Agreement and Plan of Merger By and Between Columbia Bancorp and Fulton Financial Corporation July 26, 2005
Exhibit 2.1
Agreement and Plan of Merger
By and Between
Columbia Bancorp and
Xxxxxx Financial Corporation
July 26, 2005
TABLE OF CONTENTS
ARTICLE I — THE MERGER |
2 | |||
Section 1.1 Merger |
2 | |||
Section 1.2 Name |
2 | |||
Section 1.3 Articles of Incorporation |
2 | |||
Section 1.4 Bylaws |
2 | |||
Section 1.5 Directors and Officers |
2 | |||
ARTICLE II — CONVERSION OF SHARES AND EXCHANGE OF STOCK
CERTIFICATES |
2 | |||
Section 2.1 Conversion of Shares |
2 | |||
Section 2.2 Exchange of Stock Certificates |
4 | |||
Section 2.3 Treatment of Outstanding Columbia Options. |
12 | |||
Section 2.4 Reservation of Shares |
14 | |||
Section 2.5 Taking Necessary Action |
14 | |||
Section 2.6 Press Releases, Etc |
14 | |||
Section 2.7 Xxxxxx Common Stock |
14 | |||
Section 2.8 Dissenters’ Rights |
14 | |||
Section 2.9 Certain Actions |
14 | |||
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF COLUMBIA |
15 | |||
Section 3.1 Authority |
15 | |||
Section 3.2 Organization and Standing |
15 | |||
Section 3.3 Subsidiaries |
16 | |||
Section 3.4 Capitalization |
16 | |||
Section 3.5 Charter, Bylaws and Minute Books |
16 | |||
Section 3.6 Financial Statements |
17 | |||
Section 3.7 Absence of Undisclosed Liabilities |
20 | |||
Section 3.8 Absence of Changes |
20 | |||
Section 3.9 Dividends, Distributions and Stock Purchases |
20 | |||
Section 3.10 Taxes |
20 | |||
Section 3.11 Title to and Condition of Assets |
21 | |||
Section 3.12 Contracts. |
21 | |||
Section 3.13 Litigation and Governmental Directives |
22 | |||
Section 3.14 Compliance with Laws; Governmental Authorizations |
23 | |||
Section 3.15 Insurance |
23 | |||
Section 3.16 Financial Institutions Bonds |
23 | |||
Section 3.17 Labor Relations and Employment Agreements |
24 | |||
Section 3.18 Employee Benefit Plans |
24 | |||
Section 3.19 Related Party Transactions |
25 | |||
Section 3.20 No Finder |
25 | |||
Section 3.21 Complete and Accurate Disclosure |
25 | |||
Section 3.22 Environmental Matters |
26 | |||
Section 3.23 Proxy Statement/Prospectus |
26 |
Section 3.24 SEC Filings |
27 | |||
Section 3.25 Reports |
27 | |||
Section 3.26 Loan Portfolio of The Columbia Bank. |
27 | |||
Section 3.27 Investment Portfolio |
28 | |||
Section 3.28 Regulatory Examinations. |
28 | |||
Section 3.29 Regulatory Agreements and Matters |
28 | |||
Section 3.30 Beneficial Ownership of Xxxxxx Common Stock |
29 | |||
Section 3.31 Fairness Opinion |
29 | |||
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF FULTON |
29 | |||
Section 4.1 Authority |
29 | |||
Section 4.2 Organization and Standing |
30 | |||
Section 4.3 Capitalization |
30 | |||
Section 4.4 Articles of Incorporation and Bylaws |
30 | |||
Section 4.5 Subsidiaries |
30 | |||
Section 4.6 Financial Statements |
31 | |||
Section 4.7 Absence of Undisclosed Liabilities |
34 | |||
Section 4.8 Absence of Changes; Dividends, Etc. |
34 | |||
Section 4.9 Litigation and Governmental Directives |
34 | |||
Section 4.10 Compliance with Laws; Governmental Authorizations |
34 | |||
Section 4.11 Complete and Accurate Disclosure |
34 | |||
Section 4.12 Labor Relations |
35 | |||
Section 4.13 Employee Benefit Plans |
35 | |||
Section 4.14 Environmental Matters |
35 | |||
Section 4.15 SEC Filings |
36 | |||
Section 4.16 Proxy Statement/Prospectus |
36 | |||
Section 4.17 Regulatory Approvals |
36 | |||
Section 4.18 No Finder |
36 | |||
Section 4.19 Taxes |
36 | |||
Section 4.20 Title to and Condition of Assets |
37 | |||
Section 4.21 Contracts |
37 | |||
Section 4.22 Insurance |
37 | |||
Section 4.23 Reports |
37 | |||
Section 4.24 Regulatory Agreements and Matters |
38 | |||
Section 4.25 Regulatory Examinations |
38 | |||
ARTICLE V — COVENANTS OF COLUMBIA |
39 | |||
Section 5.1 Conduct of Business |
39 | |||
Section 5.2 Best Efforts |
42 | |||
Section 5.3 Access to Properties and Records |
42 | |||
Section 5.4 Subsequent Financial Statements |
42 | |||
Section 5.5 Update Schedules |
42 | |||
Section 5.6 Notice |
42 | |||
Section 5.7 No Solicitation. |
42 |
-ii-
Section 5.8 Affiliate Letters |
45 | |||
Section 5.9 No Purchases or Sales of Xxxxxx Common Stock
During Price Determination Period |
45 | |||
Section 5.10 Dividends |
46 | |||
Section 5.11 Internal Controls. |
46 | |||
Section 5.12 Certain Matters, Certain Revaluations, Changes and Adjustments. |
46 | |||
Section 5.13 Other Policies |
47 | |||
Section 5.14 Other Transactions |
47 | |||
Section 5.15 Transaction Expenses of Columbia. |
47 | |||
ARTICLE VI — COVENANTS OF FULTON |
48 | |||
Section 6.1 Best Efforts |
48 | |||
Section 6.2 Access to Properties and Records |
49 | |||
Section 6.3 Subsequent Financial Statements |
49 | |||
Section 6.4 Update Schedules |
49 | |||
Section 6.5 Notice |
49 | |||
Section 6.6 No Purchase or Sales of Xxxxxx Common Stock During
Price Determination Period |
50 | |||
Section 6.7 Assumption of Columbia Trust Preferred Securities |
50 | |||
Section 6.8 Employment Arrangements. |
50 | |||
Section 6.9 Insurance; Indemnification. |
52 | |||
Section 6.10 Appointment of Fulton Director |
53 | |||
Section 6.11 Continuation of The Columbia Bank’s Structure,
Name and Directors. |
53 | |||
ARTICLE VII — CONDITIONS PRECEDENT |
54 | |||
Section 7.1 Common Conditions |
54 | |||
Section 7.2 Conditions Precedent to Obligations of Fulton |
56 | |||
Section 7.3 Conditions Precedent to the Obligations of Columbia |
60 | |||
ARTICLE VIII — TERMINATION, AMENDMENT AND WAIVER |
62 | |||
Section 8.1 Termination |
62 | |||
Section 8.2 Effect of Termination. |
63 | |||
Section 8.3 Amendment |
64 | |||
Section 8.4 Waiver |
64 | |||
ARTICLE IX — CLOSING AND EFFECTIVE TIME |
64 | |||
Section 9.1 Closing |
64 | |||
Section 9.2 Effective Time |
65 | |||
ARTICLE X — NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES |
65 | |||
Section 10.1 No Survival |
65 | |||
ARTICLE XI — GENERAL PROVISIONS |
65 | |||
Section 11.1 Expenses |
65 | |||
Section 11.2 Other Mergers and Acquisitions |
65 | |||
Section 11.3 Notices |
65 |
-iii-
Section 11.4 Counterparts |
66 | |||
Section 11.5 Governing Law |
66 | |||
Section 11.6 Parties in Interest |
66 | |||
Section 11.7 Disclosure Schedules. |
67 | |||
Section 11.8 Entire Agreement |
67 | |||
Section 11.9 Definitions |
67 |
-iv-
INDEX OF SCHEDULES
Schedule 2.3
|
Columbia Options | |
Schedule 3.3
|
Other Columbia Subsidiaries | |
Schedule 3.6
|
Financial Statements | |
Schedule 3.7
|
Undisclosed Liabilities | |
Schedule 3.8
|
Changes | |
Schedule 3.9
|
Dividends, Distributions and Stock Purchases | |
Schedule 3.10
|
Taxes | |
Schedule 3.11
|
Title to and Condition of Assets | |
Schedule 3.12
|
Contracts | |
Schedule 3.13
|
Litigation and Governmental Directives | |
Schedule 3.14
|
Compliance with Laws; Governmental Authorizations | |
Schedule 3.15
|
Insurance | |
Schedule 3.16
|
Financial Institutions Bonds | |
Schedule 3.17
|
Labor Relations and Employment Agreements | |
Schedule 3.18
|
Employee Benefit Plans | |
Schedule 3.19
|
Related Party Transactions | |
Schedule 3.20
|
Finders | |
Schedule 3.22
|
Environmental Matters | |
Schedule 3.26
|
Loan Portfolio | |
Schedule 3.27
|
Investment Portfolio | |
Schedule 3.29
|
Regulatory Agreements | |
Schedule 4.5
|
Subsidiaries | |
Schedule 4.6
|
Financial Statements | |
Schedule 4.7
|
Undisclosed Liabilities | |
Schedule 4.8
|
Dividends, Distributions and Stock Purchases | |
Schedule 4.9
|
Litigation and Governmental Directives | |
Schedule 4.10
|
Compliance with Laws; Governmental Authorizations | |
Schedule 4.14
|
Environmental Matters | |
Schedule 4.19
|
Taxes | |
Schedule 5.1
|
Conduct of Business | |
Schedule 5.1(xxi)
|
Pending and Contemplated Applications |
-v-
INDEX OF EXHIBITS
Exhibit A
|
Form of Warrant Agreement | |
Exhibit B
|
Form of Warrant | |
Exhibit C
|
Form of Voting Agreement | |
Exhibit D
|
Form of Employment Agreements | |
Exhibit E
|
Form of Opinion of Columbia’s Counsel | |
Exhibit F
|
Form of Opinion of Xxxxxx’x Counsel |
-vi-
Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER made as of the 26th day of July, 2005, by and between XXXXXX
FINANCIAL CORPORATION, a Pennsylvania business corporation having its administrative headquarters
at Xxx Xxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxxx, Xxxxxxxxxxxx 00000 (“Fulton”), and COLUMBIA BANCORP,
a Maryland corporation having its administrative headquarters at 0000 Xxxxxxxx Xxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 (“Columbia”).
BACKGROUND:
Xxxxxx is a financial holding company registered under the Bank Holding Company Act of 1956,
as amended (the “BHC Act”). Columbia is a bank holding company registered under the BHC Act and is
the parent of The Columbia Bank, a Maryland trust company (“The Columbia Bank”). In addition to
The Columbia Bank, Columbia has three 100% directly owned subsidiaries: Columbia Bancorp Statutory
Trust I, Columbia Bancorp Statutory Trust II and Columbia Bancorp Statutory Trust III, which were
formed in connection with Columbia’s issuance of trust preferred securities (the “Columbia Trust
Preferred Securities”). The Columbia Bank has four 100% directly owned subsidiaries: XxXxxxxx
Enterprises, Inc., Xxxxxx I, LLC and Xxxxxx XX, LLC, which are used primarily to manage properties
acquired through foreclosure, and Columbia Leasing, Inc., which is an inactive commercial leasing
company. The Columbia Bank and all other wholly-owned subsidiaries of Columbia and The Columbia
Bank are collectively referred to herein as the “Columbia Subsidiaries”. The Boards of Directors of
Fulton and Columbia have determined that it is in the best interests of Fulton and Columbia,
respectively, to merge with each other, resulting in The Columbia Bank becoming a subsidiary of
Fulton. Subject to the terms and conditions of this Agreement, the foregoing transaction will be
accomplished by means of a merger (the “Merger”) in which (i) Columbia will be merged with and into
Fulton, (ii) Fulton will survive the Merger, and (iii) all of the outstanding shares of the common
stock of Columbia, $ .01 par value per share (“Columbia Common Stock”), will be converted into cash
and shares of the common stock of Fulton, par value $2.50 per share, and the associated Fulton
Rights (as such term is defined in Section 2.1 herein) (“Xxxxxx Common Stock”) on the terms
described in this Agreement.
In connection with the execution of this Agreement, the parties are to enter into a Warrant
Agreement in substantially the form of Exhibit A attached hereto (the “Warrant Agreement”),
which provides for the delivery by Columbia of a warrant in substantially the form of Exhibit
B attached hereto (the “Warrant”) entitling Fulton to purchase shares of Columbia Common
Stock in certain circumstances. In addition, Columbia has obtained voting agreements in the form
of Exhibit C attached hereto, from the directors and executive officers listed on
Exhibit C, who have agreed to vote shares of voting capital stock beneficially owned by
them in Columbia in favor of this Agreement, the Merger and, to the extent required, all
transactions incident thereto (collectively, the “Voting Agreements”).
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants contained herein and intending to be
legally bound, the parties hereby agree as follows:
ARTICLE I — THE MERGER
Subject to the terms and conditions of this Agreement, Columbia shall merge with and into
Fulton in accordance with the following:
Section 1.1 Merger. At the Effective Time (as defined in Section 9.2 herein) (i) Columbia
shall merge with and into Fulton pursuant to the provisions of the Pennsylvania Business
Corporation Law of 1988, as amended (the “BCL”), and the Maryland General Corporation Law (the
"GCL”), whereupon the separate existence of Columbia shall cease, and Fulton shall be the surviving
corporation (hereinafter sometimes referred to as the “Surviving Corporation”), and (ii)
all of the outstanding shares of Columbia Common Stock will be converted into Xxxxxx Common Stock and cash in accordance with the
provisions of Article II hereof.
Section 1.2 Name. The name of the Surviving Corporation shall be “Xxxxxx Financial
Corporation”. The address of the principal office of the Surviving Corporation will be Xxx Xxxx
Xxxxxx, X.X. Xxx 0000, Xxxxxxxxx, Xxxxxxxxxxxx 00000.
Section 1.3 Articles of Incorporation. The Articles of Incorporation of the Surviving
Corporation shall be the Articles of Incorporation of Fulton as in effect at the Effective Time.
Section 1.4 Bylaws. The Bylaws of the Surviving Corporation shall be the Bylaws of Fulton as
in effect at the Effective Time.
Section 1.5 Directors and Officers. The directors and officers of the Surviving Corporation
shall be the directors and officers of Fulton in office at the Effective Time. Each of such
directors and officers shall serve until such time as his successor is duly elected and has
qualified.
ARTICLE II — CONVERSION OF SHARES AND EXCHANGE OF STOCK CERTIFICATES
Section 2.1 Conversion of Shares. At the Effective Time (as defined in Section 9.2 herein)
the shares of Columbia Common Stock then outstanding shall be converted into shares of Xxxxxx
Common Stock and cash, as follows:
(a) Conversion of Columbia Shares. Except as set forth in subsection (d)
below, each share of Columbia Common Stock (a “Columbia Share”) issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holders thereof, cease to be outstanding and be cancelled and
extinguished and converted into the right to receive, upon the surrender of the share
certificates evidencing the Columbia Shares, the Xxxxxx Stock Consideration or the Cash
Consideration, or a combination of Fulton Stock Consideration and the Cash Consideration,
without any interest thereon, as specified in this Article II (the “Merger
Consideration”) in accordance with Section 2.2 herein.
(b) Definitions. For purposes hereof, the following terms have the following
respective meanings:
-2-
“Cash Consideration” means an amount in cash payable in the Merger at a rate of
$42.48 per Columbia Share.
“Conversion Ratio” means 2.325.
“Outstanding Shares” means the aggregate number of Columbia Shares outstanding
immediately prior to the Effective Time, but excluding Columbia Shares to be
cancelled pursuant to Section 2.1(d), which number will not be greater than the
number of shares outstanding on the date of this Agreement (except as permitted in
Section 5.1 herein)
“Fulton Rights” means rights to purchase common stock of Fulton distributed to
holders of common stock of Fulton pursuant to a Rights Agreement dated June 20, 1989,
as amended and restated as of April 27, 1999 (the “Xxxxxx Rights Agreement”).
“Fulton Stock Consideration” means that number of shares of Xxxxxx Common Stock
payable in the Merger at a rate of one share of Xxxxxx Common Stock multiplied by
the Conversion Ratio per Columbia Share. In the event that Fulton shall at any time
before the Effective Time: (i) issue a dividend payable in shares of Xxxxxx Common
Stock, (ii) combine the outstanding shares of Xxxxxx Common Stock into a smaller
number of shares, or (iii) subdivide the outstanding shares of Xxxxxx Common Stock
into a greater number of shares, then the Conversion Ratio shall be proportionately
adjusted (calculated to four decimal places), so that each Columbia stockholder
shall receive at the Effective Time, in exchange for his shares of Columbia Common
Stock, the number of shares of Xxxxxx Common Stock as would then have been owned by
him if the Effective Time had occurred before the record date of such event. For
example, if Fulton were to declare a five percent (5%) stock dividend after the date
of this Agreement and if the record date for that stock dividend were to occur
before the Effective Time, the Conversion Ratio would be adjusted from 2.325 to
2.413 shares. In the event that between the date of this Agreement, and the
Effective Time, the issued and outstanding shares of Xxxxxx Common Stock shall have
been effected or changed into a different number of shares or a different class of
shares as a result of a stock split, reverse stock split, stock dividend, spin-off,
extraordinary dividend, recapitalization, reclassification, subdivision, combination
of shares or other similar transaction, or
there shall have been a record date declared for any such matter, the Xxxxxx Stock
Consideration shall be proportionately adjusted.
“Stock Test Amount” means the product of (i) the number of Outstanding Shares to be
converted into Fulton Stock Consideration (determined after taking into account
adjustments under Section 2.2(b)(i)), multiplied by (ii) the Conversion Ratio,
multiplied by (iii) the Xxxxxx Share Value.
“Cash Test Amount” means the product of (i) the number of Outstanding Shares to be
converted into the right to receive the Cash Consideration (determined
-3-
after
taking into account adjustments under Section 2.2(b)(i)), multiplied by (ii) $42.48.
"Fulton Share Value” means the lowest price at which a share of Xxxxxx Common Stock
trades on NASDAQ on the Effective Date.
(c) No Fractional Shares. No fractional shares of Xxxxxx Common Stock shall be
issued in connection with the Merger. In lieu of the issuance of any fractional share to
which he would otherwise be entitled, each former stockholder of Columbia shall receive in
cash an amount equal to the fair market value of his fractional interest, which fair market
value shall be determined by multiplying such fraction by $42.48.
(d) Cancelled Columbia Shares. Notwithstanding the provisions of Section
2.1(a) herein, the following shares of Columbia Common Stock shall not be converted into
Xxxxxx Common Stock and shall be cancelled at the Effective Time: (i) shares of Columbia
Common Stock then owned by Fulton or any direct or indirect subsidiary of Fulton (except for
trust account shares or shares acquired in connection with debts previously contracted); and
(ii) shares of Columbia Common Stock owned by Columbia or any direct or indirect subsidiary
of Columbia (except for trust account shares or shares acquired in connection with debts
previously contracted).
(e) Closing Market Price. For purposes of this Agreement, the “Closing Market Price”
shall be the average of the per share closing bid and asked prices for Xxxxxx Common Stock,
calculated to two decimal places, for the ten (10) consecutive trading days immediately
preceding the date which is two (2) business days before the Effective Date (as such term is
defined in Section 9.2 herein), as reported on the National Market System of the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”), the foregoing
period of ten (10) trading days being hereinafter sometimes referred to as the “Price
Determination Period” (For example, if January 15, 2006 were to be the Effective Date, then
the Price Determination Period would be December 29-30, 2005 and January 2-6 and January 9-11, 2006).
In the event that NASDAQ shall fail to report closing bid and asked prices for Xxxxxx Common
Stock for any trading day during the Price Determination Period, the closing bid and asked
prices for that day shall be equal to the average of the closing bid and asked prices as
quoted: (i) by X. X. Xxxxxxxxx & Company, Inc. and by Xxxx, Xxxx & Co.; or (ii) in the event
that both of these firms are
not then making a market in Xxxxxx Common Stock, by two brokerage firms then making a
market in Xxxxxx Common Stock to be selected by Fulton and approved by Columbia.
Section 2.2 Exchange of Stock Certificates. Columbia Common Stock certificates shall be
exchanged for certificates evidencing the Xxxxxx Stock Consideration and the Cash Consideration in
accordance with the following procedures:
(a) Election Procedure. Each holder of Columbia Shares (other than holders of
Columbia Shares to be cancelled as set forth in Section 2.1(d)) shall have the right to
submit a request specifying either that such holder’s Columbia Shares shall be converted
into the
-4-
Fulton Stock Consideration, Cash Consideration or a combination of Cash
Consideration and Fulton Stock Consideration, without interest, in the Merger in accordance
with the following procedures:
(i) Each holder of Columbia Shares may specify in a request made in accordance
with the provisions of this Section 2.2 (herein called an “Election”) to either: (i)
convert each Columbia Share owned by such holder into the right to receive the
Xxxxxx Stock Consideration in the Merger (a “Stock Election”); (ii) convert each
Columbia Share owned by such holder into the right to receive the Cash Consideration
in the Merger (a “Cash Election”); or (iii) convert a portion of the Columbia Shares
owned by such holder into the right to receive the Cash Consideration in the Merger,
and a portion of the Columbia Shares owned by such holder into the right to receive
the Xxxxxx Stock Consideration in the Merger, in such ratio of Fulton Stock
Consideration to Cash Consideration of 90%/10% 80%/20%, 70%/30%, 60%/40%, 50%/50%,
40%/60%, 30%/70%, 20%/80%, 10%/90% (a “Cash/Stock Election”). A Form of Election (as
defined below) shall be included with each copy of the Proxy Statement/Prospectus
(as defined in Section 6.1(b)) mailed to stockholders of Columbia in connection with
the meeting of stockholders called to consider the approval of this Agreement.
Fulton and Columbia shall each use its reasonable best efforts to mail or otherwise
make available the Form of Election to all persons who become holders of Columbia
Shares during the period between the record date for such stockholder meeting and
the Election Deadline (as defined in Section 2.2(a)(iv)).
(ii) Fulton shall prepare a form (the “Form of Election”), which shall be in
form and substance acceptable to Columbia, pursuant to which each holder of Columbia
Shares, no later than at the close of business on the Election Deadline, may make an
Election and which shall be mailed to the Columbia stockholders in accordance with
Section 2.2(a)(i) so as to permit Columbia’s stockholders to exercise their right to
make an Election on or prior to the Election Deadline.
(iii) Holders of record of Columbia Shares who hold such shares as nominees,
trustees, or in other representative capacities may submit multiple Forms of
Election, provided that such representative certifies that each Form of
Election covers all Columbia Shares held by such representative for a
particular beneficial owner.
(iv) Not later than the filing of the Proxy Statement/Prospectus with the
Securities and Exchange Commission (the “SEC”), as contemplated in Section 6.1(b)
hereof, Fulton shall appoint Xxxxxx Financial Advisors, National Association, as the
person to receive Forms of Election and to act as exchange agent under this
Agreement (the “Exchange Agent”). Any Columbia stockholder’s Election shall have
been made properly only if the Exchange Agent shall have received, by 5:00 p.m.
local time in the city in which the principal office of such Exchange Agent is
located, on the date of the Election Deadline, a Form of Election properly completed
and signed and accompanied by certificates
-5-
for the Columbia Shares to which such
Form of Election relates (or by an appropriate guarantee of delivery of such
certificates, as set forth in such Form of Election, from a member of any registered
national securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States provided such
certificates are in fact delivered to the Exchange Agent by the time required in
such guarantee of delivery). Failure to deliver Columbia Shares covered by such a
guarantee of delivery within the time set forth on such guarantee shall be deemed to
invalidate any otherwise properly made Election. As used herein, “Election
Deadline” means the date announced by Fulton (which date shall be agreed upon by
Columbia), as the last day on which Forms of Election will be accepted, which date
shall be no more than ten (10) business days before the Effective Time. In the
event this Agreement shall have been terminated prior to the Effective Time, the
Exchange Agent shall immediately return all Forms of Election and certificates for
Columbia Shares to the appropriate Columbia stockholders.
(v) Any Columbia stockholder may at any time prior to the Election Deadline
change his Election by written notice received by the Exchange Agent prior to the
Election Deadline accompanied by a revised Form of Election properly completed and
signed.
