PLAN AND AGREEMENT TO MERGE
TABLE OF CONTENTS
1. Effective Date.............................................................2
2. Events Preceding Effectiveness.............................................2
3. Representations and Warranties of Suburban Bancshares......................4
3.1. Organization, Standing, and Capitalization of
Suburban Bancshares and the Suburban Subsidiaries.....................4
3.2. Financial Statements..................................................5
3.3. Taxes.................................................................5
3.4. No Undisclosed Liabilities............................................6
3.5. Absence of Certain Changes or Events..................................6
3.6. Complete and Accurate Disclosure......................................6
3.7. Title to Properties; Absence of Liens and Encumbrances;
Compliance with Laws..................................................7
3.8. Contracts.............................................................7
3.9. Litigation, Etc.......................................................9
3.10. Environmental Matters..............................................9
3.11. Labor Matters.....................................................11
3.12. Pension and Welfare Matters.......................................11
3.13. Related Party Transactions........................................15
3.14. No Conflict with Other Documents..................................15
3.15. Compliance with Laws; Governmental Authorizations.................15
3.16. Authority; Enforceability.........................................16
3.17. Insurance.........................................................16
3.18. Financial Institutions Bond.......................................16
3.19. Brokers; Financial Advisor........................................16
3.20. Beneficial Ownership of Columbia Bancorp Common Stock.............17
3.21. Year 2000.........................................................17
4. Representations and Warranties of Columbia Bancorp........................17
4.1. Organization, Standing, and Capitalization of Columbia
Bancorp and Columbia Subsidiaries....................................17
4.2. Financial Statements.................................................19
4.3. Taxes................................................................19
4.4. No Undisclosed Liabilities...........................................19
4.5. Absence of Certain Changes or Events.................................20
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4.6. Complete and Accurate Disclosure.....................................20
4.7. Title to Properties; Absence of Liens and Encumbrances;
Compliance with Laws.................................................20
4.8. Contracts............................................................21
4.9. Litigation, Etc......................................................22
4.10. Environmental Matters.............................................23
4.11. Labor Matters.....................................................24
4.12. Pension and Welfare Matters.......................................24
4.13. Related Party Transactions........................................28
4.14. No Conflict with Other Documents..................................28
4.15. Compliance with Laws; Governmental Authorizations.................28
4.16. Authority; Enforceability.........................................29
4.17. Insurance.........................................................29
4.18. Financial Institutions Bond.......................................29
4.19. Brokers; Financial Advisor........................................29
4.20. Beneficial Ownership of Suburban Bancshares Common Stock..........30
4.21. Year 2000.........................................................30
5. Covenants of Suburban Bancshares..........................................30
5.1. Information..........................................................30
5.2. Events Preceding Effectiveness.......................................31
5.3. Regulatory Approvals.................................................31
5.4. Conduct of Business..................................................31
5.5. Reservation of Shares................................................32
5.6. Meeting of Stockholders of Suburban Bancshares;
Document Preparation.................................................32
5.7. Consents.............................................................33
5.8. Current Information; Advice of Changes...............................33
5.9. No Solicitation of Other Offers......................................34
5.10. Affiliate Agreements..............................................35
5.11. Pooling-of-Interests..............................................35
5.12. Taxes.............................................................35
5.13. Public Announcements..............................................36
6. Covenants of Columbia Bancorp.............................................36
6.1. Information..........................................................36
6.2. Events Preceding Effectiveness.......................................37
6.3. Applications to Governmental Regulatory Authorities..................37
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6.4. Conduct of Business..................................................37
6.5. Columbia Bancorp Common Stock........................................38
6.6. Registration of Shares...............................................38
6.7. Meeting of Stockholders of Columbia Bancorp; Document
Preparation..........................................................39
6.8. Consents.............................................................40
6.9. Current Information; Advice of Changes...............................40
6.10. No Solicitation of Other Offers...................................40
6.11. Affiliate Agreements..............................................41
6.12. Pooling-of-Interests..............................................41
6.13. Taxes.............................................................41
6.14. Public Announcements..............................................42
7. Conditions Precedent to Columbia Bancorp's Obligations....................42
7.1. Representations, Warranties, and Covenants...........................42
7.2. No Adverse Changes...................................................42
7.3. Events Preceding the Effective Date..................................42
7.4. Other Evidence.......................................................43
7.5. No Adverse Proceedings, Events, or Regulatory Requirements...........43
7.6. Consents, Etc........................................................43
7.7. Opinion of Tax Counsel...............................................43
7.8. Fairness Opinion.....................................................43
7.9. Opinion of Counsel...................................................43
7.10. Pooling-of-Interests Accounting...................................43
8. Conditions Precedent to Suburban Bancshares' Obligations..................44
8.1. Representations, Warranties, and Covenants...........................44
8.2. No Adverse Changes...................................................44
8.3. Events Preceding the Effective Date..................................44
8.4. Other Evidence.......................................................44
8.5. No Adverse Proceedings, Events, or Regulatory Requirements...........45
8.6. Consents, Etc........................................................45
8.7. Opinion of Tax Counsel...............................................45
8.8. Fairness Opinion.....................................................45
8.9. Opinion of Counsel...................................................45
9. Terms of the Holding Company Merger.......................................45
9.1. Structure of the Holding Company Merger..............................45
9.2. Conversion of Stock; Conversion Ratio................................46
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9.3. Exchange Procedure...................................................46
9.4. Stock Options........................................................47
9.5. Charter of the Successor Corporation.................................47
9.6. By-Laws of the Successor Corporation.................................47
9.7. Anti-Dilution Provision..............................................47
9.8. Restriction on Issuance or Repurchase of Securities..................48
10. Terms of the Bank Merger..................................................48
10.1. Structure of the Bank Merger......................................48
10.2. Conversion of Stock; Conversion Ratio.............................48
10.3. Exchange Procedure................................................48
10.4. Charter of the Successor Bank.....................................48
10.5. By-Laws of the Successor Bank.....................................48
10.6. Restriction on Issuance or Repurchase of Securities...............48
11. Boards of Directors and Employment Matters................................49
12. Amendment of this Plan....................................................50
13. Abandonment of this Plan; Effect Thereof..................................50
14. Expenses..................................................................52
15. Notices...................................................................52
16. Entire Agreement; Effect..................................................52
17. Representations, Warranties, and Agreements...............................52
18. Governing Law.............................................................53
19. General...................................................................53
APPENDIX I....................................................................54
APPENDIX II...................................................................57
APPENDIX III..................................................................66
APPENDIX IV...................................................................73
APPENDIX V....................................................................80
APPENDIX VI...................................................................84
APPENDIX VII..................................................................87
APPENDIX VIII.................................................................92
APPENDIX IX...................................................................97
APPENDIX X....................................................................99
APPENDIX XI..................................................................102
APPENDIX XII.................................................................106
APPENDIX XIII................................................................108
APPENDIX XIV.................................................................110
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APPENDIX XV..................................................................112
APPENDIX XVI.................................................................123
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PLAN AND AGREEMENT TO MERGE
PLAN AND AGREEMENT TO MERGE (this "Plan"), dated as of September 28, 1999
by and between COLUMBIA BANCORP ("Columbia Bancorp"), a Maryland corporation,
and SUBURBAN BANCSHARES, INC. ("Suburban Bancshares"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Columbia Bancorp is a bank holding company and the holder of all
of the issued and outstanding capital stock of Columbia Bank ("Columbia Bank"),
a Maryland commercial bank; and Suburban Bancshares is a bank holding company
and the holder of all of the issued and outstanding capital stock of Suburban
Bank of Maryland ("Suburban Bank"), a Maryland commercial bank; and
WHEREAS, Columbia Bancorp desires to have Suburban Bancshares merge with
Columbia Bancorp in such a manner that, upon the merger becoming effective,
Columbia Bancorp will be the surviving Maryland corporation, and all of the
issued and outstanding shares of the Common Stock of Suburban Bancshares will be
converted into shares of the Common Stock of Columbia Bancorp, subject to the
terms and conditions and based upon Suburban Bancshares' representations,
warranties, and covenants hereinafter set forth, such merger hereinafter
referred to as the "Holding Company Merger;" and
WHEREAS, Columbia Bancorp desires to have Suburban Bank merge with Columbia
Bank in such a manner that, upon the merger becoming effective, Columbia Bank
will be the surviving Maryland commercial bank, and all of the issued and
outstanding shares of the Common Stock of Suburban Bank will be converted into
shares of the Common Stock of Columbia Bank and owned by Columbia Bancorp,
subject to the terms and conditions and based upon Suburban Bancshares'
representations, warranties, and covenants hereinafter set forth, such merger
hereinafter referred to as the "Bank Merger," and with the Holding Company
Merger, collectively, the "Mergers;" and
WHEREAS, Suburban Bancshares desires that it be merged with Columbia
Bancorp in the manner set forth above, and that the issued and outstanding
shares of the Common Stock of Suburban Bancshares be converted into shares of
the Common Stock of Columbia Bancorp, subject to the terms and conditions and
based upon Columbia Bancorp's representations, warranties, and covenants
hereinafter set forth; and
WHEREAS, Suburban Bancshares desires that Suburban Bank be merged with
Columbia Bank in the manner set forth above, and that the issued and outstanding
shares of the Common Stock of Suburban Bank be converted into shares of the
Common Stock of Columbia Bank owned by Columbia Bancorp, subject to the terms
and conditions and based upon Columbia Bancorp's representations, warranties,
and covenants hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and the mutual benefits to be derived herefrom, the parties
agree as follows:
1. Effective Date. Pursuant to MD. GENERAL CORPORATION LAW SS. 3-113(a),
MD. FIN. INS. CODE SS. 3-709(b), and DE. GENERAL CORPORATION LAW SS. 252(c), the
effective date of this Plan and the Mergers (the "Effective Date") shall be
eitheR (a) the first day of the month following the month in which the last of
the events in Section 2, Section 7 and Section 8 occurs; or (b) such other date
as Columbia Bancorp and Suburban Bancshares may agree upon. Columbia Bancorp and
Suburban Bancshares will prepare and execute an Agreement and Articles of Merger
in substantially the form attached as Appendix II which will set forth the
Effective Date, and will file the Agreement and Articles of Merger with the
Maryland State Department of Assessments and Taxation and the Delaware Secretary
of State. Columbia Bank and Suburban Bank will prepare and execute an Agreement
of Bank Merger in substantially the form attached as Appendix II, and will file
the Agreement of Bank Merger and the Certificate of Merger of the Commissioner
of Financial Institutions which will set forth the Effective Date with the
Maryland State Department of Assessments and Taxation.
2. Events Preceeding Effectiveness. On or before the Effective Date the
following shall have occurred:
(a) A majority of the Boards of Directors of each of Suburban
Bancshares and Columbia Bancorp shall have approved and agreed to this Plan
and the Mergers;
(b) A majority of the Boards of Directors of each of Suburban
Bancshares and Columbia Bancorp shall have approved and agreed to the Stock
Option Agreements (the "Stock Option Agreements") in the forms attached as
Appendix III and Appendix IV, respectively; and Suburban Bancshares and
Columbia Bancorp, respectively, shall have authorized and reserved an
adequate number of shares of its Common Stock for issuance upon exercise of
the option granted by such Stock Option Agreements, and taken all actions
necessary to fulfill its obligations thereunder;
(c) the Board of Directors of Suburban Bancshares shall call a meeting
of the stockholders of Suburban Bancshares. Notice of the time and place of
the meeting shall be provided in accordance with DE. GENERAL CORPORATION
LAW ss. 252(c), and this Plan and the Holding Company Merger shall have
been ratified and confirmed by the affirmative vote of not less than a
majority of the issued and outstanding voting stock of Suburban Bancshares
at the meeting, in accordance with DE. GENERAL CORPORATION LAW ss. 252(c);
(d) the Board of Directors of Columbia Bancorp shall call a meeting of
the stockholders of Columbia Bancorp. Notice of the time and place of the
meeting shall be provided in accordance with MD. GENERAL CORPORATION LAW
2
ss. 2-504, and this Plan and the Holding Company Merger shall have been
ratified and confirmed by the affirmative vote of not less than two-thirds
of the issued and outstanding voting stock of Columbia Bancorp at the
meeting, in accordance with MD. GENERAL CORPORATION LAW ss. 3-105(d);
(e) the Board of Directors and the stockholder of Columbia Bank shall
have approved the Bank Merger in accordance with MD. FIN. INS. CODE ▇▇.▇▇.
3-701 et seq.;
(f) the Board of Directors and the stockholder of ' Suburban Bank
shall have approved the Bank Merger in accordance with MD. FIN. INS. CODE
▇▇.▇▇. 3-701 et seq.;
(g) Columbia Bancorp shall have procured the required approval,
consent, waiver, or other administrative action with respect to this Plan
and the transactions contemplated hereby by the Board of Governors of the
Federal Reserve System under Section 3(a)(5) of the Bank Holding Company
Act of 1956, as amended;
(h) Columbia Bank and Suburban Bank shall have procured the required
approval, consent, waiver, or other administrative action with respect to
this Plan and the transactions contemplated hereby by the Maryland
Commissioner of Financial Regulation under MD. FIN. INS. CODE ▇▇.▇▇. 5-904
and 3-705;
(i) Columbia Bank and Suburban Bank shall have procured the required
approval, consent, waiver, or other administrative action with respect to
this Plan and the transactions contemplated hereby by the Federal Deposit
Insurance Corporation under Sections 18(c) and 18(d) of the Federal Deposit
Insurance Act;
(j) the parties shall have procured all other regulatory approvals,
consents, waivers, or administrative actions of governmental entities or
other persons or agencies that are necessary or appropriate to the
consummation of the transactions contemplated by this Plan, and no
approval, consent, waiver, or administrative action referred to in this
Section 2(j) shall have included any condition or requirement that would
(i) result in a materially adverse effect on Columbia Bancorp or Suburban
Bancshares, or (ii) so materially and adversely affect the economic or
business benefits of the Mergers that Columbia Bancorp, in the sole
judgment of Columbia Bancorp, would not have entered into this Plan had
such conditions or requirements been known at the date hereof;
(k) Columbia Bancorp shall have filed a Registration Statement with
the Securities and Exchange Commission (the "SEC") under the Securities Act
3
of 1933, as amended (the "Securities Act"), pertaining to the shares of
Common Stock of Columbia Bancorp to be issued to the stockholders of
Suburban Bancshares pursuant to this Plan and the Holding Company Merger,
and such Registration Statement shall have become effective and there shall
not be in effect a stop order with respect thereto; and
(l) Columbia Bancorp shall have made such filings and obtained such
approvals as are necessary under the state securities or "blue sky" laws
pertaining to the shares of Common Stock of Columbia Bancorp to be issued
to the stockholders of Suburban Bancshares pursuant to this Plan and the
Mergers.
3. Representations and Warranties of Suburban Bancshares. Suburban
Bancshares represents and warrants to Columbia Bancorp as follows:
3.1. Organization, Standing, and Capitalization of Suburban Bancshares
and the Suburban Subsidiaries. (a) Suburban Bancshares is a duly organized and
validly existing corporation and is in good standing under the laws of the State
of Delaware. Suburban Bancshares has the corporate power and authority to own
and hold its material properties and to carry on its business as it is now being
conducted. Suburban Bancshares is a registered bank holding company under the
Bank Holding Company Act of 1956, as amended. Suburban Bancshares has no
subsidiaries or affiliated companies and is not a party to any joint venture or
partnership other than as listed on Schedule 3.1(a) (collectively, the "Suburban
Subsidiaries").
(b) Suburban Bank is a duly organized and validly existing Maryland
commercial bank and is in good standing under the laws of the State of Maryland.
The deposits of Suburban Bank are insured under the provisions of the Federal
Deposit Insurance Act, as amended. Each of the other Suburban Subsidiaries is a
duly organized and validly existing corporation or other entity and is in good
standing under the laws of the jurisdiction of its incorporation or organization
as set forth on Schedule 3.1(a). Each of the Suburban Subsidiaries has the power
(corporate or other) and authority to own and hold its material properties and
to carry on its business as it is now being conducted. All outstanding shares of
capital stock or other equity interests of all of the Suburban Subsidiaries are
validly issued, fully paid, and non-assessable. Except as disclosed in Schedule
3.1(b), each of the Suburban Subsidiaries is wholly owned by its parent. There
are no outstanding options, warrants, rights, or obligations of any kind
entitling the holder thereof to acquire shares of the capital stock or other
equity interests of any of the Suburban Subsidiaries, and there are no
outstanding securities or instruments of any kind that are convertible into
shares of the capital stock or other equity interests of any of the Suburban
Subsidiaries. Except as disclosed in Schedule 3.1(b), none of the Suburban
Subsidiaries is a party to any joint venture or partnership.
(c) Copies of all organizational documents and by-laws of Suburban
Bancshares and each of the Suburban Subsidiaries are attached as Schedule
3.1(c), and all such copies are true and correct as of the date hereof. The
minute books of Suburban Bancshares and each of the Suburban Subsidiaries, which
4
have been made available to Columbia Bancorp for inspection, are complete in all
material respects and accurately record the actions taken by the stockholders
and directors of Suburban Bancshares and each of the Suburban Subsidiaries.
(d) The authorized capital stock of Suburban Bancshares consists
exclusively of 20,000,000 shares of Common Stock, par value $.01 per share,
11,301,218 of which shares are outstanding at September 17, 1999, and 1,000,000
shares of Preferred Stock, par value $.01 per share, none of which shares are
issued or outstanding. All outstanding shares of Suburban Bancshares Common
Stock are validly issued, fully paid, and non assessable. Suburban Bancshares
has reserved 500,000 shares of its Common Stock for issuance under its Stock
Option Plans. On September 17, 1999, there were outstanding options to purchase
491,134 shares of Suburban Bancshares' Common Stock at prices ranging from
$2.59375 to $5.625 pursuant to these Stock Option Plans. Except for the option
to be granted to Columbia Bancorp pursuant to the Stock Option Agreement
attached as Appendix III and as disclosed in Schedule 3.1(d), there are no other
outstanding options, warrants, rights, or obligations of any kind entitling the
holder thereof to acquire shares of the Common Stock of Suburban Bancshares, and
there are no outstanding securities or instruments of any kind that are
convertible into shares of the Common Stock of Suburban Bancshares.
