenses, registrations, and other assets of
every kind and description of Harbor, and shall be subject to, and be
responsible for, all debts, liabilities, and obligations of Harbor, all without
further act or deed, and in accordance with the applicable provisions of the
MGCL.
1.6 Closing; Effective Time. (a) The closing of the Merger (the
"Closing") shall occur at the principal offices of FCNB, at a time and on a date
specified in writing by the parties, which date shall be as soon as practicable,
but not more than fifteen (15) days, after the receipt of all requisite
approvals and authorizations of regulatory and governmental authorities, the
expiration of all applicable waiting periods and the satisfaction or waiver of
all conditions hereto. The date at which the Closing occurs is occasionally
referred to herein as the "Closing Date."
(b) The Merger shall become effective upon the later of (i) the filing of the
articles of merger in substantially the form attached hereto as Exhibit A (the
"Articles of Merger") with the Maryland State Department of Taxation and
Assessments (the "Department") or (ii) the time set forth in the Articles of
Merger filed with the Department (the "Effective Time"). Except as otherwise
agreed in writing, the Effective Time shall be within one business day of the
Closing.
1.7 Bank Merger. FCNB and Harbor acknowledge and agree that it is
anticipated that at the Effective Time, or as soon thereafter as may reasonably
be practicable, Odenton shall be merged with and into Elkridge (the "Bank
Merger"), pursuant to a Plan and Agreement of Merger substantially in the form
of that attached hereto as Exhibit B. Harbor agrees that it shall, at the
request of FCNB, provide such assistance, cooperation and information, execute,
deliver, verify, file or acknowledge such other agreements, instruments,
applications or other documents, and take all such other actions and do all such
other things as may be reasonably necessary in order to effect such other
transactions and to effect the intents and purposes of this Section 1.7. FCNB
also agrees to cause Elkridge Bank to assume the liquidation account established
in the mutual-to-stock conversion of Odenton.
ARTICLE II
CONVERSION OF SHARES
2.1 Purchase Price; Conversion of Shares and Options. (a) The per share
purchase price (the "Purchase Price") to be paid in exchange for each of the
shares of the common stock, $.01 par value, of Harbor (the "Harbor Common
Stock") outstanding as of the Effective Time, shall be cash in an amount equal
to Sixty Nine Dollars and Eight Cents ($69.08). The Purchase Price shall be
proportionately adjusted to reflect any stock split, stock dividend, combination
or consolidation of shares, capital reclassification or similar change in
capitalization in respect of
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the Harbor Common Stock effected after the date hereof. FCNB shall, on or prior
to the Closing Date, deposit with the Exchange Agent (hereinafter defined) an
amount of cash equal to (i) the aggregate Purchase Price for all shares of
Harbor Common Stock outstanding as of the Closing Date plus (ii) the aggregate
Option Price (hereinafter defined) for all options to purchase Harbor Common
Stock outstanding as of the Closing Date less (iii) the product of the Purchase
Price multiplied by the number of dissenting shares (the "Acquisition Price").
(b) At the Effective Time, each of the outstanding shares of Harbor Common Stock
(excluding shares of Harbor Common Stock held in treasury or by any Harbor
Subsidiary, or as to which the holders have perfected dissenters' right in
accordance with the MGCL ("dissenting shares")), shall automatically, and
without further action, be converted into the right to receive cash in an amount
equal to the Purchase Price. Following the Effective Time, certificates which
formerly represented shares of Harbor Common Stock (except for certificates
representing shares held in treasury or by any Harbor Subsidiary or dissenting
shares) shall be deemed for all purposes to represent only the right to receive
the amount of cash equal to the Purchase Price multiplied by the number of
shares of Harbor Common Stock represented by said certificate. At the Effective
Time, the stock transfer books of Harbor shall be closed as to holders of Harbor
Common Stock immediately prior to the Effective Time, and no transfer of Harbor
Common Stock shall thereafter be made or recognized on the books of Harbor.
(c) At the Effective Time, and subject to the receipt of an agreement from each
holder of an option outstanding as of the Effective Time, satisfactory in form
and substance to FCNB regarding the treatment of such options (the "Optionholder
Agreements"), each of the options to acquire Harbor Common Stock outstanding as
of the Effective Time shall automatically, and without further action, be
terminated and each such optionholder shall be entitled to receive in exchange
for the termination of such options cash in an amount equal to the excess of the
Purchase Price over the exercise price per share of such option (the "Option
Price"), multiplied by the number of shares of Harbor Common Stock for which
such option is exercisable. Such amount shall be payable whether or not any such
option is by its terms exercisable as of the Effective Time.
(d) All shares of Harbor Common Stock held by Harbor as treasury shares, or held
by any Harbor Subsidiary, shall be cancelled and shall not be converted as
provided in Section 2.1(a). Following the Effective Time, dissenting shares, if
any, shall represent only the right to receive the fair value of such shares as
determined in accordance with the applicable provisions of the MGCL.
(e) Each share of FCNB Common Stock outstanding immediately prior to the
Effective Time shall be unchanged, and shall continue to be issued and
outstanding shares of FCNB Common Stock.
(f) Notwithstanding anything to the contrary contained herein, the aggregate
Purchase Price and Option Price payable by FCNB in respect of all of the Harbor
Common Stock and options to acquire shares of Harbor Common Stock outstanding as
of the Effective Time (other than
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dissenting shares) shall not exceed Six Million Seven Hundred Twenty One
Thousand Four Hundred Eighty Four Dollars ($6,721,484) less the sum of (i) the
aggregate exercise price of all options outstanding as of the Effective Time and
(ii) the Purchase Price multiplied by the number of dissenting shares.
2.2 Exchange of Share Certificates. Certificates formerly representing
shares of Harbor Common Stock shall be exchanged for the amount of cash into
which they shall have been converted only in accordance with the following
procedures:
(a) Exchange Agent. At FCNB's election, FCNB or the transfer agent for FCNB
shall act as exchange agent ("Exchange Agent") to receive Harbor Common Stock
certificates from the holders thereof and to distribute cash for shares of
Harbor Common Stock pursuant to Section 2.1(a) hereof and for options to acquire
shares of Harbor Common Stock pursuant to Section 2.1(c) hereof. The Exchange
Agent shall, promptly after the Effective Time, mail to each former shareholder
of Harbor a notice specifying the procedures to be followed in surrendering such
shareholder's Harbor Common Stock certificates.
(b) Surrender of Certificates. As promptly as possible after receipt of the
Exchange Agent notice, each former shareholder of Harbor shall surrender his or
her certificates to the Exchange Agent; provided, that if any former shareholder
of Harbor shall be unable to surrender his Harbor Common Stock certificates due
to loss or mutilation thereof, he or she may make a constructive surrender by
following the procedures customarily followed by FCNB in the replacement of lost
or mutilated certificates, including, if necessary, the posting of appropriate
bond. Upon actual or constructive surrender of Harbor Common Stock certificates
from a former Harbor shareholder, the Exchange Agent shall issue such
shareholder, in exchange therefore, one or more checks representing in the
aggregate the amount of cash into which such shareholder's shares of Harbor
Common Stock have been converted. No interest shall accrue or be paid to holders
of Harbor Common Stock with respect to the cash payable upon the surrender of
shares of Harbor Common Stock for payment of the Per Share Amount. If any
payment for shares of Harbor Common Stock is to be made in a name other than
that in which the certificate for Harbor Common Stock or surrendered for
exchange is registered, it shall be a condition to the payment that the
certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting the payment shall either (i)
pay to the Exchange Agent any transfer or other taxes required by reason of the
payment to a person other than the registered holder of the certificate
surrendered or (ii) establish to the satisfaction of the Exchange Agent that
such taxes have been paid or are not payable.
(c) Failure to Surrender Certificates. All Harbor Common Stock certificates must
be surrendered to the Exchange Agent within two (2) years after the Effective
Time. In the event that any former Harbor shareholder shall not have properly
surrendered his Harbor Common Stock certificates within two (2) years after the
Effective Time, the cash that would otherwise have been paid to such shareholder
shall be held by the Exchange Agent in a properly documented noninterest-bearing
account for such shareholder's benefit. To the extent permitted by applicable
law, including without limitation all applicable laws of escheat, such cash
shall be
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paid to such former Harbor shareholder, without interest, upon proper surrender
of his Harbor Common Stock certificates. Notwithstanding anything to the
contrary contained herein, FCNB may elect to have all cash relating to
unsurrendered shares of Harbor Common Stock delivered to FCNB two (2) years
following the Effective Time. FCNB agrees that it shall hold and pay any such
funds delivered to it in accordance with the provisions of this paragraph.
(d) Expenses. All costs and expenses of the Exchange Agent and compliance with
the procedures set forth herein shall be borne by FCNB.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FCNB
FCNB represents and warrants to Harbor as follows:
3.1 Organization and Authority. FCNB is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland,
is a registered bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHCA"), and has the corporate power and authority to own its
properties and assets and to carry on its business, and the business of its
subsidiaries, as now being conducted and to enter into and carry out its
obligations under this Agreement. FCNB is qualified to do business as a foreign
corporation in each jurisdiction where such qualification is necessary, except
where the failure to obtain such qualification would not have a material adverse
effect on FCNB's operations , assets, financial condition or results of
operations. FCNB has all necessary governmental authorizations to own or lease
its properties and assets, and those of its subsidiaries, with the exception of
those authorizations which the failure to obtain would not have a material
adverse effect on the business, operations, financial condition, or result of
operations of FCNB and its subsidiaries, taken as a whole.
3.2 Authorization. The execution, delivery and performance of this
Agreement by FCNB and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of FCNB and no other
corporate proceedings on the part of FCNB are necessary to authorize this
Agreement and the transactions contemplated hereby. Subject to the approvals of
government agencies having regulatory authority over FCNB as may be required by
statute or regulation, this Agreement is the valid and binding obligation of
FCNB, enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or moratorium or other similar
laws affecting creditors' rights generally and subject to general equitable
principles which may limit the enforcement of certain remedies.
Except as set forth in the separate disclosure letter of FCNB dated as
of the date hereof, and delivered not later than the date hereof (the "FCNB
Disclosure Letter"), updated for comparative purposes as of the date of Closing,
neither the execution, delivery and performance of this Agreement by FCNB, nor
the consummation of the transactions contemplated hereby, nor compliance by FCNB
with any of the provisions of this Agreement, will (i) violate, conflict with,
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or result in a breach of any provisions of, or constitute a default (or an event
which, with notice of lapse of time or both, would constitute a default) under
the terms, conditions or provisions of, (x) the Articles of Incorporation or
Bylaws of FCNB, or Elkridge or FCNB Bank, the wholly owned banking subsidiaries
of FCNB (each a "Bank Subsidiary" and collectively the "Bank Subsidiaries") (y)
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which FCNB or any Bank Subsidiary is a party
or by which FCNB or any Bank Subsidiary may be bound, or to which FCNB, any Bank
Subsidiary or any of their properties or assets may be subject, or (ii) subject
to compliance with the statutes and regulations referred to in the next
paragraph, to FCNB's knowledge, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to FCNB, any Bank
Subsidiary or any of their properties or assets.