(vi) Any Columbia stockholder may, at any time prior to the Election Deadline,
revoke his Election by written notice received by the Exchange Agent prior to the
Election Deadline or by withdrawal prior to the Election Deadline of his
certificates for Columbia Shares, or of the guarantee of delivery of such
certificates, previously deposited with the Exchange Agent. All Elections shall be
revoked automatically if the Exchange Agent is notified in writing by Fulton or
Columbia that this Agreement has been terminated. Any Columbia stockholder who
shall have deposited certificates for Columbia Shares with the Exchange Agent shall
have the right to withdraw such certificates by written notice received by the
Exchange Agent prior to the Election Deadline and thereby revoke his Election as of
the Election Deadline if the Merger shall not have been consummated prior thereto.
(vii) Fulton and Columbia shall have the right to make rules, not inconsistent
with the terms of this Agreement, governing the validity of the Forms of Election,
the manner and extent to which Elections are to be taken into account in making the
determinations prescribed by Section 2.2, the issuance and delivery of certificates
for Xxxxxx Common Stock into which Columbia Shares are converted in the Merger and
the payment of cash for Columbia Shares converted into the right to receive the Cash
Consideration in the Merger.
(b) Issuance of Fulton Stock Consideration and Payment of Cash Consideration;
Proration. The manner in which each Columbia Share (except Columbia Shares to be
cancelled as set forth in Section 2.1(d)) shall be converted into the Xxxxxx Stock
Consideration, the Cash Consideration or the right to receive a combination of Fulton
-6-
Stock
Consideration and Cash Consideration at the Effective Time shall be as set forth in this
Section 2.2(b) subject to the provisions of Section 2.2(b)(i)(A).
(i) As is more fully set forth below, the number of Columbia Shares to be converted into
the right to receive the Cash Consideration in the Merger pursuant to this Agreement
shall not exceed fifty percent (50%) of all Outstanding Shares (the “Maximum Cash
Percentage”) and shall not be less than twenty percent (20%) of all Outstanding
Shares (the “Minimum Cash Percentage”); provided, however, that for federal income
tax purposes, it is intended that the Merger should qualify as a reorganization
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and, notwithstanding anything to
the contrary contained herein, in order that the Merger will not fail to satisfy
continuity of interest requirements under applicable federal income tax principles
relating to reorganizations under Section 368(a) of the Code, as reasonably
determined by Barley Xxxxxx LLC, Fulton shall increase the number of Outstanding
Shares that will be converted into the Xxxxxx Stock Consideration and reduce the
number of Outstanding Shares that will be converted into the right to receive the
Cash Consideration to the extent, if any, necessary to cause the Stock Test Amount
to exceed the Cash Test Amount by at least $100.00 provided, however, that, solely
for purposes of determining whether the Stock Test Amount exceeds the Cash Test
Amount, shares issuable under Fulton Stock Options issued under Section 2.3 and cash
paid for Columbia Options pursuant to Section 2.3 shall be disregarded.
(ii) If the percentage of Outstanding Shares for which a Cash Election is made
(including the cash portion of any Cash/Stock Elections) exceeds the Minimum Cash
Percentage and is less than the Maximum Cash Percentage, all Elections shall be
honored as submitted and all Non-Electing Shares shall be converted into the Cash
Consideration until the Maximum Cash Percentage is reached and thereafter into
Fulton Stock Consideration.
(iii) If the percentage of Outstanding Shares for which a Cash Election is made
(including the cash portion of any Cash/Stock Elections) exceeds the Maximum Cash
Percentage: Each Columbia Share for which the holder made a Stock Election, the
portion of each Cash/Stock Election electing Fulton Stock
Consideration (collectively, the “Aggregate Stock Elections”) and each
Non-Electing Share shall be converted in the Merger into the Xxxxxx Stock
Consideration. Each Columbia Share for which a Cash Election has been received and
the portion of a Cash/Stock Election electing Cash Consideration (collectively, the
“Aggregate Cash Elections”) shall be converted into the right to receive Cash
Consideration and Fulton Stock Consideration in the following manner:
(A) Each Columbia stockholder shall have the Pro-rated Cash Percentage
of the Columbia Shares for which he or she elected Cash Consideration
(including the cash portion of any Cash/Stock Election) converted into the
Cash Consideration;
-7-
(B) Each Columbia stockholder shall have the Remaining Stock Percentage
of the Columbia Shares for which he or she elected Cash Consideration
(including the portion of any Cash/Stock Election electing Cash
Consideration) converted into the Xxxxxx Stock Consideration; and
(C) For the purposes of the foregoing:
“Aggregate Cash Election Percentage” shall mean the percentage of
Outstanding Shares represented by the Aggregate Cash Elections.
“Pro-rated Cash Percentage” shall mean the percentage determined by
the following formula:
1 — (Aggregate Cash Election Percentage — 50%)/Aggregate Cash
Election Percentage
“Remaining Stock Percentage” shall mean the percentage determined by
subtracting the Pro-rated Cash Percentage from 100%.
(iv) If the percentage of Outstanding Shares for which a Cash Election is made
(including the cash portion of any Cash/Stock Elections) is less than the Minimum
Cash Percentage: Each Columbia Share for which the Aggregate Cash Elections have
been made and each Non-Electing Share shall be converted in the Merger into the Cash
Consideration. Each Columbia Share for which the Aggregate Stock Elections have
been made shall be converted into the right to receive the Cash Consideration and
Fulton Stock Consideration in the following manner:
(A) Each Columbia Stockholder shall have the Pro-rated Stock Percentage
of the Columbia Shares for which he or she elected Fulton Stock Election converted
into the Xxxxxx Stock Consideration;
(B) Each Columbia Stockholder shall have the Remaining Cash Percentage
of the Columbia Shares for which he or she elected Xxxxxx Stock Consideration
(including the portion of any Cash/Stock Election electing Xxxxxx Stock
Consideration) converted into the Cash Consideration; and
(C) For the purposes of the foregoing:
“Aggregate Stock Election Percentage” shall mean the percentage of
Outstanding Shares represented by the Aggregate Stock Elections.
“Pro-rated Stock Percentage” shall mean the percentage determined by
the following formula:
-8-
1 — (Aggregate Stock Election Percentage — 80%)/Aggregate
Stock Election Percentage
“Remaining Cash Percentage” shall mean the percentage determined by
subtracting the Pro-rated Stock Percentage from 100%.
(v)
If Non-Electing Shares are not converted under Sections (i) — (iv) above, the
Exchange Agent shall convert each Non-Electing Share into the Cash Consideration.
(vi) For the purposes of this Section 2.2, Outstanding Shares as to which an
Election is not in effect at the Election Deadline shall be called “Non-Electing
Shares.” If Xxxxxx shall determine that any Election is not properly made with
respect to any Columbia Shares, such Election shall be deemed to be not in effect,
and the Columbia Shares covered by such Election shall, for purposes hereof, be
deemed to be Non-Electing Shares. Xxxxxx, Columbia and the Exchange Agent shall
have no obligation to notify any person of any defect in any Form of Election
submitted to the Exchange Agent.
(vii) The Exchange Agent shall make all computations contemplated by this
Section 2.2 and all such computations shall be conclusive and binding on the holders
of Columbia Shares absent manifest error.
(c) Issuance of Xxxxxx Stock Consideration.
(i) Immediately prior to the Effective Time, Xxxxxx shall deliver to the
Exchange Agent, in trust for the benefit of the holders of Columbia Shares,
certificates representing an aggregate number of shares of Xxxxxx Common Stock as
nearly as practicable equal to the number of shares to be converted into Xxxxxx
Common Stock as determined in Section 2.2(b)
(ii) As soon as practicable following the Effective Time, each holder of
Columbia Shares converted into Xxxxxx Stock Consideration pursuant to Article II,
upon proper surrender to the Exchange Agent with a properly completed Letter of
Transmittal (to the extent not previously surrendered with a Form of Election ) of
one or more certificates for such Columbia Shares for cancellation, shall be
entitled to receive (and the Exchange Agent shall deliver) certificates representing
the number of shares of Xxxxxx Common Stock into which such Columbia Shares shall
have been converted in the Merger.
(iii) No dividends or distributions that have been declared, if any, will be
paid to persons entitled to receive certificates for shares of Xxxxxx Common Stock
until such persons surrender their certificates for Columbia Shares, at which time all such dividends and
distributions shall be paid. In no event shall the persons entitled to receive such
dividends be entitled to receive interest on such dividends. If any certificate for
such Xxxxxx Common Stock is to be issued in a name other than that in which the
-9-
certificate surrendered in exchange therefor is registered, it shall be a condition
of such exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer taxes or other taxes required by reason of issuance in a name
other than the registered holder of the certificate surrendered, or shall establish
to the satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Columbia Shares for any Xxxxxx Common Stock or
dividends thereon delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(d) Payment of Cash Consideration. Immediately prior to the Effective Time,
Xxxxxx shall deposit with the Exchange Agent, in trust for the benefit of the holders of
Columbia Shares, an amount in cash equal to the Cash Consideration to be paid to holders of
Columbia Shares to be converted into the right to receive the Cash Consideration as
determined in Section 2.2(b). As soon as practicable following the Effective Time, the
Exchange Agent shall distribute to holders of Columbia Shares converted into the right to
receive the Cash Consideration and determined in accordance with Section 2.2(b), upon proper
surrender to the Exchange Agent (to the extent not previously surrendered with a Form of
Election) of one or more certificates for such Columbia Shares for cancellation, a bank
check for an amount equal to the Cash Consideration multiplied by the number of Columbia
Shares to converted. In no event shall the holder of any such surrendered certificates be
entitled to receive interest on any of the Cash Consideration to be received in the Merger.
If such check is to be issued in the name of a person other than the person in whose name
the certificates surrendered for exchange therefor are registered, it shall be a condition
of the exchange that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of issuance of such check to a person other than
the registered holder of the certificates surrendered, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto shall be
liable to a holder of Columbia Shares for any
amount paid to a public official pursuant to any applicable abandoned property, escheat
or similar law.
(e) Letter of Transmittal. Xxxxxx will instruct the Exchange Agent to mail to
each holder of record of Columbia Shares who has not previously surrendered such holder’s
certificates with a validly executed Form of Election as soon as reasonably practical after
the Effective Time, (i) a Letter of Transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such holder’s certificates shall pass, only upon
proper delivery of the certificates to the Exchange Agent and shall be in such form and have
such other provisions as shall be agreed upon by Columbia prior to the Effective Time) and
(ii) instructions for use in effecting the surrender of certificates in exchange for the
Merger Consideration (the “Letter of Transmittal”).
-10-
(f) Missing Certificates.
(i) If any holder of Columbia Shares convertible into the right to receive the
Merger Consideration is unable to deliver the certificates which represent such
shares, the Exchange Agent shall deliver to such holder the Merger Consideration to
which the holder is entitled for such shares upon presentation of the following:
(A) evidence to the reasonable satisfaction of Xxxxxx that any such
certificate has been lost, wrongfully taken or destroyed;
(B) such security or indemnity as may be reasonably requested by Xxxxxx
in accordance with industry standards to indemnify and hold harmless Xxxxxx
and the Exchange Agent; and
(C) evidence satisfactory to Xxxxxx that such person is the owner of
the shares theretofore represented by each certificate claimed to be lost,
wrongfully taken or destroyed and that the holder is the person who would be
entitled to present such certificate for payment pursuant to this Agreement.
(ii) Xxxxxx shall receive any remaining Cash Consideration and Xxxxxx Stock
Consideration on deposit with the Exchange Agent on the date which is one year after
the Effective Date, and any stockholder of Columbia who has not surrendered his
certificate(s) to the Exchange Agent prior to such time shall be entitled to receive
the Merger Consideration without interest upon the surrender of such certificate(s)
to Xxxxxx, subject to applicable escheat or abandoned property laws.
(iii) In the event that any certificates for Columbia Shares have not been surrendered for exchange
in accordance with this Section on or before the first anniversary of the Effective
Time, Xxxxxx may at any time thereafter, with or without notice to the holders of
record of such certificates, sell for the accounts of any or all of such holders any
or all of the shares of Xxxxxx Common Stock which such holders are entitled to
receive under Article II hereof (the “Unclaimed Shares”). Any such
sale may be made by public or private sale or sale at any broker’s board or on
any securities exchange in such manner and at such times as Xxxxxx shall determine.
If, in the opinion of counsel for Xxxxxx, it is necessary or desirable, any
Unclaimed Shares may be registered for sale under the Securities Act of 1933, as
amended (the “1933 Act”), and applicable state laws. Xxxxxx shall not be obligated
to make any sale of Unclaimed Shares if it shall determine not to do so, even if
notice of the sale of the Unclaimed Shares has been given. The net proceeds of any
such sale of Unclaimed Shares shall be held for holders of the unsurrendered
certificates for Columbia Shares whose Unclaimed Shares have been sold, to be paid to them upon
surrender of the certificates for shares of Xxxxxx Common Stock. From and after any
such sale, the sole right of the holders of the unsurrendered certificates for Columbia Shares whose
Unclaimed Shares have been sold shall be the right to collect the net sale proceeds
held by Xxxxxx for their respective accounts, and such holders shall not be entitled
to receive any interest on such net sale proceeds held
-11-
by Xxxxxx. If outstanding
certificates are not surrendered or the payment for them is not claimed prior to the
date on which such payments would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted by
abandoned property laws, escheat laws and any other applicable law, become the
property of Xxxxxx (and to the extent not in its possession shall be paid over to
it), free and clear of all claims or interest of any person previously entitled to
such claims. Notwithstanding the foregoing, none of Xxxxxx, Columbia, the Exchange
Agent or any other person shall be liable to any former holder of Columbia Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) Withholding Rights. Xxxxxx shall be entitled to deduct and withhold, or
cause the Exchange Agent to deduct and withhold, from funds provided by the holder or from
the consideration otherwise payable pursuant to this Agreement to any holder of Columbia
Shares, the minimum amounts (if any) that Xxxxxx is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of tax law. To the
extent that amounts are so withheld by Xxxxxx, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of Columbia Shares in
respect of which such deduction and withholding was made by Xxxxxx.
(h) Expenses. All costs and expenses associated with the foregoing surrender
and exchange procedure shall be borne by Xxxxxx.
Section 2.3 Treatment of Outstanding Columbia Options.
(a) At the Effective Time, each option (collectively, “Columbia Options”) to purchase
shares of Columbia Common Stock that (i) is outstanding at the Effective Time, (ii) has been
granted pursuant to Columbia’s 1987 Stock Option Plan, as amended, 1990 Director Stock
Option Plan, as amended and 1997 Stock Option Plan, as amended (collectively, the “Columbia
Stock Option Plans”); and (iii) would otherwise survive
the Effective Time, in the absence of the transactions contemplated by this Agreement,
shall, at the election of the holder of a Columbia Option made on or before the Election
Deadline, either (A) be entitled to cash in an amount equal to the number of shares of
Columbia Common Stock covered by such Columbia Option multiplied by the excess, if any, of
$42.48 over the exercise price per share of such Columbia Option or (B) be assumed by Xxxxxx
through the grant of an option to acquire shares of Xxxxxx Common Stock on the terms set
forth below (each Columbia Option, as assumed, a “Xxxxxx Stock Option”). In the absence of
an election by the holder of a Columbia Option and subject to the next sentence, Columbia
Options held by such holder shall be converted to cash .
(b) A Xxxxxx Stock Option shall be a stock option to acquire shares of Xxxxxx Common
Stock with the following terms: (i) the number of shares of Xxxxxx Common Stock which may
be acquired pursuant to such Xxxxxx Stock Option shall be equal to the product of the number
of shares of Columbia Common Stock covered by the Columbia
-12-
Option multiplied by the
Conversion Ratio, provided that any fractional share of Xxxxxx Common Stock resulting from
such multiplication shall be rounded down to the nearest whole share; (ii) the exercise
price per share of Xxxxxx Common Stock shall be equal to the exercise price per share of
Columbia Common Stock of such Columbia Option, divided by the Conversion Ratio, provided
that such exercise price shall be rounded up to the nearest whole cent; (iii) the duration
and other terms of such Xxxxxx Stock Option shall be identical to the duration and other
terms of such Columbia Option (giving effect to the terms of the Columbia Stock Option Plans
or the Columbia Options providing for accelerated vesting as a result of the transactions
contemplated by this Agreement) except that all references to Columbia shall be deemed to be
references to Xxxxxx and its affiliates, where the context so requires, and shall remain
exercisable until the stated expiration date of the corresponding Columbia Option; (iv)
Xxxxxx shall assume such Columbia Option, whether vested or not vested, as contemplated by
Section 424(a) of the Code; and (v) to the
extent Columbia Options qualify as incentive stock options under Section 422 of the Code,
the Xxxxxx Stock Options exchanged therefor shall also so qualify. In connection with the
foregoing, (i) the foregoing is intended to effect an assumption of a Columbia Option by
Xxxxxx under Section 424(a) of the Code and (ii) neither a Xxxxxx Option nor the assumption
of a Columbia Option shall give the holder of a Columbia Option additional benefits which he
did not have under such Columbia Option within the meaning of Section 424(a)(1) of the Code.
Subject to the Xxxxxx Stock Options and the foregoing, the Columbia Stock Option Plans and
all options or other rights to acquire Columbia Common Stock issued thereunder shall
terminate at the Effective Time. Xxxxxx shall not issue or pay for any fractional shares
otherwise issuable upon exercise of a Xxxxxx Stock Option.
(c) Prior to the Effective Time, Xxxxxx shall take appropriate action to reserve for
issuance and, if not previously registered pursuant to the 1933 Act, register the number of
shares of Xxxxxx Common Stock necessary to satisfy Xxxxxx’x obligations with respect to the
issuance of Xxxxxx Common Stock pursuant to the exercise of Xxxxxx Stock Options and under
Section 2.3.
(d) On or before the Election Deadline (to the extent required as determined by Xxxxxx
or Columbia under applicable law, the terms of the Columbia Stock Option Plans or
otherwise), Xxxxxx shall receive agreements from each holder of a Columbia Option that does
not elect to exercise such Columbia Option immediately prior to the Effective Time and have
the Columbia Common Stock acquired as a result of such exercise converted into cash or
Xxxxxx Common Stock pursuant to Section 2.1 of this Agreement, pursuant to which each such
holder agrees to accept cash or a Xxxxxx Stock Option in substitution for the Columbia
Option, as of the Effective Time.
(e) Schedule 2.3 sets forth a listing of each Columbia Option as of the date of
this Agreement (copies of which have been provided to Xxxxxx), including the name of each
holder of such Columbia Option, the date of grant, the number of shares of Columbia Common
Stock subject to such Columbia Option, the exercise price per share
-13-
of such Columbia Option,
the expiration date, and the classification of whether such Columbia Option is an incentive
stock option or a nonqualified stock option.
Section 2.4 Reservation of Shares. Xxxxxx agrees that (i) prior to the Effective Time, it
will take appropriate action to reserve a sufficient number of authorized but unissued shares of
Xxxxxx Common Stock to be issued in accordance with this Agreement, and (ii) at the Effective Time,
Xxxxxx will issue shares of Xxxxxx Common Stock to the extent set forth in, and in accordance with,
this Agreement.
Section 2.5 Taking Necessary Action. Xxxxxx and Columbia shall take all such actions as may
be reasonably necessary or appropriate in order to effectuate the transactions contemplated hereby
including, without limitation, providing information necessary for preparation of any filings
needed to obtain the regulatory approvals required to consummate the Merger. In case at any time
after the Effective Time any further action is necessary or desirable to carry out the purposes of
this Agreement and to vest Xxxxxx with full title to all properties, assets, rights, approvals,
immunities and franchises of Columbia, the officers and directors of Columbia, at the expense of
Xxxxxx, shall use commercially reasonable efforts to take all such necessary action.
Section 2.6 Press Releases, Etc. Xxxxxx and Columbia agree that all press releases or other
public communications relating to this Agreement or the transactions contemplated hereby will
require mutual approval by Xxxxxx and Columbia, unless counsel has advised any such party that such
release or other public communication must immediately be issued and the issuing party has not been
able, despite its good faith efforts, to obtain such approval.
Section 2.7 Xxxxxx Common Stock. Each share of Xxxxxx Common Stock that is issued and
outstanding immediately before the Effective Time shall, on and after the Effective Time, remain
issued and outstanding as one (1) share of Xxxxxx Common Stock, and each holder thereof shall
retain his rights therein. The
holders of the shares of Xxxxxx Common Stock outstanding immediately prior to the Effective
Time shall, immediately after the Effective Time, continue to hold a majority of the outstanding
shares of Xxxxxx Common Stock.
Section 2.8 Dissenters’ Rights. Pursuant to Section 3-202(c) of the GCL, the stockholders of
Columbia shall not be entitled to exercise dissenters’ rights.
Section 2.9 Certain Actions. Prior to the Effective Time, Xxxxxx and Columbia shall take all
such steps as may be required to cause any dispositions of shares of Columbia Common Stock
(including derivative securities with respect to such shares) resulting from the transactions
contemplated by Article II of this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”),
with respect to Columbia to be exempt under Rule 16b-3 promulgated under the 1934 Act, such steps
to be taken in accordance with the No-Action Letter dated January 12, 1999 issued by the SEC to
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
-14-
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF COLUMBIA
Columbia represents and warrants to Xxxxxx, as of the date of this Agreement, as follows:
Section 3.1 Authority. The execution and delivery of this Agreement, the Warrant Agreement
and the Warrant and the performance of the transactions contemplated herein and therein have been
authorized by the Board of Directors of Columbia. At a meeting duly called and held, by a vote of
at least a majority of the members of the Board of Directors, the Board of Directors (i) approved
the Merger and this Agreement, and (ii) directed that this Agreement and Merger be submitted for
approval by its stockholders with the recommendation of the Board of Directors that the
stockholders of Columbia approve this Agreement, the Merger and the transactions contemplated
thereby, and, except for the approval of this Agreement by its stockholders, Columbia has taken all
corporate action necessary on its part to authorize this Agreement, the Warrant Agreement and the
Warrant and the performance of the transactions contemplated herein and therein. This Agreement,
the Warrant Agreement and the Warrant have been duly executed and delivered by Columbia and,
assuming due authorization, execution and delivery by Xxxxxx, constitute valid and binding
obligations of Columbia, enforceable against Columbia in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, regulations and rules affecting
financial institutions and subject as to enforceability, to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in equity (the “Bankruptcy
and Equity Exceptions”). The execution, delivery and performance of this Agreement, the Warrant
Agreement and the Warrant will not constitute a violation or breach of or default under (i) the
Articles of Incorporation or Bylaws of Columbia, (ii) the Articles of Incorporation or Bylaws of
The Columbia Bank, (iii) any statute, rule, regulation,
order, decree or directive of any governmental authority or court applicable to Columbia or
any Columbia Subsidiary, subject to the receipt of all required governmental approvals, or (iv) any
agreement, contract, memorandum of understanding, indenture or other instrument to which Columbia
or any Columbia Subsidiary is a party or by which Columbia or any Columbia Subsidiary or any of
their properties are bound.
Section 3.2 Organization and Standing. Columbia is a corporation that is duly organized,
validly existing and in good standing under the laws of the State of Maryland. Columbia is a bank
holding company under the BHC Act, and has full power and lawful authority to own and hold its
properties and to carry on its business as presently conducted. The Columbia Bank is a trust
company that is duly organized, validly existing and in good standing under the laws of the State
of Maryland. The Columbia Bank is an insured bank under the provisions of the Federal Deposit
Insurance Act, as amended (the “FDI Act”), and is not a member of the Federal Reserve System. The
Columbia Bank has full power and lawful authority to own and hold its properties and to carry on
its business as presently conducted. Each of the Columbia Subsidiaries currently conducting
operations other than The Columbia Bank is an entity or business trust that is duly organized,
validly existing and in good standing under the laws of its state of incorporation or formation.
Each of the Columbia Subsidiaries currently conducting operations has full power and lawful
authority to own and hold its properties and to carry on its business as presently conducted.
Section 3.3 Subsidiaries. The Columbia Bank, Columbia Bancorp Statutory Trust I, Columbia
Bancorp Trust II and Columbia Bancorp Statutory Trust III are wholly-owned subsidiaries of Columbia
(except that Columbia owns 100% of the common securities of such trusts and third parties own the
capital securities issued by such trusts). Each of XxXxxxxx
-15-
Enterprises, Inc., Xxxxxx I, LLC,
Xxxxxx XX, LLC and Columbia Leasing, Inc. is a wholly-owned subsidiary of The Columbia Bank.
Except for the Columbia Subsidiaries, Columbia owns no subsidiaries, directly or indirectly.