3.2. Financial Statements. Suburban Bancshares has provided in
Schedule 3.2 copies of the Consolidated Financial Statements of Suburban
Bancshares and the Suburban Subsidiaries at December 31, 1994, 1995, 1996, 1997,
and 1998 and for each of the years then ended, as reported upon by ▇▇▇▇▇▇▇ &
Company, and at June 30, 1998 and 1999 and for each of the six month periods
then ended, all of which are true and complete in all material respects, have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods covered by such consolidated
financial statements and present fairly the financial position, results of
operations, cash flows, and changes in stockholders' equity of Suburban
Bancshares and the Suburban Subsidiaries at the dates of and for the periods
covered by such financial statements.
3.3. Taxes. Schedule 3.3 sets forth the tax returns to federal, state,
county, municipal, or foreign taxing authorities for the taxable year ended
December 31, 1994 and all taxable years through and including December 31, 1998
for Suburban Bancshares and the Suburban Subsidiaries. Suburban Bancshares and
the Suburban Subsidiaries have filed with appropriate federal, state, county,
municipal, or foreign taxing authorities all tax returns required to be filed
(taking any applicable extensions into consideration) and have paid or reserved
for all taxes shown to be due on such returns and all penalties and interest
payable in respect thereof. Except as disclosed in Schedule 3.3, neither
Suburban Bancshares nor any of the Suburban Subsidiaries have received from any
taxing authority any notice of deficiency or assessment of additional taxes not
paid or any notice of an intention to commence an examination or audit of its
tax returns, and no tax audits by any taxing authority are in process. Except as
disclosed on Schedule 3.3, neither Suburban Bancshares nor any of the Suburban
Subsidiaries have 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. The accruals and reserves reflected in
the consolidated financial statements which Suburban Bancshares has provided to
Columbia Bancorp as described in Section 3.2 are adequate to cover all taxes
5
(including interest and penalties, if any, thereon) that are payable or accrued
as a result of the operations of Suburban Bancshares and the Suburban
Subsidiaries for all periods prior to the date of such consolidated financial
statements. For purposes of this Section 3.3, any reference to the Suburban
Subsidiaries shall be deemed to include any entity listed on Schedules 3.1(a)
and 3.1 (b).
3.4. No Undisclosed Liabilities. Except as and to the extent reflected
or reserved against in the consolidated financial statements referred to in
Section 3.2, neither Suburban Bancshares nor any of the Suburban Subsidiaries at
the dates of such consolidated financial statements had any material liabilities
or obligations (whether accrued, absolute, or contingent) required under
generally accepted accounting principles to be reflected thereon which would
materially and adversely affect the fair presentation of such financial
statements. Neither Suburban Bancshares nor any of the Suburban Subsidiaries has
incurred any liability since the date of the consolidated financial statements
referred to in Section 3.2 (including any liability for taxes) which would
materially and adversely affect the condition (financial or otherwise), assets,
liabilities, business, or operations of Suburban Bancshares and the Suburban
Subsidiaries, taken as a whole, other than liabilities which have been incurred
in the ordinary course of business.
3.5. Except as setforth in Schedule 3.5, since December 31, 1998 there
has not been:
(a) Any materially adverse change in the financial position,
results of operations, assets, liabilities, or business of Suburban
Bancshares or the Suburban Subsidiaries, other than changes in the ordinary
course of business;
(b) any increase in salaries or wages of directors, officers, or
employees of Suburban Bancshares or the Suburban Subsidiaries other than in
the ordinary course of business; or any establishment or increase of any
employment, compensation, bonus, pension, option, incentive or deferred
compensation, retirement payments, profit sharing, or similar agreement or
benefit, authorized, granted, or accrued to any directors, officers, or
employees of Suburban Bancshares or the Suburban Subsidiaries other than in
the ordinary course of business; or
(c) any declaration, payment, or set aside by Suburban Bancshares
of any dividend or distribution in respect of its Common Stock, or any
purchase, issuance, or sale of any of its Common Stock.
3.6. Complete and Accurate Disclosure. Neither this Plan (insofar as
it relates to Suburban Bancshares and the Suburban Subsidiaries, the Common
Stock of Suburban Bancshares, and the involvement of Suburban Bancshares in the
transactions contemplated hereby) nor any financial statement, schedule,
6
certificate, or other statement or document set forth on a schedule delivered by
Suburban Bancshares to Columbia Bancorp in connection with this Plan, when
considered in the aggregate, contains 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 necessary to
make the statements contained herein or therein not false or misleading.
3.7. Title to Properties; Absence of Liens and Encumbrances;
Compliance with Laws. Except as disclosed on Schedule 3.7, Suburban Bancshares
and each of the Suburban Subsidiaries has good and marketable title to all of
their respective properties and assets, including those reflected in the
consolidated financial statements referred to in Section 3.2, except as sold or
otherwise disposed of for fair value and only in the ordinary course of
business, free and clear of all liens and encumbrances, except (i) with respect
to property as to which they are lessees, (ii) with respect to real estate owned
by Suburban Bancshares or the Suburban Subsidiaries, for use, occupancy, and
similar restrictions of public record that may be observed by an inspection of
the property, and such other utility and other easements and encumbrances as do
not materially adversely affect the fair market value of such real property, and
(iii) liens to secure borrowings, liens to secure governmental deposits, and
liens for current taxes not yet due and payable. Neither Suburban Bancshares nor
any of the Suburban Subsidiaries owns or leases real property except as
disclosed on Schedule 3.7, and is not in default under any material lease of
real or personal property to which it is a party. As of the date hereof, except
as disclosed on Schedule 3.7, the real properties, structures, buildings,
equipment, and the tangible personal property owned, operated, or leased by
Suburban Bancshares or any of the Suburban Subsidiaries are (x) in good repair,
order, and condition, except for depletion, depreciation, and ordinary wear and
tear, (y) suitable for the uses for which they were intended, and (z) free from
any known structural defects. As of the date hereof, there are no laws,
conditions of record, or other impediments which materially interfere with the
intended uses by Suburban Bancshares or any of the Suburban Subsidiaries of the
real property or tangible personal property owned or leased by it, except as set
forth in Schedule 3.7. Neither Suburban Bancshares nor any of the Suburban
Subsidiaries have received any notice of any violation of any applicable law,
building code, zoning ordinance, or other similar law. Suburban Bancshares and
the Suburban Subsidiaries own or have the rights to use all real and personal
properties and assets that are material to the conduct of the business as now
conducted of Suburban Bancshares and the Suburban Subsidiaries, taken as a
whole.
3.8. Contracts. Except for the plans, contracts, and agreements of
Suburban Bancshares and the Suburban Subsidiaries (or of any plan under Section
3.8(b)) disclosed on Schedule 3.8, neither Suburban Bancshares nor any of the
Suburban Subsidiaries(nor any plan under Section 3.8(b))is a party to or subject
to:
(a) Any employment, consultation, or compensation contract or
arrangement (other than those terminable at will) with any officer,
consultant, director, or employee;
7
(b) any plan, contract, program, understanding, or agreement
providing for bonuses, pensions, severance pay, executive compensation,
options, stock purchases, or any other form of retirement, incentive or
deferred compensation, retirement payments, death benefits, profit sharing,
branch closing benefits, workers' compensation, tuition reimbursement or
scholarship program, any plans providing benefits or payments in the event
of a change in control, change in ownership, or sale of a substantial
portion (including all or substantially all) of the assets of Suburban
Bancshares or any of the Suburban Subsidiaries, or any health, accident,
disability, sick leave, vacation pay, life insurance, or other welfare
benefit, or any other employee or retired employee benefit (including,
without limitation, any "employee benefit plan" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) in which any current or former employee, director, or agent (or
beneficiary of any of them) of Suburban Bancshares or any of the Suburban
Subsidiaries is or was, within the last six years, entitled to participate;
(c) any contract or agreement with any labor union;
(d) any lease of real or personal property with annual rentals in
excess of $5,000;
(e) any agreement for services in excess of $10,000 per year or
for the purchase or disposition of any equipment or supplies except
individual purchase orders for office supplies incurred in the ordinary
course of business of $10,000 or less;
(f) any instrument evidencing or relating to indebtedness for
borrowed money except for customer accounts, deposits, certificates of
deposit, federal funds purchased, and the like which may be construed as
borrowings and except for loans made by Suburban Bank as lender in the
ordinary course of its business;
(g) any lease or other contract containing covenants not to enter
into or consummate the transactions contemplated hereby or which provides
for payments in excess of $2,000 and will be terminated or violated by the
Mergers or in respect of which the Mergers would cause a default or
acceleration of obligations; or
(h) any other contract or agreement not of the type covered by
any of the other specific terms of this Section 3.8 obligating Suburban
Bancshares or any Suburban Subsidiary to expenditures in excess of $25,000.
Each of the instruments disclosed on Schedule 3.8 is valid and in full force and
effect. Neither Suburban Bancshares nor any of the Suburban Subsidiaries are in
8
default nor have any of them received any notice that they are in default, nor
to their actual knowledge is any other party in default, under any material
agreements, instruments, or obligations to which Suburban Bancshares or any of
the Suburban Subsidiaries is a party or by which they are bound.
3.9. Litigation, Etc. Except as disclosed on Schedule 3.9, (a) there
is no litigation, proceeding, or investigation pending or, to the knowledge of
Suburban Bancshares, threatened against Suburban Bancshares or any of the
Suburban Subsidiaries which would result in any materially adverse change in the
condition (financial or otherwise), assets, liabilities, business, operations,
or future prospects of Suburban Bancshares and the Suburban Subsidiaries, taken
as a whole; (b) there are no outstanding orders, writs, injunctions, judgments,
decrees, directives, consent agreements, or memoranda of understanding issued by
any federal, state, or local court or governmental authority or arbitration
tribunal issued against or with the consent of Suburban Bancshares or any of the
Suburban Subsidiaries that materially and adversely affect the condition
(financial or otherwise), assets, liabilities, business, operations, or future
prospects or that in any manner restrict Suburban Bancshares' right to carry on
its business or that of the Suburban Subsidiaries as now conducted; and (c)
Suburban Bancshares is aware of no fact or condition now existing that might
give rise to any litigation, investigation, or proceeding which, if determined
adversely to Suburban Bancshares or any of the Suburban Subsidiaries, would
materially and adversely affect the condition (financial or otherwise), assets,
liabilities, business, operations, or future prospects of Suburban Bancshares
and the Suburban Subsidiaries, taken as a whole, or would restrict in any manner
Suburban Bancshares' right to carry on its business or that of the Suburban
Subsidiaries as now conducted. Suburban Bancshares has disclosed on Schedule 3.9
all litigation in which Suburban Bancshares or any of the Suburban Subsidiaries
is involved as a party (other than bankruptcy proceedings in which Suburban
Bancshares or any of the Suburban Subsidiaries has filed proofs of claim or
routine collection and foreclosure suits initiated in the ordinary course of
business).
3.10. Environmental Matters. (a) The following terms shall have the
indicated meaning:
"Property" or "Properties" means all branch properties now
or formerly owned or operated, all other real property now owned or
operated, and any real properties owned or operated on or after July
1, 1991 and subsequently disposed of.
"Environmental Law" means (i) any applicable federal, state,
or local statute, law, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, order, judgment, decree,
directive, requirement, or agreement with any court, governmental
authority, or other regulatory or administrative agency or commission,
domestic or foreign ("Governmental Entity") now existing, relating to
the use, storage, treatment, generation, transportation, processing,
handling, labeling, production, release, or disposal of Hazardous
9
Substances, each as amended, or (ii) any common law that may impose
liability or obligations for injuries or damages due to the presence
of or exposure to any Hazardous Substance.
"Hazardous Substance" means any substance, whether liquid,
solid, or gas, listed, defined, designated, or classified as
hazardous, toxic, radioactive, or dangerous under any applicable
Environmental Law, whether by type or by quantity. Hazardous Substance
includes, without limitation, any "hazardous substance" as defined in
the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, and any other substance regulated or subject to any
federal environmental statute, including, but not limited to the Toxic
Substance Control Act, Clean Water Act, Clean Air Act, Oil Pollution
Act and Resource Conservation and Recovery Act, or a similar state
statute, regardless of the amount of the Hazardous Substance.
(b) Except as disclosed on Schedule 3.10 or as would not individually
or in the aggregate have a materially adverse effect on the condition (financial
or otherwise), assets, liabilities, business, or operations of Suburban
Bancshares and the Suburban Subsidiaries, taken as a whole:
(i) neither Suburban Bancshares nor any of the Suburban
Subsidiaries has received any written notices, demand letters, or
written requests for information from any Governmental Entity or any
third party indicating that Suburban Bancshares or any Suburban
Subsidiary may be in violation of, or liable under, any Environmental
Law;
(ii) there are no civil, criminal, or administrative
actions, suits, demands, claims, hearings, investigations, or
proceedings pending or to the knowledge of Suburban Bancshares
threatened against Suburban Bancshares or any Suburban Subsidiary
alleging that they may be in violation of, or liable under, any
Environmental Law;
(iii) no reports have been filed with any Governmental
Entity, nor to the knowledge of Suburban Bancshares are any reports
required to be filed with any Governmental Entity, by Suburban
Bancshares or any of the Suburban Subsidiaries concerning the release
of any Hazardous Substance or the violation of any Environmental Law
on or at any of the Properties of Suburban Bancshares or any of the
Suburban Subsidiaries;
(iv) to the knowledge of Suburban Bancshares or except as
disclosed on Schedule 3.10, there are no underground storage tanks on,
in, or under any of the Properties of Suburban Bancshares or any of
the Suburban Subsidiaries, and no underground storage tanks have been
closed or removed from any Property of Suburban Bancshares or any of
10
the Suburban Subsidiaries while such Property was owned or operated by
Suburban Bancshares or any of the Suburban Subsidiaries;
(v) to the knowledge of Suburban Bancshares or except as
disclosed on Schedule 3.10, no Hazardous Substance has been generated,
used, stored, processed, disposed of, or discharged on or into any of
the Properties of Suburban Bancshares or any of the Suburban
Subsidiaries, except for such hazardous substances as may be used in
the everyday business of a bank office; and
(vi) to the knowledge of Suburban Bancshares or except as
disclosed on Schedule 3.10, no materials containing asbestos have been
used or incorporated in any building or other structure or improvement
located on any of the Properties of Suburban Bancshares or any of the
Suburban Subsidiaries.
(c) There are no permits or licenses or agency filings or reports
required under any Environmental Law in respect of any of the Properties now or
formerly owned or operated by Suburban Bancshares or any of the Suburban
Subsidiaries that the absence of which could, individually or in the aggregate,
have a materially adverse effect on the condition (financial or otherwise),
assets, liabilities, business, or operations of Suburban Bancshares and the
Suburban Subsidiaries, taken as a whole.
(d) Suburban Bancshares has disclosed on Schedule 3.10 a copy of its
current policy regarding compliance with Environmental Laws.
3.11. Labor Matters. To Suburban Bancshares' knowledge, no
organization effort with respect to any of the employees of Suburban Bancshares
or any of the Suburban Subsidiaries is pending or threatened, and no labor
dispute, strike, work stoppage, employee action, or labor relation problem which
may materially affect Suburban Bancshares or any of the Suburban Subsidiaries
currently is pending or threatened. Suburban Bancshares and each of the Suburban
Subsidiaries have at all times in all material respects complied with all
applicable employee termination notice and similar laws. Suburban Bancshares and
each of the Suburban Subsidiaries have at all times complied in all material
respects with all applicable family medical leave and similar laws. If
applicable, Suburban Bancshares and each of the Suburban Subsidiaries have at
all times complied in all material respects with all applicable requirements of
the Worker Adjustment and Retraining Notification Act and all similar state
laws.