Other than in connection or in compliance with the applicable
provisions of the MGCL, the Maryland Financial Institutions Code (the "MFIC"),
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), the securities or blue sky laws of the various
states and consents, authorizations, approvals or exemptions required under the
BHCA or the Home Owners Loan Act of 1934, as amended ("HOLA"), or any applicable
federal or state banking statute, no notice to, filing with, authorization of,
exemption by, or consent or approval of, any public body or authority is
necessary for the consummation by FCNB of the transactions contemplated by this
Agreement. FCNB has no reason to believe that any required regulatory consent or
approval will not be received or will be received with conditions or
restrictions which it would deem unduly burdensome, or which would have an
adverse impact on its capacity to consummate the transactions contemplated
hereby.
3.3 Financial Capacity. There are no facts or circumstances relating to
the business or financial condition of FCNB which may prevent, restrict or
impair the ability of FCNB to fulfill its obligations and consummate the
transactions contemplated hereby. Not in limitation of the foregoing, FCNB has
the financial capacity to pay the Purchase Price in full on the Closing Date.
3.4 Litigation and Other Proceedings. Neither FCNB nor any Bank
Subsidiary is a party to any pending, or to the knowledge of FCNB, threatened
claim, action, suit, investigation or proceeding, or subject to any order,
judgment or decree, except for matters which, in the aggregate, will not have,
or cannot reasonably be expected to have, a material adverse effect on the
ability of FCNB to consummate the transactions contemplated hereby.
3.5 Proxy Statement, Etc. None of the information supplied or to be
supplied by FCNB for inclusion, or included, in (i) the Proxy Statement to be
mailed to the shareholders of Harbor (as described in Section 5.3 below), in
connection with the Harbor Shareholder Meeting and (ii) any other documents to
be filed with the SEC or any regulatory agency in connection with the
transactions contemplated hereby will, to the best knowledge of FCNB and at such
respective times as such information is supplied or such documents are filed or
mailed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading. All documents which FCNB is responsible for
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filing with the SEC and any regulatory agency in connection with the Merger will
comply as to form in all material respects with the provisions of applicable
law.
3.6 Brokers and Finders. Neither FCNB nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for FCNB
in connection with this Agreement or the transactions contemplated hereby.
3.7 Regulatory Approvals. FCNB is not aware of any facts of
circumstances relating to the business, operations or financial condition of
FCNB or its wholly-owned subsidiaries which would result in the denial, or
conditioning in a manner unacceptable to FCNB, of any of the regulatory
approvals required for consummation of the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF HARBOR
Harbor represents and warrants to FCNB that:
4.1 Organization and Authority. Harbor is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland, a
registered savings association holding company under HOLA and has the corporate
power and authority to own its properties and assets and to carry on its
business and the business of the Harbor Subsidiaries as now being conducted and
to enter into and carry out its obligations under this Agreement. Harbor is not
required to qualify to do business in any other state or foreign jurisdiction.
Harbor has all necessary governmental authorizations to own or lease its
properties and assets and those of the Harbor Subsidiaries, and to carry on its
business, and those of the Harbor Subsidiaries, as now being conducted, with the
exception of those authorizations which the failure to obtain would not have a
material adverse effect on the business, operations, financial condition or
results of operations of Harbor and the Harbor Subsidiaries, taken as a whole.
4.2 Harbor Subsidiaries. Harbor directly owns all the shares of the
outstanding capital stock of Odenton. Except as set forth in the separate
disclosure letter of Harbor dated as of a date and delivered not later than the
date hereof (the "Harbor Disclosure Letter"), updated for comparative purposes
as of the date of Closing, neither Harbor nor Odenton has any other
subsidiaries, or owns any capital stock or other interests in any entity
(including, without limitation, corporations, partnerships, joint ventures, and
inactive corporations). Odenton, together with all other Harbor subsidiaries
(including any corporation, partnership or joint venture in which Harbor or any
Harbor subsidiary has an interest) referred to on occasion as "Harbor
Subsidiaries" and each individually as a "Harbor Subsidiary". No equity
securities of any Harbor Subsidiary are or may become required to be issued by
reason of any options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever, relative to, or concerning securities
or rights convertible into, or exchangeable for, shares of any class of capital
stock of any Harbor Subsidiary, and there are no other contracts, commitments,
understandings
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or arrangements by which any Harbor Subsidiary is bound to issue additional
shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. All of the shares of capital
stock of each of the Harbor Subsidiaries so owned by Harbor are fully paid and
non-assessable and are owned by it free and clear of any claim, lien,
encumbrance or agreement with respect thereto. Odenton is a stock form federal
savings association duly organized, validly existing and in good standing under
the laws of the United States, and has the corporate power and authority and all
necessary federal, state, local and foreign authorizations to own or lease its
properties and assets and to carry on its business as it is now being conducted.
The deposits of Odenton are insured to the applicable legal limits by the
Savings Association Insurance Fund of the FDIC. Each other Harbor Subsidiary is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has the corporate power and authorization and
all necessary material federal, state, local and foreign authorizations to own
or lease its properties and assets and to carry on its business as it is now
being conducted, except for such authorizations which the failure to possess or
obtain would not have a material adverse effect on the financial condition,
results of operations, properties, assets or business of Harbor and the Harbor
Subsidiaries, taken as a whole.
4.3 Capitalization of Harbor. As of September 30, 1995, the authorized
capital stock of Harbor consisted of 2,000,000 shares of Harbor Common Stock,
par value $.01 per share, and 500,000 shares of serial preferred stock, par
value $.01 per share ("Serial Preferred Stock"). As of September 30, 1995,
89,300 shares of Harbor Common Stock were issued and outstanding, and no shares
of Harbor Common Stock or Serial Preferred Stock have been issued since that
date. Except as set forth in this Section 4.3 and except for options to acquire
8,000 shares of Harbor Common Stock upon the exercise of options issued pursuant
to the Harbor Option Plan, which options are described (including, but not
limited to, exercise price, expiration date, identity of optionholders, and
number of options held by each optionholder) in the Harbor Disclosure Letter,
there are no other shares of capital stock or other equity securities of Harbor
outstanding and no other outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of capital
stock of Harbor, or contracts, commitments, understandings, or arrangements by
which Harbor was or may become bound to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any additional
shares of its capital stock.
4.4 Authorization. The execution, delivery and performance of this
Agreement by Harbor and the consummation of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Harbor and, except for
the approval by the shareholders of Harbor of this Agreement and the Amendment
(as defined in Section 7.1(b) hereof), no other corporate proceedings on the
part of Harbor are necessary to authorize this Agreement and the transactions
contemplated hereby. Subject to shareholder approval and to the approvals of
government agencies having regulatory authority over Harbor as may be required
by statute or regulation, this Agreement is the valid and binding obligation of
Harbor enforceable against it in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization or moratorium or
other similar laws or equitable principles affecting creditors' rights generally
and subject to general equitable principles which may limit the enforcement of
certain remedies.
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Except insofar as this Agreement and the transaction contemplated
hereby violates and conflicts with the provisions of Article XIII of the
Articles of Incorporation of Harbor, and as disclosed in the Harbor Disclosure
Letter, neither the execution, delivery and performance of this Agreement by
Harbor, nor the consummation of the transactions contemplated hereby, nor
compliance by Harbor with any of the provisions hereof or thereof, will (i)
violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Harbor or any Harbor
Subsidiary under any of the terms, conditions or provisions of (x) its or any
Harbor Subsidiary's Articles or Certificate of Incorporation or Charter or
Bylaws or (y) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Harbor or any of the
Harbor Subsidiaries may be bound, or to which Harbor or any of the Harbor
Subsidiaries or any of the properties or assets of Harbor or the Harbor
Subsidiaries may be subject, including but not limited to the conditions imposed
in connection with, and the obligations imposed by federal law or regulation, or
assumed by Harbor or any Harbor Subsidiary in connection with the conversion of
Odenton from a mutual savings bank to a stock form savings bank and the
formation of Harbor as the holding company for Odenton or (ii) subject to
compliance with the statutes and regulations referred to in the next paragraph,
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Harbor or any of the Harbor Subsidiaries or any of
their respective properties or assets.
Other than in connection or in compliance with the applicable
provisions of the MGCL, the MFIC, the securities or blue sky laws of the various
states and consents, authorizations, approvals or exemptions required under the
BHCA, HOLA or any applicable federal or state banking statute or regulation, no
notice to, filing with, authorization of, exemption by, or consent or approval
of, any public body or authority is necessary for the consummation by Harbor of
the transactions contemplated by this Agreement. Harbor has no reason to believe
that any required regulatory consent or approval will not be received or will be
received with conditions or restrictions which FCNB would deem unduly
burdensome, or which would have an adverse impact on its capacity to consummate
the transactions contemplated hereby.
4.5 Harbor Financial Statements. The consolidated statements of
financial condition, of Harbor as of June 30, 1995 and 1994 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the three years ended June 30, 1995, certified by Xxxxxxxx Associates
and the unaudited consolidated balance sheet of Harbor as of September 30, 1995,
and the related unaudited consolidated statements of financial condition,
operations, changes in stockholders' equity and cash flows for the three month
period then ended, copies of each of which have been furnished by Harbor to FCNB
(collectively the "Harbor Consolidated Financial Statements"), and like
financial information provided to FCNB subsequent to the date hereof, have been
and will be prepared in accordance with generally accepted accounting principles
applied on a consistent basis, and present and will present fairly the financial
position of Harbor at the dates, and the consolidated results of operations,
stockholders' equity, and
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changes in the financial position of Harbor for the periods stated therein. In
the case of interim fiscal periods, all adjustments, consisting only of normal
recurring items, have been and will be made, subject to year-end audit
adjustments. Without limitation of the foregoing, and except as agreed upon
between the parties hereto, Harbor in good faith believes that the reserves for
possible credit losses which it has established and which are included in the
above-referenced Harbor Consolidated Financial Statements, were as of such
dates, adequate to absorb all reasonably anticipated losses in the loan and
lease portfolios of Harbor and each of the Harbor Subsidiaries, in view of the
size and character of such portfolios, current economic conditions, and other
pertinent factors; and, further, no facts have subsequently come to the
attention of management of Harbor which would cause it to restate in any
material way the levels of such reserves for possible credit losses.
4.6 Books of Account; Corporate Records. The books of account of Harbor
and each Harbor Subsidiary are maintained in compliance in all material respects
with all applicable legal and accounting requirements. The minute books of
Harbor and each of the Harbor Subsidiaries accurately disclose all material
corporate actions of their respective shareholders and Board of Directors and of
all committees thereof.
4.7 Reports. As of September 30, 1995, Harbor and the Harbor
Subsidiaries have filed, since that date have filed, and subsequent to the date
hereof will file, all reports, registrations and statements, if any, together
with any amendments required to be made with respect thereto, that were and are
required to be filed with (i) the SEC, (ii) the Federal Reserve Board, (iii) the
Office of Thrift Supervision (the "OTS") (iv) the Federal Deposit Insurance
Corporation (the "FDIC"), and (v) the Department (all such reports and
statements are collectively referred to herein as the "Harbor Reports"). As of
their respective dates, the Harbor Reports complied and will comply in all
material respects with all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
4.8 Absence of Certain Changes. Since September 30, 1995 to the date
hereof, there has not been any change, in the nature of the business, results of
operations, assets, financial condition, prospects, method of accounting or
accounting practice, or manner of conducting the business of Harbor and the
Harbor Subsidiaries, or otherwise, any of which changes has had, or may
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the financial condition, results of operations, business or
prospects of Harbor and the Harbor Subsidiaries taken as a whole. For purposes
hereof, adverse developments with respect to any matter disclosed to FCNB prior
to the date hereof and which is described in the Harbor Disclosure Letter
delivered to FCNB on the date hereof shall not constitute a material adverse
effect to the extent that the nature and scope of the adverse development is of
the nature and within the scope of the matter disclosed.