Section 3.4 Capitalization. The authorized capital of Columbia consists exclusively of
10,000,000 shares of Columbia Common Stock. As of the date of this Agreement, 6,932,702 shares of
Columbia Common Stock are outstanding, all of which are validly issued, fully paid and
non-assessable. In addition, as of the date of this Agreement, 641,815 shares of Columbia Common
Stock are subject to issuance upon the exercise of Columbia Options and 1,881,809 shares of
Columbia Common Stock will be reserved for issuance upon exercise of the Warrant. Except for the
Columbia Options and the Warrant, there are no outstanding obligations, options or rights of any
kind entitling other persons to acquire shares of Columbia Common Stock and there are no
outstanding securities or other instruments of any kind that are convertible into shares of
Columbia Common Stock. The authorized capital of The Columbia Bank consists exclusively of shares
of common stock (the “Columbia Bank Common Stock”). All of the outstanding shares of Columbia Bank
Common Stock are owned beneficially and of record by Columbia and are
validly issued, fully-paid and non-assessable. There are no outstanding obligations, options
or rights of any kind entitling other persons to acquire shares of Columbia Bank Common Stock, and
there are no outstanding securities or instruments of any kind that are convertible into shares of
Columbia Bank Common Stock. All outstanding shares of the capital stock or membership interests,
as applicable, of the other Columbia Subsidiaries are owned beneficially and of record by Columbia
or The Columbia Bank, as appropriate, except that, in the case of Columbia Bancorp Statutory Trust
I, Columbia Bancorp Statutory Trust II and Columbia Bancorp Statutory Trust III, Columbia owns 100%
of the common securities and the purchasers thereof own the capital securities issued by each said
trust. There are no outstanding obligations, options or rights of any kind entitling other persons
to acquire shares of such Columbia Subsidiaries, and there are no outstanding securities or
instruments of any kind that are convertible into shares of such Columbia Subsidiaries. The
Columbia Bank Common Stock and the common stock or membership interests of the other Columbia
Subsidiaries are sometimes collectively referred to herein as the “Columbia Subsidiaries Common
Equity”.
Section 3.5 Charter, Bylaws and Minute Books. The copies of the Certificate of Incorporation
and Bylaws or Articles of Organization and Operating Agreements (or, with respect to Columbia
Bancorp Statutory Trust I, Columbia Bancorp Statutory Trust II and Columbia Bancorp Statutory Trust
III, their trust declarations) of Columbia and the Columbia Subsidiaries that have been made
available to Xxxxxx for inspection are true, correct and complete. Except as previously disclosed
to Xxxxxx in writing, the minute books of Columbia and the Columbia Subsidiaries that have been
made available to Xxxxxx for inspection are true, correct and complete in all material respects and
accurately record the actions taken by the Boards of Directors and stockholders or members of
Columbia and the Columbia Subsidiaries at the meetings documented in such minutes, excluding
information related to the transactions contemplated by this Agreement and to any other merger,
consolidation, share exchange or sale, exchange or other disposition of all, or substantially all,
of Columbia’s property or assets.
-16-
Section 3.6 Financial Statements.
(a) Columbia has delivered to Xxxxxx the following financial statements: Consolidated
Balance Sheets of Columbia at December 31, 2004 and 2003 and Consolidated Statements of
Income, Statements of Stockholders’ Equity, and Consolidated Statements of Cash Flows of
Columbia for the years ended December 31, 2004, 2003 and 2002, audited by KPMG LLP, and set
forth in the 2004 Annual Report to Columbia’s stockholders and unaudited Consolidated
Balance Sheets of Columbia at March 31, 2005 and unaudited Consolidated Statements of Income
for the three-month periods ended March 31, 2005 and 2004, unaudited Consolidated Statements
of Stockholders’ Equity for the three-month periods ended March 31, 2005 and 2004 and
unaudited Consolidated Statements of Cash Flows for the three-month periods ended March 31,
2005 and 2004, as filed with the SEC in a Quarterly Report on Form 10-Q (the aforementioned
Balance Sheet as of March 31, 2005 being hereinafter referred to as the
“Columbia Balance Sheet”). Each of the foregoing financial statements fairly present
the consolidated financial position, and results of operations and cash flows of Columbia at
their respective dates and for the respective periods then ended and has been prepared in
accordance with United States generally accepted accounting principles consistently applied
(“GAAP”), except as otherwise noted in a footnote thereto and except for (i) the omission of
the notes from the financial statements applicable to any interim period and (ii) with
respect to any interim period, normal year-end adjustments.
(b) Except (A) as reflected in Columbia’s unaudited balance sheet at March 31, 2005 or
liabilities described in any notes thereto (or liabilities for which neither accrual nor
footnote disclosure is required pursuant to GAAP) or (B) for liabilities incurred in the
ordinary course of business since March 31, 2005 consistent with past practices or in
connection with this Agreement or the transactions contemplated hereby, neither Columbia nor
any of its subsidiaries has any material liabilities or obligations of any nature. The
Columbia SEC Reports describe and Columbia has delivered to Xxxxxx copies of the
documentation creating or governing, all securitization transactions and “off-balance sheet
arrangements” (as defined in Item 303(c) of Regulation S-K of the SEC) effected by Columbia
or its subsidiaries since KPMG LLP expressed its opinion with respect to the financial
statements of Columbia and its subsidiaries included in the Columbia SEC Reports (including
the related notes).
(c) KPMG LLP is and has been (x) since September 24, 2003, a registered public
accounting firm (as defined in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act of 2002 (the “SOX
Act”)), (y) throughout the periods covered by such financial statements, “independent” with
respect to Columbia within the meaning of Regulation S-X, and (z) since May 6, 2003, in
compliance with subsections (g) through (l) of Section 10A of the 1934 Act and the related
Rules of the SEC and the Public Company Accounting Oversight Board. The Columbia SEC
Reports describe the types of non-audit services performed by KPMG LLP for Columbia and
its subsidiaries since January 1, 2002, other than non-audit services performed in
connection with the transactions contemplated by this Agreement.
(d) Each of Columbia and the Columbia Subsidiaries maintains accurate books and records
reflecting its assets and liabilities and maintains proper and adequate internal
-17-
accounting
controls which provide assurance that (i) transactions are executed with management’s
authorization; (ii) transactions are recorded as necessary to permit preparation of the
consolidated financial statements of Columbia and to maintain accountability for Columbia’s
consolidated assets; (iii) access to Columbia’s assets is permitted only in accordance with
management’s authorization; (iv) the reporting of Columbia’s assets is compared with
existing assets at regular intervals; and (v) accounts, notes and other receivables and
inventory are recorded accurately, and proper and adequate procedures are implemented to
effect the collection thereof on a current and timely basis.
(e) Columbia has, on a timely basis, filed all forms, reports and documents required to
be filed by it with the SEC since January 1, 2002. Except to the extent
available in full without redaction on the SEC’s website through the Electronic Data
Gathering, Analysis and Retrieval System (“XXXXX”), Columbia has delivered to Xxxxxx copies
in the form filed with the SEC of (i) Columbia’s Annual Reports on Form 10-K for each fiscal
year of Columbia from and after January 1, 2002, (ii) its Quarterly Reports on Form 10-Q for
each of the first three fiscal quarters in each of the fiscal years of Columbia referred to
in clause (i) above, (iii) all proxy statements relating to Columbia’s meetings of
stockholders (whether annual or special) held, and all information statements relating to
stockholder consents since the beginning of the first fiscal year referred to in clause (i)
above, (iv) all certifications and statements required by (x) the SEC’s Order dated June 27,
2002 pursuant to Section 21(a)(1) of the 1934 Act (File No. 4-460), (y) 18 U.S.C. §1350
(Section 906 of the SOX Act) with respect to any report referred to in clause (i) or (iii)
above, (y) all other forms, reports, registration statements and other documents (other than
preliminary materials if the corresponding definitive materials have been provided to Xxxxxx
pursuant to this Section 3.6) filed by Columbia with the SEC since the beginning of the
first fiscal year referred to in clause (i) above (the forms, reports, registration
statements and other documents referred to in clauses (i), (ii), (iii), (iv) and (v) above
are, collectively, the “Columbia SEC Reports” and, to the extent available in full without
redaction on the SEC’s website through XXXXX two days prior to the date of this Agreement,
are, collectively, the “Filed Columbia SEC Reports”), and (vi) all comment letters received
by Columbia from the Staff of the SEC since January 1, 2002 and all responses to such
comment letters by or on behalf of Columbia. The Columbia SEC Reports (x) were prepared in
accordance with the requirements of the 1933 Act and the 1934 Act, as the case may be, and
the rules and regulations thereunder and (y) did not at the time they were filed with the
SEC, or will not at the time they are filed with the SEC, 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 made therein, in light of the circumstances under which they
were made, not misleading. No Subsidiary of Columbia is or has been required to file any
form, report, registration statement or other document with the SEC.
(f) Columbia maintains disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the 1934 Act; such controls and procedures are effective to ensure that all
material information concerning Columbia and its subsidiaries is made known on a timely
basis to the individuals responsible for the preparation of Columbia’s filings with
-18-
the SEC
and other public disclosure documents. Schedule 3.6 lists, and Columbia has
delivered to Xxxxxx copies of, all written descriptions of, and all policies, manuals and
other documents promulgating, such disclosure controls and procedures. To Columbia’s
knowledge, except as set forth in the Columbia SEC Reports, each director and executive
officer of Columbia has filed with the SEC on a timely basis all statements required by
Section 16(a) of the 1934 Act and the rules and regulations thereunder since January 1,
2002. As used in this Section 3.6, the term “file” shall be broadly construed to include
any manner in which a document or information is furnished, supplied or otherwise made
available to the SEC. To the extent required, Columbia and The Columbia Bank have in place
“disclosure controls and procedures” as defined in Rules 13a-15(e) and 15(d)-15(e) of the
1934 Act to allow Columbia’s management to make timely decisions regarding required
disclosures and to make the certifications of the Chief
Executive Officer and Chief Financial Officer of Columbia required under the 1934 Act.
Since March 31, 2005, there has not been any material change in the internal controls
utilized by Columbia to assure that its consolidated financial statements conform with GAAP.
Without limiting the generality of the foregoing, Columbia’s disclosure controls and
procedures are designed and maintained to ensure that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, (v) all information (both
financial and non-financial) required to be disclosed by Columbia in the reports that it
files or submits under the 1934 Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and (vi) all such information
is accumulated and communicated to Columbia’s management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications of the Chief
Executive Officer and Chief Financial Officer of Columbia required under the 1934 Act with
respect to such reports. None of Columbia’s or any Columbia Subsidiary’s records, systems,
controls, data or information are recorded, stored, maintained, operated or otherwise wholly
or partly dependent on or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control of the
Columbia or the Columbia Subsidiaries or their independent accountants.
(g) Each of the Chief Executive Officer and the Chief Financial Officer of Columbia has
signed, and Columbia has furnished to the SEC, all certifications required by Sections 302
and 906 of the SOX Act; such certifications contain no qualifications or exceptions to the
matters certified therein and have not been modified or withdrawn; and neither Columbia nor
any of its officers has received notice from any Governmental Entity questioning or
challenging the accuracy, completeness, form or manner of filing or submission of such
certifications.
-19-
(h) Columbia heretofore has provided to Xxxxxx complete and correct copies of all
certifications filed with the SEC pursuant to Sections 302 and 906 of the SOX Act and to the
Knowledge of Columbia, the matters and statements made in such certificates were true as of
the date thereof.
Section 3.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule 3.7,
or as reflected, noted or adequately reserved against in the Columbia Balance Sheet, at March 31,
2005, Columbia had no material liabilities (whether accrued, absolute, contingent or otherwise)
which were required to be reflected, noted or reserved against in the Columbia Balance Sheet under
GAAP. Except as disclosed in Schedule 3.7, Columbia and the Columbia Subsidiaries have not
incurred, since March 31, 2005, any such liability, other than liabilities of the same nature as
those set forth in the Columbia
Balance Sheet, all of which have been incurred in the Ordinary Course of Business. For
purposes of this Agreement, the term “Ordinary Course of Business” shall mean the ordinary course
of business consistent with Columbia’s and the Columbia Subsidiaries’ customary business practices.
Section 3.8 Absence of Changes. Since March 31, 2005, Columbia and the Columbia Subsidiaries
have each conducted their businesses in the Ordinary Course of Business and, except as disclosed in
Schedule 3.8, neither Columbia nor the Columbia Subsidiaries have undergone any changes in
their condition (financial or otherwise), assets, liabilities, business, results of operations or
future prospects other than changes in the Ordinary Course of Business, which have been, in the
aggregate, materially adverse as to Columbia and the Columbia Subsidiaries on a consolidated basis
(a “Columbia Material Adverse Effect”).
Section 3.9 Dividends, Distributions and Stock Purchases. Since March 31, 2005, Columbia has
not declared, set aside, made or paid any dividend or other distribution in respect of the Columbia
Common Stock, or purchased, issued or sold any shares of Columbia Common Stock or the Columbia
Subsidiaries Common Equity, other than as described in the Columbia SEC Reports.
Section 3.10 Taxes. Columbia and The Columbia Bank have filed all federal, state, county,
municipal and foreign tax returns, reports and declarations which are required to be filed by them
or either of them as of March 31, 2005. Except as disclosed in Schedule 3.10: (i) Columbia
and The Columbia Bank have paid all taxes, penalties and interest which have become due pursuant
thereto or which became due pursuant to federal, state, county, municipal or foreign tax laws
applicable to the periods covered by the foregoing tax returns, (ii) neither Columbia nor the
Columbia Subsidiaries have received any notice of deficiency or assessment of additional taxes, and
no tax audits are in process; and (iii) the Internal Revenue Service (the “IRS”) has not commenced
or given notice of an intention to commence any examination or audit of the federal income tax
returns of Columbia or The Columbia Bank for any year through and including the year ended December
31, 2004. Except as disclosed in Schedule 3.10, neither Columbia nor the Columbia
Subsidiaries have granted any waiver of any statute of limitations or otherwise agreed to any
extension of a period for the assessment of any
-00-
xxxxxxx, xxxxx, xxxxxx, xxxxxxxxx or foreign income
tax. The accruals and reserves reflected in the Columbia Balance Sheet for taxes (including
interest and penalties, if any, thereon) have been made in accordance with GAAP.
Section 3.11 Title to and Condition of Assets. Except as disclosed in Schedule 3.11,
Columbia and the Columbia Subsidiaries have good and marketable title to all material consolidated
real and personal properties and assets reflected in the Columbia Balance Sheet or acquired
subsequent to March 31, 2005, (other than property and assets disposed of in the Ordinary Course of
Business), free and clear of all liens or encumbrances of any kind whatsoever; provided, however,
that the representations and
warranties contained in this sentence do not cover liens or encumbrances that: (i) are
reflected in the Columbia Balance Sheet or in Schedule 3.11; (ii) represent liens of
current taxes not yet due or which, if due, may be paid without penalty, or which are being
contested in good faith by appropriate proceedings; and (iii) represent such imperfections of
title, liens, encumbrances, zoning requirements 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 use, of the properties and assets subject thereto. The material structures and other
improvements to real estate, furniture, fixtures and equipment reflected in the Columbia Balance
Sheet or acquired subsequent to March 31, 2005: (A) are in good operating condition and repair
(ordinary wear and tear excepted), and (B) comply in all material respects with all applicable
laws, ordinances and regulations, including without limitation all building codes, zoning
ordinances and other similar laws, except where any noncompliance would not materially detract from
the value, or interfere with the present use, of such structures, improvements, furniture, fixtures
and equipment. Columbia and the Columbia Subsidiaries own or have the right to use all real and
personal properties and assets that are material to the conduct of their respective businesses as
presently conducted.
Section 3.12 Contracts.
(a) Each written or oral contract entered into by Columbia or the Columbia Subsidiaries
(other than loan agreements, promissory notes, deeds of trust and other contracts with
customers reasonably entered into by Columbia or the Columbia Subsidiaries in the Ordinary
Course of Business) which involves aggregate payments or receipts in excess of $100,000 per
year, including without limitation every employment contract, employee benefit plan,
agreement, lease, license, indenture, mortgage and other commitment to which either Columbia
or the Columbia Subsidiaries are a party or by which Columbia or the Columbia Subsidiaries
or any of their properties may be bound (collectively referred to herein as “Material
Contracts”) is identified in Schedule 3.12. Except as disclosed in Schedule
3.12, all Material Contracts are enforceable against Columbia or the Columbia
Subsidiaries, as the case may be, and Columbia or the Columbia Subsidiaries have in all
material respects performed all obligations required to be performed by them to date and are
not in default in any material respect and Columbia has no Knowledge (as defined in Section
3.13) of any default by a third party under a Material Contract. Schedule 3.12
identifies all Material Contracts which require the consent or approval of third parties to
the execution and delivery of this Agreement or to the consummation of the transactions
contemplated herein.
-21-
(b) Except for the Warrant Agreement and as set forth in Schedule 3.12, as of
the date of this Agreement, neither Columbia nor the Columbia Subsidiaries is a party to, or
bound by, any oral or written:
(i) “material contract” as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC;
(ii) consulting agreement involving the payment of more than $100,000 per annum
or extending for a period longer than one year;
(iii) agreement with any officer or other key employee the benefits of which
are contingent, or the terms of which are materially altered, upon the occurrence of
a transaction of the nature contemplated by this Agreement;
(iv) agreement with respect to any officer providing any term of employment or
compensation guarantee extending for a period longer than one year or for a payment
in excess of $100,000;
(v) agreement or plan, including any stock option plan, stock appreciation
rights plan, employee stock ownership plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this Agreement;
(vi) agreement containing covenants that limit its ability to compete in any
line of business or with any person, or that involve any restriction on the
geographic area in which, or method by which, it may carry on its business (other
than as may be required by law or any regulatory agency);
(vii) agreement, contract or understanding, other than this Agreement, and the
Warrant Agreement, regarding the capital stock of Columbia and/or The Columbia Bank
or committing to dispose of some or all of the capital stock or substantially all of
the assets of Columbia and/or The Columbia Bank;
(viii) collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization;
(ix) deferred compensation plan or arrangement; or
(x) joint venture agreements.
Section 3.13 Litigation and Governmental Directives. Except as disclosed in Schedule
3.13, (i) there is no litigation, investigation or proceeding pending, or to the Knowledge (as
that term is defined below) of Columbia or the Columbia Subsidiaries, threatened, that involves
Columbia or the Columbia Subsidiaries or any of their properties and
- 22 -
that, if determined adversely,
would have a Columbia Material Adverse Effect; (ii) there are no outstanding orders, writs,
injunctions, judgments, decrees, regulations, directives, consent agreements or memoranda of
understanding issued by any federal, state or local court or governmental agency or authority or
arbitration tribunal (each a “Governmental Entity” issued against or with the consent of Columbia or the Columbia Subsidiaries
that would have a Columbia Material Adverse Effect or that materially restricts the right of
Columbia or the Columbia Subsidiaries to carry on their businesses as presently conducted taken as
a whole; and (iii) neither Columbia nor the Columbia Subsidiaries have Knowledge of any fact or
condition presently existing that might give rise to any litigation, investigation or proceeding
which, if determined adversely to either Columbia or the Columbia Subsidiaries, would have a Columbia Material Adverse Effect or would
materially restrict the right of Columbia or the Columbia Subsidiaries to carry on their businesses
as presently conducted taken as a whole. All litigation (except for bankruptcy proceedings in
which Columbia or the Columbia Subsidiaries have filed proofs of claim) in which Columbia or the
Columbia Subsidiaries are involved as a plaintiff (other than routine collection and foreclosure
suits initiated in the Ordinary Course of Business) in which the amount sought to be recovered is
greater than $125,000 is identified in Schedule 3.13. In this Agreement, the terms
“Knowledge of Columbia or The Columbia Bank” and “Knowledge of Columbia and the Columbia
Subsidiaries” shall mean the actual knowledge of the
Contract Employees (as defined in Section 3.17).
Section 3.14 Compliance with Laws; Governmental Authorizations. Except as disclosed in
Schedule 3.14 or where noncompliance would not have a Columbia Material Adverse Effect: (i)
Columbia and the Columbia Subsidiaries are in compliance with all statutes, laws, ordinances,
rules, regulations, judgments, orders, decrees, directives, consent agreements, memoranda of
understanding, permits, concessions, grants, franchises, licenses, and other governmental
authorizations or approvals applicable to Columbia or the Columbia Subsidiaries or to any of their
properties; and (ii) all material permits, concessions, grants, franchises, licenses and other
governmental authorizations and approvals necessary for the conduct of the business of Columbia or
the Columbia Subsidiaries as presently conducted have been duly obtained and are in full force and
effect, and there are no proceedings pending or, to the Knowledge of Columbia threatened, which may
result in the revocation, cancellation, suspension or materially adverse modification of any
thereof.
Section 3.15 Insurance. All policies of insurance relating to Columbia’s and the Columbia
Subsidiaries’ operations (except for title insurance policies), including without limitation all
financial institutions bonds, held by or on behalf of Columbia or the Columbia Subsidiaries are
listed in Schedule 3.15. All such policies of insurance are in full force and effect, and
no notices of cancellation have been received in connection therewith.
Section 3.16 Financial Institutions Bonds. Since January 1, 2000, The Columbia Bank has
continuously maintained in full force and effect one or more financial institutions bonds listed in
Schedule 3.16 insuring The Columbia Bank against acts of dishonesty by each of its
employees. No claim has been made under any such bond and The Columbia Bank has no Knowledge of
any fact or condition presently existing which might form the basis of a claim under any such bond.
The Columbia Bank has received no notice that its present
- 23 -
financial institutions bond or bonds
will not be renewed by its carrier on substantially the same terms as those now in effect.
Section 3.17 Labor Relations and Employment Agreements. Neither Columbia nor any of the
Columbia Subsidiaries is a party to or bound by any collective bargaining agreement. To their
Knowledge, Columbia and the Columbia Subsidiaries enjoy good working relationships with their employees, and there are no labor disputes
pending, or to the Knowledge of Columbia or The Columbia Bank threatened, that would have a
Columbia Material Adverse Effect. Except as disclosed in Schedule 3.17, neither Columbia
nor any of the Columbia Subsidiaries has any employment contract, change of control agreement or
policy, severance agreement, deferred compensation agreement, consulting agreement or similar
obligation (including any related amendments, each an “Employment Obligation”) with any director,
officer, employee, agent or consultant; provided however, that, as of the date of this Agreement
(and effective as of the Effective Time), each of Xxxx X. Xxxx, Xx. and Xxxx X. Xxxxxxxx, Xx. (the
“Contract Employees”) has executed employment agreements (the “Employment Agreements”) with Xxxxxx
and The Columbia Bank so as to, among other things, (i) consent to certain changes in their
respective duties, powers and functions following the Merger, such agreements to be substantially
in the form of Exhibit D attached hereto and (ii) provide for the payment of a portion of
the “change of control” payments due under their existing employment agreements with Columbia or
The Columbia Bank. Except as disclosed in Schedule 3.17, as of the Effective Time (as
defined in Section 9.2 herein), neither Columbia nor the Columbia Subsidiaries will have any
liability for employee termination rights arising out of any Employment Obligation and neither the
execution of this Agreement nor the consummation of the Merger shall, by itself, entitle any
employee of Columbia or the Columbia Subsidiaries to any “change of control” payments or benefits.
Except as set forth on Schedule 3.17, no payment that is owed or may become due to any
director, officer, employee, or agent of Columbia or any Columbia Subsidiary as a result of the
consummation of the Merger will be non-deductible to Columbia or any Columbia Subsidiary or subject
to tax under IRC § 280G or § 4999; nor, except as set forth on Schedule 3.17, will Columbia
or any Columbia Subsidiary be required to “gross up” or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such person as a result of the
consummation of the Merger.