3.12. Pension and Welfare Matters. With respect to the plans,
contracts, programs, understandings, or agreements identified pursuant to
Sections 3.8(a) and (b) (for purposes of this Section 3.12, the "plans"):
(a) Schedule 3.12 clearly identifies all of the plans which
are (i) Multiemployer Plans (as defined in (l) below), (ii) multiple
employer plans subject to Sections 4063 and 4064 of ERISA ("Multiple
11
Employer Plans"), (iii) plans other than Multiemployer Plans and
Multiple Employer Plans that are subject to Section 412 of the
Internal Revenue Code of 1986, as amended (the "Code"), (iv) plans
intended to qualify under Section 401 of the Code, and (v) "welfare
benefit plans" within the meaning of Section 3(1) of ERISA which
provide for continuing benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of
employment except coverage or benefits required by Section 4980B of
the Code if paid 100% by the participant;
(b) true, correct and complete copies of the following
documents, with respect to each of the plans have been made available
or delivered to Columbia Bancorp: (i) all plan documents, including
trust agreements, insurance policies, loan documents, and service
agreements and amendments thereto, (ii) the most recent Forms 5500 and
any financial statements attached thereto and those for the prior
three years, (iii) the last Internal Revenue Service determination
letter and the application with respect thereto, (iv) summary plan
descriptions, (v) the most recent actuarial statements and those for
the prior three years, (vi) written descriptions of all non-written
agreements relating to any such plan, as applicable, for Suburban
Bancshares and each of the Suburban Subsidiaries, and (vii) all
filings with a governmental agency or entity within the last three
years, including, without limitation, filings under the voluntary or
other compliance programs of the U.S. Department of Labor or the
Internal Revenue Service;
(c) each of the plans has been operated in all material
respects in accordance with its terms and in accordance with all
applicable laws including, but not limited to, the ERISA, the Code,
the Consolidated Omnibus Budget Reconciliation Act of 1985, the Health
Insurance Portability and Accountability Act of 1996, and state health
care continuation laws;
(d) all reporting and disclosure requirements of ERISA
imposed upon each such plan have been complied with in all material
respects, and all required governmental filings have been made with
respect to the plans;
(e) none of (i) the plans, (ii) the Suburban Subsidiaries,
and (iii) Suburban Bancshares, and to Suburban Bancshares' knowledge,
(x) no current or former director, officer, employee, agent, or
representative of Suburban Bancshares or any of the Suburban
Subsidiaries, and (y) no fiduciary, "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in
Section 4975 of the Code) with respect to any of the plans has engaged
in any non-exempt "prohibited transaction" in connection with any of
the plans within the meaning of Section 4975 of the Code or Title I,
Part 4 of ERISA;
(f) none of the plans has any accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
12
whether or not waived, with respect to the latest five plan years, nor
any liability to the Pension Benefit Guaranty Corporation (the "PBGC")
(other than normal premium payments);
(g) with respect to plans which are pension plans (as
defined in Section 3(2) of ERISA) subject to Title IV of ERISA, the
assets of each such funded plans equal or exceed the liabilities (as
defined in Section 4001(a)(16) of ERISA) under such plans when such
liabilities are valued on a termination basis using PBGC interest and
other assumptions;
(h) no contributions to any of the plans from Suburban
Bancshares or any of the Suburban Subsidiaries are currently past due
and, if applicable, all past service and other liabilities currently
existing but payable in the future, if any, are reflected in the
latest actuarial report in accordance with sound actuarial principles;
(i) no audits, proceedings, investigations, filings, or
other matters (excluding any determination letter application that has
been or may be filed prior to the Effective Date) are pending before
the IRS, the Department of Labor, the PBGC, or other public or
quasi-public body in connection with any such plans;
(j) each plan intended to qualify under Section 401(a) of
the Code is so qualified and the trust maintained pursuant thereto is
exempt from taxation under Section 501 of the Code and nothing has
occurred with respect to the operation or administration of such plan
which would cause the loss of such qualification or exemption or the
imposition of any liability, penalty, or tax under ERISA or the Code
that could reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), assets, liabilities, business,
or operations of Suburban Bancshares and the Suburban Subsidiaries,
taken as a whole, or on such plan;
(k) except as disclosed in Schedule 3.12, through the
Effective Date, there will be no changes in the operation of the plans
or in the documents constituting or affecting the plans except for
amendments and operational changes required by applicable law which do
not materially increase the cost of such plans;
(l) no employees, former employees, or retired employees of
Suburban Bancshares or any of the Suburban Subsidiaries, as a result
of their employment with Suburban Bancshares or any of the Suburban
Subsidiaries, are participants in any "multiemployer plan" which is a
"pension plan," as such terms are defined in Sections 3(37) and 3(2)
of ERISA, respectively, ("Multiemployer Plan") and neither Suburban
Bancshares nor any of the Suburban Subsidiaries has any current,
contingent or potential liability with respect to any such plan;
13
(m) no "reportable event," as such term is defined in
Section 4043(c) of ERISA, has occurred with respect to any plan since
the effective date of ERISA, other than a reportable event for which
the 30 days notice requirement under regulations of the PBGC has been
waived;
(n) there are no pending or threatened claims by or disputes
with any participants or beneficiaries of the plans, except plan
benefit claims arising in the normal course of the operations of the
plans (other than terminated plans) and as to which no dispute exists;
(o) Suburban Bancshares has no knowledge of any facts which
could give rise to any claims against any plan or any fiduciary of any
plan, except for plan benefit claims arising in the normal course of
the operations of the plans (other than terminated plans);
(p) neither Suburban Bancshares nor any of the Suburban
Subsidiaries nor any fiduciary of any plan has given notice to any
fiduciary liability insurer of any claims or potential claims in
connection with any of the plans;
(q) except as disclosed in Schedule 3.12, each of the plans
which benefit retired employees of Suburban Bancshares or any of the
Suburban Subsidiaries may effectively be terminated or amended, in any
manner and at any time, without further liability to its participants,
by its sponsoring employer;
(r) neither Suburban Bancshares nor any of the Suburban
Subsidiaries has provided, nor is required to provide, security to any
pension plan or to any single-employer plan pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA;
(s) there has been no announcement or legally binding
commitment by Suburban Bancshares or any of the Suburban Subsidiaries
to create an additional plan, or to amend a plan except for amendments
required by applicable law which do not materially increase the cost
of such plan;
(t) as to any terminated plans, all obligations for plan
benefits or other liabilities have been satisfied in full;
(u) none of the plans contains any provision which would
prohibit the transactions contemplated by this Plan or which, except
as disclosed in Schedule 3.12, would give rise to any severance,
termination, or other payments or liabilities, or any forgiveness of
indebtedness, vesting, distribution, increase in benefits, or
obligations to fund benefits as a result of the transactions
14
contemplated by this Plan; no payment that is owed or may become due
any director, officer, employee, or agent of Suburban Bancshares or
any of the Suburban Subsidiaries in connection with a plan will be
non-deductible to the payor under Section 280G of the Code, and none
of the Suburban Subsidiaries, Columbia Subsidiaries, Suburban
Bancshares, and Columbia Bancorp will be required to "gross up" or
otherwise compensate any person in connection with a plan because of
the imposition of any excise tax under Section 4999 of the Code; and
(v) no plan is funded by, associated with, or related to a
"voluntary employees' beneficiary association" within the meaning of
Section 501(c)(9) of the Code.
3.13. Related Party Transactions. Except as disclosed on Schedule
3.13, neither Suburban Bancshares nor any of the Suburban Subsidiaries has any
contract, extension of credit, business arrangement, or other relationship of
any kind with any of the following persons: (a) any executive officer or
director of Suburban Bancshares or any of the Suburban Subsidiaries; (b) any
stockholder owning five percent or more of the outstanding Common Stock of
Suburban Bancshares; or (c) any "affiliate" (as defined in the SEC Rule 405) of
the foregoing persons or any business in which any of the foregoing persons is
an officer, director, employee, or five percent or greater equity owner.
3.14. No Conflict with Other Documents. Except as disclosed on
Schedule 3.14, neither the execution and delivery of this Plan nor the carrying
out of the transactions contemplated hereunder will result in any violation,
termination, or default or acceleration of, or be in conflict with, any terms of
any contract or other instrument to which Suburban Bancshares or any of the
Suburban Subsidiaries is a party, or of any judgment, decree, or order
applicable to Suburban Bancshares or any of the Suburban Subsidiaries, or result
in the creation of any lien, charge, or encumbrance upon any of their properties
or assets, except for any of the foregoing which would not have a material
adverse effect upon the condition (financial or otherwise), assets, liabilities,
business, or operations of Suburban Bancshares and the Suburban Subsidiaries,
taken as a whole.
3.15. Compliance with Laws; Governmental Authorizations. (a) Except
where noncompliance would not have a material and adverse effect upon the
condition (financial or otherwise), assets, liabilities, business, or operations
of Suburban Bancshares and the Suburban Subsidiaries, taken as a whole, (i)
Suburban Bancshares and each of the Suburban 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 Suburban Bancshares, the Suburban Subsidiaries, or
any of their properties; and (ii) all permits, concessions, grants, franchises,
licenses, and other governmental authorizations and approvals necessary for the
15
conduct of the business of Suburban Bancshares and the Suburban Subsidiaries as
now conducted have been duly obtained and are in full force and effect, and
there are no proceedings pending or, to Suburban Bancshares' knowledge,
threatened which may result in the revocation, cancellation, suspension, or
materially adverse modification of any thereof.
(b) Suburban Bancshares has filed all reports that it was required to
file with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), all of which complied in all material respects with all
applicable requirements of the Exchange Act and the rules and regulations
adopted thereunder. As of their respective dates, each such report, statement,
form, or other document, including without limitation, any financial statements
or schedules included therein, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided, that information as of a later
date shall be deemed to modify information as of an earlier date.
3.16. Auathority; Enforceability. The execution, delivery, and
performance of this Plan by Suburban Bancshares have been duly and validly
authorized by its Board of Directors, subject only to requisite approval by the
stockholders of Suburban Bancshares and appropriate governmental regulatory
authorities. This Plan is a valid and binding agreement of Suburban Bancshares,
enforceable against it in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3.17. Insurance. All insurance policies held by Suburban Bancshares
and the Suburban Subsidiaries relating to their operations (except for title
insurance policies), including without limitation all financial institutions
bonds, are set forth on Schedule 3.17. All such policies are in full force and
effect. Neither Suburban Bancshares nor any of the Suburban Subsidiaries has
received any notice of cancellation with respect to any such policies and has no
reason to expect that it will receive a notice of cancellation from any of its
present insurance carriers; provided, however, that Suburban Bancshares makes no
representation as to the effect of this Plan or the Mergers on its present
financial institutions bond or bonds.
3.18. Financial Institutions Bond. Since January 1, 1993, Suburban
Bancshares and the Suburban Subsidiaries have continuously maintained in full
force and effect one or more financial institutions bonds insuring Suburban
Bancshares and the Suburban Subsidiaries against acts of dishonesty by each of
their employees. No claim has been made under any such bond since such date, and
Suburban Bancshares is not aware of any fact or condition now existing which
forms the basis of a claim under any such bond. Suburban Bancshares and the
Suburban Subsidiaries have no reason to expect that their present financial
institutions bond or bonds will not be renewed by their carrier on substantially
the same terms as those now in effect; provided, however, that Suburban
Bancshares makes no representation as to the effect of this Plan or the Mergers
on its present financial institutions bond or bonds.
3.19. Brokers; Financial Advisor. All negotiations relating to this
Plan and the transactions contemplated hereunder have been carried on by
16
Suburban Bancshares directly or through its counsel or financial advisor, and
there has been no intervention of any person as the result of any action of
Suburban Bancshares (and, so far as known to Suburban Bancshares, no
intervention of any other person) in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's
fee, or other like payment (other than to its financial advisor, ▇▇▇▇▇▇▇▇▇
Associates Inc.). Schedule 3.19 is a copy of the agreement with ▇▇▇▇▇▇▇▇▇
Associates Inc., which has been engaged by Suburban Bancshares as its financial
advisor and to deliver an opinion as to the fairness of the transactions
contemplated by this Plan to Suburban Bancshares.
3.20. Beneficial ownership of Columbia Bancorp Common Stock. As of the
date hereof, Suburban Bancshares does not beneficially own any shares of
Columbia Bancorp Common Stock or have any option, warrant, or right of any kind
to acquire the beneficial ownership of any Columbia Bancorp Common Stock, except
pursuant to the terms of this Plan, the terms of the Stock Option Agreement
attached as Appendix IV, or in a fiduciary capacity.
3.21. Year 2000. Suburban Bancshares has carried out a review to
evaluate the extent to which the business or operations of Suburban Bancshares
or any of the Suburban Subsidiaries will be affected by the Year 2000 Problem
(as defined below). As a result of such review, Suburban Bancshares has no
reason to believe, and does not believe, that the Year 2000 Problem will have a
material adverse effect on the condition (financial or otherwise), assets,
liabilities, business, or operations of Suburban Bancshares and the Suburban
Subsidiaries, taken as a whole. Suburban Bancshares reasonably believes that the
suppliers, vendors, customers or other material third parties used or served by
Suburban Bancshares and the Suburban Subsidiaries are addressing or will address
the Year 2000 Problem in a timely manner. Suburban Bancshares is in compliance
with all applicable requirements of any Governmental Entity relating to the Year
2000 Problem and has not received any correspondence from or provided any
written information to any Governmental Entity relating to the Year 2000 Problem
except as disclosed in Schedule 3.21. Suburban Bancshares has provided in
Schedule 3.21 copies of all of its internal plans, including estimates of the
anticipated associated costs, for addressing the Year 2000 Problem as it relates
to Suburban Bancshares and the Suburban Subsidiaries. "Year 2000 Problem" means
the risk that computer hardware or software applications will not record, store,
process, calculate and present calendar dates falling on and after January 1,
2000, and calculate information dependent upon or relating to such dates, in the
same manner and with the same functionality, data integrity and performance as
such products record, store, process, calculate and present calendar dates
falling on or before December 31, 1999, and calculate information dependent on
or relating to such dates.
4. Representations and Warranties of Columbia Bancorp. Columbia Bancorp
represents and warrants to Suburban Bancshares as follows:
4.1. Organization, Standing, and Capitalization of Columbia Bancorp
and Columbia Subsidiaries. (a) Columbia Bancorp is a duly organized and validly
existing corporation in good standing es. under the laws of the State of
Maryland. Columbia Bancorp has the corporate power and authority to own and hold
17
its properties and to carry on its business as it is now being conducted.
Columbia Bancorp is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended. Columbia Bancorp has no subsidiaries or
affiliated companies and is not a party to any joint venture or partnership
other than as listed on Schedule 4.1(a) (collectively, the "Columbia
Subsidiaries").
(b) Columbia Bank is a duly organized and validly existing Maryland
commercial bank and is in good standing under the laws of the State of Maryland.
The deposits of Columbia Bank are insured under the provisions of the Federal
Deposit Insurance Act, as amended. Each of the other Columbia Subsidiaries is a
duly organized and validly existing corporation or other entity and is in good
standing under the laws of the jurisdiction of its incorporation or organization
as set forth on Schedule 4.1(a). Each of the Columbia Subsidiaries has the power
(corporate or other) and authority to own and hold its material properties and
to carry on its business as it is now being conducted. All outstanding shares of
capital stock or other equity interests of all of the Columbia Subsidiaries are
validly issued, fully paid, and non-assessable. Except as disclosed in Schedule
4.1(b), each of the Columbia Subsidiaries is wholly owned by its parent. There
are no outstanding options, warrants, rights, or obligations of any kind
entitling the holder thereof to acquire shares of the capital stock or other
equity interests of any of the Columbia Subsidiaries, and there are no
outstanding securities or instruments of any kind that are convertible into
shares of the capital stock or other equity interests of any of the Columbia
Subsidiaries. Except as disclosed in Schedule 4.1(b), none of the Columbia
Subsidiaries is a party to any joint venture or partnership.
(c) Copies of all organization documents and by-laws of Columbia
Bancorp and each of the Columbia Subsidiaries are attached as Schedule 4.1(c),
and all such copies are true and correct as of the date hereof. The minute books
of Columbia Bancorp and each of the Columbia Subsidiaries, which have been made
available to Suburban Bancshares for inspection, are complete in all material
respects and accurately record the actions taken by the stockholders and
directors of Columbia Bancorp and each of the Columbia Subsidiaries.
(d) The authorized capital stock of Columbia Bancorp consists
exclusively of 9,994,000 shares of Common Stock, par value $.01 per share,
4,506,035 of which shares are outstanding on September 17, 1999, and 6,000
shares of Series A Convertible Preferred Stock, par value $.01 per share, none
of which shares are outstanding on September 17, 1999. All outstanding shares of
Columbia Bancorp Common Stock are validly issued, fully paid, and
non-assessable. Columbia Bancorp has reserved 300,000 shares of its Common Stock
for issuance under its Dividend Reinvestment and Stock Purchase Plan and 300,000
shares of its Common Stock for issuance under its Stock Option Plans. On
September 17, 1999, there were outstanding options to purchase 292,310 shares of
Columbia Bancorp's Common Stock at prices ranging from $4.545 to $17.00 pursuant
to these Stock Option Plans. Except for the option to be granted to Suburban
Bancshares pursuant to the Stock Option Agreement attached as Appendix IV and as
disclosed in Schedule 4.1(d), there are no other outstanding options, warrants,
rights, or obligations of any kind entitling the holder thereof to acquire
shares of the Common Stock of Columbia Bancorp, and there are no outstanding
securities or instruments of any kind that are convertible into shares of the
18
Common Stock of Columbia Bancorp. The Common Stock of Columbia Bancorp
deliverable pursuant to this Plan will be, prior to its issuance, duly
authorized for issuance and will, when issued and delivered in accordance with
this Plan, be duly and validly issued, fully paid, and nonassessable.
4.2. Financial Statements. Columbia Bancorp has provided in Schedule
4.2 copies of the Consolidated Financial Statements of Columbia Bancorp and the
Columbia Subsidiaries at December 31, 1994, 1995, 1996, 1997, and 1998 and for
each of the years then ended, as reported upon by KPMG LLP, and at June 30, 1998
and 1999 and for each of the six month periods then ended, all of which are true
and complete in all material respects, have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods covered by such consolidated financial statements and present fairly the
financial position, results of operations, cash flows, and changes in
stockholders' equity of Columbia Bancorp and the Columbia Subsidiaries at the
dates of and for the periods covered by such financial statements.
4.3. Taxes. Schedule 4.3 sets forth the tax returns to federal, state,
county, municipal, or foreign taxing authorities for the taxable year ended
December 31, 1994 and all taxable years through and including December 31, 1998
for Columbia Bancorp and the Columbia Subsidiaries. Columbia Bancorp and the
Columbia Subsidiaries have filed with appropriate federal, state, county,
municipal, or foreign taxing authorities all tax returns required to be filed
(taking any applicable extensions into consideration) and have paid or reserved
for all taxes shown to be due on such returns and all penalties and interest
payable in respect thereof. Except as disclosed in Schedule 4.3, neither
Columbia Bancorp nor any of the Columbia Subsidiaries have received from any
taxing authority any notice of deficiency or assessment of additional taxes not
paid or any notice of an intention to commence an examination or audit of its
tax returns, and no tax audits by any taxing authority are in process. Except as
disclosed on Schedule 4.3, neither Columbia Bancorp nor any of 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 federal, state,
county, municipal, or foreign income tax. The accruals and reserves reflected in
the consolidated financial statements which Columbia Bancorp has provided to
Suburban Bancshares as described in Section 4.2 are adequate to cover all taxes
(including interest and penalties, if any, thereon) that are payable or accrued
as a result of the operations of Columbia Bancorp and the Columbia Subsidiaries
for all periods prior to the date of such consolidated financial statements. For
purposes of this Section 4.3, any reference to the Columbia Subsidiaries shall
be deemed to include any entity listed on Schedules 4.1(a) and 4.1 (b).
4.4 No Undisclosed Liabilities. Except as and to the extent reflected
or reserved against in the consolidated financial statements referred to in
Section 4.2, neither Columbia Bancorp nor any of the Columbia Subsidiaries at
the dates of such consolidated financial statements had any material liabilities
or obligations (whether accrued, absolute, or contingent) required under
generally accepted accounting principles to be reflected thereon which would
materially and adversely affect the fair presentation of such financial
19
statements. Neither Columbia Bancorp nor any of the Columbia Subsidiaries has
incurred any liability since the date of the consolidated financial statements
referred to in Section 4.2 (including any liability for taxes) which would
materially and adversely affect the condition (financial or otherwise), assets,
liabilities, business, or operations of Columbia Bancorp and the Columbia
Subsidiaries, taken as a whole, other than liabilities which have been
reasonably incurred in the ordinary course of business.