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4.9 Insurance. All policies of insurance, including policies of title
insurance, liability insurance and financial institutions bonds maintained by
Harbor or any Harbor Subsidiary, including the identity of the carrier, type of
coverage, policy limits, expiration, and claims made within the past five (5)
years, are set forth in the Harbor Disclosure Letter. All such policies are in
full force and effect and no notices of cancellation have been received in
connection therewith. Such policies are in accordance with customary and
reasonable practice in the banking industry in respect of amounts, types and
risks insured, for the business in which Harbor and the Harbor Subsidiaries are
engaged, and are sufficient for compliance with all legal requirements and all
agreements to which Harbor or any Harbor Subsidiary is a party. Neither Harbor
nor any Harbor Subsidiary is in default with respect to any such policy which
defaults, taken as a whole, are material to Harbor.
4.10 Properties, Leases and Other Agreements. Except as may be set
forth in the Harbor Disclosure Letter or reflected in the Harbor Consolidated
Financial Statements and except for any lien for current taxes not yet
delinquent, and except for imperfections of title, encumbrances and easements,
if any, as are not substantial in character, amount or extent and do not
materially detract from the value, or interfere with the present or proposed use
of, such properties or assets, Harbor and the Harbor Subsidiaries have good
title, free and clear of any liens, claims, charges, options or other
encumbrances, to all of the personal and real property reflected in the
consolidated balance sheet of Harbor as of September 30, 1995 referred to above
in Section 4.5, and all personal and real property acquired since such date,
except such personal and real property as has been disposed of for fair value in
the ordinary course of business. All leases material to Harbor and the Harbor
Subsidiaries, pursuant to which Harbor or any Harbor Subsidiary, as lessee,
leases real or personal property, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any material
existing default by Harbor or any Harbor Subsidiary or any event which with
notice or lapse of time or both would constitute such a material default. The
Harbor Disclosure Letter sets forth a complete list and brief description of all
real estate owned or leased by Harbor or any Harbor Subsidiary (including real
estate acquired by means of foreclosure, transfer in lieu of foreclosure or by
exercise of any creditor's right), and all personal property having a value in
excess of $25,000 owned or leased by Harbor or any Harbor Subsidiary. Each item
of real estate described in the Harbor Disclosure Letter and used in the conduct
of the business of Harbor or any Harbor Subsidiary is in good repair and
insurable at market rates; no notice of violation of zoning laws, building or
fire codes or other statutes, ordinances or regulations relating to the use or
operation of such property has been received by or is known of by Harbor or any
Harbor Subsidiary; and there are no condemnation or similar proceedings pending
or threatened against any such property or any portion thereof.
4.11 Taxes. Harbor and the Harbor Subsidiaries have duly filed, or will
file, all federal, state, local and foreign tax returns ("Returns") required by
applicable law to be filed on or before the Effective Time (all such Returns
being accurate and complete in all material respects), and have paid or have set
up adequate reserves or accruals for the payment of all taxes required to be
paid in respect of the periods covered by such Returns, and will pay, or where
payment is not yet due, will set up adequate reserves or accruals adequate in
all material respects for the payment
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of all taxes for any subsequent periods ending on or prior to the Effective Time
or any portion of a subsequent period which includes the Effective Time and ends
subsequent thereto. Except for the amount of unrecorded income tax liability
with respect to the special bad debt deduction taken by Odenton, neither Harbor
nor any of the Harbor Subsidiaries will have any material liability for any such
taxes in excess of the amounts so paid or reserved or accruals so established.
The amount of bad debt deduction taken by Odenton and the amount included in
retained earnings for which no provision for federal income taxes has been made
does not exceed the amount permitted by applicable law. The Harbor Disclosure
Letter sets forth the amount of retained earnings for which no provision for
taxes has been made. Neither Harbor nor any of the Harbor Subsidiaries is
delinquent in the payment of any material tax, assessment or governmental charge
and has not requested any extension of time within which to file any tax returns
in respect of any fiscal year which have not since been filed. No material
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or definitively) against Harbor which have not
been settled and paid and, as of the date of this Agreement, no requests for
waivers of the time to assess any tax, or waivers of the statutory period of
limitation, are pending or have been granted, and Harbor does not have in effect
any currently effective power of attorney or authorization to any person to
represent it in connection with any taxes.
4.12 Fiduciary Activities. Neither Harbor, nor any Harbor Subsidiary,
is directly or indirectly engaged in any fiduciary or custodial activities.
4.13 Intangible Property. Harbor and the Harbor Subsidiaries own or
possess the right, free of the claims of any third party, to use all material
trademarks, service marks, trade names, copyrights, patents, and licenses
currently used by them in the conduct of their respective businesses, each of
which is described in the Harbor Disclosure Letter. No material product or
service offered and no material trademark, service xxxx or similar right used by
them infringes any rights of any other person, and, as of the date hereof,
Harbor has received no written or oral notice of any claim of such infringement.
4.14 Employee Relations. As of the date hereof, Harbor and each Harbor
Subsidiary is in all material respects in compliance with all federal and state
laws, regulations, and orders respecting employment and employment practices
(including Title 7 of the Civil Rights Act of 1964), terms and conditions of
employment, and wages and hours, and none of them is engaged in any unfair labor
practice. As of the date hereof, no dispute exists between Harbor or any of the
Harbor Subsidiaries and any of their respective employee groups regarding
employee organization, wages, hours, or conditions of employment which would
materially interfere with the business or operations of Harbor and the Harbor
Subsidiaries taken as a whole. As of the date hereof, there are no labor or
collective bargaining agreements binding upon Harbor or any Harbor Subsidiary or
to which Harbor or any Harbor Subsidiary is a party, and, except as set forth in
the Harbor Disclosure Letter, no employment or consulting agreements binding
upon Harbor or any Harbor Subsidiary, or to which Harbor or any Harbor
Subsidiary is a party. As of the date hereof, neither Harbor nor any Harbor
Subsidiary is aware of any attempts to organize a collective bargaining unit to
represent any of their respective employee groups. All
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contributions due on or prior to the date hereof to any pension, profit-sharing,
or similar plan of Harbor or any Harbor Subsidiary have been paid or provided
for in accordance with the Employee Retirement Income Security Act of 1974, as
amended, and all other applicable federal and state statutes and regulations.
The Harbor Disclosure Letter sets forth each employment contract, deferred
compensation, non-competition, bonus, stock option, profit sharing, pension,
retirement, incentive and insurance arrangement or plan, and any other
remunerative or fringe benefit arrangement applicable to Harbor or any Harbor
Subsidiary, including the amounts currently payable pursuant to any employment
agreement or other remunerative arrangement.
4.15 ERISA. The Harbor Disclosure Letter sets forth a complete list of
Harbor's or any Harbor Subsidiary's employee pension benefit plans within the
meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), profit sharing plans, stock purchase plans, deferred
compensation and supplemental income plans, group insurance plans and all other
plans, programs, or arrangements providing benefits to employees (including, but
not limited to, paid time off, fringe benefits, service awards, tuition
reimbursement or scholarships or welfare benefits plans within the meaning of
Section 3(1) of ERISA) maintained for the benefit of the employees or former
employees, including any beneficiaries thereof, and directors or former
directors of Harbor and Harbor Subsidiaries (collectively, the "employee benefit
plans"). Harbor has delivered to FCNB a true and correct copy of each such
employee benefit plan. Other than as set forth in this Section 4.15 and in the
Harbor Disclosure Letter, neither Harbor nor any Harbor Subsidiary maintains any
plans of the type described in this Section.
All "employee benefit plans" (as defined in the preceding paragraph)
comply in all material respects with all applicable provisions of ERISA, the
Code, and all other federal, state, or local laws. The assets of Harbor are not
subject to any liens under ERISA or the Code with respect to any employee
benefit plan of Harbor or an Affiliate (as defined below), and no event has
occurred, or condition exists, which could subject Harbor or its assets to a
future liability, obligation, or lien arising out of any employee benefit plan
of Harbor or an Affiliate.
All employee benefit plans currently or previously maintained,
sponsored, or contributed to by Harbor or any Harbor Subsidiary have been
administered, maintained, and operated in accordance with their terms. All
contributions, payments, fees or expenses relating to each such employee benefit
plan that were deducted by Harbor or any Harbor Subsidiary for income tax
purposes were properly deductible in the year claimed. There are no actions,
claims (other than routine benefit claims made in the ordinary course),
proceedings or inquiries, pending or threatened, with respect to any such
employee benefit plan, and neither Harbor nor any Harbor Subsidiary has any
knowledge of any fact which could give rise to any such action, claim,
proceeding or inquiry. Neither Harbor, any Harbor Subsidiary, nor any other
person or entity who or which is a party in interest (as defined in Section
3(14) of ERISA) or disqualified person (as defined in Section 4975(e)(2) of the
Code) has acted or failed to act with respect to any such employee benefit plan
in any manner which constitutes: (1) a breach of fiduciary responsibility under
ERISA; (2) a prohibited transaction under Section 406 of ERISA or Section 4975
of the Code; or (3) any other violation of ERISA or the Code, except as set
forth in the Harbor
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Disclosure Letter. Except as set forth in the Harbor Disclosure Letter, neither
Harbor nor any Harbor Subsidiary is obligated to indemnify, reimburse, or
contribute to the liabilities or expenses of any person or entity who may have
committed or been involved in any such fiduciary breach, prohibited transaction,
or ERISA or Code violation. Each such employee benefit plan which is intended to
meet the requirements for tax-favored treatment under Subtitle A, Chapter 1 of
the Code meets such requirements. Each such employee benefit plan that was
intended to constitute a qualified plan under Section 401(a) of the Code
(including, but not limited to, the Harbor Employee Stock Ownership Plan (the
"Harbor ESOP")) has, at all times, been qualified, in form and operation, under
Section 401(a) of the Code, and any related trust is and has, at all times, been
exempt from income tax. Neither Harbor nor any Affiliate (as defined below) has
ever maintained or contributed to a multiemployer plan (as defined in Section
3(37) of ERISA) or any defined benefit plan (as defined in Section 3(35) of
ERISA). Except as disclosed on the Harbor Disclosure Letter, all returns,
reports, statements, notices, declarations or documents relating to an employee
benefit plan that are required by law to be filed with or furnished to any
federal, state, or local governmental agency have been timely filed. Any
employee benefit plan (including any employee benefit plan of an Affiliate) that
is a group health plan (as defined in Section 5000(b)(1) of the Code) has
complied in each and every case with the requirements of Sections 601 through
607 of ERISA and Section 4980B of the Code and all other applicable federal,
state, and local laws relating to continuation coverage (collectively "COBRA"),
and no such plan provides benefits to former employees or their beneficiaries
(except to the extent required under COBRA). Each employee benefit plan can be
amended, modified, or terminated without participant consent and without
additional liability accruing to Harbor or any Harbor Subsidiary after the date
of Plan termination. For this purpose, liabilities accrued on or before the date
of Plan termination shall be limited to the following: (1) in the case of an
employee benefit pension plan (within the meaning of Section 3(2) of ERISA), the
participant's "accrued benefit," as defined in Section 3(23) of ERISA; and (2)
in the case of an employee welfare benefit plan (within the meaning of Section
3(1) of ERISA), claims for expenses, costs, or services (including, but not
limited to, medical and other health care services) actually performed or
incurred before the date of the Plan termination. Any prior amendment,
modification, or termination of an employee benefit plan has been made in
accordance with the terms of the Plan and applicable law.