Section 3.18 Employee Benefit Plans. All employee benefit plans, contracts or arrangements to
which Columbia or the Columbia Subsidiaries are a party or by which Columbia or the Columbia
Subsidiaries are bound, including without limitation all pension, retirement, deferred
compensation, savings, incentive, bonus, profit sharing, stock purchase, stock option, life
insurance, death or survivor’s benefit, health insurance, sickness, disability, medical, surgical,
hospital, severance, layoff or vacation plans, contracts or arrangements (collectively the
“Columbia Benefit Plans”), but not including the Employment Obligations described in Section 3.17,
are identified in Schedule 3.18. Each of the Columbia Benefit Plans which is an “employee
pension benefit plan” as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”; each such Plan being herein called a “Columbia Pension Plan”) is exempt
from tax under Sections 401 and 501 of the Code and has been maintained and operated in material
compliance with all applicable provisions of the Code and ERISA, except where a failure to so
comply would not result in a material liability. No “prohibited transaction” (as such term is
defined in Section 4975 of the
- 24 -
Code or Section 406 of ERISA) and not otherwise exempt under ERISA
or the Code has occurred in respect of the Columbia Pension Plans. There have been no material
breaches of fiduciary duty by any fiduciary under or with respect to the Columbia Pension Plans or
any other Columbia Benefit Plan which is an employee welfare benefit plan as defined in Section
3(1) of ERISA, and no claim is pending or, to the Knowledge of Columbia, threatened
with respect to any Columbia Benefit Plan other than claims for benefits made in the Ordinary
Course of Business. Neither Columbia nor the Columbia Subsidiaries have incurred any material
penalty imposed by the Code or by ERISA with respect to the Columbia Pension Plans or any other
Columbia Benefit Plan. Within the past five years, there has not been any audit of any Columbia
Benefit Plan by the U.S. Department of Labor or the IRS.
Section 3.19 Related Party Transactions.
(a) Except as disclosed in Schedule 3.19, neither Columbia nor any of the
Columbia Subsidiaries has any contract, extension of credit, or business arrangement of any
kind with any of the following persons: (i) any executive officer or director (including any
person who has served in such capacity since January 1, 2000) of Columbia or any of the
Columbia Subsidiaries; (ii) any stockholder owning five percent (5%) or more of the
outstanding Columbia Common Stock; and (iii) any “associate” (as defined in Rule 405 under
the 0000 Xxx) of the foregoing persons or any business in which any of the foregoing persons
is an officer, director, employee or five percent (5%) or greater equity owner. Each such
contract or extension of credit disclosed in Schedule 3.19, except as otherwise
specifically described therein, has been made in the Ordinary Course of Business on
substantially the same terms, including interest rates and collateral, as those prevailing
at the time for comparable arms’ length transactions with other persons that do not involve
more than a normal risk of collectability or present other unfavorable features.
(b) Except as disclosed in Schedule 3.19, Columbia has not, since July 30, 2002,
extended or maintained credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or executive officer (or
equivalent thereof) of Columbia. Schedule 3.19 identifies any loan or extension of
credit maintained by Columbia to which the second sentence of Section 13(k)(l) of the 1934
Act applies.
Section 3.20 No Finder. Except as disclosed in Schedule 3.20, neither Columbia nor
any of the Columbia Subsidiaries have paid or become obligated to pay any fee or commission of any
kind whatsoever to any investment banker, broker, finder, financial advisor or other intermediary
for, on account of or in connection with the transactions contemplated in this Agreement.
Section 3.21 Complete and Accurate Disclosure. Neither this Agreement (insofar as it relates
to Columbia, the Columbia Subsidiaries, the Columbia Common Stock, the Columbia Subsidiaries’
Common Equity, and the involvement of Columbia and the Columbia Subsidiaries in the transactions
contemplated hereby) nor any Exhibits or Schedules to this Agreement nor the Financial Statements
delivered by Columbia to Xxxxxx pursuant to Section 3.6
- 25 -
contains any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they were made, not
misleading.
Section 3.22 Environmental Matters. Except as disclosed in Schedule 3.22, neither
Columbia nor any of the Columbia Subsidiaries has any material liability relating to any
environmental contaminant, pollutant, toxic or hazardous waste or other similar substance that has
been generated, used, stored, processed, disposed of or discharged onto any of the real estate now
or previously owned or acquired (including without limitation any real estate acquired by means of
foreclosure or exercise of any other creditor’s right) or leased by Columbia or any of the Columbia
Subsidiaries and which is required to be reflected, noted or adequately reserved against in
Columbia’s consolidated financial statements under GAAP. In particular, without limiting the
generality of the foregoing sentence, but subject to the materiality and financial statement
disclosure standards therein, except as disclosed in Schedule 3.22, neither Columbia nor
any of the Columbia Subsidiaries have environmental liabilities based on their use or incorporation
of: (i) any materials containing asbestos in any building or other structure or improvement
located on any of the real estate now or previously owned or acquired (including without limitation
any real estate acquired by means of foreclosure or exercise of any other creditor’s right) or
leased by Columbia or any of the Columbia Subsidiaries; (ii) any electrical transformers,
fluorescent light fixtures with ballasts or other equipment containing PCB’s on any of the real
estate now or previously owned or acquired (including without limitation any real estate acquired
by means of foreclosure or exercise of any other creditor’s right) or leased by Columbia or any of
the Columbia Subsidiaries; or (iii) any underground storage tanks for the storage of gasoline,
petroleum products or other toxic or hazardous wastes or similar substances located on any of the
real estate now or previously owned or acquired (including without limitation any real estate
acquired by means of foreclosure or exercise of any other creditor’s right) or leased by Columbia
or any of the Columbia Subsidiaries.
Section 3.23 Proxy Statement/Prospectus. At the time the Proxy Statement/Prospectus (as
defined in Section 6.1(b) herein) is mailed to the stockholders of Columbia and at all times
subsequent to such mailing, up to and including the Effective Time, the Proxy Statement/Prospectus
(including any pre- and post-effective amendments and supplements thereto), with respect to all
information relating to Columbia, the Columbia Subsidiaries, Columbia Common Stock, the Columbia
Subsidiaries Common Equity and all actions taken and statements made by Columbia and the Columbia
Subsidiaries in connection with the transactions contemplated herein (except for information
provided by Xxxxxx to Columbia or the Columbia Subsidiaries) will: (i) comply in all material
respects with applicable provisions of the 1933 Act, and the 1934 Act and the applicable rules and
regulations of the SEC thereunder; and (ii) not contain any statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with respect to any
material fact, or omit to state any material fact that is required to be stated therein or
necessary in order (A) to make the statements therein not false or misleading, or (B) to correct
any statement in an earlier communication with respect to the Proxy Statement/Prospectus which has
become false or misleading.
- 26 -
Section 3.24 SEC Filings. No registration statement, offering circular, proxy statement,
schedule or report filed and not withdrawn by Columbia or The Columbia Bank with the SEC under the
1933 Act or the 1934 Act, on the date of effectiveness (in the case of any registration statement
or offering circular) or on the date of filing (in the case of any report or schedule) or on the
date of mailing (in the case of any proxy statement), contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they were made, not
misleading.
Section 3.25 Reports. Columbia and The Columbia Bank have filed all material reports,
registrations and statements that are required to be filed with the Federal Reserve Board (the
“FRB”), the Federal Deposit Insurance Company (“FDIC”), the Commissioner of Financial Regulation,
Maryland Department of Labor, Licensing and Regulation (the “Department”) and any other applicable
federal, state or local governmental or regulatory authorities and such reports, registrations and
statements referred to in this Section 3.25 were, as of their respective dates, in compliance in
all material respects with all of the statutes, rules and regulations enforced or promulgated by
the governmental or regulatory authority with which they were filed; provided, however, that the
failure to file any such report, registration, or statement or the failure of any report,
registration or statement to comply with the applicable regulatory standard shall not be deemed to
be a breach of the foregoing representation unless such failure has or may have a Columbia Material
Adverse Effect. Columbia has furnished Xxxxxx with, or made available to Xxxxxx, copies of all
such filings made in the last three fiscal years and in the period from January 1, 2005 through the
date of this Agreement. Columbia is required to file reports with the SEC pursuant to Section 12
of the 1934 Act, and Columbia has made all appropriate filings under the 1934 Act and the rules
and regulations promulgated thereunder; provided, however, that the failure to make any such filing
shall not be deemed to be a breach of the foregoing representation unless such failure has or may
have a Columbia Material Adverse Effect. The Columbia Common Stock is traded on NASDAQ under the
symbol “CBMD”.
Section 3.26 Loan Portfolio of The Columbia Bank.
(a) Attached hereto as Schedule 3.26 is a list of (i) all outstanding
commercial loans, commercial loan commitments and commercial letters of credit of The
Columbia Bank in excess of $3,000,000, (ii) all loans of The Columbia Bank classified by The
Columbia Bank or any regulatory authority as “Monitor,” “Substandard,” “Doubtful” or
“Loss,” (iii) all commercial and mortgage loans of The Columbia Bank classified as
“non-accrual,” and (iv) all commercial loans of The Columbia Bank classified as “in
substance foreclosed.”
(b) The Columbia Bank has adequately reserved for or charged off loans in accordance
with applicable regulatory requirements, United States GAAP and current written policies of
The Columbia Bank.
(c) Except as set forth on Schedule 3.26, The Columbia Bank does not engage in
so-called “subprime Section 32 lending.” For the purposes of this representation, “subprime
Section 32 lending” shall be deemed to refer to programs that target borrowers with weakened credit
histories typically characterized by payment delinquencies, previous charge-offs, judgments
or bankruptcies, or that target borrowers with questionable repayment capacity evidenced by
low credit scores or high debt-burden ratios.
Section 3.27 Investment Portfolio. Attached hereto as Schedule 3.27 is a list of all
securities held by Columbia and the Columbia Subsidiaries for investment, showing the holder,
- 27 -
principal amount, book value and market value of each security as of a recent date, and of all
short-term investments held by them as of March 31, 2005. These securities are free and clear of
all liens, pledges and encumbrances, except as shown on Schedule 3.27. Except as set forth
on Schedule 3.27, the investment portfolio of Columbia or the Columbia Subsidiaries does
not include any financial derivatives.
Section 3.28 Regulatory Examinations.
(a) Except for normal examinations conducted by a regulatory agency in the Ordinary
Course of Business, to Columbia’s Knowledge, no regulatory agency has initiated any material
proceeding or investigation into the business or operations of Columbia or any of the
Columbia Subsidiaries within the past three (3) years. Except as otherwise disclosed in
Schedule 3.28, neither Columbia nor any of the Columbia Subsidiaries have received
any notice from any regulatory agency relating to any examinations of Columbia and any of
the Columbia Subsidiaries which would have a Columbia Material Adverse Effect.
(b) Neither Columbia nor any of the Columbia Subsidiaries are required to divest any
assets currently held by it or discontinue any activity currently conducted as a result of
the Federal Deposit Insurance Corporation Improvement Act of 1991, any regulations
promulgated thereunder, or otherwise which would have a Columbia Material Adverse Effect.
Section 3.29 Regulatory Agreements and Matters.
(a) Except as set forth on Schedule 3.29, on the date hereof, neither Columbia
nor The Columbia Bank is a party to any assistance agreement, directive, commitment letter,
supervisory agreement or letter, memorandum of understanding, consent order, cease and
desist order, or condition of any regulatory order, decree or similar directive with or by
the FDIC, the FRB, the Department or any other financial services regulatory agency having
jurisdiction over Columbia or The Columbia Bank that relates to the conduct of the business
of Columbia or The Columbia Bank, nor has Columbia or The Columbia Bank been advised by any
such regulatory agency or other governmental entity that it is considering issuing or
requesting any such agreement, order or decree.
(b) No report has been made by any attorney to Columbia’s chief legal officer, chief
executive officer, board of directors (or committee thereof) or other representative
pursuant to 17 CFR Part 205.
- 28 -
(c) Columbia is, or will timely be in all material respects, in compliance with all
current and proposed listing and corporate governance requirements of NASDAQ, and is in
compliance in all material respects, and will continue to remain in compliance following the
Effective Time, with all rules, regulations, and requirements of the SOX Act and the SEC.
(d) Each of Columbia and its senior financial officers has had the opportunity to
consult with Columbia’s independent auditors and with Columbia’s outside counsel with
respect to, and (to the extent applicable to the Company) is familiar in all material
respects, with all of the requirements of the SOX Act. Columbia’s directors have had the
opportunity to consult with Columbia’s independent auditors and with Columbia’s outside
counsel with respect to, and (to the extent applicable to the Company) each has a reasonable
understanding in all material respects, of all of the requirements of the SOX Act. The
Company is in material compliance with the provisions of the SOX Act applicable to it as of
the date hereof and has implemented such programs and has taken reasonable steps, upon the
advice of Columbia’s independent auditors and outside counsel, respectively, to ensure
Columbia’s future compliance (not later than the relevant statutory and regulatory deadlines
therefor) and all provisions of the SOX Act which shall become applicable to Columbia after
the date hereof.
Section 3.30 Beneficial Ownership of Xxxxxx Common Stock. Columbia and the Columbia
Subsidiaries do not, and prior to the Effective Time, Columbia and the Columbia Subsidiaries will
not, own beneficially (within the meaning of SEC Rule 13d 3(d)(1)) more than five percent (5%) of
the outstanding shares of Xxxxxx Common Stock.
Section 3.31 Fairness Opinion. Columbia’s Board of Directors has received a written opinion
from Xxxxxxxxx Associates Inc. to be updated in writing prior to the publication of the Proxy
Statement/Prospectus (a copy of such updated written opinion being provided simultaneously to
Xxxxxx at the time of receipt), to the effect that the Conversion Ratio and the Cash Consideration,
at the time of execution of this Agreement and the mailing of the Proxy Statement/Prospectus, is
fair to Columbia’s stockholders from a financial point of view.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to Columbia, as of the date of this Agreement and as of the
date of the Closing, as follows:
Section 4.1 Authority. The execution and delivery of this Agreement and the consummation of the transactions
contemplated herein have been authorized by the Board of Directors of Xxxxxx, and no other
corporate or shareholder action on the part of Xxxxxx is necessary to authorize this Agreement or
consummate the transactions contemplated herein. This Agreement has been duly executed and
delivered by Xxxxxx and, assuming due authorization, execution and delivery by Columbia,
constitutes a valid and binding obligation of Xxxxxx, enforceable against Xxxxxx in accordance with
its terms, subject to the Bankruptcy and Equity Exceptions. The execution, delivery and
consummation of this Agreement will not constitute a violation or breach of or default under the
Articles of Incorporation or Bylaws of Xxxxxx or any statute, rule, regulation, order, decree or
directive of any governmental authority or
- 29 -
court applicable to Xxxxxx, agreement, contract,
memorandum of understanding, indenture or other instrument to which Xxxxxx is a party or by which
Xxxxxx or any of its properties are bound.
Section 4.2 Organization and Standing. Xxxxxx is a business corporation that is duly
organized, validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Xxxxxx is a registered financial holding company under the BHC Act and has full
power and lawful authority to own and hold its properties and to carry on its business as presently
conducted.
Section 4.3 Capitalization. The authorized capital of Xxxxxx consists exclusively of
600,000,000 shares of Xxxxxx Common Stock and 10,000,000 shares of preferred stock without par
value (the “Xxxxxx Preferred Stock”). As of July 21, 2005, there were 172,118,122 shares of
Xxxxxx Common Stock validly issued, fully paid and non-assessable and 15,311,691 shares are held as
treasury shares. No shares of Xxxxxx Preferred Stock have been issued as of the date of this
Agreement, and Xxxxxx has no present intention to issue any shares of Xxxxxx Preferred Stock. As
of the date of this Agreement, there are no outstanding obligations, options or rights of any kind
entitling other persons to acquire shares of Xxxxxx Common Stock or shares of Xxxxxx Preferred
Stock and there are no outstanding securities or other instruments of any kind convertible into
shares of Xxxxxx Common Stock or into shares of Xxxxxx Preferred Stock, except as follows: (i)
5,837,659 shares of Xxxxxx Common Stock were issuable upon the exercise of outstanding stock
options granted under the Xxxxxx Incentive Stock Option Plan and the Xxxxxx Employee Stock Purchase
Plan and (ii) there were outstanding 172,118,122 Rights representing the right under certain
circumstances to purchase shares of Xxxxxx Common Stock pursuant to the terms of a Xxxxxx Rights
Agreement and (iii) 2,671,846 shares of Xxxxxx Common Stock reserved from time to time for issuance
pursuant to Xxxxxx’x Employee Stock Purchase and Dividend Reinvestment Plans. All shares of Xxxxxx
Common Stock that are issued in the Merger shall include purchase Rights under the Xxxxxx Rights
Agreement unless, prior to the Effective Date, all Rights issued under said Agreement shall have
been redeemed by Xxxxxx without a Distribution Date having occurred under such Agreement.
Section 4.4 Articles of Incorporation and Bylaws. The copies of the Articles of Incorporation, as amended, and of the Bylaws, as amended, of
Xxxxxx that have been delivered to Columbia are true, correct and complete.
Section 4.5 Subsidiaries. Schedule 4.5 contains a list of all subsidiaries (“Xxxxxx
Subsidiaries”) which Xxxxxx owns, directly or indirectly. Except as otherwise disclosed on
Schedule 4.5: (i) Xxxxxx owns, directly or indirectly, all of the outstanding shares of
capital stock of each Xxxxxx Subsidiary, and (ii) as of the date of this Agreement: (A) there are
no outstanding obligations, options or rights of any kind entitling persons (other than Xxxxxx or
any Xxxxxx Subsidiary) to acquire shares of capital stock of any Xxxxxx Subsidiary, and (B) there
are no outstanding securities or other instruments of any kind held by persons (other than Xxxxxx
or any Xxxxxx Subsidiary) that are convertible into shares of capital stock of any Xxxxxx
Subsidiary. Each Xxxxxx Subsidiary is duly organized, validly existing and in good standing under
the laws of the jurisdiction pursuant to which it is incorporated. Each Xxxxxx Subsidiary has full
power and lawful authority to own and hold its properties and to carry on its business as presently
- 30 -
conducted. Each Xxxxxx Subsidiary which is a banking institution is an insured bank under the
provisions of the FDI Act.
Section 4.6 Financial Statements.
(a) Xxxxxx has delivered to Columbia the following financial statements: Consolidated
Balance Sheets at December 31, 2004 and 2003 and Consolidated Statements of Income,
Consolidated Statements of Stockholders’ Equity, and Consolidated Statements of Cash Flows
for the years ended December 31, 2004, 2003 and 2002, audited by KPMG LLP and set forth in
the Annual Report to the shareholders of Xxxxxx for the year ended December 31, 2004, and
unaudited Consolidated Balance Sheets as of March 31, 2005, unaudited Consolidated
Statements of Income for the three-month periods ended March 31, 2005 and 2004, and
unaudited Consolidated Statements of Cash Flows for the three-months ended March 31, 2005
and 2004 as filed with the SEC in a Quarterly Report on Form 10-Q (the Consolidated Balance
Sheet as of March 31, 2005 being hereinafter referred to as the “Xxxxxx Balance Sheet”).
Each of the foregoing financial statements fairly presents the consolidated financial
position, assets, liabilities and results of operations and cash flows of Xxxxxx at their
respective dates and for the respective periods then ended and has been prepared in
accordance with GAAP, except as otherwise noted in a footnote thereto.
(b) Except (A) as reflected in Xxxxxx’x unaudited balance sheet at March 31, 2005 or
liabilities described in any notes thereto (or liabilities for which neither accrual nor
footnote disclosure is required pursuant to GAAP) or (B) for liabilities incurred in the
ordinary course of business since March 31, 2005 consistent with past practices or in
connection with this Agreement or the transactions contemplated hereby, neither Xxxxxx nor
any of the Xxxxxx Subsidiaries has any material liabilities or obligations of any nature.
Schedule 4.6 lists and Xxxxxx has delivered to Columbia copies of the documentation
creating or governing, all securitization transactions and “off-balance sheet
arrangements” (as defined in Item 303(c) of Regulation S-K of the SEC) effected by
Xxxxxx or the Xxxxxx Subsidiaries since KPMG LLP expressed its opinion with respect to the
financial statements of Xxxxxx and the Xxxxxx Subsidiaries included the Xxxxxx SEC
Reports (including the related notes).
(c) KPMG LLP is and has been (x) since September 24, 2003, a registered public
accounting firm (as defined in Section 2(a)(12) of the SOX Act), (y) throughout the periods
covered by such financial statements, “independent” with respect to Xxxxxx within the
meaning of Regulation S-X, and (z) since May 6, 2003, in compliance with subsections (g)
through (l) of Section 10A of the 1934 Act and the related Rules of the SEC and the Public
Company Accounting Oversight Board. Schedule 4.6 lists all non-audit services performed by
KPMG LLP for Xxxxxx and the Xxxxxx Subsidiaries since January 1, 2002.
(d) Each of Xxxxxx and the Xxxxxx Subsidiaries maintains accurate books and records
reflecting its assets and liabilities and maintains proper and adequate internal accounting
controls which provide assurance that (i) transactions are executed with management’s
authorization; (ii) transactions are recorded as necessary to permit preparation of the
consolidated financial statements of Xxxxxx and to maintain accountability for Xxxxxx’x
consolidated assets; (iii) access to Xxxxxx’x assets is permitted only in accordance with
management’s authorization; (iv) the reporting of Xxxxxx’x assets is compared with existing
assets at regular intervals; and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis.
(e) Xxxxxx has, on a timely basis, filed all forms, reports and documents required to
be filed by it with the SEC since January 1, 2002. Schedule 4.6 lists, and except
to the
- 31 -
extent available in full without redaction on the SEC’s website through XXXXX has
delivered to Columbia copies in the form filed with the SEC of (i) Xxxxxx’x Annual Reports
on Form 10-K for each fiscal year of Xxxxxx’x beginning since January 1, 2002, (ii) its
Quarterly Reports on Form 10-Q for each of the first three fiscal quarters in each of the
fiscal years of Xxxxxx referred to in clause (i) above, (iii) all proxy statements relating
to Xxxxxx’x meetings of stockholders (whether annual or special) held, and all information
statements relating to stockholder consents since the beginning of the first fiscal year
referred to in clause (i) above, (iv) all certifications and statements required by (x) the
SEC’s Order dated June 27, 2002 pursuant to Section 21(a)(1) of the 1934 Act (File No.
4-460), (y) 18 U.S.C. §1350 (Section 906 of the SOX Act) with respect to any report referred
to in clause (i) or (iii) above, (v) all other forms, reports, registration statements and
other documents (other than preliminary materials if the corresponding definitive materials
have been provided to Columbia pursuant to this Section 4.6) filed by Xxxxxx with the SEC
since the beginning of the first fiscal year referred to in clause (i) above (the forms,
reports, registration statements and other documents referred to in clauses (i), (ii),
(iii), (iv) and (v) above are, collectively, the “Xxxxxx SEC Reports” and, to the extent
available in full without redaction on the SEC’s website through XXXXX two days prior to the
date of this Agreement, are, collectively, the “Filed Xxxxxx SEC Reports”), and (vi) all
comment letters received by Xxxxxx from the Staff of the SEC
since January 1, 2002 and all responses to such comment letters by or on behalf of
Xxxxxx. The Xxxxxx SEC Reports (x) were or will be prepared in accordance with the
requirements of the 1933 Act and the 1934 Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed with the SEC, or will not
at the time they are filed with the SEC 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 made therein, in light of the circumstances under which they were made, not
misleading. No Xxxxxx Subsidiary is or has been required to file any form, report,
registration statement or other document with the SEC.
(f) Xxxxxx maintains disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the 1934 Act; such controls and procedures are effective to ensure that all
material information concerning Xxxxxx and the Xxxxxx Subsidiaries is made known on a timely
basis to the individuals responsible for the preparation of Xxxxxx’x filings with the SEC
and other public disclosure documents. Schedule 4.6 lists, and Xxxxxx has delivered
to Columbia copies of, all written descriptions of, and all policies, manuals and other
documents promulgating, such disclosure controls and procedures. To Xxxxxx’x knowledge, each
director and executive officer of Xxxxxx has filed with the SEC on a timely basis all
statements required by Section 16(a) of the 1934 Act and the rules and regulations
thereunder since January 1, 2002. As used in this Section 4.6, the term “file” shall be
broadly construed to include any manner in which a document or information is furnished,
supplied or otherwise made available to the SEC. To the extent required, Xxxxxx has in
place “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15(d)-15(e) of
the 1934 Act to allow Xxxxxx’x management to make timely decisions regarding required
disclosures and to make the certifications of the Chief Executive Officer and Chief
Financial Officer of Xxxxxx required under the 1934 Act. Since March 31, 2005, there has
not been any material change in the internal controls utilized by
- 32 -
Xxxxxx to assure that its
consolidated financial statements conform with GAAP. Without limiting the generality of the
foregoing, Xxxxxx’x disclosures and controls are designed and maintained to ensure that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization, (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences, (v) all information (both financial and non-financial) required to be disclosed
by Xxxxxx in the reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC,
and (vi) all such information is accumulated and communicated to Xxxxxx’x management as
appropriate to allow timely decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial Officer of Xxxxxx required
under the 1934 Act with respect to such reports. None of Xxxxxx’x or any Xxxxxx
Subsidiary’s records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any means
(including any electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access
thereto and therefrom) are not under the exclusive ownership and direct control of the
Xxxxxx or the Xxxxxx Subsidiaries or their independent accountants.