4.5. Absence of Certain Changes or Events. Except as set forth in
Schedule 4.5, since December 31, 1998 there has not been:
(a) Any materially adverse change in the financial position,
results of operations, assets, liabilities, or business of Columbia
Bancorp or the Columbia Subsidiaries, other than changes in the
ordinary course of business;
(b) any increase in salaries or wages of directors,
officers, or employees of Columbia Bancorp or the Columbia
Subsidiaries other than in the ordinary course of business; or any
establishment or increase of any employment, compensation, bonus,
pension, option, incentive or deferred compensation, retirement
payments, profit sharing, or similar agreement or benefit, authorized,
granted, or accrued to any directors, officers, or employees of
Columbia Bancorp or the Columbia Subsidiaries other than in the
ordinary course of business; or
(c) except with respect to the three cash dividend payments
aggregating $.24 per share paid to date and the cash dividend payment
of $.08 per share of Common Stock declared on September 27, 1999, to
be paid on October 29, 1999, any declaration, payment, or set aside by
Columbia Bancorp of any dividend or distribution in respect of its
Common Stock, or any purchase, issuance, or sale of any of its Common
Stock.
4.6. Complete and Accurate Disclosure. Neither this Plan (insofar as
it relates to Columbia Bancorp and the Columbia Subsidiaries, the Common Stock
of Columbia Bancorp, and the involvement of Columbia Bancorp in the transactions
contemplated hereby) nor any financial statement, schedule, certificate, or
other statement or document set forth on a schedule delivered by Columbia
Bancorp to Suburban Bancshares in connection with this Plan, when considered in
the aggregate, contains 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 necessary to make the
statements contained herein or therein not false or misleading.
4.7. Title to Properties; Absence of Liens and Encumbrances;
Compliance with Laws. Except as disclosed on Schedule 4.7, Columbia Bancorp and
each of the Columbia Subsidiaries has good and marketable title to all of their
respective properties and assets, including those reflected in the consolidated
financial statements referred to in Section 4.2, except as sold or otherwise
disposed of for fair value and only in the ordinary course of business, free and
20
clear of all liens and encumbrances, except (i) with respect to property as to
which they are lessees, (ii) with respect to real estate owned by Columbia
Bancorp or the Columbia Subsidiaries, for use, occupancy, and similar
restrictions of public record that may be observed by an inspection of the
property, and such other utility and other easements and encumbrances as do not
materially adversely affect the fair market value of such real property, and
(iii) liens to secure borrowings, liens to secure governmental deposits, and
liens for current taxes not yet due and payable. Neither Columbia Bancorp nor
any of the Columbia Subsidiaries owns or leases real property except as
disclosed on Schedule 4.7, and is not in default under any material lease of
real or personal property to which it is a party. As of the date hereof, except
as disclosed on Schedule 4.7, the real properties, structures, buildings,
equipment, and the tangible personal property owned, operated, or leased by
Columbia Bancorp or any of the Columbia Subsidiaries are (x) in good repair,
order, and condition, except for depletion, depreciation, and ordinary wear and
tear, (y) suitable for the uses for which they were intended, and (z) free from
any known structural defects. As of the date hereof, there are no laws,
conditions of record, or other impediments which materially interfere with the
intended uses by Columbia Bancorp or any of the Columbia Subsidiaries of the
real property or tangible personal property owned or leased by it, except as set
forth in Schedule 4.7. Neither Columbia Bancorp nor any of the Columbia
Subsidiaries have received any notice of any violation of any applicable law,
building code, zoning ordinance, or other similar law. Columbia Bancorp and the
Columbia Subsidiaries own or have the rights to use all real and personal
properties and assets that are material to the conduct of the business as now
conducted of Columbia Bancorp and the Columbia Subsidiaries, taken as a whole.
4.8. Contracts. Except for the plans, contracts, and agreements of
Columbia Bancorp and the Columbia Subsidiaries (or of any plan under Section
4.8(b)) disclosed on Schedule 4.8, neither Columbia Bancorp nor any of the
Columbia Subsidiaries (nor any plan under Section 4.8(b)) is a party to or
subject to:
(a) Any employment, consultation, or compensation contract
or arrangement (other than those terminable at will) with any officer,
consultant, director, or employee;
(b) any plan, contract, program, understanding, or agreement
providing for bonuses, pensions, severance pay, executive
compensation, options, stock purchases, or any other form of
retirement, incentive or deferred compensation, retirement payments,
death benefits, profit sharing, branch closing benefits, workers'
compensation, tuition reimbursement or scholarship program, any plans
providing benefits or payments in the event of a change in control,
change in ownership, or sale of a substantial portion (including all
or substantially all) of the assets of Columbia Bancorp or any of the
Columbia Subsidiaries, or any health, accident, disability, sick
leave, vacation pay, life insurance, or other welfare benefit, or any
other employee or retired employee benefit (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of
ERISA) in which any current or former employee, director, or agent (or
21
beneficiary of any of them) of Columbia Bancorp or any of the Columbia
Subsidiaries is or was, within the last six years, entitled to
participate;
(c) any contract or agreement with any labor union;
(d) any lease of real or personal property with annual
rentals in excess of $5,000;
(e) any agreement for services in excess of $10,000 per year
or for the purchase or disposition of any equipment or supplies except
individual purchase orders for office supplies incurred in the
ordinary course of business of $10,000 or less;
(f) any instrument evidencing or relating to indebtedness
for borrowed money except for customer accounts, deposits,
certificates of deposit, federal funds purchased, and the like which
may be construed as borrowings and except for loans made by Columbia
Bank as lender in the ordinary course of its business;
(g) any lease or other contract containing covenants not to
enter into or consummate the transactions contemplated hereby or which
provides for payments in excess of $2,000 and will be terminated or
violated by the Mergers or in respect of which the Mergers would cause
a default or acceleration of obligations; or
(h) any other contract or agreement not of the type covered
by any of the other specific terms of this Section 4.8 obligating
Columbia Bancorp or any Columbia Subsidiary to expenditures in excess
of $25,000.
Each of the instruments disclosed on Schedule 4.8 is valid and in full force and
effect. Neither Columbia Bancorp nor any of the Columbia Subsidiaries are in
default nor have any of them received any notice that they are in default, nor
to their actual knowledge is any other party in default, under any material
agreements, instruments, or obligations to which Columbia Bancorp or any of the
Columbia Subsidiaries is a party or by which they are bound.
4.9. Litigation. Except as disclosed on Schedule 4.9, (a) there is no
litigation, proceeding, or investigation pending or, to the knowledge of
Columbia Bancorp, threatened against Columbia Bancorp or any of the Columbia
Subsidiaries which would result in any materially adverse change in the
condition (financial or otherwise), assets, liabilities, business, operations,
or future prospects of Columbia Bancorp and the Columbia Subsidiaries, taken as
a whole; (b) there are no outstanding orders, writs, injunctions, judgments,
decrees, directives, consent agreements, or memoranda of understanding issued by
any federal, state, or local court or governmental authority or arbitration
22
tribunal issued against or with the consent of Columbia Bancorp or any of the
Columbia Subsidiaries that materially and adversely affect the condition
(financial or otherwise), assets, liabilities, business, operations, or future
prospects or that in any manner restrict Columbia Bancorp's right to carry on
its business or that of the Columbia Subsidiaries as now conducted; and (c)
Columbia Bancorp is aware of no fact or condition now existing that might give
rise to any litigation, investigation, or proceeding which, if determined
adversely to Columbia Bancorp or any of the Columbia Subsidiaries, would
materially and adversely affect the condition (financial or otherwise), assets,
liabilities, business, operations, or future prospects of Columbia Bancorp and
the Columbia Subsidiaries, taken as a whole, or would restrict in any manner
Columbia Bancorp's right to carry on its business or that of the Columbia
Subsidiaries as now conducted. Columbia Bancorp has disclosed on Schedule 4.9
all litigation in which Columbia Bancorp or any of the Columbia Subsidiaries is
involved as a party (other than bankruptcy proceedings in which Columbia Bancorp
or any of the Columbia Subsidiaries has filed proofs of claim or routine
collection and foreclosure suits initiated in the ordinary course of business).
4.10. Environmental Matters. (a) Except as disclosed on Schedule 4.10
or as would not individually or in the aggregate have a materially adverse
effect on the condition (financial or otherwise), assets, liabilities, business,
or operations of Columbia Bancorp and the Columbia Subsidiaries, taken as a
whole:
(i) neither Columbia Bancorp nor any of the Columbia
Subsidiaries has received any written notices, demand letters, or
written requests for information from any Governmental Entity or any
third party indicating that Columbia Bancorp or any Columbia
Subsidiary may be in violation of, or liable under, any Environmental
Law;
(ii) there are no civil, criminal, or administrative
actions, suits, demands, claims, hearings, investigations, or
proceedings pending or to the knowledge of Columbia Bancorp threatened
against Columbia Bancorp or any Columbia Subsidiary alleging that they
may be in violation of, or liable under, any Environmental Law;
(iii) no reports have been filed with any Governmental
Entity, nor to the knowledge of Columbia Bancorp are any reports
required to be filed with any Governmental Entity, by Columbia Bancorp
or any of the Columbia Subsidiaries concerning the release of any
Hazardous Substance or the violation of any Environmental Law on or at
any of the Properties of Columbia Bancorp or any of the Columbia
Subsidiaries;
(iv) to the knowledge of Columbia Bancorp or except as
disclosed on Schedule 4.10, there are no underground storage tanks on,
in, or under any of the Properties of Columbia Bancorp or any of the
Columbia Subsidiaries, and no underground storage tanks have been
closed or removed from any Property of Columbia Bancorp or any of the
Columbia Subsidiaries while such Property was owned or operated by
Columbia Bancorp or any of the Columbia Subsidiaries;
23
(v) to the knowledge of Columbia Bancorp or except as
disclosed on Schedule 4.10, no Hazardous Substance has been generated,
used, stored, processed, disposed of, or discharged on or into any of
the Properties of Columbia Bancorp or any of the Columbia
Subsidiaries, except for such hazardous substances as may be used in
the everyday business of a bank office; and
(vi) to the knowledge of Columbia Bancorp or except as
disclosed on Schedule 4.10, no materials containing asbestos have been
used or incorporated in any building or other structure or improvement
located on any of the Properties of Columbia Bancorp or any of the
Columbia Subsidiaries.
(b) There are no permits or licenses or agency filings or reports
required under any Environmental Law in respect of any of the Properties now or
formerly owned or operated by Columbia Bancorp or any of the Columbia
Subsidiaries that the absence of which could, individually or in the aggregate,
have a materially adverse effect on the condition (financial or otherwise),
assets, liabilities, business, or operations of Columbia Bancorp and the
Columbia Subsidiaries, taken as a whole.
(c) Columbia Bancorp has disclosed on Schedule 4.10 a copy of its
current policy regarding compliance with Environmental Laws.
4.11. Labor Matters. To Columbia Bancorp's knowledge, no organization
effort with respect to any of the employees of Columbia Bancorp or any of the
Columbia Subsidiaries is pending or threatened, and no labor dispute, strike,
work stoppage, employee action, or labor relation problem which may materially
affect Columbia Bancorp or any of the Columbia Subsidiaries currently is pending
or threatened. Columbia Bancorp and each of the Columbia Subsidiaries have at
all times in all material respects complied with all applicable employee
termination notice and similar laws. Columbia Bancorp and each of the Columbia
Subsidiaries have at all times complied in all material respects with all
applicable family medical leave and similar laws. If applicable, Columbia
Bancorp and each of the Columbia Subsidiaries have at all times complied in all
material respects with all applicable requirements of the Worker Adjustment and
Retraining Notification Act and all similar state laws.
4.12. Pension and Welfare Matters. With respect to the plans,
contracts, programs, understandings, or agreements identified pursuant to
Sections 4.8(a) and (b) (for purposes of this Section 4.12, the "plans"):
(a) Schedule 4.12 clearly identifies all of the plans which
are (i) Multiemployer Plans, (ii) Multiple Employer Plans, (iii) plans
other than Multiemployer Plans and Multiple Employer Plans that are
subject to Section 412 of the Code, (iv) plans intended to qualify
under Section 401 of the Code, and (v) "welfare benefit plans" within
the meaning of Section 3(1) of ERISA which provide for continuing
benefits or coverage for any participant or any beneficiary of a
24
participant after such participant's termination of employment except
coverage or benefits required by Section 4980B of the Code if paid
100% by the participant;
(b) true, correct and complete copies of the following
documents, with respect to each of the plans have been made available
or delivered to Suburban Bancshares: (i) all plan documents, including
trust agreements, insurance policies, loan documents, and service
agreements and amendments thereto, (ii) the most recent Forms 5500 and
any financial statements attached thereto and those for the prior
three years, (iii) the last Internal Revenue Service determination
letter and the application with respect thereto, (iv) summary plan
descriptions, (v) the most recent actuarial statements and those for
the prior three years, (vi) written descriptions of all non-written
agreements relating to any such plan, as applicable, for Columbia
Bancorp and each of the Columbia Subsidiaries, and (vii) all filings
with a governmental agency or entity within the last three years,
including, without limitation, filings under the voluntary or other
compliance programs of the U.S. Department of Labor or the Internal
Revenue Service;
(c) each of the plans has been operated in all material
respects in accordance with its terms and in accordance with all
applicable laws including, but not limited to, the ERISA, the Code,
the Consolidated Omnibus Budget Reconciliation Act of 1985, the Health
Insurance Portability and Accountability Act of 1996, and state health
care continuation laws;
(d) all reporting and disclosure requirements of ERISA
imposed upon each such plan have been complied with in all material
respects, and all required governmental filings have been made with
respect to the plans;
(e) none of (i) the plans, (ii) the Columbia Subsidiaries,
and (iii) Columbia Bancorp, and to Columbia Bancorp's knowledge, (x)
no current or former director, officer, employee, agent, or
representative of Columbia Bancorp or any of the Columbia
Subsidiaries, and (y) no fiduciary, "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in
Section 4975 of the Code) with respect to any of the plans has engaged
in any non-exempt "prohibited transaction" in connection with any of
the plans within the meaning of Section 4975 of the Code or Title I,
Part 4 of ERISA;
(f) none of the plans has any accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, with respect to the latest five plan years, nor
any liability to the PBGC (other than normal premium payments);
(g) with respect to plans which are pension plans (as
defined in Section 3(2) of ERISA) subject to Title IV of ERISA, the
assets of each such funded plans equal or exceed the liabilities (as
25
defined in Section 4001(a)(16) of ERISA) under such plans when such
liabilities are valued on a termination basis using PBGC interest and
other assumptions;
(h) no contributions to any of the plans from Columbia
Bancorp or any of the Columbia Subsidiaries are currently past due
and, if applicable, all past service and other liabilities currently
existing but payable in the future, if any, are reflected in the
latest actuarial report in accordance with sound actuarial principles;
(i) no audits, proceedings, investigations, filings, or
other matters (excluding any determination letter application that has
been or may be filed prior to the Effective Date) are pending before
the IRS, the Department of Labor, the PBGC, or other public or
quasi-public body in connection with any such plans;
(j) each plan intended to qualify under Section 401(a) of
the Code is so qualified and the trust maintained pursuant thereto is
exempt from taxation under Section 501 of the Code and nothing has
occurred with respect to the operation or administration of such plan
which would cause the loss of such qualification or exemption or the
imposition of any liability, penalty, or tax under ERISA or the Code
that could reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), assets, liabilities, business,
or operations of Columbia Bancorp and the Columbia Subsidiaries, taken
as a whole, or on such plan;
(k) except as disclosed in Schedule 4.12, through the
Effective Date, there will be no changes in the operation of the plans
or in the documents constituting or affecting the plans except for
amendments and operational changes required by applicable law which do
not materially increase the cost of such plans;
(l) no employees, former employees, or retired employees of
Columbia Bancorp or any of the Columbia Subsidiaries, as a result of
their employment with Columbia Bancorp or any of the Columbia
Subsidiaries, are participants in any Multiemployer Plan and neither
Columbia Bancorp nor any of the Columbia Subsidiaries has any current,
contingent, or potential liability with respect to any such plan;
(m) no "reportable event," as such term is defined in
Section 4043(c) of ERISA, has occurred with respect to any plan since
the effective date of ERISA, other than a reportable event for which
the 30 days notice requirement under regulations of the PBGC has been
waived;
26
(n) there are no pending or threatened claims by or disputes
with any participants or beneficiaries of the plans, except plan
benefit claims arising in the normal course of the operations of the
plans (other than terminated plans) and as to which no dispute exists;
(o) Columbia Bancorp has no knowledge of any facts which
could give rise to any claims against any plan or any fiduciary of any
plan, except for plan benefit claims arising in the normal course of
the operations of the plans (other than terminated plans);
(p) neither Columbia Bancorp nor any of the Columbia
Subsidiaries nor any fiduciary of any plan has given notice to any
fiduciary liability insurer of any claims or potential claims in
connection with any of the plans;
(q) except as disclosed in Schedule 4.12, each of the plans
which benefit retired employees of Columbia Bancorp or any of the
Columbia Subsidiaries may effectively be terminated or amended, in any
manner and at any time, without further liability to its participants,
by its sponsoring employer;
(r) neither Columbia Bancorp nor any of the Columbia
Subsidiaries has provided, nor is required to provide, security to any
pension plan or to any single-employer plan pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA;
(s) there has been no announcement or legally binding
commitment by Columbia Bancorp or any of the Columbia Subsidiaries to
create an additional plan, or to amend a plan except for amendments
required by applicable law which do not materially increase the cost
of such plan;
(t) as to any terminated plans, all obligations for plan
benefits or other liabilities have been satisfied in full;
(u) none of the plans contains any provision which would
prohibit the transactions contemplated by this Plan or which, except
as disclosed in Schedule 4.12, would give rise to any severance,
termination, or other payments or liabilities, or any forgiveness of
indebtedness, vesting, distribution, increase in benefits, or
obligations to fund benefits as a result of the transactions
contemplated by this Plan; no payment that is owed or may become due
any director, officer, employee, or agent of Columbia Bancorp or any
of the Columbia Subsidiaries in connection with a plan will be
non-deductible to the payor under Section 280G of the Code, and none
of the Suburban Subsidiaries, Columbia Subsidiaries, Suburban
27
Bancshares, and Columbia Bancorp will be required to "gross up" or
otherwise compensate any person in connection with a plan because of
the imposition of any excise tax under Section 4999 of the Code; and
(v) no plan is funded by, associated with, or related to a
"voluntary employees' beneficiary association" within the meaning of
Section 501(c)(9) of the Code.