The Harbor ESOP currently constitutes (and at all times has
constituted) an "employee stock ownership plan" within the meaning of Section
4975(e)(7) of the Code and Section 407(d)(6) of ERISA. Further, the Harbor ESOP
is, and has at all times been, in compliance with all provisions of the Code and
ERISA applicable to employee stock ownership plans, including, but not limited
to, the provisions of Section 409 of ERISA and 4975 of the Code. The Harbor ESOP
has not, at any time, acquired or held any employer securities (within the
meaning of Section 407(d)(1) of ERISA), other than "qualifying employer
securities" (within the meaning of Section 4975(e)(8) of the Code). Each
determination of value of any qualifying employer securities held by the Harbor
ESOP has been made in accordance with the requirements of Section 401(a)(28) of
the Code, Section 3(18) of ERISA, and Prop. DOL Reg. ss.2510.3-18(b) (to the
extent applicable).
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For purposes of this Section 4.15, the term Affiliate means an entity
included in the group of entities consisting of Harbor and all other entities
that are treated as part of the same controlled group under Section 414(b), (c),
(m) or (o) of the Code.
4.16 Contracts. Except as disclosed in the Harbor Disclosure Letter,
neither Harbor nor any Harbor Subsidiary is a party to, and no property or
assets of Harbor or any Harbor Subsidiary is subject to any contract, agreement,
lease, sublease, license, arrangement, understanding or instrument calling for
payments in excess of $25,000 over the term of the contract or in any year
("Material Contract"). Each such Material Contract is valid and in full force
and effect, and all parties thereto have in all material respects performed all
obligations thereunder required to be performed to date, and are not in material
default. Except as disclosed in the Harbor Disclosure Letter each Material
Contract is assumable and assignable without consent of the other party thereto
and do not contain any provision, increasing or accelerating payments otherwise
due, or change or modify the provisions or terms of such Material Contract as a
result of this Agreement or the transactions contemplated hereby.
4.17 Related Party Transactions. Except as set forth in the Harbor
Disclosure Letter neither Harbor nor any Harbor Subsidiary has any contract,
extension of credit, business arrangement, depository relationship, or other
relationship with (i) any present or former director or officer of Harbor or any
Harbor Subsidiary; (ii) any shareholder of Harbor owning 5% or more of the
outstanding Harbor Common Stock; or (iii) any affiliate or associate of the
foregoing. Each extension of credit disclosed in the Harbor Disclosure Letter
has been made in the ordinary course of business, and on the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable arms'-length transactions, and do not involve more than the normal
risk of collectibility or present other unfavorable features.
4.18 Loans. Each of the loans of Harbor or any Harbor Subsidiary
represents the legal, valid and binding obligation of the borrowers named
therein, enforceable in accordance with its terms (including the validity,
perfection and enforceability of any lien, security interest or other
encumbrance relating to such loan), except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights generally, and
subject to general principles of equity which may limit the enforcement of
certain remedies. Except as set forth in the Harbor Disclosure Letter no default
(including any event or circumstance which with the passage of time or the
giving of notice or both would constitute a default) in respect of any material
provision of any such loan exists, and Harbor has no knowledge of any borrower's
inability to repay any of such loans when due, whether or not such borrower is
currently in default.
4.19 Environmental Matters. Harbor has no knowledge that any
environmental contaminant, pollutant, petroleum product, toxic or hazardous
waste or substance, or similar or like substance has been generated, used,
stored, processed, disposed of, discharged at, or was or is otherwise present at
any real estate now or previously owned or acquired (including without
limitation any real estate acquired by means of foreclosure, transfer in lieu of
foreclosure or by exercise of any other creditor's right), operated or leased by
Harbor or any Harbor Subsidiary,
- 19 -
or any real estate which is pledged or stands as collateral security for any
loan or other extension of credit by Harbor or any Harbor Subsidiary. There is
no legal, administrative, arbitrarial or other proceeding, claim, action, cause
of action or governmental proceeding or investigation of any nature whatsoever,
seeking to impose, or that could result in the imposition, on Harbor or any
Harbor Subsidiary of any liability arising under any local, state, or federal
environmental statute, regulation, rule or ordinance, pending or, to the
knowledge of Harbor, threatened against Harbor or any Harbor Subsidiary; and
there is no reasonable basis for any of the foregoing; and neither Harbor nor
any Harbor Subsidiary is subject to any agreement, order, judgment, decree or
memorandum of any court, governmental authority, regulatory agency or third
party imposing any such liability.
4.20 Litigation and Other Proceedings. Neither Harbor nor any of the
Harbor Subsidiaries is a party to any pending, or, to the knowledge of Harbor,
threatened claim, action, suit, investigation or proceeding or subject to any
order, judgment or decree, except for matters which, in the aggregate, cannot
reasonably be anticipated to have, a material adverse effect on the financial
condition, results of operations, business, properties or prospects of Harbor
and the Harbor Subsidiaries taken as a whole. The Harbor Disclosure Letter sets
forth a complete and accurate list and a brief description of all actions,
suits, investigations or proceedings to which Harbor or any Harbor Subsidiary is
a party or which relate to any of their respective assets.
4.21 Compliance with Laws. Harbor and each of the Harbor Subsidiaries
have all permits, licenses, certificates of authority, orders and approvals of,
and have made all filings, applications and registrations with, federal, state,
local or foreign governmental or regulatory bodies that are required in order to
permit them to carry on their business as presently conducted and the absence of
which would have a material adverse effect on such business; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect, and, to the best knowledge of Harbor, no suspension or cancellation of
any of them is threatened; and all such filings, applications and registrations
are current. The conduct of its business by Harbor and each of the Harbor
Subsidiaries does not violate, in any material respect, any applicable domestic
(federal, state or local) or foreign law, statute, ordinance, license or
regulation now in effect. Neither Harbor nor any of the Harbor Subsidiaries is
in default under any order, license, regulation or demand of any federal, state,
local or other governmental agency or with respect to any order, writ,
injunction or decree of any court. Except for statutory or regulatory
restrictions of general application, no federal, state, local or other
governmental authority has placed any restrictions on the business of Harbor or
any of the Harbor Subsidiaries.
4.22 Proxy Statement, Etc. None of the information supplied or to be
supplied by Harbor for inclusion, or included, in (i) the Proxy Statement or
(ii) any other documents to be filed with the SEC or any regulatory agency in
connection with the transactions contemplated hereby will, to the best knowledge
of Harbor, and at the respective times such information is supplied or such
documents are filed or mailed, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading. All documents which Harbor is responsible for
filing with the SEC and any regulatory agency in connection with the Merger, and
all information provided by Harbor to FCNB for inclusion in
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any such filings by FCNB, will comply as to form in all material respects with
the provisions of applicable law.
4.23 Brokers and Finders. Except for the fee set forth in the Harbor
Disclosure Letter payable to Trident Financial Corporation upon effectiveness of
Merger, neither Harbor nor any of its officers, directors, employees, or any
shareholder of Harbor, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted, directly or indirectly, for
Harbor, in connection with this Agreement or the transactions contemplated
hereby.
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
5.1 Forbearance by Harbor. From the date hereof until the Effective
Time, Harbor covenants and agrees that it will not do, or agree or commit to do,
or permit any Harbor Subsidiary to do or agree or commit to do, without the
prior written consent of FCNB, any of the following:
(a) except as in the ordinary course of business consistent with past practice
(including the conduct of its lending activities consistent with the conduct of
such activities prior to the date hereof), enter into or assume any Material
Contract, make any material commitment, incur any material liabilities or
material obligations, whether directly or by way of guaranty, including any
obligation for borrowed money whether or not evidenced by a note, bond,
debenture or similar instrument, acquire or dispose of any material property or
asset, or engage in any transaction not in the ordinary course of business
consistent with past practice or subject any of Harbor's assets or properties to
any lien, claim, charge or encumbrances whatsoever;
(b) grant any general increase in compensation to its employees or officers or
directors, pay any bonus, or effect any increase in retirement benefits to any
class of employees or its officers (unless any such change shall be required by
applicable law), except that Harbor may, without the prior approval of FCNB and
in the ordinary course of its business consistent with past practice, grant
general salary increases and year end bonuses to its employees (other than
executive officers subject to an employment contract), provided, however, that
the aggregate amount of such salary increases and bonuses shall not exceed ten
thousand dollars ($10,000) and four thousand Dollars ($4,000), respectively, or
enter into, amend, or extend the term of any employment agreement, except that
Harbor may, without the prior approval of FCNB and in the ordinary course of its
business consistent with past practice, extend the term of existing employment
contracts with executive officers for one year in accordance with the provisions
of such contracts;
(c) declare, set aside or pay any dividend or other distribution on Harbor's
Common Stock, except that Harbor may declare and pay, in accordance with past
practice, quarterly dividends not in excess of twelve and one half cents ($.125)
per share per quarter;
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(d) 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; merge into any other corporation, bank or association, or permit
any other corporation, bank or association to merge into it, or consolidate with
any other corporation, bank or association; liquidate, sell or dispose of any
assets or acquire any assets, otherwise than in the ordinary course of its
business consistent with past practice; or agree to do any of the foregoing;
(e) open, or file an application with any federal or other regulatory agency
with respect to the opening of any additional office, branch or banking
facility, or the acquisition or establishment of any additional banking or
nonbanking facility;
(f) issue any share of its capital stock or permit any share of its capital
stock held in its treasury to become outstanding, except for the issuance of
shares of Harbor Common Stock pursuant to the exercise of options outstanding as
of the date hereof pursuant to the Harbor Option Plan; issue, grant or extend
the term of any option, warrant, or stock appreciation right;
(g) amend the Articles or Certificate of Incorporation or Charter or Bylaws of
Harbor or any Harbor Subsidiary, except for the Amendment as contemplated by
Section 7.1(b) hereof or, to the extent required, an amendment to reflect a
decrease in the number of directors;
(h) effect any capital reclassification, stock dividend, stock split,
consolidation of shares or similar change in capitalization;
(i) take, cause or, to the extent within the control or influence of Harbor or
any Harbor Subsidiary, permit the occurrence of any change or event which would
render any of its representations and warranties contained herein untrue in any
material respect at and as of the Effective Time;
(j) enter into any related party transaction of the type contemplated by Section
4.17 hereof, except for transactions relating to deposit relationships or the
extension of credit in the ordinary course of business, on substantially the
same terms, including interest rate and collateral, as those prevailing for
comparable transactions with unaffiliated parties, and which do not present more
than the normal risk of collectibility or other unfavorable features, and in
respect of which disclosure has been made to FCNB prior to disbursement;
(k) except as provided in Section 8.5 hereof, solicit, encourage, or authorize
any person, including but not limited to directors, officers, shareholders, or
employees, to solicit from, or communicate with, any third party, inquiries or
proposals relating to the disposition of Harbor's or any Harbor Subsidiary's
business or assets, or the acquisition of Harbor's or any Harbor Subsidiary's
voting securities, or the merger of Harbor, Odenton or any other material Harbor
Subsidiary with any person other than FCNB or any subsidiary of FCNB, or provide
any such person with information or assistance or negotiate or conduct any
discussions with any such person in furtherance of such inquiries or to obtain a
proposal, or continue any such activities in progress on the date hereof, and
Harbor shall promptly notify FCNB of all of the relevant details,
- 22 -
including the identity of such third party and the nature of any such third
party proposal, relating to all inquiries and proposals which it may receive
relating to any of such matters; or
(l) knowingly take any action which would (i) adversely affect the ability to
obtain the necessary approvals of governmental authorities required for the
transactions contemplated hereby; or (ii) adversely affect the ability to
perform the covenants and agreements under the Agreement.