(g)
Each of the Chief Executive Officer and the Chief Financial Officer of Xxxxxx has signed,
and Xxxxxx has furnished to the SEC, all certifications required by Sections 302 and 906 of
the SOX Act; such certifications contain no qualifications or exceptions to the matters
certified therein and have not been modified or withdrawn; and neither Xxxxxx nor any of its
officers has received notice from any Governmental Entity questioning or challenging the
accuracy, completeness, form or manner of filing or submission of such certifications.
(h) Xxxxxx heretofore has provided to Columbia complete and correct copies of all
certifications filed with the SEC pursuant to Sections 302 and 906 of the SOX Act and hereby
reaffirms, represents and warrants to Columbia the matters and statements made in such
certificates.
- 33 -
Section 4.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule 4.7
or as reflected, noted or adequately reserved against in the Xxxxxx Balance Sheet, at March 31,
2005, Xxxxxx had no material liabilities (whether accrued, absolute, contingent or otherwise)
which were required to be reflected, noted or reserved against in the Xxxxxx Balance Sheet under
GAAP. Except as disclosed in Schedule 4.7, since March 31, 2005, Xxxxxx has not incurred
any such liability other than liabilities of the same nature as those set forth in the Xxxxxx
Balance Sheet, all of which have been reasonably incurred in the ordinary course of business
consistent with Xxxxxx’x customary business practices (the “Ordinary Course of Business of
Xxxxxx”).
Section 4.8 Absence of Changes; Dividends, Etc. Since March 31, 2005 (a) there has not been
any material and adverse change in the condition (financial or otherwise), results of operations,
assets, liabilities, business or future prospects of Xxxxxx and the Xxxxxx Subsidiaries on a
consolidated basis (a “Xxxxxx Material Adverse Effect”) and (b) except as disclosed in Schedule
4.8, Xxxxxx has not declared, set aside, made or paid any dividend or other distribution in
respect of the Xxxxxx Common Stock, or purchased, issued or sold any shares of Xxxxxx Common Stock
or the Xxxxxx Subsidiaries Common Stock.
Section 4.9 Litigation and Governmental Directives. Except as disclosed in Schedule
4.9: (i) there is no litigation, investigation or proceeding pending, or to the knowledge of
Xxxxxx or the Xxxxxx Subsidiaries threatened, that involves Xxxxxx or any Xxxxxx Subsidiary or its
properties and that, if determined adversely to Xxxxxx or the Xxxxxx Subsidiary, would have a
Xxxxxx Material Adverse Effect; (ii) there are no outstanding orders, writs, injunctions,
judgments, decrees, regulations, directives, consent agreements or memoranda of understanding
issued by any federal, state or local court or governmental agency or authority or of any
arbitration tribunal issued against or with the consent of Xxxxxx against Xxxxxx which would have a
Xxxxxx Material Adverse Effect or materially restrict the right of Xxxxxx to carry on its business as presently conducted; and (iii) Xxxxxx
has no knowledge of any fact or condition presently existing that might give rise to any
litigation, investigation or proceeding which, if determined adversely to Xxxxxx, would have a
Xxxxxx Material Adverse Effect or materially restrict the right of Xxxxxx to carry on its business
as presently conducted.
Section 4.10 Compliance with Laws; Governmental Authorizations. Except as disclosed in
Schedule 4.10 or where noncompliance would not have a Xxxxxx Material Adverse Effect: (i)
Xxxxxx and each of the Xxxxxx Subsidiaries are in compliance with all statutes, laws, ordinances,
rules, regulations, judgments, orders, decrees, directives, consent agreements, memoranda of
understanding, permits, concessions, grants, franchises, licenses, and other governmental
authorizations or approvals applicable to their respective operations and properties; and (ii) all
permits, concessions, grants, franchises, licenses and other governmental authorizations and
approvals necessary for the conduct of the respective businesses of Xxxxxx and each of the Xxxxxx
Subsidiaries as presently conducted have been duly obtained and are in full force and effect, and
there are no proceedings pending or threatened which may result in the revocation, cancellation,
suspension or materially adverse modification of any thereof.
Section 4.11 Complete and Accurate Disclosure. Neither this Agreement (insofar as it relates
to Xxxxxx, the Xxxxxx Subsidiaries, Xxxxxx Common Stock, and the
- 34 -
involvement of Xxxxxx in the
transactions contemplated hereby) nor any Exhibits or Schedules to this Agreement nor the
Financial Statements delivered by Xxxxxx to Columbia pursuant to Section 4.6 contains any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
Section 4.12 Labor Relations. Neither Xxxxxx nor any of the Xxxxxx Subsidiaries is a party to
or bound by any collective bargaining agreement. To its knowledge, Xxxxxx and each of the Xxxxxx
Subsidiaries enjoy good working relationships with their employees, and there are no labor disputes
pending, or to the knowledge of Xxxxxx or any Xxxxxx Subsidiary threatened, that would have a
Xxxxxx Material Adverse Effect.
Section 4.13 Employee Benefit Plans. Xxxxxx’x contributory profit-sharing plan, defined
benefits pension plan and 401(k) plan (hereinafter collectively referred to as the “Xxxxxx Pension
Plans”) are exempt from tax under Sections 401 and 501 of the Code, have been maintained and
operated in compliance with all applicable provisions of the Code and ERISA, are not subject to any
accumulated funding deficiency within the meaning of ERISA and the regulations promulgated
thereunder, and do not have any outstanding liability to the Pension Benefit Guaranty Corporation
(the “PBGC”). No “prohibited transaction” or “reportable event” (as such terms are defined in the
Code or ERISA) has occurred with respect to the Xxxxxx Pension Plans or any other employee benefit
plan to which Xxxxxx or any of the Xxxxxx Subsidiaries are a party or by which Xxxxxx or any of the
Xxxxxx Subsidiaries are bound (each hereinafter called a “Xxxxxx Benefit Plan”). There have
been no breaches of fiduciary duty by any fiduciary under or with respect to the Xxxxxx Pension
Plans or any other Xxxxxx Benefit Plan, and no claim is pending or threatened with respect to any
Xxxxxx Benefit Plan other than claims for benefits made in the Ordinary Course of Business of
Xxxxxx. Neither Xxxxxx or any of the Xxxxxx Subsidiaries have incurred any liability for any tax
imposed by Section 4975 of the Code or for any penalty imposed by the Code or by ERISA with respect
to the Xxxxxx Pension Plans or any other Xxxxxx Benefit Plan. There has not been any audit of any
Xxxxxx Benefit Plan by the U.S. Department of Labor, the IRS or the PBGC since 1990.
Section 4.14 Environmental Matters. Except as disclosed in Schedule 4.14, Xxxxxx has
no material liability relating to any environmental contaminant, pollutant, toxic or hazardous
waste or other similar substance that has been used, generated, stored, processed, disposed of or
discharged onto any of the real estate now or previously owned or acquired (including without
limitation any real estate acquired by means of foreclosure or other exercise of any creditor’s
right) or leased by Xxxxxx and which is required to be reflected, noted or adequately reserved
against in Xxxxxx’x consolidated financial statements under GAAP. In particular, without limiting
the generality of the foregoing sentence, but subject to the materiality standard therein, except
as disclosed in Schedule 4.14, neither Xxxxxx nor any of the Xxxxxx Subsidiaries have used
or incorporated: (i) any materials containing asbestos in any building or other structure or
improvement located on any of the real estate now or previously owned or acquired (including
without
- 35 -
limitation any real estate acquired by means of foreclosure or exercise of any other
creditor’s right) or leased by Xxxxxx or any of the Xxxxxx Subsidiaries; (ii) any electrical
transformers, fluorescent light fixtures with ballasts or other equipment containing PCB’s on any
of the real estate now or previously owned or acquired (including without limitation any real
estate acquired by means of foreclosure or exercise of any other creditor’s right) or leased by
Xxxxxx or any of the Xxxxxx Subsidiaries; or (iii) any underground storage tanks for the storage of
gasoline, petroleum products or other toxic or hazardous wastes or similar substances located on
any of the real estate now or previously owned or acquired (including without limitation any real
estate acquired by means of foreclosure or exercise of any other creditor’s right) or leased by
Xxxxxx or any of the Xxxxxx Subsidiaries.
Section 4.15 SEC Filings. No registration statement, offering circular, proxy statement,
schedule or report filed and not withdrawn by Xxxxxx with the SEC under the 1933 Act or the 1934
Act, on the date of effectiveness (in the case of any registration statement or offering circular)
or on the date of filing (in the case of any report or schedule) or on the date of mailing (in the
case of any proxy statement), contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading.
Section 4.16 Proxy Statement/Prospectus. At the time the Proxy Statement/Prospectus (as defined in Section 6.1(b)) is mailed to the
stockholders of Columbia and at all times subsequent to such mailing, up to and including the
Effective Time, the Proxy Statement/Prospectus (including any pre- and post-effective amendments
and supplements thereto), with respect to all information relating to Xxxxxx, Xxxxxx Common Stock,
and actions taken and statements made by Xxxxxx in connection with the transactions contemplated
herein (other than information provided by Columbia or The Columbia Bank to Xxxxxx), will: (i)
comply in all material respects with applicable provisions of the 1933 Act and 1934 Act and the
applicable rules and regulations thereunder; and (ii) not contain any statement which, at the time
and in light of the circumstances under which it is made, is false or misleading with respect to
any material fact, or omits to state any material fact that is required to be stated therein or
necessary in order (A) to make the statements therein not false or misleading, or (B) to correct
any statement in an earlier communication with respect to the Proxy Statement/Prospectus which has
become false or misleading.
Section 4.17 Regulatory Approvals. Xxxxxx is not aware of any reason why any of the required
regulatory approvals to be obtained in connection with the Merger should not be granted by such
regulatory authorities or why such regulatory approvals should be conditioned on any requirement
which would be a significant impediment to Xxxxxx’x ability to carry on its business.
Section 4.18 No Finder. Xxxxxx has not paid or become obligated to pay any fee or commission
of any kind whatsoever to any investment banker, broker, finder, advisor or other intermediary for,
on account of, or in connection with the transactions contemplated in this Agreement.
Section 4.19
Taxes. Xxxxxx has filed, or, as disclosed in Schedule 4.19 has received
extension for filing, all federal, state, county, municipal and foreign tax returns, reports and
declarations which are required to be filed by it as of December 31, 2004. Except as disclosed in
Schedule 4.19, (i) Xxxxxx has paid all taxes, penalties and interest which have become due
pursuant thereto or which became due pursuant to federal, state, county, municipal
- 36 -
or foreign tax
laws applicable to the periods covered by the foregoing tax returns, (ii) Xxxxxx has not received
any notice of deficiency or assessment of additional taxes; (iii) the IRS has not commenced or
given notice of an intention to commence any examination or audit of the federal income tax returns
of Xxxxxx for any year through and including the year ended December 31, 2004. Except as disclosed
in Schedule 4.19, Xxxxxx has not granted any waiver of any statute of limitations or otherwise
agreed to any extension of a period for the assessment of any federal, state, county, municipal or
foreign income tax. Except as disclosed in Schedule 4.19, the accruals and reserves
reflected in the Xxxxxx Balance Sheet for taxes (including interest and penalties, if any, thereon)
have been made in accordance with GAAP.
Section 4.20 Title to and Condition of Assets. Xxxxxx has good and marketable title to all material consolidated real and personal
properties and assets reflected in the Xxxxxx Balance Sheet or acquired subsequent to March 31,
2005 (other than property and assets disposed of in the Ordinary Course of Business of Xxxxxx),
free and clear of all liens or encumbrances of any kind whatsoever; provided, however, that the
representations and warranties contained in this sentence do not cover liens or encumbrances that:
(i) are reflected in the Xxxxxx Balance Sheet; (ii) represent liens of current taxes not yet due or
which, if due, may be paid without penalty, or which are being contested in good faith by
appropriate proceedings; and (iii) represent such imperfections of title, liens, encumbrances,
zoning requirements 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 the
properties and assets subject thereto. Xxxxxx owns or has the right to use all real and personal
properties and assets that are material to the conduct of its business as presently conducted.
Section 4.21 Contracts. All Xxxxxx Material Contracts are enforceable against Xxxxxx, and
Xxxxxx has in all material respects performed all obligations required to be performed by it to
date and is not in default in any material respect and has no knowledge of any default by a third
party under a Xxxxxx Material Contract. “Xxxxxx Material Contracts” shall be defined as each
written or oral contract entered into by Xxxxxx or any Xxxxxx Subsidiary (other than contracts with
customers reasonably entered into by Xxxxxx in the Ordinary Course of
Business of Xxxxxx) which involves
aggregate payments or receipts in excess of $500,000 per year, including without limitation every
employment contract, employee benefit plan, agreement, lease, license, indenture, mortgage and
other commitment to which either Xxxxxx or a Xxxxxx Subsidiary is a party or by which Xxxxxx or any
of the Xxxxxx Subsidiaries or any of their properties may be bound.
Section 4.22 Insurance. All policies of insurance relating to operations of Xxxxxx, including
without limitation all financial institutions bonds, held by or on behalf of Xxxxxx are in full
force and effect, and no notices of cancellation have been received in connection therewith.
Section 4.23 Reports. Xxxxxx and the Xxxxxx Subsidiaries have filed all material reports,
registrations and statements that are required to be filed with the FRB, the FDIC, the Pennsylvania
Department of Banking (the “Pennsylvania Department”), and any other applicable federal, state or local governmental or regulatory
authorities and such reports, registrations and statements referred to in this Section 4.23 were,
as of their respective dates, in compliance in all material respects with
- 37 -
all of the statutes,
rules and regulations enforced or promulgated by the governmental or regulatory authority with
which they were filed; provided, however, that the failure to file any such report, registration or
statement or the failure of any report, registration or statement to comply with the applicable
regulatory standard shall not be deemed to be a breach of the foregoing representation unless such
failure has or may have a material adverse impact on Xxxxxx and the Xxxxxx Subsidiaries on a
consolidated basis. Xxxxxx has furnished Columbia with, or made available to Columbia, copies of
all such filings made in the last three fiscal years and in the period from January 1,
2005 through the date of this Agreement. Xxxxxx is required to file reports with the SEC
pursuant to Section 12 of the 1934 Act, and Xxxxxx has made all appropriate filings under the 1934
Act and the rules and regulations promulgated thereunder; provided, however, that the failure to
make any such filing shall not be deemed to be a breach of the foregoing representation unless such
failure has or may have a material adverse impact on Xxxxxx and the Xxxxxx subsidiaries. The
Xxxxxx Common Stock is traded on NASDAQ under the symbol “FULT.”
Section 4.24 Regulatory Agreements and Matters.
(a) Except as set forth on Schedule 4.24, on the date hereof, neither Xxxxxx
nor any Xxxxxx Subsidiary is a party to any assistance agreement, directive, commitment
letter, supervisory agreement or letter, memorandum of understanding, consent order, cease
and desist order, or condition of any regulatory order, decree or similar directive with or
by the FDIC, the FRB, the Pennsylvania Department or any other financial services regulatory agency
having jurisdiction over Xxxxxx or any Xxxxxx Subsidiary that relates to the conduct of the
business of Xxxxxx or any Xxxxxx Subsidiary Bank, nor has Xxxxxx or any Xxxxxx Subsidiary
been advised by any such regulatory agency or other governmental entity that it is
considering issuing or requesting any such agreement, order or decree.
(b) No report has been made by any attorney to Xxxxxx’x chief legal officer, chief
executive officer, board of directors (or committee thereof) or other representative
pursuant to 17 CFR Part 205.
(c) Xxxxxx is, or will timely be in all material respects, in compliance with all
current and proposed listing and corporate governance requirements of NASDAQ, and is in
compliance in all material respects, and will continue to remain in compliance following the
Effective Time, with all rules, regulations, and requirements of the SOX Act and the SEC.
(d) Xxxxxx is in material compliance with the provisions of the SOX Act applicable to
it as of the date hereof and has implemented such programs and has taken reasonable steps,
upon the advice of Xxxxxx’x independent auditors and outside counsel, respectively, to
ensure Xxxxxx’x future compliance (not later than the relevant statutory and regulatory
deadlines therefore) and all provisions of the SOX Act which shall become applicable to
Xxxxxx after the date hereof.
Section 4.25 Regulatory Examinations. Except for normal examinations conducted by a
regulatory agency in the Ordinary Course of Business of Xxxxxx, to Xxxxxx’x knowledge, no
regulatory agency has initiated any material proceeding or investigation into the
- 38 -
business or
operations of Xxxxxx within the past three (3) years. Xxxxxx has not received any notice objection
from any regulatory agency relating to any examinations of Xxxxxx which would have a Xxxxxx
Material Adverse Effect.
Xxxxxx is not required to divest any assets currently held by it or discontinue any activity
currently conducted as a result of the Federal Deposit Insurance Corporation Improvement Act
of 1991, any regulations promulgated thereunder, or otherwise which would have a materially
adverse effect on Xxxxxx.
ARTICLE V — COVENANTS OF COLUMBIA
From the date of this Agreement until the Effective Time, Columbia covenants and agrees to do,
and shall cause the Columbia Subsidiaries to do, the following:
Section 5.1 Conduct of Business. Except as otherwise consented to by Xxxxxx in writing (such
consent not to be unreasonably withheld) or as set forth on Schedule 5.1, Columbia and the
Columbia Subsidiaries shall:
(i) use all reasonable efforts to carry on their respective businesses in, and
only in, the Ordinary Course of Business;
(ii) use all reasonable efforts to preserve their present business
organizations, to retain the services of substantially all of their present officers
and employees, and to maintain their relationships with customers, suppliers and
others having business dealings with Columbia or any of the Columbia Subsidiaries;
(iii) maintain all of their structures, equipment and other real property and
tangible personal property in good repair, order and condition, except for ordinary
wear and tear and damage by unavoidable casualty;
(iv) use all reasonable efforts to preserve or collect all material claims and
causes of action belonging to Columbia or any of the Columbia Subsidiaries;
(v) keep in full force and effect all insurance policies now carried by
Columbia or any of the Columbia Subsidiaries;
(vi) perform in all material respects each of their obligations under all
Material Contracts to which Columbia or any of the Columbia Subsidiaries are a party
or by which any of them may be bound or which relate to or affect their properties,
assets and business;
(vii) maintain their books of account and other records in the Ordinary Course
of Business;
(viii) comply in all material respects with all statutes, laws, ordinances,
rules and regulations, decrees, orders, consent agreements, memoranda of
- 39 -
understanding and other federal, state, and local governmental directives applicable
to Columbia or any of the Columbia Subsidiaries and to the conduct of their
businesses;
(ix) not amend Columbia’s or any of the Columbia Subsidiaries’ Certificate of
Incorporation or Bylaws, except in accordance with the terms hereof or to the extent
necessary to consummate the transactions contemplated by this Agreement;
(x) not enter into or assume any Material Contract, incur any material
liability or obligation, or make any material commitment, except in the Ordinary
Course of Business;
(xi) not make any material acquisition or disposition of any properties or
assets (except for acquisitions or dispositions of properties or assets in
accordance with any Material Contract disclosed on Schedule 3.12 or which do
not exceed, in any case, $100,000), or subject any of their properties or assets to
any material lien, claim, charge, or encumbrance of any kind whatsoever, except for
loan and investment activity engaged in the Ordinary Course of Business and
consistent with past practice;
(xii) not knowingly take or permit to be taken any action which would
constitute or cause a material breach of any representation, warranty or covenant
set forth in this Agreement as of or subsequent to the date of this Agreement or as
of the Effective Date;
(xiii) except as permitted in Section 5.10 herein, not declare, set aside or
pay any dividend or make any other distribution in respect of Columbia Common Stock;
(xiv) not authorize, purchase, redeem, issue (except upon the exercise of
outstanding options under the Columbia Stock Option Plans) or sell (or grant options
or rights to purchase or sell) any shares of Columbia Common Stock or any other
equity or debt securities of Columbia (other than the Warrant or the Columbia Common
Stock issuable under the Warrant);
(xv) not increase the rate of compensation of, pay a bonus or severance
compensation to, establish or amend any Columbia Benefit Plan, except as required by
law, or enter into or amend any Employment Obligation, severance or “change in
control” agreement or arrangement with any officer, director, employee or
consultant of Columbia or any of the Columbia Subsidiaries, except that Columbia and
the Columbia Subsidiaries may grant reasonable salary increases and bonuses to their
officers and employees in the Ordinary Course of Business to the extent consistent
with past practice, in magnitude and otherwise;
(xvi) not enter into any related party transaction of the kind contemplated in
Section 3.19 herein;
- 40 -
(xvii) in determining the additions to loan loss reserves and the loan
write-offs, writedowns and other adjustments that reasonably should be made by The
Columbia Bank and classifying, valuing and retaining its investment
portfolio, during the fiscal year ending December 31, 2005 and thereafter,
Columbia and the Columbia Subsidiaries shall act in accordance with GAAP and shall
advise Xxxxxx of, and provide Xxxxxx with the opportunity to comment on, any
material changes thereto;
(xviii) file with appropriate federal, state, local and other governmental
agencies all tax returns and other material reports required to be filed, pay in
full or make adequate provisions for the payment of all taxes, interest, penalties,
assessments or deficiencies shown to be due on tax returns or by any taxing
authorities and report all information on such returns truthfully, accurately and
completely;
(xix) not renew any existing contract for services, goods, equipment or the
like or enter into, amend in any material respect or terminate any contract or
agreement (including without limitation any settlement agreement with respect to
litigation) involving an amount in excess of $250,000 or for a term of one year or
more;
(xx) except as permitted by (xi) above, not make any capital expenditures other
than in the Ordinary Course of Business or as necessary to maintain existing assets
in good repair;
(xxi) not make application for the opening or closing of any, or open or close
any, branches or automated banking facility except as disclosed on Schedule
5.1(xxi);
(xxii) not make any equity investment or commitment to make such an investment
in real estate or in any real estate development project, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructuring in the Ordinary Course of Business consistent with customary banking
practice;
(xxiii) not take any other action which would cause the Merger not to qualify
as a tax-free reorganization under Section 368 of the Code; and
(xxiv) following receipt of both stockholder and regulatory approval of the
Merger and upon agreement as to the Effective Date by Xxxxxx and Columbia, conform
its practices to the standards used by Xxxxxx, with respect to its investment and
loan portfolios and loan loss reserve; provided, however, (A) in taking such
actions, Columbia shall not be required to breach any existing contractual
obligations and (B) any such actions taken at the request of Xxxxxx shall be subject
to the provisions of subparagraph (a) of Section 7.2(f) herein.
- 41 -
Section 5.2 Best Efforts. Columbia and the Columbia Subsidiaries shall cooperate with Xxxxxx
and shall use their best efforts to do or cause to be done all things necessary or appropriate on
their part in order to
fulfill the conditions precedent set forth in Article VII of this Agreement and to consummate
the transactions contemplated by this Agreement, including the Merger. In particular, without
limiting the generality of the foregoing sentence, Columbia and the Columbia Subsidiaries shall:
(i) cooperate with Xxxxxx in the preparation of all required applications for regulatory approval
of the transactions contemplated by this Agreement and in the preparation of the Registration
Statement (as defined in Section 6.1(b)); and (ii) cooperate with Xxxxxx in making Columbia’s and
the Columbia Subsidiaries’ employees reasonably available for training by Xxxxxx at Columbia’s and
the Columbia Subsidiaries’ facilities prior to the Effective Time, to the extent that such training
is deemed reasonably necessary by Xxxxxx to ensure that Columbia’s and the Columbia Subsidiaries’
facilities will be properly operated in accordance with Xxxxxx’x policies after the Merger.
Section 5.3 Access to Properties and Records. Columbia and the Columbia Subsidiaries shall
give to Xxxxxx and its authorized employees and representatives (including without limitation its
counsel, accountants, economic and environmental consultants and other designated representatives)
such access during normal business hours to all properties, books, contracts, documents and records
of Columbia and the Columbia Subsidiaries as Xxxxxx may reasonably request, subject to the
obligation of Xxxxxx and its authorized employees and representatives to maintain the
confidentiality of all nonpublic information concerning Columbia and the Columbia Subsidiaries
obtained by reason of such access and subject to applicable law.