4.13. Related Party Transactions. Except as disclosed on Schedule
4.13, neither Columbia Bancorp nor any of the Columbia Subsidiaries has any
contract, extension of credit, business arrangement, or other relationship of
any kind with any of the following persons: (a) any executive officer or
director of Columbia Bancorp or any of the Columbia Subsidiaries; (b) any
stockholder owning five percent or more of the outstanding Common Stock of
Columbia Bancorp; or (c) any "affiliate" (as defined in the SEC Rule 405) of the
foregoing persons or any business in which any of the foregoing persons is an
officer, director, employee, or five percent or greater equity owner.
4.14. No Conflict with Other Documents. Except as disclosed on
Schedule 4.14, neither the execution and delivery of this Plan nor the carrying
out of the transactions contemplated hereunder will result in any violation,
termination, or modification of, or be in conflict with, any terms of any
contract or other instrument to which Columbia Bancorp or any of the Columbia
Subsidiaries is a party, or of any judgment, decree, or order applicable to
Columbia Bancorp or any of the Columbia Subsidiaries, or result in the creation
of any lien, charge, or encumbrance upon any of their properties or assets,
except for any of the foregoing which would not have a material adverse effect
upon the condition (financial or otherwise), assets, liabilities, business, or
operations of Columbia Bancorp and the Columbia Subsidiaries, taken as a whole.
4.15. Compliance with Laws; Governmental Authorizations. (a) Except
where noncompliance would not have a material and adverse effect upon the
condition (financial or otherwise), assets, liabilities, business, or operations
of Columbia Bancorp and the Columbia Subsidiaries, taken as a whole, (i)
Columbia Bancorp and each of 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 Bancorp, the Columbia Subsidiaries, or any
of their properties; and (ii) all permits, concessions, grants, franchises,
licenses, and other governmental authorizations and approvals necessary for the
conduct of the business of Columbia Bancorp and the Columbia Subsidiaries as now
conducted have been duly obtained and are in full force and effect, and there
are no proceedings pending or, to Columbia Bancorp's knowledge, threatened which
may result in the revocation, cancellation, suspension, or materially adverse
modification of any thereof.
(b) Columbia Bancorp has filed all reports that it was required to
file with the SEC under the Exchange Act, all of which complied in all material
respects with all applicable requirements of the Exchange Act and the rules and
28
regulations adopted thereunder. As of their respective dates, each such report,
statement, form, or other document, including without limitation, any financial
statements or schedules included therein, did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, that
information as of a later date shall be deemed to modify information as of an
earlier date.
4.16. Authority; Enforceability. The execution, delivery, and
performance of this Plan by Columbia Bancorp has been duly and validly
authorized by its Board of Directors, subject only to requisite approval by the
stockholders of Columbia Bancorp and appropriate governmental regulatory
authorities. This Plan is a valid and binding agreement of Columbia Bancorp,
enforceable against it in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4.17. Insurance. All insurance policies held by Columbia Bancorp and
the Columbia Subsidiaries relating to their operations (except for title
insurance policies), including without limitation all financial institutions
bonds, are set forth on Schedule 4.17. All such policies are in full force and
effect. Neither Columbia Bancorp nor any of the Columbia Subsidiaries has
received any notice of cancellation with respect to any such policies and has no
reason to expect that it will receive a notice of cancellation from any of its
present insurance carriers; provided, however, that Columbia Bancorp makes no
representation as to the effect of this Plan or the Mergers on its present
financial institutions bond or bonds.
4.18. Financial Institution Bond. Since January 1, 1993, Columbia
Bancorp and the Columbia Subsidiaries have continuously maintained in full force
and effect one or more financial institutions bonds insuring Columbia Bancorp
and the Columbia Subsidiaries against acts of dishonesty by each of their
employees. No claim has been made under any such bond since such date, and
Columbia Bancorp is not aware of any fact or condition now existing which forms
the basis of a claim under any such bond. Columbia Bancorp and the Columbia
Subsidiaries have no reason to expect that their present financial institutions
bond or bonds will not be renewed by their carrier on substantially the same
terms as those now in effect; provided, however, that Columbia Bancorp makes no
representation as to the effect of this Plan or the Mergers on its present
financial institutions bond or bonds.
4.19. Brokers; Financial Advisor. All negotiations relating to this
Plan and the transactions contemplated hereunder have been carried on by
Columbia Bancorp directly or through its counsel or financial advisor and there
has been no intervention of any person as the result of any action of Columbia
Bancorp (and, so far as known to Columbia Bancorp, no intervention of any other
person) in such manner as to give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee, or other like payment
(other than to its financial advisor, Austin Financial Services, Inc.). Schedule
29
4.19 is a copy of the agreement with Austin Financial Services, Inc., which has
been engaged by Columbia Bancorp as its financial advisor and to deliver an
opinion as to the fairness of the transactions contemplated by this Plan to
Columbia Bancorp.
4.20. Beneficial Ownership of Suburban Bancshares Common Stock. As of
the date hereof, Columbia Bancorp does not beneficially own any shares of
Suburban Bancshares Common Stock or have any option, warrant, or right of any
kind to acquire the beneficial ownership of any Suburban Bancshares Common
Stock, except pursuant to the terms of this Plan, the terms of the Stock Option
Agreement attached as Appendix III, or in a fiduciary capacity.
4.21. Year 2000. Columbia Bancorp has carried out a review to evaluate
the extent to which the business or operations of Columbia Bancorp or any of the
Columbia Subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, Columbia Bancorp has no reason to believe, and does not believe,
that the Year 2000 Problem will have a material adverse effect on the condition
(financial or otherwise), assets, liabilities, business, or operations of
Columbia Bancorp and the Columbia Subsidiaries, taken as a whole. Columbia
Bancorp reasonably believes that the suppliers, vendors, customers or other
material third parties used or served by Columbia Bancorp and the Columbia
Subsidiaries are addressing or will address the Year 2000 Problem in a timely
manner. Columbia Bancorp is in compliance with all applicable requirements of
any Governmental Entity relating to the Year 2000 Problem and has not received
any correspondence from or provided any written information to any Governmental
Entity relating to the Year 2000 Problem except as disclosed in Schedule 4.21.
Columbia Bancorp has provided in Schedule 4.21 copies of all of its internal
plans, including estimates of the anticipated associated costs, for addressing
the Year 2000 Problem as it relates to Columbia Bancorp and the Columbia
Subsidiaries.
5. Covenants of Suburban Bancshares. Except as otherwise consented to in
writing by Columbia Bancorp after the date of this Plan, Suburban Bancshares
covenants to and agrees with Columbia Bancorp as follows:
5.1. Information. (a) Suburban Bancshares shall, upon reasonable
notice, give to Columbia Bancorp and to its officers, accountants, counsel,
financial advisors, and other representatives, reasonable access during Suburban
Bancshares' and the Suburban Subsidiaries' normal business hours throughout the
period prior to the Effective Date to all of their properties, books, contracts,
commitments, reports of examination (consistent with applicable law), depositor
and stockholder lists, and records. Suburban Bancshares and the Suburban
Subsidiaries will, at their own expense, furnish Columbia Bancorp during such
period with all such information concerning their affairs as Columbia Bancorp
may reasonably request, including information for use in determining if the
conditions of Section 7.1 through Section 7.10 have been satisfied, necessary to
prepare the regulatory filings or applications to be filed with governmental
regulatory authorities to obtain the approvals referred to in Section 2, and for
use in any other necessary filings to be made with appropriate governmental
regulatory authorities.
30
(b) Suburban Bancshares acknowledges that information received by it
concerning Columbia Bancorp and the Columbia Subsidiaries and their operations
is subject to the Confidentiality Agreement dated September 16, 1999 between
Columbia Bancorp and Suburban Bancshares (the "Confidentiality Agreement").
Without limiting the foregoing, Suburban Bancshares will not, and will cause its
representatives not to, use any information obtained pursuant to Section 6.1 for
any purpose unrelated to the consummation of the transactions contemplated by
this Plan. Subject to the requirements of law, Suburban Bancshares will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to Section 6.1 unless such
information (i) was already known to Suburban Bancshares, (ii) becomes available
to Suburban Bancshares from other sources not known by Suburban Bancshares to be
bound by a confidentiality obligation, (iii) is disclosed with prior written
approval of Columbia Bancorp and the Columbia Subsidiaries, or (iv) is or
becomes readily ascertainable from published information or trade sources. In
the event that this Plan is terminated or the transactions contemplated by this
Plan shall otherwise fail to be consummated, Suburban Bancshares shall promptly
cause all copies of documents or extracts thereof containing information and
data as to Columbia Bancorp and the Columbia Subsidiaries to be returned. In the
event that this Plan has been terminated or the transactions contemplated hereby
shall have failed to be consummated and Suburban Bancshares or any of its agents
or representatives are requested or required (by oral questions,
interrogatories, requests for information, or documents in legal proceedings,
subpoena, civil investigative demand, or other similar process) to disclose any
of the materials delivered or obtained pursuant to the Plan (the "Columbia
Documentation"), Suburban Bancshares shall provide Columbia Bancorp with prompt
written notice of any such request or requirement so that Columbia Bancorp may
seek a protective order or other appropriate remedy. If, in the absence of a
protective order or other remedy, Suburban Bancshares or any of its agents or
representatives are compelled to disclose any of such Columbia Documentation to
any tribunal or else stand liable for contempt or suffer other censure or
penalty, Suburban Bancshares or its agents or representatives may, without
liability hereunder, disclose to such tribunal only that portion of the Columbia
Documentation which Suburban Bancshares' counsel advises Suburban Bancshares is
legally required to be disclosed, provided, that Suburban Bancshares shall
exercise its best efforts to preserve the confidentiality of the Columbia
Documentation, including, without limitation, by cooperating with Columbia
Bancorp to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Columbia Documentation by such
tribunal.
5.2. Events Preceding Effectiveness. Suburban Bancshares and the
Suburban Subsidiaries will use commercially reasonable efforts to assure that
each of the events specified in Section 2 which require action on its part shall
occur on or before the Effective Date.
5.3. Regulatory Approvals. Suburban Bancshares and the Suburban
Subsidiaries will, where necessary, cooperate with Columbia Bancorp's efforts to
obtain all necessary regulatory approvals of the transactions contemplated by
this Plan.
5.4. Conduct of Business. After the date of this Plan and pending the
Effective Date, (a) Suburban Bancshares and the Suburban Subsidiaries will
31
conduct their business only in the ordinary course; (b) Suburban Bancshares and
the Suburban Subsidiaries shall not effect any change or amendment in their
respective charters or by-laws; (c) except with respect to Suburban Bancshares
stock options outstanding on the date of this Plan which are or may become
subject to exercise, Suburban Bancshares and the Suburban Subsidiaries shall not
change their authorized, issued, or outstanding capital stock; (d) Suburban
Bancshares shall not declare cash dividends in respect of its Common Stock; (e)
except as disclosed in Schedule 5.4(e), Suburban Bancshares and the Suburban
Subsidiaries shall not increase employee compensation or benefit levels (except
for annual increases not in excess of amounts established by its regular past
practices), shall not establish or make any increase in any employment,
compensation, bonus, pension, option, incentive or deferred compensation,
retirement, death, profit sharing, or similar agreements or benefits of any of
its past, present, or future officers or employees, other than additional
premiums to obtain an extension of directors' and officers' liability coverage
for six years (which Suburban Bancshares is authorized to obtain), and except as
provided in this Agreement, shall not modify the existing employment agreements
with any officers or employees; (f) Suburban Bancshares and the Suburban
Subsidiaries shall not make any change in any of their accounting policies or
practices unless required by generally accepted accounting principles or take
any action which would cause the Mergers not to be accounted for as a
pooling-of-interests (and will provide and cause ▇▇▇▇▇▇▇ & Company to provide
the letters contemplated by Section 7.10); (g) Suburban Bancshares and the
Suburban Subsidiaries shall not incur any liability for borrowed money except in
the ordinary course of their banking business (i.e., may only incur variable
rate loans with terms not greater than one year) or place upon or permit any
lien or encumbrance upon any of their properties or assets except liens of the
type permitted in the exceptions to Section 3.7; and (h) notwithstanding the
foregoing, upon Columbia Bancorp's request, Suburban Bancshares shall terminate
the Suburban Bancshares, Inc. 401(k) Plan, effective as of the date immediately
preceding the Effective Date. Pending the Effective Date, Suburban Bancshares
and the Suburban Subsidiaries shall (x) use commercially reasonable efforts to
preserve their business organization and assets and to keep available the
services of their full-time officers and employees, (y) continue in effect the
present method of conducting their business, and (z) consult with Columbia
Bancorp as to making decisions or actions in matters (i) other than those in the
ordinary course of business, or (ii) except as disclosed in Schedule 5.4(z)(ii),
involving any capital expenditures in excess of $25,000.
5.5. Reservation of Shares. Suburban Bancshares shall have reserved a
sufficient number of shares of its Common Stock for issuance upon exercise of
the option granted pursuant to the Stock Option Agreement attached as Appendix
III, which is to be executed by Columbia Bancorp and Suburban Bancshares, and
shall have taken all other actions necessary to fulfill its obligations
thereunder.
5.6. Meeting of Stockholders of Suburban Bancshares; Document
Preparation. (a) Suburban Bancshares will duly call and convene a meeting of its
stockholders to act upon the transactions contemplated hereby as soon as
practicable. Except to the extent legally required for the discharge by the
board of directors of its fiduciary duties, Suburban Bancshares will recommend
32
approval of this Plan and the Holding Company Merger to its stockholders, and
will use commercially reasonable efforts to obtain a favorable vote thereon. The
calling and holding of such meeting and all notices, transactions, documents,
and information related thereto will be in material compliance with all
applicable laws.
(b) Suburban Bancshares shall furnish Columbia Bancorp with such
information concerning Suburban Bancshares and the Suburban Subsidiaries as is
necessary in order to cause the Proxy Statement/Prospectus (as defined in
Section 6.6), insofar as it relates to such corporations, to comply with Section
6.6. Suburban Bancshares agrees promptly to advise Columbia Bancorp if at any
time prior to the Suburban Bancshares stockholders' meeting, any information
provided by Suburban Bancshares in the Proxy Statement/Prospectus becomes
incorrect or incomplete in any material respect and to provide Columbia Bancorp
with the information needed to correct such inaccuracy or omission. Suburban
Bancshares shall furnish Columbia Bancorp with such supplemental information as
may be necessary in order to cause the Proxy Statement/Prospectus, insofar as it
relates to Suburban Bancshares and the Suburban Subsidiaries, to comply with
Section 6.6 after the mailing thereof to Suburban Bancshares stockholders. The
information provided and the representations made by Suburban Bancshares to
Columbia Bancorp in connection with the Registration Statement described in
Section 6.6, both at the time such information and representations are provided
and made and at the Effective Date, will be true and accurate in all material
respects and will not contain any false or misleading statement with respect to
any material fact or omit to state any material fact required to be stated
therein or necessary in order (i) to make the statements made therein not false
or misleading, or (ii) to correct any statement contained in an earlier
communication with respect to such information or representations which has
become false or misleading. Suburban Bancshares may rely upon all information
provided to it by Columbia Bancorp and its representatives in the preparation of
the Proxy Statement/Prospectus and shall not be liable for any untrue statement
of a material fact or any omission to state a material fact in the Proxy
Statement/Prospectus, if such statement is made in reliance upon any information
provided to it by Columbia Bancorp or by any of its officers or authorized
representatives.
(c) Suburban Bancshares shall promptly furnish Columbia Bancorp with
such information regarding the Suburban Bancshares stockholders as Columbia
Bancorp requires to enable it to determine what filings are required under
applicable state securities laws. Suburban Bancshares authorizes Columbia
Bancorp to utilize in such filings the information concerning Suburban
Bancshares and the Suburban Subsidiaries provided to Columbia Bancorp in
connection with, or contained in, the Proxy Statement/Prospectus. Suburban
Bancshares shall promptly notify Columbia Bancorp of all communications, oral,
or written, with the SEC concerning the Registration Statement and the Proxy
Statement/Prospectus.
5.7. Consents. Suburban Bancshares and the Suburban Subsidiaries will
use commercially reasonable efforts to obtain any consents, approvals, or
waivers from third parties required in connection with the transactions
contemplated hereunder.
5.8. Current Information; Advice of Changes. (a) During the period
from the date of this Plan to the Effective Date, Suburban Bancshares will cause
33
one or more of its designated representatives to confer on a monthly or more
frequent basis with representatives of Columbia Bancorp regarding its business,
operations, properties, assets, and condition (financial or otherwise) and
matters relating to the completion of the transactions contemplated herein. As
soon as reasonably available, but in no event more than 45 days after the end of
each calendar quarter (other than the last calendar quarter of each calendar
year) ending after the date of this Plan, Suburban Bancshares will deliver to
Columbia Bancorp its quarterly reports on Form 10-Q, as filed with the SEC under
the Exchange Act. As soon as reasonably available, but in no event more than 90
days after the calendar year, Suburban Bancshares will deliver to Columbia
Bancorp its Annual Report on Form 10-K as filed with the SEC under the Exchange
Act.
(b) Between the date of this Plan and the Effective Date, Suburban
Bancshares shall promptly advise Columbia Bancorp in writing of any fact which,
if existing or known at the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Plan or of any fact which, if existing
or known as of the date hereof, would have made any of the representations
contained herein untrue in any material respect.