5.2 Conduct of Business. From the date hereof until the Effective Time,
Harbor covenants and agrees that, except as otherwise consented to by FCNB in
writing it shall, and shall cause each Harbor Subsidiary to:
(a) carry on its business, and maintain its books of account and other corporate
records, in the ordinary course consistent with past practice and legal and
regulatory requirements;
(b) to the extent consistent with prudent business judgment, use all reasonable
efforts to preserve its present business organization, to retain the services of
its officers and employees, and maintain customer and other business
relationships;
(c) maintain all of the structures, equipment, and other real and personal
property of Harbor and the Harbor Subsidiaries in good repair, order and
condition, ordinary wear and tear and unavoidable casualty excepted;
(d) use all reasonable efforts to preserve or collect all material claims or
causes of action of Harbor or the Harbor Subsidiaries;
(e) keep in full force and effect all insurance coverage maintained by Harbor or
the Harbor Subsidiaries;
(f) perform in all material respects all obligations under all material
agreements, contracts, commitments and other instruments which Harbor or any
Harbor Subsidiary is a party or by which they may be bound or which relate to or
affect any of their respective assets or properties;
(g) comply in all material respects with all statutes, laws, regulations, rules,
ordinances, orders, decrees, consent agreements, examination reports and other
federal, state and local governmental or regulatory directives applicable to
Harbor or any Harbor Subsidiary and the conduct of their respective businesses;
and
(h) at all times maintain the allowance for loan losses at a level which is
adequate to absorb reasonably anticipated losses in the loan and lease
portfolio, in accordance with generally accepted accounting principles and
regulatory requirements.
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5.3 Conduct of Business by FCNB. FCNB covenants that from the date
hereof until the Effective Time, it shall not, without the prior written consent
of Harbor, knowingly take any action which would (i) adversely affect the
ability to obtain the necessary approvals of governmental authorities required
for the transactions contemplated hereby; or (ii) adversely affect the ability
to perform the covenants and agreements under the Agreement, including the
payment of the Purchase Price.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access and Information. (a) Harbor shall afford to FCNB, and to
FCNB's accountants, counsel and other representatives, reasonable access during
normal business hours, during the period prior to the Effective Time, to all of
its properties, books, contracts, commitments and records and, during such a
period, shall furnish promptly to FCNB (a) a copy of each report, schedule and
other document filed or received by it during such period with or from (i) the
SEC; (ii) the OTS; (iii) the Federal Reserve Board; (iv) the Department; (v) the
FDIC; and (b) all other information concerning its business, properties and
personnel as FCNB may reasonably request. FCNB shall cause all information
obtained by it or its representatives pursuant to this Agreement or in
connection with the negotiation thereof to be treated as confidential and shall
not use, nor knowingly permit others to use, any such information for any
purpose other than in connection with the transactions contemplated hereby,
unless such information becomes generally available to the public or is required
to be disclosed pursuant to the order of a court of competent jurisdiction or
otherwise in accordance with applicable law, and in the event of the termination
of this Agreement shall promptly return all documents (including copies thereof)
obtained hereunder from Harbor, and shall destroy all copies of any analyses,
compilations, notes, studies or other documents prepared from any such material
by FCNB or for FCNB's use.
6.2 Applications; Harbor Shareholder Meeting; Other Information;
Cooperation. (a) As promptly as practicable after the date hereof and the
furnishing by Harbor of all information regarding Harbor required to be
reflected therein, FCNB shall file (i) the applications and notices for OTS,
Federal Reserve Board and Maryland State Bank Commissioner ("Commissioner")
approval, and (ii) any other applications for regulatory or other approvals
deemed necessary or appropriate by FCNB. Harbor shall have the right to review
each of the above applications, together with any and all amendments thereto,
and to comment on their form and content, prior to their being filed by FCNB.
Harbor agrees that it shall, and shall cause its employees, agents,
representatives, and advisors to, cooperate with FCNB in the preparation and
filing of the aforementioned regulatory applications, including, but not in
limitation, by providing on a prompt basis information requested by FCNB for
inclusion in such documents, and by providing comments on drafts of such
documents on a timely basis.
(b) FCNB agrees to use its best efforts to prepare and file all material
applications referred to in Section 6.2(a) not later than forty five (45) days
from the date hereof, subject to the timely
- 24 -
furnishing by Harbor of all information regarding Harbor required to be included
therein or necessary for the preparation of such applications.
(c) Harbor agrees that it shall cause a meeting of its shareholders (the "Harbor
Shareholder Meeting") to be held as promptly as practicable after the date
hereof, but in any event not more than ninety (90) days after the date hereof,
for the purpose of considering the approval of (i) the Amendment; and (ii) the
Merger and adoption of this Agreement. Harbor shall cause to be distributed to
each shareholder of record of Harbor (according to the transfer records of
Harbor as of the record date for the Harbor Shareholder Meeting), a proxy
statement, prepared by Harbor, containing such material and information as may
be required by applicable statutes or regulations, and in any event containing
all information material to the consideration by its shareholders of the
Amendment and the Merger (the "Proxy Statement"). The Proxy Statement shall be
mailed by Harbor on the date (the "Mailing Date") at least twenty (20) days
prior to the date of the Harbor Shareholder Meeting. The Board of Directors of
Harbor shall, subject to the receipt of the fairness opinion dated as of the
date immediately prior the date of the Proxy Statement and subject to the
fiduciary duty of the directors (as determined in the manner set forth in
Section 8.5(a)), recommend to its shareholders that they vote the shares held by
them to approve the Amendment and the Merger and to adopt this Agreement and
Harbor shall use its best efforts in good faith to obtain its shareholders'
approval of the Amendment and the Merger in accordance with Maryland law. Harbor
agrees that as of the Mailing Date of the Proxy Statement, and as of the date of
any amendment or supplement thereto, the Proxy Statement shall comply in all
material respects with the applicable provisions of law, and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that information as of a
later date included therein shall be deemed to modify information as of an
earlier date, and the foregoing statement shall not apply to statements in or
omissions from the Proxy Statement made in reliance upon and in conformity with
information furnished by FCNB for use in the Proxy Statement. After becoming
aware of any statement or omission which renders the statement set forth in the
preceding sentence not true or correct, Harbor will promptly amend, supplement
or revise such material in order to make the statement in the preceding sentence
true and correct at all times up to and including the Effective Time. FCNB shall
have the right to review the Proxy Statement, together with any and all
amendments or revisions thereto, and to comment on its form and content, prior
to their being mailed by Harbor. FCNB agrees that it shall, and shall cause its
employees, agents, representatives, and advisors to, cooperate with Harbor in
the preparation of the Proxy Statement including, but not in limitation, by
providing on a prompt basis information requested by Harbor for inclusion in
such documents, and by providing comments on drafts of such documents on a
timely basis. The obligation of Harbor under this paragraph with respect to the
timing of the Harbor Shareholder Meeting shall be subject to the furnishing by
FCNB of all information regarding FCNB required to be included in the Proxy
Statement.
6.3 Notice of Actual or Threatened Breach. Each party will promptly
give written notice to the other party upon becoming aware of any impending or
threatened occurrence of any event or the failure of any event to occur which
would cause or constitute a breach of any of the
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representations, warranties or covenants made by such party in this Agreement,
any other changes or inaccuracies in any data previously given or made available
to the other party, or which would threaten consummation of the transaction
contemplated hereby.
6.4 Current Information. During the period from the date of this
Agreement to the Effective Time, Harbor will cause one or more of its
representatives to confer on a regular and frequent basis with representatives
of FCNB and to report the general status of its ongoing operations. Harbor will
promptly notify FCNB of any material change in the normal course of its business
or in the operation of its properties and, to the extent permitted by applicable
law, of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the institution
or the threat of material litigation involving Harbor, and will keep FCNB fully
informed with respect to such events.
6.5 Filing with Department. FCNB and Harbor shall execute and deliver
and use their best efforts to file appropriate Articles of Merger with the
Department at the earliest practicable date after satisfaction or waiver of the
conditions set forth in Article VII hereof.
6.6 Expenses. Each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and to the
consummation of the Merger and the transactions contemplated hereby. Harbor
agrees that the aggregate expenses of Harbor, including all fees and expenses of
legal counsel, accountants, and financial or other advisors, shall not exceed
reasonable amounts in light of the circumstances and the amount and nature of
work or services to be performed.
6.7 Miscellaneous Agreements and Consents. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby. FCNB and Harbor will, and Harbor will cause each of the
Harbor Subsidiaries, as the case may be, to use its best efforts to obtain
consents of all third parties and governmental bodies necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
6.8 Press Releases. FCNB and Harbor will consult with each other as to
the form, substance and timing of any press release or other public disclosure
of matters related to this Agreement or any of the transactions contemplated
hereby. Notwithstanding the foregoing, FCNB and Harbor agree that FCNB and
Harbor shall, immediately following the execution hereof, issue a joint press
release announcing the execution of the Agreement and the proposed Merger, and
further agree that FCNB and Harbor shall each be entitled to issue separate
press releases announcing the execution of the Agreement and the proposed
Merger, a copy of which release will be provided to the other party prior to
issuance.
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6.9 Harbor Employees. FCNB agrees that all employees of Harbor or
Odenton (other than executive officers or other employees of Harbor or Odenton
subject to an employment agreement between such employee and Harbor and/or
Odenton) who were employees of Harbor and/or Odenton as of the date hereof and
as of the Effective Time and who are not retained by FCNB at least six (6)
months following the Effective Time (such six (6) month period referred to
hereinafter as the "Severance Period") shall be entitled to receive a lump sum
severance payment equal to one week of salary for each full year of service with
Harbor/Odenton. Notwithstanding the foregoing, any such employee who is
terminated by FCNB during the Severance Period for misconduct or other good
cause, or who voluntarily terminates employment during the Severance Period,
shall not be entitled to receive any portion of such severance payment. No
former employee of Harbor/Odenton whose employment terminates during the
Severance Period shall be entitled to receive any severance or termination
benefits other than as provided by this Section 6.9. Such employees of
Harbor/Odenton as FCNB retains ("Retained Employees") shall be employed subject
to the same terms and conditions of employment as employees of FCNB performing
the same or similar functions at other facilities of FCNB, including but not
limited to wages, salaries, health and welfare, vacation and other benefit plans
or arrangements generally available to FCNB's employees. If the employment of
any Retained Employee shall be terminated at any time after the Severance
Period, such Retained Employee shall be entitled only to such severance or
termination benefits, if any, as FCNB shall in its discretion determine, and
such Retained Employee shall not be entitled to the severance payment described
in the first sentence of this Section 6.9. FCNB does not guarantee any Retained
Employee the continuance of any title or status held with Harbor/Odenton. For
purposes of determining wages and salary levels and eligibility for employee
benefits (where such determinations are based on length of service and during
any period where such Retained Employee shall be entitled to receive such
benefits), each Retained Employee shall receive full credit for all years of
service with Harbor/Odenton commencing on such employees latest hire date with
Harbor/Odenton. Nothing contained herein shall confer upon any Retained Employee
any right to continued employment for any period beyond the Effective Time, and
each such employee shall be an employee at will, and shall be subject to such
periodic evaluation and review as FCNB shall in its sole discretion determine.