Section 5.4 Subsequent Financial Statements. Between the date of signing of this Agreement
and the Effective Time, Columbia and the Columbia Subsidiaries shall promptly prepare and deliver
to Xxxxxx as soon as practicable all internal monthly and quarterly financial statements, all
quarterly and annual reports to stockholders and all reports to regulatory authorities prepared by
or for either Columbia or any of the Columbia Subsidiaries (which additional financial statements
and reports are hereinafter collectively referred to as the “Additional Columbia Financial
Statements”). Columbia shall be deemed to make the representations and warranties set forth in
Section 3.6, 3.7 and 3.8 to Xxxxxx with respect to the Additional Columbia Financial Statements
upon delivery thereof.
Section 5.5 Update Schedules. Columbia or any of the Columbia Subsidiaries shall promptly
disclose to Xxxxxx in writing any material change, addition, deletion or other modification to the
information set forth in its Schedules hereto.
Section 5.6 Notice. Columbia or any of the Columbia Subsidiaries shall promptly notify Xxxxxx
in writing of any actions, claims, investigations, proceedings or other developments which, if
pending or in existence on the date of this Agreement, would have been required to be disclosed to
Xxxxxx in order to ensure the accuracy of the representations and warranties set forth in this
Agreement or
which otherwise would have a Columbia Material Adverse Effect or restrict in any material
manner their ability to carry on their respective businesses as presently conducted.
Section 5.7 No Solicitation.
- 42 -
(a) Columbia and the Columbia Subsidiaries shall not, and shall not authorize or permit
any of their officers, directors or employees or any investment banker, financial advisor or
attorney to initiate or encourage or take any other action to facilitate (including by way
of furnishing non-public information) any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, provided,
however, that if, at any time the Board of Directors of Columbia determines in good faith,
after consultation with outside counsel, that failure to do so would be inconsistent with
their responsibilities under Maryland law, Columbia, in response to a written Acquisition
Proposal that (i) was unsolicited or that did not otherwise result from a breach of this
Section, and (ii) may lead to a Superior Proposal, Columbia and the Columbia Subsidiaries
may (x) furnish non-public information with respect to Columbia or the Columbia Subsidiaries
to the person who made such Acquisition Proposal pursuant to a customary confidentiality
agreement and (y) participate in negotiations regarding such Acquisition Proposal. Without
limiting the foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any director or officer of Columbia or any of the Columbia
Subsidiaries or any investment banker, financial advisor, attorney, accountant, or other
representative of Columbia or any of the Columbia Subsidiaries, whether or not acting on
behalf of Columbia or any of its subsidiaries, shall be deemed to be a breach of this
Section by Columbia.
(b) Columbia shall call a meeting of its stockholders to be held as promptly as
practicable for the purpose of voting upon this Agreement and shall take, in good faith, all
actions which are necessary or appropriate on its part in order to secure the approval of
this Agreement by its stockholders at the meeting, including recommending the approval of
this Agreement by Columbia’s stockholders; provided, however, that Columbia’s Board of
Directors shall not be required to take any action otherwise required by this sentence that
it has determined in good faith, after consultation with outside counsel, would be
inconsistent with their responsibilities under Maryland law.
(c) The Board of Directors of Columbia shall not (1) fail to recommend this Agreement,
withdraw or modify, or propose to withdraw or modify, in a manner adverse to Xxxxxx, its
approval or recommendation of this Agreement or the Merger unless there is an Acquisition
Proposal outstanding, (2) approve or recommend, or propose to approve or recommend, an
Acquisition Proposal or (3) cause Columbia to enter into any letter of intent, agreement in
principle, acquisition agreement or other agreement with respect to an Acquisition Proposal
unless the Board of Directors of Columbia shall have determined in good faith after
consultation with outside counsel, that failure to do so would be inconsistent with their
responsibilities under Maryland law and that the applicable Acquisition Proposal is a
Superior Proposal.
(d) Nothing contained in this Section shall prohibit Columbia from at any time taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated
under the 1934 Act, as amended, provided, however, that neither Columbia nor its Board of
Directors shall, except as permitted by paragraph (b) or (c) of this section, propose to
approve or recommend, an Acquisition Proposal.
- 43 -
(e) Columbia shall promptly (but in any event within one day) advise Xxxxxx orally and
in writing of any Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the person making such request,
Acquisition Proposal or inquiry. Columbia will, to the extent reasonably practicable, keep
Xxxxxx fully informed of the status and details (including amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
(i) In the event the Board of Directors of Columbia takes any of the actions
set forth in clauses (1), (2) and/or (3) of Section 5.7(c) in compliance with the
standards therein, such action shall allow termination of this Agreement by Xxxxxx
under Section 8.1(b)(iii) herein which shall be treated in the same manner as
termination under Section 8.1(a) herein and shall allow exercise of the Warrant. In
the event the Board of Directors of Columbia takes any of the actions set forth in
clauses (1), (2) and/or (3) of Section 5.7(c) without compliance with the standards
therein, such action shall constitute a breach allowing termination of this
Agreement by Xxxxxx under Section 8.1(b)(iii) herein which shall be treated in the
same manner as termination by Xxxxxx under Section 8.1(b)(i) herein and shall allow
exercise of the Warrant.
(ii) This Agreement may be terminated by Columbia prior to the stockholders
meeting of Columbia if (A) the Board of Directors of Columbia shall have determined
in good faith after consultation with outside counsel that failure to do so would be
reasonably likely to be inconsistent with their responsibilities under Maryland law,
(B) it is not in breach of its obligations under this Section 5.7 in any material
respect and has complied with, and continues to comply with, all requirements and
procedures of this Section 5.7 in all material respects and the Board of Directors
of Columbia has authorized, subject to complying with the terms of this Agreement,
Columbia to enter into a binding written agreement for a transaction that
constitutes a Superior Proposal and Columbia notifies Xxxxxx in writing that it
intends to enter into such agreement, attaching the most current version of such
agreement to such notice; (C) Xxxxxx does not make, within five (5) business days
after receipt of Columbia’s written notice of its intention to enter into a binding
agreement for a Superior Proposal, any offer that the Board of Directors of Columbia
reasonably and in good faith determines, after consultation with its financial and
legal advisors, is at least as favorable to the stockholders of Columbia as the
Superior Proposal and during such period Columbia reasonably considers and discusses
in good faith all proposals submitted by Xxxxxx and, without limiting the foregoing,
meets with, and causes its financial and legal
advisors to meet with, Xxxxxx and its advisors from time to time as required by
Xxxxxx to consider and discuss in good xxxxx Xxxxxx’x proposals, and (D) prior to
Columbia’s termination pursuant to this Section 5.7(e)(ii), Columbia confirms in
writing that such termination allows exercise of the Warrant. Columbia agrees (x)
that it will not enter into a binding agreement referred to in clause (B) above
until at least the five (5) business days after Xxxxxx has received the notice to
Xxxxxx
- 44 -
required by clause (C) and (y) to notify Xxxxxx promptly if its intention to
enter into a binding agreement referred to in its notice to Xxxxxx shall change at
any time after giving such notice.
(f) For the purpose of this Section 5.7:
(i) “Acquisition Proposal” shall mean a written proposal or written offer
(other than by another party hereto) for a tender or exchange offer for securities
of Columbia or any of the Columbia Subsidiaries, or a merger, consolidation or other
business combination involving an acquisition of Columbia or any of the Columbia
Subsidiaries or any proposal to acquire in any manner a substantial equity interest
in or a substantial portion of the assets of Columbia or any of the Columbia
Subsidiaries.
(ii) A “Superior Proposal” shall be an Acquisition Proposal that the Board of
Directors of Columbia believes in good faith (after consultation with its financial
advisor) is reasonably capable of being completed, taking into account all relevant
legal, financial, regulatory and other aspects of the Acquisition Proposal and the
source of its financing, on the terms proposed and, believes in good faith (after
consultation with its financial advisor), would, if consummated, result in a
transaction more favorable to the stockholders of Columbia from a financial point of
view, than the transactions contemplated by this Agreement and believes in good
faith (after consultation with its financial advisor) that the person making such
Acquisition Proposal has, or is reasonably likely to have or obtain, any necessary
funds or customary commitments to provide any funds necessary to consummate such
Acquisition Proposal.
Section 5.8 Affiliate Letters. Columbia shall use its best efforts to deliver or cause to be
delivered to Xxxxxx, at or before the Closing, a letter from each of the executive officers and
directors of Columbia and shall use its best efforts to obtain and deliver such a letter from each
stockholder of Columbia who may be deemed to be an “affiliate” (as that term is defined for
purposes of Rules 145 and 405 promulgated by the SEC under the 0000 Xxx) of Columbia, in form and
substance satisfactory to Xxxxxx and Columbia, under the terms of which each such officer, director
or stockholder acknowledges and agrees to abide by all limitations imposed by the 1933 Act and by
all rules, regulations and releases promulgated thereunder by the SEC with respect to the sale or
other disposition of the shares of Xxxxxx Common Stock to be received by such person pursuant to
this Agreement.
Section 5.9 No Purchases or Sales of Xxxxxx Common Stock During Price Determination Period.
Columbia and the Columbia Subsidiaries shall not, and shall use their best efforts to ensure that
their executive officers and directors do not, and shall use their best efforts to ensure that each
stockholder of Columbia who may be deemed an “affiliate” (as defined in SEC Rules 145 and 405) of
Columbia does not, purchase or sell on NASDAQ, or submit a bid to purchase or an offer to sell on
NASDAQ, directly or indirectly, any shares of Xxxxxx Common Stock or any options, rights or other
securities convertible into shares of Xxxxxx Common Stock during the Price Determination Period,
provided, however, that Columbia may
- 45 -
purchase shares of Columbia Common Stock in the ordinary
course of business during the Price Determination Period for the benefit of Columbia’s Benefit
Plans or Columbia’s Dividend Reinvestment Plan.
Section 5.10 Dividends. Between the date of this Agreement and the Effective Date, Columbia
shall not declare or pay cash dividends on the Columbia Common Stock; provided, however, that (a)
Columbia may declare and pay a quarterly dividend of up to $0.17 per share on the Columbia Common
Stock on each of (i) July 28, 2005; and (ii) October 28, 2005, provided that the Effective Date
does not occur (or is not expected to occur) on or before the record date for the dividend on
Xxxxxx Common Stock scheduled to be paid on or about October 14, 2005; and (b) Columbia may declare
and pay a quarterly dividend of up to $0.19 per share on the Columbia Common Stock on each of (i)
January 25, 2006, provided that the Effective Date does not occur (or is not expected to occur) on
or before the record date for the dividend on the Xxxxxx Common Stock scheduled to be paid on or
about January 16, 2006; (ii) April 14, 2006, provided that the Effective Date does not occur (or is
not expected to occur) on or before the record date for the dividend on the Xxxxxx Common Stock
scheduled to be paid on or about April 14, 2006 and (iii) July 28, 2006, provided that the
Effective Date does not occur (or is not expected to occur) on or before the record date for the
dividend on the Xxxxxx Common Stock scheduled to be paid on or about July 14, 2006 (it being the
intent of Xxxxxx and Columbia that Columbia be permitted to pay a dividend on the Columbia Common
Stock on the dates indicated in subsections (a)(ii), (b)(i), (ii) and (iii) above only if the
stockholders of Columbia, upon becoming shareholders of Xxxxxx, would not be entitled to receive a
dividend on the Xxxxxx Common Stock on the payment dates indicated in such subsections.
Section 5.11 Internal Controls. Between the date of this Agreement and the Closing Date,
Columbia shall permit Fulton senior officers to meet with the Chief Financial Officer of Columbia
and other officers responsible for the Columbia Financial Statements, the internal controls of
Columbia and the disclosure controls and procedures of Columbia to discuss such matters as Xxxxxx
may xxxx reasonably necessary or appropriate for Xxxxxx to satisfy its obligations under Sections
302, 404 and 906 of the SOX Act and any rules and regulations relating thereto. Xxxxxx shall have
continuing access through the Effective Time to both the Columbia books and records and internal
audit team for the purpose of ongoing assessment of internal controls and shall cause its outside
auditors to provide any documentation regarding Columbia’s internal control to Xxxxxx
and cause its auditors to be available for discussions with Xxxxxx’x representatives regarding
Columbia’s systems of internal controls.
Section 5.12 Certain Matters, Certain Revaluations, Changes and Adjustments.
Notwithstanding that Columbia believes that it and the Columbia Subsidiaries have established
all reserves and taken all provisions for possible loan losses required by GAAP and applicable
laws, rules and regulations, Columbia recognizes that Xxxxxx may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of reserves for possible
loan losses). At or before the Effective Time, upon the request of Xxxxxx and Xxxxxx’x written
confirmation that all conditions precedent under Article VII (other than the delivery of customary
closing documents) have been satisfied or waived, and in order to
- 46 -
formulate the plan of integration
for the Merger, Columbia shall, consistent with GAAP, modify and change its loan, litigation and
real estate valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied consistently on a mutually satisfactory basis with those of Xxxxxx
and establish such accruals and reserves as shall be necessary to reflect Merger-related expenses
and costs incurred by Columbia and its Subsidiaries, provided, however, that Columbia shall not be
required to take such action prior to receipt of stockholder and regulatory approvals; and provided
further, however, that no accrual or reserve made by Columbia or any Columbia Subsidiary pursuant
to this Section 5.12 or any litigation or regulatory proceeding arising out of any such accrual or
reserve, shall constitute or be deemed to be a breach, violation of or failure to satisfy any
representation, warranty, covenant, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to satisfy shall have
occurred.
Section 5.13 Other Policies. Between the date of this Agreement and the Effective Time,
Columbia shall cooperate with Xxxxxx to reasonably conform the policies and procedures of Columbia
and its Subsidiaries regarding applicable regulatory matters to those
of Xxxxxx and the Xxxxxx Subsidiaries, as Xxxxxx may reasonably identify to Columbia from time to time, provided, however,
that implementation of such conforming actions may at Columbia’s discretion be delayed until the
time period following satisfaction of the conditions set forth in Section 5.12.
Section 5.14 Other Transactions. Columbia acknowledges that Xxxxxx may be in the process of
acquiring other banks and financial institutions or in offering securities to the public and that
in connection with such transactions, information concerning Columbia
and the Columbia Subsidiaries may be
required to be included in the registration statements, if any, for the sale of securities of
Xxxxxx or in SEC reports in connection with such transactions. Xxxxxx shall provide Columbia and
its counsel with copies of such registration statements at the time of filing. Columbia agrees to
provide Xxxxxx with any information, certificates, documents or other materials about Columbia and
the Columbia Subsidiaries as are reasonably necessary to be included in such SEC reports or registration
statements, including registration statements which may be filed by Xxxxxx prior to the Effective
Time. Columbia shall use its reasonable efforts to cause its attorneys and accountants to
provide Xxxxxx and any underwriters for Xxxxxx with any consents, comfort letters, opinion letters,
reports or information which are necessary to complete the registration statements and applications
for any such acquisition or issuance of securities. Xxxxxx shall not file with the SEC any
registration statement or amendment thereto or supplement thereof containing information regarding
Columbia unless Columbia shall have consented in writing to such filing, which consent shall not be
unreasonably delayed or withheld.
Section 5.15 Transaction Expenses of Columbia.
(a)
Columbia shall cause its and the Columbia Subsidiaries’ professionals to render monthly
invoices within 30 days after the end of each month. Columbia shall advise Xxxxxx monthly of
all out-of-pocket expenses which Columbia and the Columbia Subsidiaries have incurred in connection
with the transactions contemplated hereby. Columbia shall not, and
shall cause each of the Columbia Subsidiaries not to, pay fees and expenses to its accountants or attorneys
- 47 -
on any basis
different than the basis on which such professionals would be paid in the absence of any
business combination.
(b) Columbia, in reasonable consultation with Xxxxxx and at Xxxxxx’x expense, shall
make all arrangements with respect to the printing and mailing of the Prospectus/Proxy
Statement.
ARTICLE VI — COVENANTS OF XXXXXX
From the date of this Agreement until the Effective Time, or until such later date as may be
expressly stipulated in any Section of this Article VI, Xxxxxx covenants and agrees to do the
following:
Section 6.1 Best Efforts. Xxxxxx shall cooperate with Columbia and the Columbia Subsidiaries
and shall use its best efforts to do or cause to be done all things necessary or appropriate on its
part in order to fulfill the conditions precedent set forth in Article VII of this Agreement and to
consummate the transactions contemplated by this Agreement, including the Merger. In particular,
without limiting the generality of the foregoing sentence, Xxxxxx agrees to do the following:
(a) Applications for Regulatory Approval. Xxxxxx shall promptly prepare and
file, with the cooperation and assistance of (and after review by) Columbia and its counsel
and accountants, all required applications for regulatory approval of the transactions
contemplated by this Agreement, including without limitation applications for approval under
the BHC Act and the Financial Institutions Article of the Annotated Code of Maryland, as
amended.
(b) Registration Statement. Xxxxxx shall promptly prepare, with the
cooperation and assistance of (and after review by) Columbia and its counsel and
accountants, and file with the SEC a registration statement (the “Registration Statement”)
for the purpose of registering under the 1933 Act the shares of Xxxxxx Common Stock to be
issued to stockholders of Columbia under the provisions of this Agreement and a proxy statement
and prospectus which is prepared as a part thereof (the “Proxy Statement/Prospectus”) for
the purpose of registering under the 1933 Act the shares of Xxxxxx Common Stock to be issued
to the stockholders of Columbia, and the soliciting of the proxies of Columbia’s
stockholders in favor of the Merger, under the provisions of this Agreement. Xxxxxx may
rely upon all information provided to it by Columbia and The Columbia Bank in connection
with the preparation of the Proxy Statement/Prospectus and Xxxxxx shall not be liable for
any untrue statement of a material fact or any omission to state a material fact in the
Registration Statement, or in the Proxy Statement/Prospectus, if such statement is made by
Xxxxxx in reliance upon any information provided to Xxxxxx by Columbia or the Columbia
Subsidiaries or by any of their officers, agents or representatives. Xxxxxx shall provide a
draft of the Registration Statement to Columbia and its counsel for comment and review at
least ten (10) business days in advance of the anticipated filing date.
- 48 -
(c) State Securities Laws. Xxxxxx, with the cooperation and assistance of
Columbia and its counsel and accountants, shall promptly take all such actions as may be
necessary or appropriate in order to comply with all applicable securities laws of any state
having jurisdiction over the transactions contemplated by this Agreement.
(d) Stock Listing. Xxxxxx, with the cooperation and assistance of Columbia and
its counsel and accountants, shall promptly take all such actions as may be necessary or
appropriate in order to list the shares of Xxxxxx Common Stock to be issued in the Merger on
NASDAQ.
(e) Adopt Amendments. Xxxxxx shall not adopt any amendments to its charter or
bylaws or other organizational documents that would alter the terms of Xxxxxx’x Common Stock
or could reasonably be expected to have a material adverse effect on the ability of Xxxxxx
to perform its obligations under this Agreement.
(f) Tax Treatment. Xxxxxx shall take no action which would have the effect of
causing the Merger not to qualify as a tax-free reorganization under Section 368 of the
Code.
Section 6.2 Access to Properties and Records. Xxxxxx shall give to Columbia and to its
authorized employees and representatives (including without limitation Columbia’s counsel,
accountants, economic and environmental consultants and other designated representatives) such
access during normal business hours to all properties, books, contracts, documents and records of
Xxxxxx as Columbia may reasonably request, subject to the obligation of Columbia and its authorized
employees and representatives to maintain the confidentiality of all nonpublic information
concerning Xxxxxx obtained by reason of such access and subject to applicable law.
Section 6.3 Subsequent Financial Statements. Between the date of signing of this Agreement and the Effective Time, Xxxxxx shall promptly
prepare and deliver to Columbia as soon as practicable each Quarterly Report to Xxxxxx’x
shareholders and any Annual Report to Xxxxxx’x shareholders and all reports to regulatory
authorities normally prepared by Xxxxxx. Xxxxxx shall be deemed to make the representations and
warranties set forth in Sections 4.6, 4.7 and 4.8 herein to Columbia with respect to the financial
statements (hereinafter collectively referred to as the “Additional Xxxxxx Financial Statements”)
set forth in the foregoing Quarterly Reports and any Annual Report to Xxxxxx’x shareholders upon
delivery thereof.
Section 6.4 Update Schedules. Xxxxxx shall promptly disclose to Columbia in writing any
change, addition, deletion or other modification to the information set forth in its Schedules to
this Agreement.
Section 6.5 Notice. Xxxxxx shall promptly notify Columbia in writing of any actions, claims,
investigations, proceedings or other developments which, if pending or in existence on the date of
this Agreement, would have been required to be disclosed to Columbia in order to ensure the
accuracy of the representations and warranties set forth in this Agreement or which otherwise would
have a Xxxxxx Material Adverse Effect or materially restrict in any manner the right of Xxxxxx to
carry on its business as presently conducted.
- 49 -
Section 6.6 No Purchase or Sales of Xxxxxx Common Stock During Price Determination Period
Neither Xxxxxx nor any Xxxxxx Subsidiary, nor any executive officer
or director of Xxxxxx or any Xxxxxx Subsidiary, nor any shareholder of Xxxxxx who may be deemed to be an “affiliate” (as that
term is defined for purposes of Rules 145 and 405 promulgated by the SEC under the 1900 Xxx) of
Xxxxxx, shall purchase or sell on NASDAQ, or submit a bid to purchase or an offer to sell on
NASDAQ, directly or indirectly, any shares of Xxxxxx Common Stock or Columbia Common Stock or any
options, rights or other securities convertible into shares of Xxxxxx Common Stock or Columbia
Common Stock during the Price Determination Period; provided, however, that Xxxxxx may purchase
shares of Xxxxxx Common Stock in the Ordinary Course of Business of Xxxxxx during the Price
Determination Period for the benefit of Xxxxxx’x Benefit Plans or Xxxxxx’x Dividend Reinvestment
Plan.
Section 6.7 Assumption of Columbia Trust Preferred Securities. Xxxxxx agrees that, effective
with the Effective Date, it shall assume the Columbia Trust Preferred Securities, and all of
Columbia’s obligations under the related Indentures, and shall take all actions necessary or
appropriate in accordance therewith, including, if requested by the trustee, execution of a
supplemental indenture and other appropriate documents or certificates.
Section 6.8 Employment Arrangements.
(a) In arriving at the Merger Consideration, Xxxxxx anticipated that there will be some
consolidation of The Columbia Bank’s “back room” operations. Subject to that caveat, from
and after the Effective Time, (i) Xxxxxx, The Columbia Bank or another subsidiary of Xxxxxx
(any such parties employing employees of Columbia or a Columbia Subsidiary, the “Xxxxxx
Employers”) shall: (A) satisfy each of the Employment Obligations, and (B) use its good
faith efforts to retain each present employee of Columbia and the Columbia Subsidiaries in
such employee’s current position and salary compensation (or, if offered to, and accepted
by, an employee, a position for which the employee is qualified with the Xxxxxx Employers at
a compensation commensurate with the position), (ii) in the event that the Xxxxxx Employers
shall continue to employ officers or employees of Columbia and the Columbia Subsidiaries as
of the Effective Time, the Xxxxxx Employers shall employ such persons on the Effective Time
who are not Contract Employees as “at-will” employees, and (iii) in the event the Xxxxxx
Employers are not willing to employ, or terminate the employment (other than as a result of
unsatisfactory performance of their respective duties) of, any officers or employees of
Columbia or the Columbia Subsidiaries who are not Contract Employees, the Xxxxxx Employers
shall pay severance benefits to such employees (other than Contract Employees) as follows:
(A) in the event employment is terminated on or prior to the date which is one year after
the Effective Date, one week’s salary plus one week’s salary for each year of service with
Columbia or a Columbia Subsidiary, or predecessor of Columbia or a Columbia Subsidiary if
such service was recognized by Columbia for the purposes of Columbia’s 401(k) Plan, up to a
maximum of 26 weeks’ salary; (B) in the event employment is terminated thereafter, in
accordance with the then existing severance policy of Xxxxxx or its
successor; or (C) as
otherwise agreed between Xxxxxx and Columbia.
-50-
(b) The Xxxxxx Employers shall be obligated to provide employee benefits to each person
who is an employee of Columbia or a Columbia Subsidiary immediately before the Effective
Time and continues to be employed that are substantially equivalent, in the aggregate, to
the benefits under the Columbia Benefit Plans prior to the Effective Time, until at least
three (3) years after the Effective Date. Notwithstanding the immediately preceding
sentence, if the Xxxxxx Employers can no longer satisfy the applicable employee benefit plan
testing requirements under the Code after applicable transition periods under the Code with
respect to a Xxxxxx Benefit Plan then the Xxxxxx Employers shall provide appropriately
adjusted benefits to each person who is an employee of Columbia or a Columbia Subsidiary
that would permit such Xxxxxx Benefit Plan to satisfy the applicable test under the Code.