5.9. No Solicitation of Other Offers. Suburban Bancshares agrees that
neither it nor any of the Suburban Subsidiaries nor any of their respective
officers, directors, and employees shall, and Suburban Bancshares shall direct
and use its best efforts to cause its and the Suburban Subsidiaries' agents and
representatives (including, without limitation, any investment banker, attorney,
or accountant retained by it or any of the Suburban Subsidiaries) not to,
directly or indirectly, take any action to solicit or initiate any inquiries or
the making of any offer or proposal (including without limitation any proposal
to stockholders of Suburban Bancshares) with respect to a merger, consolidation,
business combination, liquidation, reorganization, sale or other disposition of
any significant portion of assets (except problem assets shown on Schedule 5.9),
sale of shares of capital stock, or similar transactions involving Suburban
Bancshares or any of the Suburban Subsidiaries (any such inquiry, offer, or
proposal, a "Suburban Acquisition Proposal"), or, except in the opinion of
outside counsel to Suburban Bancshares as may be legally required to comply with
the duties the Board of Directors of Suburban Bancshares under applicable law
and upon receipt of a confidentially agreement with terms not materially less
favorable to Suburban Bancshares than those contained in the Confidentiality
Agreement, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to a
Suburban Acquisition Proposal. As of the time hereof, Suburban Bancshares is not
engaged in any negotiations or discussions relating to a Suburban Acquisition
Proposal. Suburban Bancshares shall promptly notify Columbia Bancorp orally and
in writing of, and keep it fully and currently informed on, any Suburban
Acquisition Proposal or any inquiries with respect thereto, such written
notification to include the identity of the Person making such inquiry or
Suburban Acquisition Proposal and such other information with respect thereto as
is reasonably necessary to apprise Columbia Bancorp of the material terms of
such Suburban Acquisition Proposal. Suburban Bancshares shall give Columbia
Bancorp contemporaneous written notice upon engaging in discussions or
negotiations with, or providing any information regarding Suburban Bancshares or
any of the Suburban Subsidiaries to, any such person regarding a Suburban
Acquisition Proposal.
34
5.10. Affiliate Agreements. Within 10 days of the date of this Plan,
Suburban Bancshares shall deliver or cause to be delivered to Columbia Bancorp
memoranda substantially in the form attached as Appendix V (the "Affiliates'
Memoranda") and agreements substantially in the form attached as Appendix VII
(the "Support Agreements") from each of its executive officers and directors
(and shall use commercially reasonable efforts to obtain and deliver such
memoranda and agreements from each stockholder of Suburban Bancshares who (a)
may be deemed to be an "affiliate" of Suburban Bancshares, as that term is
defined for purposes of the SEC Rules 145 and 405, or (b) may be restricted
under the accounting rules applicable to a pooling-of-interests). Under the
terms of the Affiliates' Memoranda, each such officer, director or stockholder
shall acknowledge and agree (i) to abide by all limitations imposed by the
Securities 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 the Common Stock of Columbia Bancorp to be received by such person
pursuant to the Holding Company Merger, and (ii) to abide by all limitations
imposed by the accounting rules for the Mergers to be accounted for as a
pooling-of-interests. Under the terms of the Support Agreements, each such
officer, director, or stockholder shall agree to support and vote the shares of
Common Stock of Suburban Bancshares owned or controlled by him or her to ratify
and confirm this Plan and the Holding Company Merger.
5.11. Pooling-of-Interests. Suburban Bancshares shall use its best
efforts not to permit any of the directors, officers, employees, stockholders,
agents, consultants, or other representatives of Suburban Bancshares or any of
the Suburban Subsidiaries to take any action that would preclude Columbia
Bancorp from treating the Mergers as a pooling-of-interests for financial
reporting purposes.
5.12. Taxes. Suburban Bancshares shall have filed with appropriate
federal, state, county, municipal, or foreign taxing authorities all tax returns
required to be filed (taking any applicable extensions into consideration) on or
before the Effective Date and shall have paid (or shall have made adequate
provision or set up an adequate actual reserve on the financial statements
referred to in Section 3.2 for the payment of) all taxes imposed by any taxing
authority with respect to any Pre-Closing Tax Period (as hereinafter defined),
together with any interest, additions, or penalties related to any such taxes.
For purposes of this Section 5.12, any reference to Suburban Bancshares shall be
deemed to include any corporation more than 50% of the outstanding capital stock
(by vote or value) of which is owned by Suburban Bancshares. "Pre-Closing Tax
Period" shall mean (i) each taxable period that ends on or before the Effective
Date, and (ii) any taxable period that includes (but does not end on) the
Effective Date (the period described in this clause (ii) being hereafter
referred to as a "Straddle Period"). In the case of any tax for a Straddle
Period, the covenant in this Section 5.12 shall be limited to the Pre-Closing
Tax Amount determined as follows:
(a) In the case of a periodic tax that is not based on
income or receipts (e.g., an ad valorem property tax), the
"Pre-Closing Tax Amount" shall be an amount equal to the amount of
such tax for the entire Straddle Period multiplied by a fraction the
35
numerator of which is the number of days elapsed between the beginning
of the Straddle Period and the Effective Date, and the denominator of
which is the total number of days in the Straddle Period; and
(b) in the case of any other tax, the "Pre-Closing Tax
Amount" shall be the amount of such tax for which Suburban Bancshares
would have been liable if the Straddle Period had ended as of the
close of business on the day of the Effective Date.
5.13. Public Announcements. Between the date of this Plan and the
Effective Date, Suburban Bancshares and the Suburban Subsidiaries will consult
with Columbia Bancorp before issuing any press release or otherwise making any
public statements with respect to this Plan and the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as counsel may advise is required
by law.
6. Covenants of Columbia Bancorp. Except as otherwise consented to in
writing by Suburban Bancshares after the date of this Plan, Columbia Bancorp
covenants to and agrees with Suburban Bancshares as follows:
6.1. Information. (a) Columbia Bancorp shall, upon reasonable notice,
give to Suburban Bancshares and to its officers, accountants, counsel, financial
advisors, and other representatives, reasonable access during Columbia Bancorp's
and the Columbia Subsidiaries' normal business hours throughout the period prior
to the Effective Date to all of their properties, books, contracts, commitments,
reports of examination (consistent with applicable law), depositor lists, and
records. Columbia Bancorp and the Columbia Subsidiaries will, at their own
expense, furnish Suburban Bancshares during such period with all such
information concerning their affairs as Suburban Bancshares may reasonably
request, including information for use in determining if the conditions of
Section 8.1 through Section 8.09 have been satisfied and for use in any
necessary filings to be made by Suburban Bancshares or the Suburban Subsidiaries
with appropriate governmental regulatory authorities.
(b) Columbia Bancorp acknowledges that information received by it
concerning Suburban Bancshares and the Suburban Subsidiaries and their
operations is subject to the Confidentiality Agreement. Without limiting the
foregoing, Columbia Bancorp will not, and will cause its representatives not to,
use any information obtained pursuant to Section 5.1 for any purpose unrelated
to the consummation of the transactions contemplated by this Plan. Subject to
the requirements of law, Columbia Bancorp will keep confidential, and will cause
its representatives to keep confidential, all information and documents obtained
pursuant to Section 5.1 unless such information (i) was already known to
Columbia Bancorp, (ii) becomes available to Columbia Bancorp from other sources
not known by Columbia Bancorp to be bound by a confidentiality obligation, (iii)
is disclosed with prior written approval of Suburban Bancshares and the Suburban
Subsidiaries, or (iv) is or becomes readily ascertainable from published
information or trade sources. In the event that this Plan is terminated or the
transactions contemplated by this Plan shall otherwise fail to be consummated,
Columbia Bancorp shall promptly cause all copies of documents or extracts
thereof containing information and data as to Suburban Bancshares and the
36
Suburban Subsidiaries to be returned. In the event that this Plan has been
terminated or the transactions contemplated hereby shall have failed to be
consummated and Columbia Bancorp or any of its agents or representatives are
requested or required (by oral questions, interrogatories, requests for
information, or documents in legal proceedings, subpoena, civil investigative
demand, or other similar process) to disclose any of the materials delivered or
obtained pursuant to the Plan (the "Suburban Bancshares Documentation"),
Columbia Bancorp shall provide Suburban Bancshares with prompt written notice of
any such request or requirement so that Suburban Bancshares may seek a
protective order or other appropriate remedy. If, in the absence of a protective
order or other remedy, Columbia Bancorp or any of its agents or representatives
are compelled to disclose any of such Suburban Bancshares Documentation to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
Columbia Bancorp or its agents or representatives may, without liability
hereunder, disclose to such tribunal only that portion of the Suburban
Bancshares Documentation which Columbia Bancorp's counsel advises Columbia
Bancorp is legally required to be disclosed, provided, that Columbia Bancorp
shall exercise its best efforts to preserve the confidentiality of the Suburban
Bancshares Documentation, including, without limitation, by cooperating with
Suburban Bancshares to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the Suburban Bancshares
Documentation by such tribunal.
6.2. Events Preceeding Effectiveness. Columbia Bancorp and the
Columbia Subsidiaries will use commercially reasonable efforts to assure that
each of the events specified in Section 2 which require action on its part shall
occur on or before the Effective Date.
6.3. Applications to Government Regulatory Authorities. Columbia
Bancorp and the Columbia Subsidiaries will promptly prepare and file with the
appropriate governmental regulatory authorities an application requesting the
regulatory approvals referred to in Sections 2(g), 2(h), 2(i), and 2(j) and will
use commercially reasonable efforts to secure favorable action on such
applications, including without limitation commercially reasonable efforts to
pursue an appeal of a denial of a regulatory approval.
6.4. Conduct of Business. After the date of this Plan and pending the
Effective Date, (a) Columbia Bancorp and the Columbia Subsidiaries will conduct
their business only in the ordinary course; (b) Columbia Bancorp and the
Columbia Subsidiaries shall not effect any change or amendment in their
respective charters or by-laws; (c) except with respect to Columbia Bancorp
stock options outstanding on the date of this Plan which are or may become
subject to exercise, Columbia Bancorp and the Columbia Subsidiaries shall not
change their authorized, issued, or outstanding capital stock; (d) Columbia
Bancorp shall declare regular quarterly cash dividends in respect of its Common
Stock at the rate of not in excess of $.10 per share; (e) except as disclosed in
Schedule 6.4(e), Columbia Bancorp and the Columbia Subsidiaries shall not
increase employee compensation or benefit levels (except for annual increases
not in excess of amounts established by its regular past practices), shall not
37
establish or make any increase in any employment, compensation, bonus, pension,
option, incentive or deferred compensation, retirement, death, profit sharing,
or similar agreements or benefits of any of its past, present, or future
officers or employees, and shall not modify the existing employment agreements
with any officers or employees; (f) Columbia Bancorp and the Columbia
Subsidiaries shall not make any change in any of their accounting policies or
practices unless required by generally accepted accounting principles or take
any action which would cause the Mergers not to be accounted for as a
pooling-of-interests; and (g) Columbia Bancorp and the Columbia Subsidiaries
shall not incur any liability for borrowed money except in the ordinary course
of their banking business (i.e., may only incur variable rate loans with terms
not greater than one year) or place upon or permit any lien or encumbrance upon
any of their properties or assets except liens of the type permitted in the
exceptions to Section 4.7. Pending the Effective Date, Columbia Bancorp and the
Columbia Subsidiaries shall (x) use commercially reasonable efforts to preserve
their business organization and assets and to keep available the services of
their full-time officers and employees, (y) continue in effect the present
method of conducting their business, and (z) consult with Suburban Bancshares as
to making decisions or actions in matters (i) other than those in the ordinary
course of business, or (ii) except as disclosed in Schedule 6.4(z)(ii),
involving any capital expenditures in excess of $25,000.
6.5. Columbia Bancorp Common Stock. (a) At the Effective Date, the
Columbia Bancorp Common Stock to be issued in exchange for the Suburban
Bancshares Common Stock pursuant to the terms of this Plan shall be duly
authorized, validly issued, fully paid, and non-assessable, free of preemptive
rights and free and clear of all liens, encumbrances, or restrictions created by
or through Columbia Bancorp, with no personal liability attaching to the
ownership thereof. The Columbia Bancorp Common Stock to be issued upon exchange
for the Suburban Bancshares Common Stock pursuant to the terms of this Plan will
be issued in all material respects in accordance with applicable state and
federal laws, rules, and regulations.
(b) Columbia Bancorp shall have reserved a sufficient number of shares
of its Common Stock for issuance upon exercise of the option granted pursuant to
the Stock Option Agreement attached as Appendix IV, which is to be executed by
Columbia Bancorp and Suburban Bancshares, and shall have taken all other actions
necessary to fulfill its obligations thereunder.
6.6. Registration of Shares. Columbia Bancorp, with the assistance of
Suburban Bancshares and its representatives, will promptly file a Registration
Statement with the SEC which shall include a joint proxy statement for Columbia
Bancorp and Suburban Bancshares and a prospectus which shall satisfy all
applicable requirements of applicable state and federal laws, including the
Securities Act, the Exchange Act, and applicable state securities laws and the
rules and regulations thereunder (such joint proxy statement and prospectus,
together with any and all amendments or supplements thereto, being herein
referred to as the "Proxy Statement/Prospectus," and the various documents to be
filed by Columbia Bancorp under the Securities Act with the SEC to register the
Columbia Bancorp Common Stock into which shares of the Common Stock of Suburban
Bancshares held by stockholders will be converted, including the Proxy
38
Statement/Prospectus, are referred to herein as the "Registration Statement").
The number of shares to be registered will be an amount sufficient to allow all
of the shares of the Common Stock of Columbia Bancorp issued to holders of the
Common Stock of Suburban Bancshares pursuant to this Plan to be registered under
the Securities Act. Columbia Bancorp will use commercially reasonable efforts to
secure the effectiveness of the Registration Statement and, after the
Registration Statement has been declared effective, will issue the shares so
registered to the holders of the Common Stock of Suburban Bancshares on the
Effective Date. Columbia Bancorp may rely upon all information provided to it by
Suburban Bancshares and its representatives in the preparation of the
Registration Statement, any post-effective amendment thereto and the Proxy
Statement and shall not be liable for any untrue statement of a material fact or
any omission to state a material fact in the Registration Statement, the
post-effective amendment, or the Proxy Statement, if such statement is made in
reliance upon any information provided to it by Suburban Bancshares or by any of
its officers or authorized representatives. Columbia Bancorp shall promptly take
all such actions as may be necessary or appropriate in order to comply in all
material respects with all applicable securities laws of any state having
jurisdiction over the transactions contemplated by this Plan and the Holding
Company Merger. Columbia Bancorp shall furnish Suburban Bancshares with copies
of all such filings and keep Suburban Bancshares advised of the status thereof.
Columbia Bancorp shall promptly notify Suburban Bancshares of all
communications, oral or written, with the SEC concerning the Registration
Statement and the Proxy Statement/Prospectus. Prior to the Effective Date,
Columbia Bancorp will cause the listing of the Common Stock of Columbia Bancorp
deliverable pursuant to this Plan on The National Market of The National
Association of Securities Dealers, Inc. ("NASDAQ").
6.7. Meeting of Stockholders of Columbia Bancorp; Document
Preparation. (a) Columbia Bancorp shall duly call and convene a meeting of its
stockholders to act upon the transactions contemplated hereby as soon as
practicable. Except to the extent legally required for the discharge by the
board of directors of its fiduciary duties, Columbia Bancorp will recommend
approval of this Plan and the Holding Company Merger to its stockholders and
will use commercially reasonable efforts to obtain a favorable vote thereon. The
calling and holding of such meeting and all notices, transactions, documents,
and information related thereto will be in compliance with all applicable laws.
(b) Columbia Bancorp shall furnish such information concerning
Columbia Bancorp and the Columbia Subsidiaries as is necessary in order to cause
the Proxy Statement/Prospectus, insofar as it relates to such corporations, to
comply with Section 6.6. Columbia Bancorp agrees promptly to advise Suburban
Bancshares if at any time prior to the Columbia Bancorp stockholders' meeting,
any information provided by Columbia Bancorp in the Proxy Statement/Prospectus
becomes incorrect or incomplete in any material respect and to provide Suburban
Bancshares with the information needed to correct such inaccuracy or omission.
Columbia Bancorp shall furnish Suburban Bancshares with such supplemental
information as may be necessary in order to cause the Proxy
Statement/Prospectus, insofar as it relates to Columbia Bancorp and the Columbia
Subsidiaries, to comply with Section 6.6 after the mailing thereof to Columbia
39
Bancorp stockholders. The information provided and the representations made by
Columbia Bancorp to Suburban Bancshares in connection with the Proxy
Statement/Prospectus, both at the time such information and representations are
provided and made and at the Effective Date, will be true and accurate in all
material respects and will not contain any false or misleading statement with
respect to any material fact or omit to state any material fact required to be
stated therein or necessary in order (i) to make the statements made therein not
false or misleading, or (ii) to correct any statement contained in an earlier
communication with respect to such information or representations which has
become false or misleading. Columbia Bancorp may rely upon all information
provided to it by Suburban Bancshares and its representatives in the preparation
of the Proxy Statement/Prospectus and shall not be liable for any untrue
statement of a material fact or any omission to state a material fact in the
Proxy Statement/Prospectus, if such statement is made in reliance upon any
information provided to it by Suburban Bancshares or by any of its officers or
authorized representatives.
6.8. Consents. Columbia Bancorp and the Columbia Subsidiaries will use
commercially reasonable efforts to obtain any consents, approvals, or waivers
from third parties required in connection with the transactions contemplated
hereunder.
6.9. Current Information; Advice of Changes. (a) During the period
from the date of this Plan to the Effective Date, Columbia Bancorp will cause
one or more of its designated representatives to confer on a monthly or more
frequent basis with representatives of Suburban Bancshares regarding its
business, operations, properties, assets, and condition (financial or otherwise)
and matters relating to the completion of the transactions contemplated herein.
As soon as reasonably available, but in no event more than 45 days after the end
of each calendar quarter (other than the last calendar quarter of each calendar
year) ending after the date of this Plan, Columbia Bancorp will deliver to
Suburban Bancshares its quarterly reports on Form 10-Q, as filed with the SEC
under the Exchange Act. As soon as reasonably available, but in no event more
than 90 days after the calendar year, Columbia Bancorp will deliver to Suburban
Bancshares its Annual Report on Form 10-K as filed with the SEC under the
Exchange Act.
(b) Between the date of this Plan and the Effective Date, Columbia
Bancorp shall promptly advise Suburban Bancshares in writing of any fact which,
if existing or known at the date hereof, would have been required to be set
forth or disclosed in or pursuant to this Plan or of any fact which, if existing
or known as of the date hereof, would have made any of the representations
contained herein untrue in any material respect.