Harbor agrees that it shall, and shall cause the officers and employees of
Harbor and Odenton to, cooperate fully with FCNB in connection with its
determination of the retention or non-retention of the employees of
Harbor/Odenton, including by providing full access to employee employment
records and by making to employees of Harbor/Odenton such communications as FCNB
shall reasonably request. Notwithstanding anything to the contrary herein, FCNB
acknowledges that Harbor and the Harbor Subsidiaries have in effect a "pay for
stay" program pursuant to which employees, whether or not retained by FCNB, will
be compensated for remaining employed by Harbor or any of the Harbor
Subsidiaries until the Effective Time and that payment pursuant to the "pay for
stay" program will not reduce any of the payments otherwise described herein.
6.10 Insurance. Harbor agrees that it shall use its best efforts to
obtain director's and officer's liability tail insurance coverage covering the
directors of Harbor covering a period of not less than three (3) years after the
Effective Time, from its current insurance carrier or a carrier reasonably
acceptable to FCNB. In the event that Harbor shall be unable to obtain such
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insurance coverage FCNB shall be entitled to obtain comparable coverage for such
directors from its insurance carrier. In the event that neither Harbor nor FCNB
shall be able to obtain such coverage, or if such coverage shall be obtained for
a period of less than three (3) years and such coverage or comparable coverage
shall not be continued for the entirety of such three (3) year period, then FCNB
shall indemnify any person who is a director, director emeritus, or officer of
Harbor or any Harbor Subsidiary as of the date hereof, against all costs,
expenses reasonably and actually incurred, judgements, penalties, fines, or
amounts paid in settlement (with the prior approval of FCNB) in connection with
any action, suit, or proceeding to which such person shall have been made a
party as a result of such person's service in such capacities (whether or not
such action suit or proceeding shall have commenced as of the date hereof or as
of the Effective Time), to the fullest extent permitted under the Articles or
Certificate of Incorporation or Charter of Harbor or a Harbor Subsidiary, as
appropriate, as in effect on October 16, 1995 or by any law, regulation or
regulatory pronouncement applicable to FCNB or the Bank Subsidiaries, or which
would have been applicable to Harbor or any Harbor Subsidiary had such
indemnification been made by such institution. Notwithstanding anything to the
contrary contained herein, nothing in this Section 6.10 shall create any right
of any person described herein to any indemnification by FCNB at any time during
the three (3) year period following the Effective Time when the insurance
coverage described herein shall be in effect, or at any time following the end
of the three (3) year period following the Effective Time.
6.11 Harbor ESOP. As soon as practicable after the execution of this
Agreement, Harbor and FCNB will cooperate to cause the Harbor ESOP to be amended
and other action taken in a manner reasonably acceptable to Harbor and FCNB, to
provide (i) that each participant in the ESOP not fully vested will become fully
vested in his or her ESOP account as of the Effective Time and (ii) that the
ESOP will terminate upon the Effective Time. FCNB acknowledges that Harbor
presently intends to fully retire the outstanding ESOP indebtedness no later
than the Effective Time through additional employer contributions. The ESOP
amendment and other action taken will provide that, upon the repayment of the
ESOP loan, the remaining shares in the Loan Suspense Account will be allocated
(to the extent permitted by Section 415 of the Code and other applicable laws
and regulations) to ESOP participants (as determined under the terms of the
ESOP). As soon as practicable after the Effective Time Harbor and FCNB agree
that participants in the ESOP will receive lump sum distributions of their ESOP
accounts. To the extent permitted by applicable law, and to the extent requested
by participants in the Harbor ESOP, FCNB will permit Retained Employee's
participant accounts in the Harbor ESOP to be rolled over into FCNB's 401(k)
plan.
The amendments to the ESOP and actions related thereto will be adopted
conditioned upon the consumption of the Merger and upon receiving a favorable
determination letter from the IRS with regard to the continued qualification of
the ESOP after any required amendments and any private letter ruling that Harbor
and FCNB shall mutually deem appropriate. Harbor and FCNB will cooperate in
submitting appropriate requests for any such determination letter or ruling to
the IRS and will use their best efforts to seek the issuance of such letter or
ruling as soon as practicable following the date hereof. Harbor and FCNB will
adopt such additional amendments to the ESOP as may be reasonably required by
the IRS as a condition to granting
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such determination letter or ruling provided that such amendments do not
substantially change the terms outlined herein.
6.12 Environmental Matters. FCNB shall be entitled to conduct
investigations into environmental matters relating to Harbor and the Harbor
Subsidiaries for a period of 45 days from the date hereof. Harbor agrees that it
shall permit to be performed at FCNB's expense, such environmental testing and
investigations as FCNB shall reasonably request. FCNB agrees that such
investigations shall not unduly interfere with the day to day operations of
Odenton.
6.13 Employment Agreements. As of the Effective Time, the existing
employment agreements between Xx. Xxxxxxxx and Xx. Xxxxxxxxxxx and Odenton shall
each be terminated and FCNB and Harbor agree that Xx. Xxxxxxxx and Xx.
Xxxxxxxxxxx shall, subject to the provisions thereof, each be entitled to the
payment determined pursuant to Section 12 of their respective employment
agreements, such payments to be made no later than the Effective Time.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approvals. The Merger shall have been approved by the requisite
vote of the shareholders of Harbor.
(b) Amendment of Harbor Articles. At the Harbor Shareholder Meeting, or
otherwise prior to the Effective Time, an amendment (the "Amendment") to the
Articles of Incorporation of Harbor amending Article XIII, Acquisition of
Capital Stock, to exempt from the provisions thereof the acquisition of Harbor
by FCNB, shall have been approved by the requisite majority of the shareholders
of Harbor, and such amendment shall have been filed with the Department and
become effective.
(c) Regulatory Approvals. There shall have been received unconditional approval
of the Merger from the OTS, the Federal Reserve Board, the Commissioner and any
other federal or state regulatory agencies whose approval is required for
consummation of such transaction (except for such conditions as are ordinarily
imposed in connection with transactions of the type contemplated hereby and
which are not, in the opinion of FCNB, unduly burdensome), and all notice and
waiting periods after the granting of any such approval shall have expired.
7.2 Conditions to Obligation of FCNB to Effect the Merger. The
obligation of FCNB to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional conditions:
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(a) Representations and Warranties; Corporate Proceedings. The representations
and warranties of Harbor set forth in Article IV hereof shall be true and
correct in all material respects as of the date of this Agreement and as of the
Effective Time, and FCNB shall have received a certificate of the President of
Harbor to that effect. All corporate action required to have been taken by, or
on the part of, Harbor to authorize the execution, delivery and performance of
this Agreement and the Merger, respectively, shall have been duly and validly
taken, and FCNB shall have received certified copies of the resolutions
evidencing such authorizations.
(b) Performance of Obligations. Harbor shall have in all material respects
performed all obligations required to be performed by it under this Agreement
prior to the Effective Time, and FCNB shall have received a certificate of the
President of Harbor to that effect.
(c) Permits, Authorizations, Etc. Harbor and the Harbor Subsidiaries shall have
obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger.
(d) No Material Adverse Change. There shall not have been any material adverse
change in the financial condition, assets, results of operations, business or
prospects of Harbor, Odenton, or any other material Harbor Subsidiary. For
purposes hereof, adverse developments with respect to any matter disclosed to
FCNB prior to the date hereof and included in the Harbor Disclosure Letter
delivered to FCNB not later than the date hereof shall not constitute a material
adverse change to the extent that the nature and scope of the adverse
development is of the nature and within the scope of the matter disclosed.
Additionally, for purposes hereof, any decrease in the capital or stockholder's
equity or Harbor or Odenton resulting from any assessment of the type described
in Section 7.3(o) hereof not in excess of .85% of the insured deposits of
Odenton shall not constitute a material adverse change.
(e) Intentionally Omitted.
(f) No Injunction. No injunction, restraining order, stop order or other order
or action of any federal or state court or agency in the United States which
prevents the consummation of the Merger shall be in effect, and no action shall
have been instituted or threatened, and no statute, rule or regulation shall
have been enacted, by any state or federal government or government agency,
which makes the consummation of the Merger unlawful or which in the reasonable
judgment of FCNB would make it inadvisable to consummate the transactions
contemplated by this Agreement.
(g) Litigation. At the Effective Time, there shall not be pending or threatened
against Harbor or any Harbor Subsidiary or the officers or directors thereof in
their capacity as such, any suit action or proceeding (including antitrust
actions) which, if successful, would, in the reasonable judgment of FCNB, have a
material adverse effect on the financial condition, operations, business or
prospects of Harbor or Odenton.
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(h) Dissenters. Holders of not more than 10.1% of the outstanding Common Stock
of Harbor shall have validly exercised and perfected their rights to dissent
from the Merger and demand fair value of their shares of Harbor Common Stock in
accordance with Maryland law.
(i) Support Agreement. Each of the directors of Harbor shall have,
simultaneously with the execution of the Merger Agreement entered into a Support
Agreement in substantially in the form attached hereto as Exhibit C
(j) Brokers and Finders Fees. Harbor shall have paid in full, at or prior to
Closing, all amounts owing in respect of the payments contemplated in Section
4.23 hereof.
(k) Accountants' Letter. FCNB shall have received from Xxxxxxxx Associates,
independent public accountants to Harbor, a letter dated the Closing Date, with
respect to certain financial information regarding Harbor, which shall be
substantially in the following form:
(i) they are independent public accountants with respect to
Harbor;
(ii) in their opinion the audited financial statements of Harbor
examined by them and included in the Proxy Statement furnished to
shareholders of Harbor, or subsequently provided to FCNB and/or the
shareholders of Harbor, comply as to form in all material respects with
the requirements applicable thereto;
(iii) at the request of Harbor they have carried out procedures to
a specified date not more than five business days prior to the
Effective Time as follows: (1) read the unaudited financial statements
of Harbor for the period from the date of the most recent audited
financial statements of Harbor through the last day of the most recent
calendar month ended prior to such specified date (not more than five
days prior to the Effective Time; (2) read the minutes of the meetings
of the shareholders and of the Board of Directors (and all committees
thereof) of Harbor from the date of the most recently audited financial
statements to a date not more than five business days prior to the
Effective Time, and (3) consulted with certain officers and employees
of Harbor responsible for financial and accounting matters as to
whether there has been any change in capital stock or long-term debt,
or any decrease in consolidated net assets or in the total or per-share
amounts of net income of Harbor, and, based on such procedures and
except as disclosed in such letter, nothing has come to their attention
which would cause them to believe that:
(A) the financial statements referred to in (1) above do not
fairly present the financial position of Harbor and the results of
its operations and changes in its financial position at the dates
and for the periods referred to therein and are not presented in
conformity with generally accepted accounting principles applied
on a basis consistent in all material respects with that of the
audited consolidated statements of Harbor at June 30,
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1995, except as expressly required by this Agreement or noted in
such letter;
(B) as of said date not more than five business days prior to
the Effective Time, there was any (x) change in the capital stock
or long-term debt of Harbor or (y) decreases in consolidated net
assets of Harbor, in each case as compared with the amounts shown
in the balance sheet of Harbor at the date of the most recent
audited financial statements, or for the period from the date of
the most recent financial statements to said date not more than
five business days prior to the Effective Time, there were any
decreases, as compared with the corresponding portion of the
preceding fiscal year, in the total or per share amounts of income
before extraordinary items or net income, other than, in each
case, as set forth in such letter;
(C) the consolidated financial statements of Harbor for the
quarter immediately preceding the Effective Time are not prepared
in accordance with generally accepted accounting principles, and,
based on a review of the interim financial statements of Harbor
and upon due inquiry made of the management of Harbor, that
material modifications should be made to such financial statements
for them to be in conformity with generally accepted accounting
principles as of said date not more than five business days prior
to the Effective Time, except as noted in such letter, provided,
however, that if Harbor is not required to prepare, and has not
prepared, consolidated financial statements in accordance with
generally accepted accounting principles with respect to the
quarter immediately preceding the Effective Time, then the belief
expressed in accordance with this subsection (C) shall be with
respect to the most recent Thrift Financial Report (or comparable
report) filed by Odenton prior to the Effective Time and the
pertinent regulatory and/or other accounting principles in
accordance with which such report is prepared;
(D) based upon the information available as of such date, the
reserve for possible credit losses established by Harbor is not
adequate to absorb reasonably anticipated losses in the loan and
leasing portfolio of Harbor in view of the size and character of
such portfolios, then current economic conditions and other
pertinent factors; and
(E) there are any contingent liabilities which could have a
materially adverse effect on the assets, business or prospects of
Harbor or any Harbor Subsidiary other than as disclosed in the
most recent audited financial statements for Harbor or other than,
in each case, as disclosed in said letter.