(c) For at least the required three-year period, the Xxxxxx Employers shall adopt or
maintain a Xxxxxx Benefit Plan that is a 401(k) plan for the benefit of each person who is
an employee of Columbia or a Columbia Subsidiary, as of the Effective Time, and who is
eligible to participate in the Columbia Bancorp 401(k) Plan as of the Effective Date. Such
Xxxxxx Benefit Plan shall provide either (i) a matching contribution equal to 50% of each
participant’s salary deferral contributions made under such 401(k) plan, with the matching
contribution applicable only to salary deferral contributions up to 15% covered compensation
or (ii) such other employer contribution amounts as proposed by Xxxxxx and agreed upon by
Columbia on or before the Effective Date.
(d) For at least the required three-year period, the Xxxxxx Employers shall adopt or
maintain a Xxxxxx Benefit Plan that is a deferred compensation plan for the benefit of each
person who is an employee of Columbia or a Columbia Subsidiary, as of the Effective Time,
and who is eligible, as of the date hereof, to participate in any Columbia Bank deferred
compensation plans as in effect on the date hereof. Such Xxxxxx Benefit Plan shall provide
either (i) a matching contribution equal to 50% of each participant’s salary deferral
contributions made under such deferred compensation plan, with the matching contribution
applicable only to salary deferral contributions up to 15% of covered compensation or (ii)
such other employer contribution amounts as proposed by Xxxxxx and agreed upon by Columbia
on or before the Effective Date. Such Xxxxxx Benefit Plan shall also provide for benefits
and other provisions consistent with the existing deferred compensation plans, including
continuation of the accrual of earnings (but with only the prime rate election available)
and the continuation of the death benefit provisions beyond the required three-year period,
until the applicable employee consents to an amendment thereto.
(e) For vesting and eligibility purposes for employee benefits, under each Xxxxxx
Benefit Plan and/or any employee benefit plan established by Xxxxxx after the Effective
Date, employees of Columbia and the Columbia Subsidiaries shall receive credit for all years
of service with Columbia and the Columbia Subsidiaries or predecessor of Columbia or the
Columbia Subsidiaries if such service was recognized by Columbia for purposes of a
comparable Columbia Benefit Plan.
-51-
(f) Except to the extent not allowable under the terms of existing insurance contracts,
any restrictions on coverage for preexisting conditions or requirements for evidence of
insurability under a Xxxxxx Benefit Plan that is an employee welfare benefit plan shall be
waived for the employees of Columbia and the Columbia Subsidiaries who are currently covered
for such conditions under Columbia’s existing insurance plans, and such employees shall
receive credit under the applicable Xxxxxx Benefit Plan for co-payments and payments under a
deductible limit made by them and for out-of-pocket maximums applicable to them during the
plan year of the Columbia Benefit Plan in accordance with the corresponding Columbia Benefit
Plan. If the terms of an existing insurance contract do not permit a waiver of restrictions
or credit for co-payments and payments as described in the preceding sentence, Xxxxxx agrees
to use its best efforts to negotiate such provisions with the applicable insurer and, if
Xxxxxx is unable to obtain such provision, Xxxxxx shall provide reasonable compensation to
such employee in respect thereof. For the purposes of the foregoing sentence, reasonable
compensation shall be deemed to be annual compensation in the amount of the premium
contribution which Xxxxxx makes under any such insurance policy on behalf of other employees
with similar age and years of service.
Section 6.9 Insurance; Indemnification.
(a) For six (6) years after the Effective Date, Xxxxxx shall (and The Columbia Bank
shall cooperate in these efforts) obtain and maintain “tail” coverage relating to Columbia’s
existing directors and officers liability insurance policy (provided that such insurance
shall be in such amount and with terms and conditions no less favorable than the director
and officer liability policy of Columbia as of the date of this Agreement and carry such
premium (not to exceed the greater of (i) 150% of the current premium for Columbia’s
existing directors and officers liability insurance policy or (ii) the applicable percentage
increase payable by Xxxxxx during such period for its directors and officers liability
insurance policy) and that Xxxxxx may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are substantially no less
advantageous) with respect to claims arising from facts or circumstances which occur prior
to the Effective Date (including facts or circumstances relating to this Agreement and the
transactions contemplated herein to the extent coverage therefor is available) and covering
persons who are covered by such insurance immediately prior to the Effective Date.
(b) From and after the Effective Date, Xxxxxx shall indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof, or who becomes
prior to the Effective Date, an officer, employee, director or manager of Columbia or a
Columbia Subsidiary (the “Indemnified Parties”) against all losses, claims, damages, costs,
expenses (including reasonable attorneys’ fees), liabilities or judgments or amounts that
are paid in settlement (which settlement shall require the prior written consent of Xxxxxx,
which consent shall not be unreasonably withheld) or in connection with any claim, action,
suit, proceeding or investigation (a “Claim”) in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part out of the fact that
such person is or was a director, officer or employee of
-52-
Columbia or a Columbia Subsidiary if such Claim pertains to any matter of fact arising,
existing or occurring prior to the Effective Date (including, without limitation, the Merger
and other transactions contemplated by this Agreement) regardless of whether such Claim is
asserted or claimed prior to, at, or after the Effective Date (the “Indemnified
Liabilities”) to the full extent permitted under applicable law as of the date hereof or
amended prior to the Effective Date and under the Articles of Incorporation or Bylaws of
Columbia or a Columbia Subsidiary as in effect as of the date hereof (and Xxxxxx shall pay
expenses in advance of the full disposition of any such action or proceeding to each of the
Indemnified Parties to the full extent permitted by applicable law (including the SOX Act)
and Xxxxxx’x Articles of Incorporation and Bylaws). Any Indemnified Party wishing to claim
indemnification under this provision, upon learning of any Claim, shall notify Xxxxxx (but
the failure to so notify Xxxxxx shall not relieve Xxxxxx from any liability which Xxxxxx may
have under this section except to the extent Xxxxxx is materially prejudiced thereby). In
the defense of any Claim covered by this Section 6.9(b), Xxxxxx shall have the right to
direct the defense of such action and retain counsel of its choice; provided, however, that,
notwithstanding the foregoing, the Indemnified Parties as a group may retain a single law
firm to represent them with respect to each matter under this section if there is, under
applicable standards of professional conduct, a conflict on any significant issue between
the positions of Xxxxxx and the Indemnified Parties (the Indemnified Parties may also retain
more than one law firm if there is, under applicable standards of professional conduct, a
conflict of any significant issues between the positions of two or more Indemnified
Parties). Xxxxxx shall have an obligation to advance funds to satisfy an obligation of
Xxxxxx or any successor to Xxxxxx under this Section 6.9(b) to the same extent that Xxxxxx
would be obligated to advance funds under the indemnification provisions of its Articles of
Incorporation and/or Bylaws.
Section 6.10 Appointment of Xxxxxx Director. Xxxxxx shall, on or promptly after the Effective
Date (but no later than Xxxxxx’x next Board of Directors meeting following the Effective Date),
appoint to Xxxxxx’x Board of Directors Xxxx X. Xxxx, Xx. to serve as a director of Xxxxxx or,
subject to the reasonable approval of Xxxxxx, such other person as may be determined by vote of
Columbia’s Board of Directors prior to the Effective Date. Xxxxxx has a mandatory retirement
policy for directors who attain age 70.
Section 6.11 Continuation of The Columbia Bank’s Structure, Name and Directors.
(a) For a period of three (3) years after the Effective Date, Xxxxxx shall (subject to
the right of Xxxxxx and The Columbia Bank Continuing Directors (as defined below) to
terminate such obligations under this Section 6.11(a) under subsections (b) and (c) below)
(i) preserve the business structure of The Columbia Bank as a Maryland trust company; (ii)
preserve and use the present name of The Columbia Bank, and (iii) continue in office the
present directors of The Columbia Bank who indicate their desire to serve (the “Columbia
Bank Continuing Directors”), provided, that (A) prior to the Effective Time and for the
three-year period following the Effective Time, each non-employee Columbia Bank Continuing
Director shall continue to receive director’s fees as
-53-
set forth on Schedule 6.11; provided that, in the event an individual Columbia
Bank Continuing Director ceases to act as a director or as a member of any committee
thereof, the foregoing obligation to pay such fees shall apply to successors in such
positions until the expiration of such three-year period and (B) after such three-year
period, each Columbia Bank Continuing Director shall be subject to Xxxxxx’x mandatory
retirement rules for directors and shall receive the standard fee paid to directors of
comparable subsidiary banks of Xxxxxx.
(b) Xxxxxx shall have the right to terminate its obligations under subsection (a) of
this Section 6.11 as a result of (i) regulatory requirements, (ii) safe and sound banking
practices as enunciated by bank regulatory agencies, or (iii) based upon the advice of
outside legal counsel the exercise of their fiduciary duties by Xxxxxx’x directors.
(c) Notwithstanding anything herein to the contrary, The Columbia Bank Continuing
Directors, in their exercise of their fiduciary duty as to the best interests of The
Columbia Bank and Xxxxxx, may, by a majority vote of such directors, modify or waive any or
all of the foregoing provisions in subsection (a) of this Section 6.11.
ARTICLE VII — CONDITIONS PRECEDENT
Section 7.1 Common Conditions. The obligations of the parties to consummate this Agreement
shall be subject to the satisfaction of each of the following common conditions prior to or as of
the Closing, except to the extent that any such condition shall have been waived in accordance with
the provisions of Section 8.4 herein:
(a) Stockholder Approval: This Agreement shall have been duly authorized,
approved and adopted by the stockholders of Columbia in accordance with applicable law,
NASDAQ rules and regulations, the GCL and the Certificate of Incorporation of Columbia.
(b) Regulatory Approvals: The approval of each federal and state regulatory
authority having jurisdiction over the transactions contemplated by this Agreement
(including the Merger), including without limitation, the Federal Reserve Board and the
Department, shall have been obtained and all applicable waiting and notice periods shall
have expired, subject to no terms or conditions which would (i) require or could reasonably
be expected to require (A) any divestiture by Xxxxxx of a portion of the business of Xxxxxx,
or any subsidiary of Xxxxxx or (B) any divestiture by Columbia or the Columbia Subsidiaries
of a portion of their businesses which Xxxxxx in its good faith judgment believes will have
a significant and material adverse impact on the business of Columbia or the Columbia
Subsidiaries, as the case may be, or (ii) impose any condition upon Xxxxxx or The Columbia
Bank, or their other subsidiaries, taken as a whole, which in Xxxxxx’x good faith judgment
(x) would be materially burdensome to Xxxxxx and The Xxxxxx Subsidiaries taken as a whole, (y)
would significantly increase the costs incurred or that will be incurred by Xxxxxx as a
result of consummating the Merger or (z) would prevent Xxxxxx from obtaining any material
benefit contemplated by it to be attained as a result of the Merger.
-54-
(c) Stock Listing. The shares of Xxxxxx Common Stock to be issued in the
Merger shall have been authorized for listing on NASDAQ.
(d) Tax Opinion. Each of Xxxxxx and Columbia shall have received an opinion of
Xxxxxx’x counsel, Barley Xxxxxx LLC, , reasonably acceptable to Xxxxxx and Columbia,
addressed to Xxxxxx and Columbia, with respect to federal tax laws or regulations, to the
effect that:
(i) The Merger will constitute a reorganization within the meaning of Section
368(a)(1)(A) of the Code and Xxxxxx and Columbia will each be a “party to a
reorganization” within the meaning of Section 368(b)(1) of the Code;
(ii) No gain or loss will be recognized by Xxxxxx or Columbia by reason of the
Merger;
(iii) The bases of the assets of Columbia in the hands of Xxxxxx will be the
same as the bases of such assets in the hands of Columbia immediately prior to the
Merger;
(iv) The holding period of the assets of Columbia in the hands of Xxxxxx will
include the period during which such assets were held by Columbia prior to the
Merger;
(v) A holder of Columbia Common Stock who receives shares of Xxxxxx Common
Stock in exchange for his Columbia Common Stock pursuant to the reorganization
(except with respect to cash received in lieu of fractional shares of Xxxxxx Common
Stock deemed issued as described below) will not recognize any gain or loss upon the
exchange.
(vi) A holder of Columbia Common Stock who receives cash in lieu of a
fractional share of Xxxxxx Common Stock will be treated as if he received a
fractional share of Xxxxxx Common Stock pursuant to the reorganization which Xxxxxx
then redeemed for cash. The holder of Columbia Common Stock will recognize gain or
loss on the constructive redemption of the fractional share in an amount equal to
the difference between the cash received and the adjusted basis of the fractional
share.
(vii) The tax basis of the Xxxxxx Common Stock to be received by the
stockholders of Columbia pursuant to the terms of this Agreement will include the
holding period of the Columbia Common Stock surrendered in exchange therefor,
provided that such Columbia Common Stock is held as a capital asset at the Effective
Time.
(viii) The holding period of the shares of Xxxxxx Common Stock to be received
by the stockholders of Columbia will include the period during which they held the shares of Columbia Common Stock surrendered, provided the shares
-55-
of Columbia Common Stock are held as a capital asset on the date of the
exchange.
(ix) A holder of Columbia Common Stock who receives Cash Consideration and
Xxxxxx Common Stock in exchange for his Columbia Common Stock pursuant to the
reorganization will recognize gain equal to the lesser of (a) the amount of gain
realized upon the exchange or (b) the amount of Cash Consideration received.
(x) A holder of Columbia Common Stock who receives Cash Consideration in
exchange for his Columbia Common Stock will recognized gain or less on exchange
based on the difference between the Cash Consideration received and the adjusted
basis of his Columbia Common Stock.
(e) Registration Statement: The Registration Statement (as defined in Section
6.1(b), including any amendments thereto) shall have been declared effective by the SEC; the
information contained therein shall be true, complete and correct in all material respects
as of the date of mailing of the Proxy Statement/Prospectus (as defined in Section 6.1(b))
to the stockholders of Columbia; regulatory clearance for the offering contemplated by the
Registration Statement (the “Offering”) shall have been received from each federal and state
regulatory authority having jurisdiction over the Offering; and no stop order shall have
been issued and no proceedings shall have been instituted or threatened by any federal or
state regulatory authority to suspend or terminate the effectiveness of the Registration
Statement or the Offering.
(f) No Suits: No action, suit or proceeding shall be pending or threatened
before any federal, state or local court or governmental authority or before any arbitration
tribunal which seeks to modify, enjoin or prohibit or otherwise adversely and materially
affect the transactions contemplated by this Agreement; provided, however,
that if Xxxxxx agrees to defend and indemnify Columbia and The Columbia Bank and their
respective officers and directors with regard to any such action, suit or proceeding pending
or threatened against them or any of them on such specific terms and conditions as are
mutually agreeable to Columbia and Xxxxxx, then such pending or threatened action, suit or
proceeding shall not be deemed to constitute the failure of a condition precedent to the
obligation of Columbia to consummate this Agreement.
(g) Federal and State Securities and Antitrust Laws: All applicable securities
and antitrust laws of the federal government and of any state government having jurisdiction
over the transactions contemplated by this Agreement shall have been complied with.
Section 7.2 Conditions Precedent to Obligations of Xxxxxx. The obligations of Xxxxxx to
consummate this Agreement shall be subject to the satisfaction of each of the following conditions
prior to or as of the Closing, except to the extent that any such condition shall have been waived
by Xxxxxx in accordance with the provisions of Section 8.4 herein:
(a) Accuracy of Representations and Warranties: All of the representations and
warranties of Columbia as set forth in this Agreement shall be true and correct in all
-56-
material respects as of the Closing as if made on such date (or on the date to which it
relates in the case of any representation or warranty which expressly relates to an earlier
date). Solely for purposes of determining whether or not a Columbia Material Adverse Effect
has occurred for purposes of this Section 7.2(a), the exceptions set forth in Section 7.2(f)
(a) — (g) and (h) shall be applied.
(b) Covenants Performed: Columbia shall have performed or complied in all
material respects with each of the covenants required by this Agreement to be performed or
complied with by it.
(c) Opinion of Counsel for Columbia: Xxxxxx shall have received an opinion,
dated the Effective Time, from DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP, counsel to Columbia, in
substantially the form of Exhibit E hereto. In rendering any such opinion, such
counsel may require and, to the extent they deem necessary or appropriate may rely upon,
opinions of other counsel and upon representations made in certificates of officers of
Columbia, Xxxxxx, affiliates of the foregoing, and others.
(d) Affiliate Agreements: Stockholders of Columbia who are or will be
affiliates of Columbia or Xxxxxx for the purposes of the 1933 Act shall have entered into
agreements with Xxxxxx, in form and substance satisfactory to Xxxxxx, reasonably necessary
to assure compliance with Rule 145 under the 1933 Act.
(e) Columbia Options: As may be required by Section 2.3 herein, all holders of
Columbia Options who have not exercised such options shall have delivered documentation
reasonably satisfactory to Xxxxxx with respect to the assumption by Xxxxxx of the Columbia
Options and the payment of cash in cancellation of the Columbia Options as set forth in
Section 2.3.
(f) No Material Adverse Change: There shall not have been any material and
adverse change, as established by Xxxxxx to its reasonable satisfaction, in the condition
(financial or otherwise), assets, liabilities, business, results of operations or future
prospects of Columbia and the Columbia Subsidiaries on a consolidated basis taken as a
whole, since the date of this Agreement. In particular, without limiting the generality of
the foregoing sentence, the Additional Columbia Financial Statements (as defined in Section
5.4) shall indicate that the consolidated financial condition, assets, liabilities and
results of operations of Columbia as of the respective dates reported therein do not vary
adversely in any material respect from the consolidated financial condition, assets,
liabilities and results of operations presented in Columbia’s Quarterly Report on Form 10-Q
for the three months ended March 31, 2005. For purposes of this Section 7.2(f), a “material
and adverse change” shall mean an event, change, or occurrence which, individually or
together with any other event, change, or occurrence, has a material adverse impact on (i)
the condition (financial or otherwise), assets, liabilities business, results of operations
or future prospects of Columbia or (ii) the ability of Columbia to perform its obligations
under this Agreement, provided that “material and adverse change” shall not be deemed to
include the impact of any of the following (nor will any of the following be taken into
account in determining whether there has been a material
-57-
adverse change): (a) changes in law, rules, regulations, orders or other binding
directives by any Governmental Entity, including without limitation, changes in banking and
similar laws of general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (c) actions or omissions of Columbia taken at the
direction or behest of Xxxxxx with the prior written consent of Xxxxxx, including any action
or actions, individually or in the aggregate, taken by Columbia or the Columbia
Subsidiaries, (d) changes in economic conditions generally affecting financial institutions
or residential mortgage businesses, including, without limitation, changes in the general
level of interest rates, (e) the direct effects of compliance with this Agreement and of
satisfying or causing to be satisfied the conditions set forth in this Article VII on the
operating performance of Columbia, including reasonable expenses incurred by Columbia in
consummating the transactions contemplated by the Agreement, (f) changes in the relative
percentages of Columbia’s net income generated by The Columbia Bank’s commercial lending
activities and residential mortgage lending activities, (g) national or international
political or social conditions, including without limitation the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a national emergency or
war, or the occurrence of any military or terrorist attack upon the United States, or any of
its territories, possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (h) changes in financial, banking
or securities markets (including any disruption thereof and any decline in the price of any
security or market index), and (i) any existing fact, event, occurrence, or circumstance
with respect to which Xxxxxx has knowledge as of the date hereof. At the Closing, Columbia
shall deliver to Xxxxxx a certificate confirming the absence of a material adverse change
described herein and a certificate (from appropriate officers of Columbia or Columbia’s
transfer agent) as to the issued and outstanding shares of Columbia Common Stock, shares
issuable under outstanding stock options granted under Columbia’s Stock Option Plans and any
outstanding obligations, options or rights of any kind entitling persons to purchase or sell
any shares of Columbia Common Stock and any outstanding securities or other instruments of
any kind that are convertible into such shares.
(g) Accountants’ Letter. Subject to the requirements of Statement of Auditing
Standards No. 72 of the American Institute of Certified Public Accountants, KPMG LLP, or any
other accounting firm reasonably acceptable to Xxxxxx and Columbia, shall have furnished to
Xxxxxx an “agreed upon procedures” letter, dated the Effective Date, in form and substance
satisfactory to Xxxxxx to the effect that:
(i) In their opinion, the consolidated financial statements of Columbia
examined by them and included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act and
the published rules and regulations thereunder; and
(ii) On the basis of limited procedures, not constituting an audit, including a
limited review of the unaudited financial statements referred to below, a limited
review of the latest available unaudited consolidated interim financial
-58-
statements of Columbia, inspection of the minute books of Columbia and the
Columbia Subsidiaries since December 31, 2004, inquiries of officials of Columbia
and the Columbia Subsidiaries responsible for financial and accounting matters and
such other inquiries and procedures as may be specified in such letter, nothing came
to their attention that caused them to believe that:
(A) any unaudited Consolidated Balance Sheets, Consolidated Statements
of Income, Consolidated Statements of Stockholders’ Equity and Consolidated
Statements of Cash Flows of Columbia included in the Registration Statement
are not in conformity with GAAP applied on a basis substantially consistent
with that of the audited financial statements covered by their report
included in the Registration Statement;
(B) as of a specified date not more than five days prior to the date of
delivery of such letter, there have been any decreases in the consolidated
stockholders’ equity of Columbia as compared with amounts shown in the
balance sheet as of December 31, 2004 included in the Registration
Statement, except in each case for such changes, increases or decreases
which the Registration Statement discloses have occurred or may occur and
except for such changes, decreases or increases as aforesaid which are
immaterial; and
(C) for the period from January 1, 2005 to such specified date, there
were any decreases in the consolidated total net interest income,
consolidated net interest income after provision for loan losses,
consolidated other income, consolidated net income or net income per share
amounts of Columbia as compared with the comparable period of the preceding
year, except in each case for decreases which the Registration Statement
discloses have occurred or may occur, and except for such decreases which
are immaterial.
(h) Contract Employees. Each Contract Employee shall remain employed with
Columbia or The Columbia Bank other than as a result of the death or Disability (as such
term is defined in the Employment Agreements) of such Contract Employee.
(i) Closing Documents: Columbia shall have delivered to Xxxxxx: (i) a
certificate signed by Columbia’s Chairman and Chief Executive Officer and by its President
and Chief Operating Officer (or other officers reasonably acceptable to Xxxxxx) verifying
that, to their knowledge, all of the representations and warranties of Columbia set forth in
this Agreement are true and correct in all material respects as of the Closing and that
Columbia has performed in all material respects each of the covenants required to be
performed by it under this Agreement; and (ii) such other certificates and documents as
Xxxxxx and its counsel may reasonably request (all of the foregoing certificates and other
documents being herein referred to as the “Columbia Closing Documents”).
-59-
Section 7.3 Conditions Precedent to the Obligations of Columbia. The obligation of Columbia
to consummate this Agreement shall be subject to the satisfaction of each of the following
conditions prior to or as of the Closing, except to the extent that any such condition shall have
been waived by Columbia in accordance with the provisions of Section 8.4 herein:
(a) Accuracy of Representations and Warranties: All of the representations and
warranties of Xxxxxx as set forth in this Agreement shall be true and correct in all
material respects as of the Closing as if made on such date (or on the date to which it
relates in the case of any representation or warranty which expressly relates to an earlier
date). Solely for purposes of determining whether or not a Xxxxxx Material Adverse Effect
has occurred for purposes of this Section 7.3(a), the exceptions set forth in Section 7.3(e)
(a) — (d), (f) and (g) shall be applied.
(b) Covenants Performed: Xxxxxx shall have performed or complied in all
material respects with each of the covenants required by this Agreement to be performed or
complied with by Xxxxxx.
(c) Opinion of Counsel for Xxxxxx: Columbia shall have received an opinion
from Barley Xxxxxx LLC, counsel to Xxxxxx, dated the Effective Time, in substantially the
form of Exhibit F hereto. In rendering any such opinion, such counsel may require
and, to the extent they deem necessary or appropriate may rely upon, opinions of other
counsel and upon representations made in certificates of officers of Xxxxxx, Columbia,
affiliates of the foregoing, and others.
(d) Xxxxxx Options: Xxxxxx Stock Options or cash, as applicable, shall have
been substituted for the Columbia Options which have not been exercised pursuant to Section
2.3 herein. Agreements evidencing the assumption of the Columbia Options pursuant to Section
2.3 shall have been delivered and the Registration Statement for the purpose of registering
the shares necessary to satisfy Xxxxxx’x obligation with respect to the issuance of Xxxxxx
Common Stock pursuant to the exercise of the Xxxxxx Stock Options shall have been declared
effective.