6.10. No Solicitation of Other Offers. Columbia Bancorp agrees that
neither it nor any of the Columbia Subsidiaries nor any of their respective
officers, directors, and employees shall, and Columbia Bancorp shall direct and
use its best efforts to cause its and the Columbia Subsidiaries' agents and
representatives (including, without limitation, any investment banker, attorney,
or accountant retained by it or any of the Columbia Subsidiaries) not to,
directly or indirectly, take any action to solicit or initiate any inquiries or
the making of any offer or proposal (including without limitation any proposal
to stockholders of Columbia Bancorp) with respect to a merger, consolidation,
40
business combination, liquidation, reorganization, sale or other disposition of
any significant portion of assets (except problem assets shown on Schedule
6.10), sale of shares of capital stock, or similar transactions involving
Columbia Bancorp or any of the Columbia Subsidiaries (any such inquiry, offer,
or proposal, a "Columbia Acquisition Proposal"), or, except in the opinion of
outside counsel to Columbia Bancorp as may be legally required to comply with
the duties the Board of Directors of Columbia Bancorp under applicable law and
upon receipt of a confidentially agreement with terms not materially less
favorable to Columbia Bancorp than those contained in the Confidentiality
Agreement, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to a
Columbia Acquisition Proposal. As of the time hereof, Columbia Bancorp is not
engaged in any negotiations or discussions relating to a Columbia Acquisition
Proposal. Columbia Bancorp shall promptly notify Suburban Bancshares orally and
in writing of, and keep it fully and currently informed on, any Columbia
Acquisition Proposal or any inquiries with respect thereto, such written
notification to include the identity of the Person making such inquiry or
Columbia Acquisition Proposal and such other information with respect thereto as
is reasonably necessary to apprise Suburban Bancshares of the material terms of
such Columbia Acquisition Proposal. Columbia Bancorp shall give Suburban
Bancshares contemporaneous written notice upon engaging in discussions or
negotiations with, or providing any information regarding Columbia Bancorp or
any of the Columbia Subsidiaries to, any such person regarding a Columbia
Acquisition Proposal.
6.11. Affiliate Agreements. Within 10 days of the date of this Plan,
Columbia Bancorp shall deliver or cause to be delivered to Suburban Bancshares
memoranda substantially in the form attached as Appendix VI (the "Affiliates'
Memoranda") and agreements substantially in the form attached as Appendix VIII
(the "Support Agreements") from each of its executive officers and directors
(and shall use commercially reasonable efforts to obtain and deliver such
memoranda and agreements from each stockholder of Columbia Bancorp who may be
restricted under the accounting rules applicable to a pooling-of-interests).
Under the terms of the Affiliates' Memoranda, each such officer, director or
stockholder shall acknowledge and agree to abide by all limitations imposed by
the accounting rules for the Mergers to be accounted for as a
pooling-of-interests. Under the terms of the Support Agreements, each such
officer, director, or stockholder shall agree to support and vote the shares of
Common Stock of Columbia Bancorp owned or controlled by him or her to ratify and
confirm this Plan and the Holding Company Merger.
6.12. Pooling-of-Interests. Columbia Bancorp shall use its best
efforts not to permit any of the directors, officers, employees, stockholders,
agents, consultants, or other representatives of Columbia Bancorp or any of the
Columbia Subsidiaries to take any action that would preclude Columbia Bancorp
from treating the Mergers as a pooling-of-interests for financial reporting
purposes.
6.13. Taxes. Columbia Bancorp shall have filed with appropriate
federal, state, county, municipal, or foreign taxing authorities all tax returns
required to be filed (taking any applicable extensions into consideration) on or
before the Effective Date and shall have paid (or shall have made adequate
provision or set up an adequate actual reserve on the financial statements
41
referred to in Section 4.2 for the payment of) all taxes imposed by any taxing
authority with respect to any Pre-Closing Tax Period (as hereinafter defined),
together with any interest, additions, or penalties related to any such taxes.
For purposes of this Section 6.13, any reference to Columbia Bancorp shall be
deemed to include any corporation more than 50% of the outstanding capital stock
(by vote or value) of which is owned by Columbia Bancorp. "Pre-Closing Tax
Period" shall mean each taxable period that ends on or before the Effective
Date.
6.14. Public Announcements. Between the date of this Plan and the
Effective Date, Columbia Bancorp and the Columbia Subsidiaries will consult with
Suburban Bancshares before issuing any press release or otherwise making any
public statements with respect to this Plan and the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as counsel may advise is required
by law.
7. Conditions Precedent to Columbia Bancorp's Obligations. Unless waived in
writing by Columbia Bancorp in its sole discretion, all obligations of Columbia
Bancorp hereunder shall be subject to the fulfillment prior to or at the
Effective Date of the following conditions:
7.1. Representations, Warranties, and Covenants. The representations
and warranties of Suburban Bancshares herein contained shall be true in all
material respects as of the date hereof, shall be deemed made again at and as of
the Effective Date, and shall be true in all material respects as so made again;
Suburban Bancshares and the Suburban Subsidiaries shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions required by this Plan to be performed
or complied with by them on or prior to the Effective Date; and Columbia Bancorp
shall have received from Suburban Bancshares an officers' certificate to their
knowledge, information, and belief in such detail as Columbia Bancorp may
reasonably request, dated the Effective Date and signed by its Chief Executive
Officer and its Secretary, to the foregoing effect.
7.2. No Adverse Changes. There shall not have been any materially
adverse change in the condition (financial or otherwise), results of operations,
assets, liabilities, or business of Suburban Bancshares and the Suburban
Subsidiaries, taken as a whole, from December 31, 1998 to the Effective Date.
For purposes of this Section 7.2, a "materially adverse change" shall include,
without limitation, (a) a reduction of the stockholders' equity of Suburban
Bancshares to less than $19,366,000 (plus such additions to stockholders' equity
as a result of the issuance of any Common Stock after the date of this Plan),
(b) a decrease in the net income of Suburban Bancshares for calendar year 1999
and through the Effective Date to less than $625,000, or (c) an increase in
Suburban Bancshares' ratio of non-performing assets to total assets to above
1.5%, and a "materially adverse change" shall not include expenses of the
transactions under this Plan.
7.3. Events Preceeding the Effective Date. Each of the events set
forth in Section 2 shall have occurred and any other required regulatory
approvals shall have been obtained.
42
7.4. Other Evidence. Suburban Bancshares shall have delivered to
Columbia Bancorp such further certificates and documents evidencing due action
in accordance with this Plan, including certified copies of all applicable
proceedings of stockholders and directors of Suburban Bancshares and Suburban
Bank pertaining to the transactions under this Plan, as Columbia Bancorp shall
reasonably request.
7.5. No Adverse Proceedings, Events, or Regulatory Requirements. No
action or proceeding against Columbia Bancorp or any of the Columbia
Subsidiaries or against Suburban Bancshares or any of the Suburban Subsidiaries
shall be pending which seeks to prevent consummation of the transactions
contemplated by this Plan; and no order of any court shall have been entered
which prohibits consummation of the Mergers and the transactions contemplated by
this Plan. No approval, consent, waiver, or administrative action shall have
included any condition or requirement that would (i) result in a materially
adverse effect on Columbia Bancorp or Suburban Bancshares, or (ii) so materially
and adversely affect the economic or business benefits of the Mergers that
Columbia Bancorp, in the sole judgment of Columbia Bancorp, would not have
entered into this Plan had such conditions or requirements been known at the
date hereof.
7.6. Consents, Etc. All requisite consents, approvals, waivers,
undertakings, memoranda, agreements, exercises, and terminations by third
parties which Suburban Bancshares and the Suburban Subsidiaries have covenanted
to use commercially reasonable efforts to obtain under Sections 5.7, 5.10, and
5.11 shall have been obtained by Suburban Bancshares or waived by Columbia
Bancorp.
7.7. Opinion of Tax Counsel. Columbia Bancorp shall have received an
opinion from its tax counsel, dated the Effective Date, in form and substance
reasonably satisfactory to Columbia Bancorp, covering the matters set forth in
Appendix IX. In rendering such opinion, tax counsel shall require delivery of
and rely upon certain representation letters delivered by Columbia Bancorp,
Suburban Bancshares, and certain stockholders of Suburban Bancshares, which
letters shall be in form and substance satisfactory to tax counsel.
7.8. Fairness Opinion. Columbia Bancorp shall have received a written
opinion from Austin Financial Services, Inc. (or such other recognized
investment firm as Columbia Bancorp may select), dated contemporaneously with
the date of the Proxy Statement, to the effect that the consideration to be
received in the Holding Company Merger is fair to the stockholders of Columbia
Bancorp from a financial point of view.
7.9. Opinion of Counsel. Columbia Bancorp shall have received an
opinion of counsel to Suburban Bancshares, dated the Effective Date, in form and
substance reasonably satisfactory to Columbia Bancorp, covering the matters set
forth in Appendix X.
7.10. Pooling-of-Interests Accounting. Columbia Bancorp shall have
received a letter from KPMG LLP to the effect that the Mergers qualify for
pooling-of-interests accounting treatment if consummated in accordance with this
43
Plan; provided, that such condition shall be void and of no further force and
effect if Columbia Bancorp has not received such letter because of any action or
inaction of Columbia Bancorp. In rendering such letter, KPMG LLP shall require
delivery of and rely upon certain representation letters delivered by Columbia
Bancorp and Suburban Bancshares and a pooling letter delivered by ▇▇▇▇▇▇▇ &
Company, which letters shall be in form and substance satisfactory to KPMG LLP.
8. Conditions Precedent to Suburban Bancshares' Obligations. Unless waived
in writing by Suburban Bancshares in its sole discretion, all obligations of
Suburban Bancshares hereunder shall be subject to the fulfillment prior to or at
the Effective Date of the following conditions:
8.1. Representations, Warranties, and Covenants. The representations
and warranties of Columbia Bancorp herein contained shall be true in all
material respects as of the date hereof, shall be deemed made again at and as of
the Effective Date, and shall be true in all material respects as so made again;
Columbia Bancorp and the Columbia Subsidiaries shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions required by this Plan to be performed
or complied with by them on or prior to the Effective Date; and Suburban
Bancshares shall have received from Columbia Bancorp an officers' certificate to
their knowledge, information and belief in such detail as Suburban Bancshares
may reasonably request, dated the Effective Date and signed by its Chief
Executive Officer and its Secretary, to the foregoing effect.
8.2. No Adverse Changes. There shall not have been any materially
adverse change in the condition (financial or otherwise), results of operations,
assets, liabilities, or business of Columbia Bancorp and the Columbia
Subsidiaries, taken as a whole, from December 31, 1998 to the Effective Date.
For purposes of this Section 8.2, a "materially adverse change" shall include,
without limitation, (a) a reduction of the stockholders' equity of Columbia
Bancorp to less than $38,000,000 (plus such additions to stockholders' equity as
a result of the issuance of any Common Stock after the date of this Plan), (b) a
decrease in the net income of Columbia Bancorp for calendar year 1999 and
through the Effective Date to less than $3,400,000, or (c) an increase in
Columbia Bancorp's ratio of non-performing assets to total assets to above 1.5%,
and a "materially adverse change" shall not include expenses of the transactions
under this Plan.
8.3. Events Preceding the Effective Date. Each of the events set forth
in Section 2 shall have occurred and any other required regulatory approvals
shall have been obtained.
8.4. Other Evidence. Columbia Bancorp shall have delivered to Suburban
Bancshares such further certificates and documents evidencing due action in
accordance with this Plan, including certified copies of all applicable
proceedings of stockholders and directors of Columbia Bancorp and Columbia Bank
pertaining to the transactions under this Plan, as Suburban Bancshares shall
reasonably request.
44
8.5. No Adverse Proceedings, Events, or Regulatory Requirements. No
action or proceeding against Columbia Bancorp or any of the Columbia
Subsidiaries or against Suburban Bancshares or any of the Suburban Subsidiaries
shall be pending which seeks to prevent consummation of the transactions
contemplated by this Plan; and no order of any court shall have been entered
which prohibits consummation of the Mergers and the transactions contemplated by
this Plan. No approval, consent, waiver, or administrative action shall have
included any condition or requirement that would (i) result in a materially
adverse effect on Columbia Bancorp or Suburban Bancshares, or (ii) so materially
and adversely affect the economic or business benefits of the Mergers that
Suburban Bancshares, in the sole judgment of Suburban Bancshares, would not have
entered into this Plan had such conditions or requirements been known at the
date hereof.
8.6. Consents, Etc. All requisite consents, approvals, or waivers,
undertakings, memoranda, agreements, exercises, and terminations by third
parties which Columbia Bancorp has covenanted to use commercially reasonable
efforts to obtain under Sections 6.8, 6.11, and 6.12 shall have been obtained by
Columbia Bancorp or waived by Suburban Bancshares.
8.7. Opinion of Tax Counsel. Suburban Bancshares shall have received
an opinion from tax counsel to Columbia Bancorp, dated the Effective Date, in
form and substance reasonably satisfactory to Suburban Bancshares, covering the
matters set forth in Appendix IX. In rendering such opinion, tax counsel shall
require delivery of and rely upon certain representation letters delivered by
Columbia Bancorp, Suburban Bancshares, and certain stockholders of Suburban
Bancshares, which letters shall be in form and substance satisfactory to tax
counsel.
8.8. Fairness Opinion. Suburban Bancshares shall have received a
written opinion from ▇▇▇▇▇▇▇▇▇ Associates Inc. (or such other recognized
investment firm as Suburban Bancshares may select), dated contemporaneously with
the date of the Proxy Statement, to the effect that the consideration to be
received in the Holding Company Merger is fair to the stockholders of Suburban
Bancshares from a financial point of view.
8.9. Opinion of Counsel. Suburban Bancshares shall have received an
opinion of counsel to Columbia Bancorp, dated the Effective Date, in form and
substance reasonably satisfactory to Suburban Bancshares, covering the matters
set forth in Appendix XI.
9. Terms of the Holding Company Merger.
9.1. Structure of the Holding Company Merger. At the Effective Date,
subject to the terms and conditions of this Plan, Suburban Bancshares will merge
with and into Columbia Bancorp, the separate corporate existence of Suburban
Bancshares shall cease, and Columbia Bancorp shall continue as the successor
corporation (the "Successor Corporation"). From and after the Effective Date,
the Holding Company Merger shall have the effects set forth in MD. GENERAL
CORPORATION LAW SS. 3-114 and DE. GENERAL CORPORATION LAW ▇▇.▇▇. 259 - 261.
45
9.2. Conversion of Stock; Conversion Ration. (a) On the Effective
Date, each share of the Suburban Bancshares Common Stock outstanding immediately
prior to the Effective Date, shall, without any action on the part of the holder
thereof, be canceled and converted into the number of shares of Successor
Corporation Common Stock (rounded to the nearest 0.01 share) which results after
multiplication by the Conversion Ratio. The Conversion Ratio shall be 0.2196;
provided, however, that the Conversion Ratio shall be increased (but not
decreased) to the extent necessary to cause the average market value (based on
the mean of the daily high and low trade prices, or, if none, of the daily high
bid and low asked prices, reported on NASDAQ) of Columbia Bancorp Common Stock
(for each of the 10 trading days ending on the trading date that is three days
before the Effective Date) received for each share of Suburban Bancshares Common
Stock to be $3.00 per share; provided, further that such adjustment may not
increase the Conversion Ratio above 0.2338.
(b) No certificates for fractional shares of Successor Corporation
Common Stock shall be issued; in lieu thereof, each holder otherwise entitled to
a fractional interest shall receive an amount in cash based on the market value
of Columbia Bancorp Common Stock as determined in Section 9.2. Each such holder
shall have no other rights with respect to such fractional interest.
9.3. Exchange Procedure. (a) After the Effective Date, certificates
representing such shares of Common Stock of Suburban Bancshares shall represent
the right to receive certificates representing shares of Common Stock of
Successor Corporation determined in accordance with Section 9.2; such Suburban
Bancshares certificates at any time after the Effective Date may be exchanged by
the holders thereof for new certificates for the appropriate number of shares of
Common Stock of Successor Corporation by forwarding such Suburban Bancshares
Common Stock certificates and the letter of transmittal provided by Successor
Corporation to the transfer agent for Successor Corporation Common Stock, and
the payment of cash in lieu of fractions, dividends, and other distributions on
said stock may be withheld until the Suburban Bancshares certificates are
surrendered for exchange to the transfer agent for Successor Corporation Common
Stock; when such new certificates are issued, the holders thereof shall be
entitled to be paid the amount (without any interest thereon) of all such
withheld cash in lieu of fractions, dividends, or other distributions which have
theretofore become payable with respect to such shares of Common Stock of
Successor Corporation.
(b) As soon as possible after the Effective Date, the transfer agent
for Successor Corporation Common Stock shall send or cause to be sent a notice
and transmittal form to each record holder of a certificate theretofore
evidencing shares of the Suburban Bancshares Common Stock.
(c) All shares of Successor Corporation Common Stock into which shares
of Suburban Bancshares Common Stock shall have been converted shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Suburban Bancshares Common Stock.
46
9.4. Stock Options. (a) At the Effective Date, all options granted by
Suburban Bancshares which are outstanding under all Stock Option Plans
previously adopted by Suburban Bancshares to purchase shares of Suburban
Bancshares Common Stock, which are outstanding and unexercised immediately prior
thereto (each, an "Outstanding Option"), shall be converted as to each whole
share subject to such Outstanding Option into an option (each, an "Exchange
Option") to purchase a number of shares of Successor Corporation Common Stock
equal to the number of shares of Suburban Bancshares Common Stock which could
have been purchased under the Outstanding Option multiplied by the Conversion
Ratio, with the total for each holder's Exchange Options with the same option
price and expiration date rounded down to the next whole share.
(b) The per share exercise price of each Exchange Option shall be
equal to the price per share set forth in the Outstanding Option divided by the
Conversion Ratio, rounded up to the nearest whole cent.
(c) The Exchange Option shall otherwise have the same duration and
other terms as the Outstanding Option.
(d) The adjustments provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with Section 424(a) of the Code.