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(l) Opinion and Letters of Counsel. (a) Opinion of Counsel. Harbor shall have
delivered to FCNB an opinion, dated the Effective Time, of Xxxxxxx Xxxxxxxx
Kantarian & Xxxxxxxxx, P.C., counsel to Harbor, in form and substance reasonably
satisfactory to FCNB and its counsel, to the effect that:
(i) Harbor and Odenton are, respectively, a corporation and a
federal savings association duly incorporated, validly existing and in
good standing under the laws of the State of Maryland and the United
States; Harbor is duly registered as a savings bank holding company
under the HOLA; and Harbor and Odenton each has full corporate power to
own and operate its respective business and properties and to carry on
its respective business as currently conducted;
(ii) the authorized capital stock of Harbor consists solely of
2,000,000 shares of Harbor Common Stock, par value $.01 per share, and
500,000 shares of Serial Preferred Stock, par value $.01 per share; and
all shares of Harbor Common Stock outstanding are duly authorized and
nonassessable, and are free of the preemptive right of any shareholder;
(iii) subject to decrease to reflect the exercise of such options,
except for the 8,000 options outstanding pursuant to the Harbor Option
Plan, such counsel has no actual knowledge that there are any other
outstanding subscriptions, warrants, or rights to acquire from Harbor
or Odenton, or requiring Harbor or Odenton to issue, or any outstanding
securities or obligations convertible into, shares of Harbor Common
Stock or the capital stock of Odenton;
(iv) such counsel has no actual knowledge that there are any
outstanding obligations of Harbor or any Harbor Subsidiary, to
purchase, reacquire or redeem any shares of Harbor Common Stock;
(v) execution, delivery and performance of this Agreement by
Harbor and consummation of the Merger and Bank Merger do not and will
not conflict with, or result in the breach of, or constitute a default
under, any of the provisions of the Articles or Certificate of
Incorporation or Charter or Bylaws of Harbor or any Harbor Subsidiary
(as each may be amended as of the date of such opinion) or, any
material agreement to which Harbor or any Harbor Subsidiary is a party
or by which their properties or assets may be bound (which such
material agreements shall be identified by such counsel and counsel to
FCNB after the date hereof); and
(vi) Harbor has full corporate power and corporate authority to
execute, deliver and perform this Agreement, and this Agreement has
been duly authorized and approved by all requisite corporate action of
Harbor, and by the shareholders of Harbor, and constitutes the valid
and legally binding obligation of Harbor in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws
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relating to or affecting creditors' rights generally and subject to
general equity principles which may limit the enforcement of certain
remedies;
(vii) to the actual knowledge of such counsel there is no claim,
litigation, arbitration proceeding, labor dispute or investigation of
any kind pending or threatened against Harbor, or any Harbor Subsidiary
in any court or before any federal, state or municipal or other
governmental agency or instrumentality relating in any way to the
Merger and the Bank Merger, or which if determined adversely to Harbor
or such Harbor Subsidiary, would have a material adverse effect on the
financial condition, results of operations, business, properties, or
assets of Harbor and the Harbor Subsidiaries, taken as a whole, other
than as disclosed in the Harbor Disclosure Letter; and
(viii) (1) the form of the Harbor ESOP currently constitutes, (and
at all times has constituted) an "employee stock ownership plan" within
the meaning of Section 4975(e)(7) of the Code and Section 407(d)(6) of
ERISA, as such sections are or were in effect from time to time; (2)
the form of the Harbor ESOP meets the requirements for qualification
under Section 401(a) of the Code as in effect as of the date of such
opinion; (3) the form of the trust related to the Harbor ESOP complies
with the requirements for exemption under Section 501(a) of the Code as
in effect as of the date of such opinion; (4) counsel has no actual
knowledge of any matter which could affect the tax-qualified status of
the Harbor ESOP or the tax-exempt status of its related trust; (5) the
shares of Harbor Common Stock held by the Harbor ESOP constitute
"qualifying employer securities" (within the meaning of Section
4975(e)(8) of the Code as in effect as of the date of such opinion);
and (6) to the actual knowledge of such counsel the acquisition of the
Harbor Common Stock by the Harbor ESOP did not constitute a prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code, as
such sections were in effect as of the date of such acquisition.
References to any section of the Code or ERISA shall include references
to any regulations or revenue rulings promulgated and in effect
thereunder. The opinions expressed in this paragraph (viii) are subject
to the adoption of any amendments required or requested by the IRS in
connection with the termination of the ESOP, whether before or after
the Effective Time.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officials of Harbor and Odenton
or appropriate governmental officials, (ii) be limited to federal law
and the general corporation laws, and, to the extent applicable, the
financial institutions laws of the State of Maryland, and (iii)
incorporate, be guided by, and be interpreted in accordance with, the
Legal Opinion Accord of the ABA Section of Business Law (1991).
(b) Securities Letter. Harbor shall have delivered to FCNB a letter,
dated the Effective Time, of Xxxxxxx Xxxxxxxx Kantarian & Xxxxxxxxx, P.C.,
counsel to Harbor, in form and substance reasonably satisfactory to FCNB and its
counsel, to the effect that such counsel has no reason to believe that the Proxy
Statement, as it may be amended or supplemented, contained an untrue statement
of a material fact or omitted any material fact required to be stated therein or
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necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading, as of the time of the Harbor
Shareholder Meeting, provided that no statement need be made as to any financial
statements and other financial or statistical data or as to materials relating
to or supplied by FCNB or the FCNB subsidiaries for inclusion in the Proxy
Statement).
(m) Optionholder Agreements. FCNB shall have received agreements, in the form
attached hereto as Exhibit D and from each of the holders as of the date hereof
of options pursuant to the Harbor Option Plan, relating to the matters
contemplated by Section 2.1(c) hereof. The Optionholder Agreements from persons
holding options pursuant to the Harbor Option Plan shall include, but shall not
be limited to, the agreement of such persons that such options shall be
terminated as of the Effective Time.
(n) Third Party Consents. FCNB and Harbor shall have obtained all material third
party consents or waivers under any agreement, contract, lease, note, license,
permit or other document by which FCNB, any FCNB subsidiary, Harbor or any
Harbor Subsidiary is bound or to which any of their respective properties is
subject required for the consummation of the transactions contemplated hereby.
(o) FDIC Assessment. There shall not have been any legislation enacted or
regulation adopted imposing, or authorizing the imposition, on Odenton or Harbor
(or on FCNB or any Bank Subsidiary as successor to Odenton or Harbor), in
connection with the recapitalization of the Savings Association Insurance Fund
("SAIF"), the merger of SAIF and the Bank Insurance Fund, the payment of
principal or interest on the "Fico bonds," or other reorganization or
restructuring of SAIF, any special assessment (whether a single assessment, two
or more assessments, or a series of two or more assessments) in the aggregate in
excess of .85% of Odenton's insured deposits (whether or not such assessment
shall have been paid prior to Closing); and FCNB shall determine to its
satisfaction that any such special assessment (whether or not greater than .85%
of insured deposits) shall be fully deductible for federal income tax purposes.
7.3 Conditions to Obligation of Harbor to Effect the Merger. The
obligation of Harbor to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties; Corporate Proceedings. The representations
and warranties of FCNB set forth in Article III hereof shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time as though made at and as of the Effective Time, and Harbor shall
have received a signed certificate the President of FCNB to that effect. All
corporate action required to have been taken by, or on the part of, FCNB to
authorize the execution, delivery and performance of this Agreement and the
Merger, respectively, shall have been duly and validly taken, and Harbor shall
have received certified copies of the resolutions evidencing such
authorizations.
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(b) Performance of Obligations. FCNB shall have in all material respects
performed all obligations required to be performed by it under this Agreement
prior to the Effective Time, and Harbor shall have received a certificate of the
President of FCNB to that effect.
(c) Opinion and Letters of Counsel. (a) Opinion of Counsel. FCNB shall have
delivered to Harbor an opinion, dated the Effective Time of Xxxxxxx & Baris,
L.L.P., in form and substance reasonably satisfactory to Harbor and its counsel,
to the effect that:
(i) FCNB is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland; is registered as
a bank holding company under the BHCA; and FCNB has full corporate
power and authority to own and operate its business and properties and
to carry on its business as currently conducted;
(ii) except as set forth in the Agreement or the FCNB Disclosure
Letter, execution, delivery and performance of the Agreement by FCNB
and consummation of the Merger and the Bank Merger do not and will not
conflict with, or result in the breach of, or constitute a default
under, any of the provisions of the Articles of Incorporation or Bylaws
of FCNB, or, to the actual knowledge of such counsel, any material
agreement to which FCNB is a party or by which its properties or assets
may be bound;
(iii) FCNB has full corporate power and corporate authority to
make, execute, deliver and perform the Agreement and the Agreement has
been duly authorized and approved by all requisite corporate action of
FCNB and constitutes the valid and legally binding obligations of FCNB
in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally and subject to general equity
principles which may limit the enforcement of certain remedies;
(iv) all material filings and registrations with, and
notifications to, all federal, state and local authorities required on
the part of FCNB for the consummation of the Merger have been made, all
approvals and authorizations of all federal, state and local
authorities required on the part of FCNB for consummation of the Merger
are in full force and effect and all applicable waiting periods have
passed; and
(v) to the actual knowledge of such counsel there is no claim,
litigation, arbitration proceeding, labor dispute or investigation of
any kind pending or threatened against FCNB in any court or before any
federal, state or municipal or governmental agency or instrumentality
relating in any way to the Merger or the Bank Merger.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officials of FCNB or appropriate
governmental officials, (ii) be limited to federal law and the general
corporation laws, and, to the extent applicable, the financial
institutions laws of the State of Maryland, and (iii) incorporate, be
guided by, and be
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interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(b) Securities Letter. FCNB shall have delivered to Harbor a letter,
dated the Effective Time, of Xxxxxxx & Baris, L.L.P., counsel to FCNB, in form
and substance reasonably satisfactory to Harbor and its counsel, to the effect
that such counsel has no reason to believe that the Proxy Statement, as it may
be amended or supplemented, contained an untrue statement of a material fact or
omitted any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, as of the time of the Harbor Shareholder Meeting, provided
that no statement need be made as to any financial statements and other
financial or statistical data or as to materials relating to or supplied by
Harbor or the Harbor Subsidiaries for inclusion in the Proxy Statement).