(e) No Material Adverse Change: There shall not have been any material and
adverse change, as established by Columbia to its reasonable satisfaction, in the condition
(financial or otherwise), assets, liabilities, business or results of operations or future
prospects of Xxxxxx since the date of this Agreement. In particular, without limiting the
generality of the foregoing sentence, the Additional Xxxxxx Financial Statements (as defined
in Section 6.3) shall indicate that the consolidated financial condition, assets,
liabilities and results of operations of Xxxxxx as of the respective dates reported therein
do not vary adversely in any material respect from the consolidated financial condition,
assets, liabilities and results of operations presented in the Xxxxxx’x Quarterly Report on
Form 10-Q for the three months ended March 31, 2005. For purposes of this Section 7.3(e), a
“material and adverse change” shall mean an event, change, or occurrence which, individually
or together with any other event, change, or occurrence, has a material adverse impact on
(i) the condition (financial or otherwise), assets, liabilities,
-60-
business, results of operations or future prospects of Xxxxxx or (ii) the ability of
Xxxxxx to perform its obligations under this Agreement, provided that “material and adverse
change” shall not be deemed to include the impact of any of the following (nor will any of
the following be taken into account in determining whether there has been a material adverse
change): (a) changes in law, rules, regulations, orders or other binding directives by any
Governmental Entity, including without limitation, changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental authorities, (b)
changes in GAAP or regulatory accounting principles generally applicable to banks and their
holding companies, (c) changes in economic conditions generally affecting financial
institutions or residential mortgage businesses, including, without limitation, changes in
the general level of interest rates, and (d) the direct effects of compliance with this
Agreement and of satisfying or causing to be satisfied the conditions set forth in this
Article VII on the operating performance of Xxxxxx, including reasonable expenses incurred
by Xxxxxx in consummating the transactions contemplated by the Agreement, (e) changes in the
relative percentages of Xxxxxx’x net income generated by Xxxxxx’x commercial lending
activities and residential mortgage lending activities, (f) national or international
political or social conditions, including without limitation the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a national emergency or
war, or the occurrence of any military or terrorist attack upon the United States, or any of
its territories, possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (g) changes in financial, banking
or securities markets (including any disruption thereof and any decline in the price of any
security or market index), and (h) any existing fact, event, occurrence, or circumstance
with respect to which Columbia has Knowledge as of the date hereof. At the Closing, Xxxxxx
shall deliver to Columbia a certificate confirming the absence of a material adverse change
described herein and a certificate (from appropriate officers of Xxxxxx and/or Xxxxxx’x
transfer agent) as to the issued and outstanding shares of Xxxxxx Common Stock, shares of
Xxxxxx Common Stock reserved for issuance upon the exercise of stock options, under Xxxxxx’x
Employee Stock Purchase Plan, under Xxxxxx’x Dividend Reinvestment Plan and under Xxxxxx’x
Shareholders Rights Plan, any outstanding obligations, options or rights of any kind
entitling persons to purchase or sell any shares of Xxxxxx Common Stock and any
outstanding securities or other instruments of any kind that are convertible into such
shares.
(f) Fairness Opinion: Columbia shall have obtained from Xxxxxxxxx Associates
Inc. or another independent financial advisor selected by the Board of Directors of
Columbia, an opinion dated within five (5) days of the Proxy Statement/Prospectus to be
furnished to the Board of Directors of Columbia stating that the Conversion Ratio and Cash
Consideration contemplated by this Agreement is fair to the stockholders of Columbia from a
financial point of view.
(g) Contract Employees. Each Contract Employee shall remain employed with
Columbia or The Columbia Bank other than as a result of the death or Disability (as such
term is defined in the Employment Agreements) of such Contract Employee.
-61-
(h) Closing Documents: Xxxxxx shall have delivered to Columbia: (i) a
certificate signed by Xxxxxx’x Chairman and Chief Executive Officer (or other officer
reasonably acceptable to Columbia) verifying that, to their knowledge, all of the
representations and warranties of Xxxxxx set forth in this Agreement are true and correct in
all material respects as of the Closing and that Xxxxxx has performed in all material
respects each of the covenants required to be performed by Xxxxxx; and (ii) such other
certificates and documents as Columbia and its counsel may reasonably request (all of the
foregoing certificates and documents being herein referred to as the “Xxxxxx Closing
Documents”).
ARTICLE VIII — TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time before the Effective
Time (whether before or after the authorization, approval and adoption of this Agreement by the
stockholders of Columbia) as follows:
(a) Mutual Consent: This Agreement may be terminated by mutual consent of the
parties upon the affirmative vote of a majority of each of the Boards of Directors of
Columbia and Xxxxxx, followed by written notices given to the other party.
(b) Unilateral Action by Xxxxxx: This Agreement may be terminated unilaterally
by the affirmative vote of the Board of Directors of Xxxxxx, followed by written notice
given promptly to Columbia, if: (i) there has been a material breach by Columbia of any
material representation or warranty or material failure by Columbia to comply with any
material covenant set forth in this Agreement and such breach has not been cured within
thirty (30) days after written notice of such breach has been given by Xxxxxx to Columbia;
(ii) any condition precedent to Xxxxxx’x obligations as set forth in Article VII of this
Agreement remains unsatisfied, through no fault of Xxxxxx or unless any such condition
remains unsatisfied primarily as a result of Xxxxxx breaching any of its representations,
warranties or covenants in this Agreement, on June 30, 2006; provided, that such date may be
extended until September 30, 2006 by Columbia by written notice to Xxxxxx (given not later
than June 30, 2006) if the Closing shall not have occurred because of failure to obtain
approval from one or more regulatory authorities whose approval is required in connection
with this Agreement; or (iii) Xxxxxx’x Board of Directors makes an election provided for in
Section 5.7(e)(i) herein.
(c) Unilateral Action By Columbia: This Agreement may be terminated
unilaterally by the affirmative vote of a majority of the Board of Directors of Columbia,
followed by written notice given promptly to Xxxxxx, if: (i) there has been a material
breach by Xxxxxx of any material representation, or warranty or material failure by Xxxxxx
to comply with any covenant set forth in this Agreement and such breach has not been cured
within thirty (30) days after written notice of such breach has been given by Columbia to
Xxxxxx; (ii) any condition precedent to Columbia’s obligations as set forth in Article VII
of this Agreement remains unsatisfied, through no fault of Columbia or unless any such
condition remains unsatisfied primarily as a result of Columbia breaching any of its
representations, warranties or covenants in this Agreement, on June 30, 2006;
-62-
provided, that such date may be extended until September 30, 2006 by Xxxxxx by written
notice to Columbia (given not later than June 30, 2006) if the Closing shall not have
occurred because of failure to obtain approval from one or more regulatory authorities whose
approval is required in connection with this Agreement; (iii) Columbia’s Board of Directors
makes an election provided for in, and subject to the conditions of, Section 5.7(e)(ii)
herein, (iv) the fairness opinion described in Section 7.3(f) is withdrawn; (v) the
stockholders of Columbia do not approve the Merger at a stockholders meeting called for such
purpose or (vi) based on the Closing Market Price as follows:
(i) Subject to the provisions of subparagraph (B) below, Columbia shall have
the right to terminate this Agreement, through a resolution adopted by its Board of
Directors, if the Closing Market Price is less than both (I) $14.79, i.e., eighty
percent (80%) of the Starting Price (the “Floor Price”) and (II) the amount per
share equal to (x) the Starting Price multiplied by (y) .80 multiplied by (z) the
quotient of the Average NASDAQ Bank Index for the Price Determination Period (the
numerator) over the NASDAQ Bank Index on the Pre-Announcement Date (the
denominator).
(ii) In the event the conditions in (A) above allowing Columbia to terminate
the Agreement are satisfied and Columbia makes such election, Xxxxxx, through a
resolution adopted by its Board of Directors, shall have the option to cause
Columbia to amend this Agreement (and, upon such amendment, Columbia shall not have
the right to terminate this Agreement) to increase the Conversion Ratio to a level,
calculated to four decimal places, equal to the Conversion Ratio multiplied by the
quotient of the Floor Price (the numerator) over the Closing Market Price (the
denominator). For example, if the Closing Market Price is $14.00 and the Floor Price
is $14.79, Parent would have the option to increase the Exchange Ratio to 2.4562
(2.325x $14.79/$14.00) in lieu of terminating this Agreement.
(iii) For purposes of this Section 8.1(c), (I) “Pre-Announcement Date” shall
mean July 26, 2005, and (II) “Starting Price” shall mean $18.49.
(iv) The Starting Price, the Closing Market Price, the Floor Price and the
other amounts above shall be appropriately adjusted for an event described in the
definition of “Xxxxxx Stock Consideration” in Section 2.1(b) herein.
Section 8.2 Effect of Termination.
(a) Effect. In the event of a permitted termination of this Agreement under
Section 8.1 herein, the Agreement shall become null and void and the transactions
contemplated herein shall thereupon be abandoned, except that the provisions relating to
limited liability and confidentiality set forth in Sections 8.2(b) and 8.2(c) herein shall
survive such termination.
-63-
(b) Limited Liability. Subject to the terms of the Warrant Agreement and the
Warrant, the termination of this Agreement in accordance with the terms of Section 8.1
herein shall create no liability on the part of either party, or on the part of either
party’s directors, officers, stockholders, agents or representatives, except that if this
Agreement is terminated by Xxxxxx by reason of a material breach by Columbia, or if this
Agreement is terminated by Columbia by reason of a material breach by Xxxxxx, and such
breach involves an intentional, willful or grossly negligent misrepresentation or breach of
covenant, the breaching party (i.e., Xxxxxx or Columbia) shall be liable to the nonbreaching
party for all costs and expenses reasonably incurred by the nonbreaching party in connection
with the preparation, execution and attempted consummation of this Agreement, including the
reasonable fees of its counsel, accountants, consultants and other advisors and
representatives. In no event shall either party’s directors, officers, stockholders, agents
or representatives have any personal liability for any misrepresentation or breach in
connection with this Agreement.
(c) Confidentiality. In the event of a termination of this Agreement, neither
Xxxxxx nor Columbia nor The Columbia Bank shall use or disclose to any other person any
confidential information obtained by it during the course of its investigation of the other
party or parties, except as may be necessary in order to establish the liability of the
other party or parties for breach as contemplated under Section 8.2(b) herein.
Section 8.3 Amendment. To the extent permitted by law, this Agreement may be amended at any
time before the Effective Time (whether before or after the authorization, approval and adoption of
this Agreement by the stockholders of Columbia), but only by a written instrument duly authorized,
executed and delivered by Xxxxxx and by Columbia; provided, however, that any amendment to the
provisions of Section 2.1 herein relating to the consideration to be received by the former
stockholders of Columbia in exchange for their shares of Columbia Common Stock shall not take
effect until such amendment has been approved, adopted or ratified by the stockholders of Columbia
in accordance with applicable provisions of the GCL.
Section 8.4 Waiver. Any term or condition of this Agreement may be waived, to the extent
permitted by applicable federal and state law, by the party or parties entitled to the benefit
thereof at any time before the Effective Time (whether before or after the authorization, approval
and adoption of this Agreement by the stockholders of Columbia) by a written instrument duly
authorized, executed and delivered by such party or parties.
ARTICLE IX — CLOSING AND EFFECTIVE TIME
Section 9.1 Closing. Provided that all conditions precedent set forth in Article VII of this
Agreement shall have been satisfied or shall have been waived in accordance with Section 8.4 of
this Agreement, the parties shall hold a closing (the “Closing”) at the offices of Xxxxxx at Xxx
Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx, no later than thirty (30) days after the receipt of all
required regulatory and stockholder approvals and after the expiration of all applicable waiting
periods on a specific date to be agreed upon by the parties, at which time the parties shall
deliver the Columbia Closing Documents, the Xxxxxx Closing Documents, the opinions of counsel
required by Sections 7.1(d), 7.2(c) and 7.3(c) herein, and such other
-64-
documents and instruments as may be necessary or appropriate to effectuate the purposes of
this Agreement.
Section 9.2 Effective Time. Immediately following the Closing, and provided that this
Agreement has not been terminated or abandoned pursuant to Article VIII hereof, Xxxxxx and Columbia
will cause Articles of Merger (the “Articles of Merger”) to be delivered and properly filed with
the Department of State of the Commonwealth of Pennsylvania (the “Department of State”) and the
State Department of Assessments and Taxation of the State of Maryland (the “Department of
Assessments and Taxation” and, with the Department of State, the “Filing Offices”). The Merger
shall become effective at 11:59 p.m. (or such other time as the parties may agree) on the day on
which the Closing occurs and Articles of Merger are filed with the Filing Offices or such later
date and time as may be specified in the Articles of Merger (the “Effective Time”). The “Effective
Date” when used herein means the day on which the Effective Time occurs.
ARTICLE X — NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 10.1 No Survival. The representations and warranties of Columbia and of Xxxxxx set
forth in this Agreement shall expire and be terminated on the Effective Time by consummation of
this Agreement, and no such representation or warranty shall thereafter survive. Except with
respect to the agreements of the parties which by their terms are intended to be performed either
in whole or in part after the Effective Time, the agreements of the parties set forth in this
Agreement shall not survive the Effective Time, and shall be terminated and extinguished at the
Effective Time, and from and after the Effective Time none of the parties hereto shall have any
liability to the other on account of any breach of such agreements.
ARTICLE XI — GENERAL PROVISIONS
Section 11.1 Expenses. Except as provided in Section 8.2(b) herein, each party shall pay its
own expenses incurred in connection with this Agreement and the consummation of the transactions
contemplated herein. For purposes of this Section 11.1 herein, the cost of printing the Proxy
Statement/Prospectus shall be deemed to be an expense of Xxxxxx.
Section 11.2 Other Mergers and Acquisitions. Subject to the right of Columbia to refuse to
consummate this Agreement pursuant to Section 8.1(c)(i) herein by reason of a material breach by
Xxxxxx of the warranty and representation set forth in Section 4.7 herein, nothing set forth in
this Agreement shall be construed: (i) to preclude Xxxxxx from acquiring, or to limit in any way
the right of Xxxxxx to acquire, prior to or following the Effective Time, the stock or assets of
any other financial services institution or other corporation or entity, whether by issuance or
exchange of Xxxxxx Common Stock or otherwise; (ii) to preclude Xxxxxx from issuing, or to limit in
any way the right of Xxxxxx to issue, prior to or following the Effective Time, Xxxxxx Common
Stock, Xxxxxx Preferred Stock or any other equity or debt securities; or (iii) to preclude Xxxxxx
from taking, or to limit in any way the right of Xxxxxx to take, any other action not expressly and
specifically prohibited by the terms of this Agreement.
Section 11.3 Notices. All notices, claims, requests, demands and other communications which
are required or permitted to be given under this Agreement shall be in
-65-
writing and shall be deemed to have been duly delivered if delivered in person, transmitted by
telegraph or facsimile machine (but only if receipt is acknowledged in writing), or mailed by
registered or certified mail, return receipt requested, as follows:
(a) If to Xxxxxx, to:
Xxxxx X. Xxxxxx, Xx., Chairman and Chief Executive Officer
Xxxxxx Financial Corporation
Xxx Xxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxx Financial Corporation
Xxx Xxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
With a copy to:
Xxxx X. Xxxxxxxx, Esquire
Barley Xxxxxx LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Barley Xxxxxx LLC
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
(b) If to Columbia, to:
Xxxx X. Xxxx, Xx.
Chairman and Chief Executive Officer
Columbia Bancorp
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Chairman and Chief Executive Officer
Columbia Bancorp
0000 Xxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxxx, Esquire
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Section 11.4 Counterparts. This Agreement may be executed simultaneously in several
counterparts, each of which shall be deemed an original, but all such counterparts together shall
be deemed to be one and the same instrument.
Section 11.5 Governing Law. This Agreement shall be deemed to have been made in, and shall be
governed by and construed in accordance with the substantive laws of, the Commonwealth of
Pennsylvania, except to the extent that the GCL or federal law specifically applies to the Merger
and the transactions contemplated thereby.
Section 11.6 Parties in Interest. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal representatives;
provided, however, that neither party may assign its rights or delegate its duties
-66-
under this Agreement without the prior written consent of the other party (which consent may
be withheld in such other party’s sole and absolute discretion). Other than the right to receive
the consideration payable as a result of the Merger pursuant to Article II hereof and the
provisions of Section 3.17 with respect to the Contract Employees and the provisions of Section 6.9
with respect to Columbia’s directors, this Agreement is not intended to and shall not confer upon
any other person any rights, benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 11.7 Disclosure Schedules. The inclusion of a given item in a disclosure schedule
annexed to this Agreement shall not be deemed a conclusion or admission that such item (or any
other item) is material or is a material and adverse change. Information disclosed for one section
shall constitute disclosure for other sections whether or not specifically referenced.
Section 11.8 Entire Agreement. This Agreement (including the Schedules and Exhibits hereto),
together with the Warrant Agreement and the Warrant being executed by the parties on the date
hereof, sets forth the entire understanding and agreement of the parties hereto and supersedes any
and all prior agreements, arrangements and understandings, whether oral or written, relating to the
subject matter hereof and thereof.
Section 11.9 Definitions
Definitions of the following capitalized terms used in this Agreement are set forth in the
following sections:
1933 Act
|
Section 2.2(f)(iii) | |
1934 Act
|
Section 2.9 | |
Acquisition Proposal
|
Section 5.7(f)(i) | |
Additional Xxxxxx Financial Statements
|
Section 6.3 | |
Additional Columbia Financial Statements
|
Section 5.4 | |
Aggregate Cash Election Percentage
|
Section 2.2(b)(iii)(C) | |
Aggregate Cash Elections
|
Section 2.2(b)(iii) | |
Aggregate Stock Election Percentage
|
Section 2.2(b)(iv)(C) | |
Aggregate Stock Elections
|
Section 2.2(b)(iii) | |
Articles of Merger
|
Section 9.2 | |
Bankruptcy and Equity Exceptions
|
Section 3.1 | |
BCL
|
Section 1.1 | |
BHC Act
|
Background | |
Cash Consideration
|
Section 2.1(b) | |
Cash Election
|
Section 2.2(a)(i) | |
Cash/Stock Election
|
Section 2.2(a)(i) | |
Cash Test Amount
|
Section 2.1(b) | |
Claim
|
Section 6.9(b) | |
Closing
|
Section 9.1 | |
Closing Market Price
|
Section 2.1(e) | |
Code
|
Section 2.3(b) |
-00-
Xxxxxxxx
|
Xxxxxxxxxxxx | |
Xxxxxxxx Balance Sheet
|
Section 3.6(a) | |
Columbia Bank Common Stock
|
Section 3.4 | |
Columbia Bank Continuing Directors
|
Section 6.11(a) | |
Columbia Benefit Plans
|
Section 3.18 | |
Columbia Closing Documents
|
Section 7.2(i) | |
Columbia Common Stock
|
Background | |
Columbia Material Adverse Effect
|
Section 3.8 | |
Columbia Options
|
Section 2.3(a) | |
Columbia Pension Plan
|
Section 3.18 | |
Columbia SEC Reports
|
Section 3.6(e) | |
Columbia Share
|
Section 2.1(a) | |
Columbia Stock Option Plans
|
Section 2.3(a) | |
Columbia Subsidiaries
|
Background | |
Columbia Subsidiaries Common Equity
|
Section 3.4 | |
Columbia Trust Preferred Securities
|
Background | |
Contract Employees
|
Section 3.17 | |
Conversion Ratio
|
Section 2.1(b) | |
Department
|
Section 3.25 | |
Department of Assessments and Taxation
|
Section 9.2 | |
Department of State
|
Section 9.2 | |
XXXXX
|
Section 3.6(e) | |
Effective Date
|
Section 9.2 | |
Effective Time
|
Section 9.2 | |
Employment Agreements
|
Section 3.17 | |
Employment Obligation
|
Section 3.17 | |
Election
|
Section 2.2(a)(i) | |
Election Deadline
|
Section 2.2(a)(iv) | |
ERISA
|
Section 3.18 | |
Exchange Agent
|
Section 2.2(a)(iv) | |
FDI Act
|
Section 3.2 | |
FDIC
|
Section 3.25 | |
Filed Xxxxxx SEC Reports
|
Section 4.6(e) | |
Filed Columbia SEC Reports
|
Section 3.6(e) | |
Filing Offices
|
Section 9.2 | |
Floor Price
|
Section 8.1(c)(i) | |
Form of Election
|
Section 2.2(a)(ii) | |
FRB
|
Section 3.25 | |
Xxxxxx
|
Introduction | |
Xxxxxx Balance Sheet
|
Section 4.6(a) | |
Xxxxxx Benefit Plan
|
Section 4.13 | |
Xxxxxx Closing Documents
|
Section 7.3(h) | |
Xxxxxx Common Stock
|
Background | |
Xxxxxx Employers
|
Section 6.8(a) |
-68-
Xxxxxx Material Adverse Effect
|
Section 4.8 | |
Xxxxxx Material Contracts
|
Section 4.21 | |
Xxxxxx Pension Plans
|
Section 4.13 | |
Xxxxxx Preferred Stock
|
Section 4.3 | |
Xxxxxx Rights
|
Section 2.1(b) | |
Xxxxxx Rights Agreement
|
Section 2.1(b) | |
Xxxxxx SEC Reports
|
Section 4.6(e) | |
Xxxxxx Share Value
|
Section 2.1(b) | |
Xxxxxx Stock Consideration
|
Section 2.1(b) | |
Xxxxxx Stock Option
|
Section 2.3(a) | |
Xxxxxx Subsidiaries
|
Section 4.5 | |
GAAP
|
Section 3.6(a) | |
GCL
|
Section 1.1 | |
Governmental Entity
|
Section 3.13 | |
Indemnified Liabilities
|
Section 6.9(b) | |
Indemnified Parties
|
Section 6.9(b) | |
IRS
|
Section 3.10 | |
Knowledge of Columbia or The Columbia Bank, Knowledge of Columbia and the Columbia Subsidiaries |
Section 3.13 | |
Letter of Transmittal
|
Section 2.2(e) | |
Material Contracts
|
Section 3.12(a) | |
Maximum Cash Percentage
|
Section 2.2(b)(i) | |
Merger
|
Background | |
Merger Consideration
|
Section 2.1(a) | |
Minimum Cash Percentage
|
Section 2.2(b)(i) | |
NASDAQ
|
Section 2.1(e) | |
Non-Electing Shares
|
Section 2.2(b)(vi) | |
Offering
|
Section 7.1(e) | |
Ordinary Course of Business
|
Section 3.7 | |
Ordinary Course of Business of Xxxxxx
|
Section 4.7 | |
Outstanding Shares
|
Section 2.1(b) | |
PBGC
|
Section 4.13 | |
Pennsylvania Department
|
Section 4.23 | |
Pre-Announcement Date
|
Section 8.1(c)(iii) | |
Price Determination Period
|
Section 2.1(e) | |
Pro-rated Cash Percentage
|
Section 2.2(b)(iii)(C) | |
Pro-rated Stock Percentage
|
Section 2.2(b)(iv)(C) | |
Proxy Statement/Prospectus
|
Section 6.1(b) | |
Registration Statement
|
Section 6.1(b) | |
Remaining Cash Percentage
|
Section 2.2(b)(iv)(C) | |
Remaining Stock Percentage
|
Section 2.2(b)(iii)(C) | |
SEC
|
Section 2.2(a)(iv) | |
SOX Act
|
Section 3.6(c) | |
Starting Price
|
Section 8.1(c)(iii) | |
Stock Election
|
Section 2.2(a)(i) |
-69-
Stock Test Amount
|
Section 2.1(b) | |
Superior Proposal
|
Section 5.7(f)(ii) | |
Surviving Corporation
|
Section 1.1 | |
The Columbia Bank
|
Background | |
Unclaimed Shares
|
Section 2.2(f)(iii) | |
Voting Agreements
|
Background | |
Warrant
|
Background | |
Warrant Agreement
|
Background |
-70-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers all as of the day and year first above written.
Xxxxxx Financial Corporation | ||
By: |
/s/ XXXXX X. XXXXXX, XX. | |
Xxxxx X. Xxxxxx, Xx. Chairman and Chief Executive Officer |
||
Attest: |
/s/ XXXXXX X. XXXX, XX. | |
Xxxxxx X. Xxxx, Xx. Secretary |
||
Columbia Bancorp | ||
By: |
/s/ XXXX X. XXXX, XX. | |
Xxxx X. Xxxx, Xx. Chairman and Chief Executive Officer |
||
Attest: |
/s/ XXXXX X. XXXXXXXX | |
Xxxxx X. Xxxxxxxx | ||
Secretary |
-71-