(e) Fairness Opinion. Harbor shall have received from Trident Financial
Corporation., an opinion dated as of a date immediately prior to the date of the
Proxy Statement, and a supplemental opinion dated as of the Closing Date, to the
effect that the Merger is fair to the shareholders of Harbor from a financial
point of view, provided, however, that the scope of such supplemental opinion
shall be limited to events and circumstances arising subsequent to the date of
the initial opinion.
(f) No Injunction. The shall not be in effect any order, decree or injunction of
a court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated hereby, nor shall there be any
pending proceeding of any agency of competent jurisdiction seeking any of the
foregoing.
(g) Deposit of Funds. Harbor shall have received from the Exchange Agent written
confirmation of receipt by the Exchange Agent from FCNB of funds in an amount
equal to the Acquisition Price.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time:
(a) by mutual written consent of Harbor and FCNB; or
(b) by either FCNB or Harbor at anytime after August 31, 1996, if the Merger
shall not theretofore have been consummated, unless the date reflected in this
Section 8.1(b) shall be extended in writing by the parties hereto;
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(c) by either FCNB or Harbor in the event of (i) the material breach by the
other party of any representation, warranty or agreement contained herein or
(ii) a condition precedent to such party's obligations, as set forth in Article
VII of this Agreement, has not been satisfied or waived (in accordance with
Section 8.4 of this Agreement) by such time as such condition can no longer be
satisfied;
(d) by either of Harbor or FCNB if any governmental or regulatory approval
required for consummation of the Merger and the Bank Merger shall have been
denied by final, non-appealable order, or any such denial shall not have been
appealed within the time available for such appeal, provided, however, that the
denial of any application relating to the Bank Merger shall not entitle Harbor
to terminate this Agreement pursuant to this Section 8.1(d) if, within 15 days
of the later of receipt by FCNB of such final non-appealable order or the
expiration of the time available for appeal of any such denial, FCNB has
notified Harbor of its intention to proceed with the Merger notwithstanding such
denial;
(e) by FCNB, in the exercise of its sole discretion, if holders of in excess of
10.1% of the issued and outstanding shares of Harbor Common Stock validly
exercise dissenters' rights of appraisal in accordance with the applicable
provisions of the MGCL;
(f) by FCNB (i) at any time prior to 45 days from the date hereof, in the event
that the results of its investigations into environmental matters shall not have
been satisfactory to FCNB; or (ii) in the event a material adverse change, as
described in Section 7.2(d) hereof, occurs in the financial condition, results
of operations, business or prospects of Harbor or any Harbor Subsidiary
subsequent to the date of this Agreement;
(g) by FCNB or Harbor, in the event that the Amendment, the Merger and the
Agreement are not approved by the requisite majority of the shareholders of
Harbor at the Harbor Shareholder Meeting.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Harbor or FCNB as provided in Section 8.1 above, this
Agreement shall forthwith become void and there shall be no liability on the
part of either Harbor or FCNB or their respective officers or directors, except
in the event of wilful breach of a material provision of this Agreement.
Notwithstanding the foregoing, the confidentiality obligations of the parties
pursuant to Section 6.1 hereof, and the obligations of the parties pursuant to
Section 6.6 and Section 6.8 hereof, shall survive termination of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken by or on behalf of their respective Boards of Directors, at any
time before or after approval of the Merger by the shareholders of both Harbor
and FCNB; provided, however, that after such approvals no such amendment shall
reduce the value of or change the form of the consideration to be delivered to
each of Harbor's shareholders as contemplated by the Agreement, unless such
amendment is subject to the obtaining of the approval of the amendment by the
shareholders of
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Harbor and such approval is obtained. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
8.4 Waiver. Any term, condition or provision of this Agreement may be
waived at any time by the party which is, or whose shareholders are, entitled to
the benefits thereof, but only by a writing signed on behalf of the waiving
party expressly making such waiver. No failure or delay on the part of either
party hereto to exercise any right or remedy hereunder, whether upon a breach
hereof or otherwise, shall constitute a waiver of such right or remedy or a
modification of any provision of this Agreement.
8.5 Unsolicited Acquisition Proposal. (a) Notwithstanding anything
contained in Section 5.1(k) to the contrary, in the event that Harbor shall
receive prior to the earlier of the Effective Time and the date of termination
of this Agreement in accordance with its terms, an Unsolicited Acquisition
Proposal (as hereinafter defined) which, in the good faith determination of the
Board of Directors of Harbor, the fiduciary duty of the directors under Maryland
law requires that the Board of Directors consider, negotiate, communicate, or
provide information with respect to (collectively "communications"), or approve
or recommend to shareholders such Unsolicited Acquisition Proposal, which such
determination shall be made in consultation with Xxxxxxx Xxxxxxxx Kantarian &
Xxxxxxxxx, P.C., counsel to Harbor, and Harbor's financial advisor, then Harbor
shall be entitled to engage in such communications or, to the extent the
fiduciary duty of the directors so requires, to accept or recommend such
Unsolicited Acquisition Proposal.
(b) In the event that Harbor engages in communications relating to or approves
or recommends an Unsolicited Acquisition Proposal pursuant to Section 8.5(a)
above, Harbor shall not be entitled to terminate this Agreement pursuant to
provisions of Section 8.1(b).
(c) In the event that the Board of Directors of Harbor approves any Unsolicited
Acquisition Proposal, Harbor shall be deemed to have terminated this Agreement
as of the date of such approval. In the event that the Board of Directors of
Harbor recommends any Unsolicited Acquisition Proposal to the shareholders of
Harbor, or if the Board of Directors of Harbor shall fail to recommend the
Merger to the shareholders of Harbor while any unrejected Unsolicited
Acquisition Proposal exists, FCNB shall be deemed to have terminated this
Agreement as of the date of such recommendation or failure to recommend. Upon
any termination pursuant to this Section 8.5(c), Harbor shall, by the earlier of
(i) the ninetieth (90th) day following said termination; or (ii) the date of
closing of such other transaction, pay to FCNB, in cash or by wire transfer, the
sum of Four Hundred Thousand Dollars ($400,000) as a termination fee. Harbor
agrees that it shall cause the acquiror in any such transaction to expressly
assume the obligation of Harbor to make such termination payment to the extent
such obligation has not been satisfied prior to the closing of such transaction.
Notwithstanding anything to the contrary contained herein, the obligations of
Harbor to pay such termination fee and to cause such assumption shall survive
the termination of this Agreement and shall be binding upon Harbor and any
successor or assign of Harbor, whether by merger, consolidation, share purchase
or exchange, asset purchase, or otherwise.
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(d) For purposes of this Section 8.5, an "Unsolicited Acquisition Proposal"
shall mean any proposal, other than the Merger, received by Harbor without
violation of the provisions of Section 5.1(k) hereof (without reference to the
exception thereto) regarding (i) any merger, consolidation, share purchase or
exchange, or purchase and assumption or similar transaction involving Harbor or
Odenton; or (ii) any sale, lease, transfer, pledge, encumbrance or other
disposition, directly or indirectly, of all of the assets of Harbor (including,
without limitation, stock of Odenton) or Odenton. Any proposal relating to any
such transaction made by any party at the direction, suggestion, solicitation,
encouragement, or otherwise as a result of contact between such party and any
investment banker or financial advisor retained by Harbor shall be deemed to be
a proposal solicited by Harbor for purposes of this Section 8.5 and shall not
constitute an Unsolicited Acquisition Proposal, provided, however, that in the
event that any party solicited by Harbor or any of its agents prior to the date
hereof, which submitted a proposal for any such transaction to the Board of
Directors of Harbor which such transaction was rejected by the Board of
Directors, shall, without further contact initiated by Harbor or any investment
banker or financial advisor retained by Harbor, submit a further proposal to the
Board of Directors of Harbor, such further proposal shall not be deemed to have
been solicited by Harbor for purposes of this Section 8.5. Harbor shall
immediately advise FCNB of, and communicate to FCNB the terms of, any such
inquiry or proposal addressed to Harbor or Odenton or of which Harbor or
Odenton, or their respective officers, directors, employees, agents, or
representatives (including, without limitation, any investment banker or
financial advisor) has knowledge. Harbor's Board of Directors shall use its best
efforts to cause its officers, directors, employees, agents and representatives
and Odenton and its officers, directors, employees, agents and representatives
to comply with the requirements of this Section and Section 5.1(k).
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-survival of Representations, Warranties and Agreements. No
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation. Except
as otherwise provided herein, all representations, warranties and agreements in
this Agreement of Harbor and FCNB or in any instrument delivered by Harbor and
FCNB pursuant to this Agreement shall expire at the Effective Time or upon
termination of this Agreement in accordance with its terms.
- 40 -
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly received (i) on the date given if
delivered personally or by telecopier, cable, telegram or telex or (ii) on the
date received if sent by overnight delivery service or if mailed by registered
or certified mail (return receipt requested), to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to FCNB:
A. Xxxxxxx Xxxxxx, President
FCNB Corp
Xxx Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx & Baris, L.L.P.
Xxxxx 000
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
(b) if to Harbor:
Xxxxxx X. Xxxxxxxxxxx
Harbor Investment Corporation
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Copy to:
Xxxxxxx Xxxxx, Esquire
Xxxxxxx Xxxxxxxx Kantarian & Xxxxxxxxx, P.C.
Suite 700
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
9.3 Severability. Any invalidity, illegality or unenforceability of any
provision of this Agreement in any jurisdiction shall not invalidate or render
illegal or unenforceable the remaining provisions hereof in such jurisdiction
and shall not invalidate or render illegal or unenforceable such provision in
any other jurisdiction.
9.4 Headings. The headings of the Articles and Sections of this
Agreement are for convenience of reference only and shall not be deemed to be a
part of this Agreement.
9.5 Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other remedy.
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9.6 Miscellaneous. This Agreement (including exhibits, documents and
instruments referred to herein)
(a) together with all Schedules, exhibits, documents and instruments attached
hereto or required to be delivered herewith, or at or prior to closing,
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof;
(b) is not intended to confer upon any person not a party hereto any rights or
remedies hereunder;
(c) shall not be assigned by operation of law or otherwise, except that FCNB may
without prior notice to or approval by Harbor, assign this Agreement to a
wholly-owned subsidiary of FCNB, provided that no such assignment by FCNB shall
result in a material delay in consummation of the Merger or release FCNB from
its obligation to pay the Purchase Price and Option Price as contemplated by
Section 2.1 hereof;
(d) shall be governed in all respects by the laws of the State of Maryland; and
(e) may be executed in two or more counterparts which together shall constitute
a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be affixed hereto, all as of the date first
written above.
ATTEST: [SEAL] FCNB CORP
/s/ Xxxxx X. Xxxx By: /s/ A. Xxxxxxx Xxxxxx
----------------------- --------------------------------
Name: Xxxxx X. Xxxx Name: A. Xxxxxxx Xxxxxx
Title: Secretary Title: President
ATTEST: [SEAL] HARBOR INVESTMENT CORPORATION
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------ ----------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxxxxxx
Title: Secretary Title: President
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