9.5. Charter of the Successor Corporation. The Charter of Columbia
Bancorp, as in effect immediately prior to the Effective Date, shall be the
Charter of the Successor Corporation until thereafter amended as provided by
law.
9.6. By-Laws of the Successor Corporation. The By-Laws of Columbia
Bancorp, as in effect immediately prior to the Effective Date (with the
amendments set forth in Appendix XII), shall be the By-Laws of the Successor
Corporation until thereafter amended as provided by law.
9.7. Anti-Dilution Provision. If Columbia Bancorp takes any action
which establishes, prior to the Effective Date, a record date or effective date
for a stock dividend on its Common Stock, a split or reverse split of its Common
Stock or any distribution on all shares of its Common Stock other than cash
dividends, Columbia Bancorp will take such action as shall be necessary in order
that each share of Common Stock of Suburban Bancshares will be converted into
the same number of shares of the Common Stock of Successor Corporation (whether
such number is greater or less than the number otherwise provided for herein)
that the owner of such shares would have owned immediately after the record date
or effective date of such event had the Effective Date occurred immediately
before such record date or effective date, and the Conversion Ratio set forth in
Section 9.2 shall be adjusted accordingly. Suburban Bancshares hereby agrees to
any revision in the exchange ratio pursuant to this Section 9.7.
47
9.8. Restriction on Issuance or Repurchase of Securities. Except
transactions that would preclude the issuance of the pooling-of-interest letter
under Section 7.10, nothing in this Plan shall limit the right of Columbia
Bancorp to amend its Charter and By-Laws and to issue or repurchase any of its
stock or other securities in any manner and for any consideration permitted by
law either in connection with acquisitions of new affiliates or otherwise, prior
to or after the Effective Date.
10. Terms of the Bank Merger.
10.1. Structure of the Bank Merger. At the Effective Date, subject to
the terms and conditions of this Plan, Suburban Bank will merge with and into
Columbia Bank, the separate corporate existence of Suburban Bank shall cease,
and Columbia Bank shall continue as the successor banking institution (the
"Successor Bank"). From and after the Effective Date, the Bank Merger shall have
the effects set forth in MD. FIN. INS. CODE SS. 3-712.
10.2. Conversion of Stock; Conversion Ratio. On the Effective Date,
each share of the Suburban Bank Common Stock outstanding immediately prior to
the Effective Date, shall, without any action on the part of the holder thereof,
be canceled.
10.3. Exchange Procedure. (a) After the Effective Date, certificates
representing such shares of Common Stock of Suburban Bank shall represent the
right to receive certificates representing shares of Common Stock of Successor
Bank determined in accordance with Section 10.2; such Suburban Bank certificates
at any time after the Effective Date may be exchanged by Columbia Bancorp for
new certificates for the appropriate number of shares of Common Stock of
Successor Bank.
(b) All shares of Successor Bank Common Stock into which shares of
Suburban Bank Common Stock shall have been converted shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Suburban Bank Common Stock.
10.4. Charter of the Successor Bank. The Charter of Columbia Bank, as
in effect immediately prior to the Effective Date, shall be the Charter of the
Successor Bank until thereafter amended as provided by law.
10.5. By-Laws of the Sucessor Bank. The By-Laws of Columbia Bank, as
in effect immediately prior to the Effective Date (with the amendments set forth
in Appendix XIII), shall be the By-Laws of the Successor Bank until thereafter
amended as provided by law.
10.6. Restriction on Issuance or Repurchase of Securities. Nothing in
this Plan shall limit the right of Columbia Bank to amend its Charter and
By-Laws and to issue or repurchase any of its stock or other securities in any
manner and for any consideration permitted by law either in connection with
acquisitions of new affiliates or otherwise, prior to or after the Effective
Date.
48
11. Boards of Directors and Employment Matters. Upon the Effective Date or
as otherwise indicated:
(a) At Effective Date, the Board of Directors of Successor
Corporation will be increased by five members. All of the directors of
Columbia Bancorp immediately prior to the Effective Date shall
continue as directors of Successor Corporation after the Effective
Date, and five of the directors of Suburban Bancshares before the
Effective Date will become directors of Successor Corporation as shown
on Appendix XIV.
(b) At Effective Date, the Board of Directors of Successor
Bank will be increased by five members. All of the directors of
Columbia Bank immediately prior to the Effective Date shall continue
as directors of Successor Bank after the Effective Date, and five of
the directors of Suburban Bank before the Effective Date will become
directors of Successor Bank as shown on Appendix XIII.
(c) The members the Boards of Directors having board titles
and the persons serving as executive officers of Successor Corporation
and Successor Bank at the Effective Date are listed on Appendix XIV.
The employment of all officers and employees of Suburban Bancshares,
other than the officer with an employment agreement from Successor
Corporation and listed on Appendix XIV (the "Bancorp Contract
Employee"), will terminate without compensation or benefits of any
kind or form immediately prior to the Effective Date, and none will
become officers or employees of Successor Corporation except as listed
on Appendix XIV. The chief executive officer/board chairman's service
agreement of the Bancorp Contract Employee will terminate immediately
prior to the Effective Date without payment or benefits of any kind or
form, and the Bancorp Contract Employee will be offered an employment
agreement with Successor Corporation in the form attached as Appendix
IX.
(d) The officers and employees of Suburban Bank, other than
the officers and employees with an employment agreement from Successor
Bank and listed on Appendix XIV (the "Bank Contract Employees"), will
continue as officers and employees of Successor Bank as at-will
employees. The severance agreements of officers listed on Appendix XIV
will be assumed by Successor Bank, and the other officers or employees
of Suburban Bank (other than the Bank Contract Employees) becoming
officers or employees of Successor Bank upon termination of employment
by Successor Bank within four months of the Effective Date will
receive a severance payment equal to one week's pay (rounded to the
nearest one-tenth of a week) for each year's service with Suburban
Bank (with a minimum payment of four weeks' pay and a maximum payment
of 12 weeks' pay). The chief executive officer/board chairman's
49
service agreement and the employment agreement of the Bank Contract
Employees (whether with Suburban Bancshares or Suburban Bank) will
terminate immediately prior to the Effective Date without payment or
benefits of any kind or form, and the Bank Contract Employees will be
offered employment agreements with the Successor Bank in the forms
attached as Appendix XV and Appendix XVI.
(e) Successor Corporation will provide the employees of
Suburban Bank who continue as at-will employees of Successor Bank
after the Effective Date with benefits under Successor Corporation's
employee benefit plans to the extent they are eligible to do so under
the terms of such plans or programs as are in force on the Effective
Date, with credit given for their prior service with Suburban Bank for
purposes of allocation, eligibility, and vesting. In that connection,
Successor Corporation may, in its sole discretion, freeze or terminate
the employee benefit plans of Suburban Bancshares, merge them with one
or more employee benefit plans of Successor Corporation, or continue
to maintain them.
12. Amendment of this Plan. This Plan may be amended at any time prior to
the Effective Date in response to comments of governmental regulatory
authorities, or otherwise; provided, that any such amendment is in writing and
is approved by the Board of Directors of each of the parties hereto.
13. Abandonment of this Plan; Effect Thereof. Anything herein to the
contrary notwithstanding, and notwithstanding any stockholder vote or approval,
this Plan may be terminated and abandoned:
(a) by mutual consent of the Boards of Directors of Suburban
Bancshares and Columbia Bancorp;
(b) by Columbia Bancorp or Suburban Bancshares, if its Board
of Directors so determines, in the event of the failure of the
stockholders of Columbia Bancorp or the stockholders of Suburban
Bancshares to approve this Plan at the meetings called to consider
such approval, unless in each case the failure of such occurrence
shall be due to the failure of the party seeking to terminate this
Plan to perform or observe its agreement set forth herein to be
performed or observed by such party at or before the Effective Date;
(c) by Columbia Bancorp or Suburban Bancshares, if its Board
of Directors so determines, in the event of a material breach by the
other party hereto of any representation, warranty, covenant, or
agreement contained herein which is not cured or not curable within 60
days after written notice of such breach is given to the party
committing such breach by the other party;
(d) by Columbia Bancorp by written notice to Suburban
Bancshares if prior to June 30, 2000 (i) any approval, consent, or
50
waiver of any Governmental Entity required to permit consummation of
the transactions contemplated hereby shall have been denied, (ii) any
approval, consent, or waiver of any Governmental Entity required to
permit consummation of the transactions contemplated hereby shall
include any condition or requirement that would (i) result in a
materially adverse effect on Columbia Bancorp or Suburban Bancshares,
or (ii) so materially and adversely affect the economic or business
benefits of the Mergers that Columbia Bancorp, in the sole judgment of
Columbia Bancorp, would not have entered into this Plan had such
conditions or requirements been known at the date hereof, (iii) any
action or proceeding against Columbia Bancorp or any of the Columbia
Subsidiaries or against Suburban Bancshares or any of the Suburban
Subsidiaries shall be pending which seeks to prevent consummation of
the transactions contemplated by this Plan, or (iv) any court shall
have entered an order which prohibits consummation of the Mergers and
the transactions contemplated by this Plan;
(e) by Columbia Bancorp or Suburban Bancshares, by action of
the Board of Directors of either party and the delivery of written
notice by either party to the other, in the event that the Mergers are
not consummated by June 30, 2000, unless the failure to so consummate
by such time is due to the breach of any representation, warranty,
agreement, or covenant contained in this Plan by the party seeking to
terminate, or if prior to June 30, 2000, any Governmental Entity of
competent jurisdiction shall have issued a final, unappealable order
or ruling enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Plan;
(f) by action of the Board of Directors of Suburban
Bancshares in their sole discretion if they determine to negotiate a
Suburban Acquisition Proposal under Section 5.9;
(g) by action of the Board of Directors of Columbia Bancorp
in their sole discretion if they determine to negotiate a Columbia
Acquisition Proposal under Section 6.10; or
(h) by Columbia Bancorp or Suburban Bancshares, by action of
the Board of Directors of either party in their sole discretion and
the delivery of written notice by either party to the other within 10
business days of the date hereof, in the event that Columbia Bancorp
or Suburban Bancshares, as the case may be, is not satisfied with the
results of its review of the loan and related files and reports of the
other (as to which full access will be given under Sections 5.1 and
6.1).
Except as provided in Section 17, in the event of the termination of this Plan
by either Columbia Bancorp or Suburban Bancshares, as provided above, this Plan
shall thereafter become void, and there shall be no liability on the part of any
51
party hereto or their respective officers or directors, except that any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach of any other party of any covenant or willful
misrepresentation contained in this Plan.
14. Expenses. Whether or not the transactions hereunder are consummated,
each party to the Plan shall pay its own expenses relating hereto, including
fees and disbursements of its counsel and accountants and one half of filing
fees in respect of bank regulatory approvals required in order to consummate the
Mergers; provided, however, that Columbia Bancorp shall pay (a) the registration
fee of the SEC, filing fees in respect of state "blue sky" laws, and the fee
payable to The National Association of Securities Dealers, Inc. in respect of
the listing on NASDAQ of the shares of Columbia Bancorp Common Stock to be
issued pursuant to this Plan, and (b) the costs of printing and mailing the
Proxy Statement/Prospectus. The foregoing shall not be construed as a limitation
of damages in the event of breach.
15. Notices. All notices, requests, demands, and other communications under
or connected with this Plan shall be in writing, and (a) if to Columbia Bancorp,
shall be addressed to Columbia Bancorp, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President and Chief
Executive Officer, with a copy to its counsel, Piper & Marbury L.L.P., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.,
Esquire; or (b) if to Suburban Bancshares, shall be addressed to Suburban
Bancshares, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chairman of the Board and Chief Executive
Officer, with a copy to its counsel, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇, P.A., ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esquire. Any such notices, requests, demands, and other communications shall be
mailed, postage prepaid, first class mail, or delivered personally and shall be
sufficient and effective when delivered to or received at the address as
specified. Each of the parties may change the address at which it is to receive
communications by like written notice to the other.
16. Entire Agreement; Effect. Subject to Sections 5.1(b) and 6.1(b), this
Plan (including the financial statements, lists, schedules, and documents
delivered pursuant hereto, which are made a part hereof) is intended by the
parties to and does constitute the entire agreement of the parties with respect
to the transaction contemplated hereunder. This Plan supersedes any and all
prior understandings, including prior letters of intent, and it may not be
changed, waived, discharged, or terminated orally, but only in writing by a
party against which enforcement of the change, waiver, discharge, or termination
is sought.
17. Representations, Warranties, and Agreements. Except as set forth in
this Section 17, all representations, warranties, and agreements of Columbia
Bancorp and Suburban Bancshares made in this Plan, or in any instrument
delivered by Columbia Bancorp or Suburban Bancshares pursuant to this Plan,
shall expire at the Effective Date. In the event of the consummation of the
transactions contemplated hereby, the agreements contained in or referred to in
Sections 9, 10, and 11 shall survive the Effective Date. In the event of the
termination of this Plan in accordance with its terms, the agreements contained
in or referred to in Sections 5.1(b), 5.5, 5.9, 6.1(b), 6.5(b), 6.10, and 14,
52
the Stock Option Agreements, and the Support Agreements (which shall only
terminate in accordance with their respective terms) shall survive such
termination. Except to the extent that representations, warranties, and
agreements of Columbia Bancorp and Suburban Bancshares made in this Plan, or in
any instrument delivered by Columbia Bancorp or Suburban Bancshares pursuant to
this Plan, shall expire at the Effective Date, nothing contained herein shall be
construed to limit the liability of a party to another party for damages caused
by a breach of this Plan.
18. Governing Law. This Plan shall be governed by, and shall be interpreted
in accordance with, the laws of the State of Maryland or, to the extent
applicable, the federal laws of the United States of America or the laws of the
State of Delaware.
19. General. The section headings contained in this Plan are for reference
purposes only and shall not affect in any way the meaning or interpretations of
this Plan. This Plan may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Plan shall inure to the benefit of
and be binding upon the parties hereto and their respective successors but shall
not be assigned to and shall not create any rights in favor of any other party.
Any purported assignment in violation of this Section 19 shall be void.
IN WITNESS WHEREOF, Columbia Bancorp and Suburban Bancshares have caused
this Plan to be duly executed by their respective chairmen or presidents, and
their respective seals to be hereunto affixed and attested by their respective
secretaries, thereunto duly authorized as of the date first above written.
ATTEST: [SEAL] COLUMBIA BANCORP
--------------------------- By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Secretary President and Chief Executive Officer
ATTEST: [SEAL] SUBURBAN BANCSHARES, INC.
--------------------------- By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Secretary Chairman of the Board
and Chief Executive Officer
53
APPENDIX I
LIST OF SCHEDULES
A. Schedules to be Provided by Suburban Bancshares to Columbia Bancorp.
Schedule 3.1(a). List of subsidiaries of Suburban Bancshares and their
places of incorporation.
Schedule 3.1(b). Ownership of Suburban Subsidiaries, Joint Ventures, and
Partnerships.
Schedule 3.1(c). Charters and By-Laws of Suburban Bancshares and each of
the Suburban Subsidiaries.
Schedule 3.1(d). List of outstanding options, warrants, rights, restricted
stock or obligations of any kind entitling the holder
thereof to acquire shares of the Common Stock of Suburban
Bancshares or outstanding securities or instruments that
are convertible into shares of the Common Stock of Suburban
Bancshares.
Schedule 3.2. Consolidated Financial Statements of Suburban Bancshares
and the Suburban Subsidiaries at December 31, 1994, 1995,
1996, 1997, and 1998 and for each of the years then
ended, as reported upon by ▇▇▇▇▇▇▇ & Company, and at June
30, 1998 and 1999 and for each of the six month periods
then ended.
Schedule 3.3. Tax Returns of Suburban Bancshares to Federal, State,
County, Municipal, or Foreign Taxing Authorities for the
taxable years Decembet 31, 1994, 1995, 1996, 1997, and
1998.
Schedule 3.5. Increase of Salaries or Benefits to Directors, Officers,
or Employees since December 31, 1998.
Schedule 3.7. List of Liens and Encumbrances on Property, Etc.
Schedule 3.8. Plans, Contracts, and Agreements.
Schedule 3.9. Litigation, Etc.
Schedule 3.10. Environmental Matters.
Schedule 3.12. Pension and Welfare Matters.
Schedule 3.13. Related Party Transactions.
54
Schedule 3.14. No Conflicts with Other Documents.
Schedule 3.17. Insurance Policies, including Financial Institutions Bonds.
Schedule 3.19. Agreement between Suburban Bancshares and ▇▇▇▇▇▇▇▇▇
Associates Inc.
Schedule 3.21. Year 2000.
Schedule 5.4(e). Increases in Employee Compensation or Benefit Levels.
Schedule 5.4(z)(ii). Capital Expenditures In Excess of $25,000.
Schedule 5.9. Schedule of Suburban Bancshares' loans classified as
substandard, doubtful, or loss; and real estate owned;
Suburban Bancshares' Allowance for Possible Losses.
B. Schedules to be Provided by Columbia Bancorp to Suburban Bancshares.
Schedule 4.1(a). List of subsidiaries of Columbia Bancorp.
Schedule 4.1(b). Joint Ventures or Partnerships Not Wholly Owned by its
Parent Corporation
Schedule 4.1(c). Charters and By-Laws of Columbia Bancorp, Columbia Bank.
Schedule 4.1(d). List of outstanding options, warrants, rights, restricted
stock, or obligations of any kind entitling the holder
thereof to acquire shares of the Common Stock of Columbia
Bancorp or outstanding securities or instruments that are
convertible into shares of the Common Stock of Columbia
Bancorp.
Schedule 4.2. Consolidated Financial Statements of Columbia Bancorp and
the Columbia Subsidiaries at December 31, 1994, 1995, 1996,
1997, and 1998 and for each of the years then ended, as
reported upon by KPMG LLP, and at June 30, 1998 and 1999
and for each of the six month periods then ended.
Schedule 4.3. Tax Returns of Columbia Bancorp to Federal, State, County,
Municipal, or Foreign Taxing Authorities for the taxable
years December 31, 1994, 1995, 1996, 1997, and 1998.
Schedule 4.5. Increase of Salaries or Benefits to Directors, Officers, or
Employees since December 31, 1998.
Schedule 4.7. List of Liens and Encumbrances on Property, Etc.
55
Schedule 4.8. Plans, Contracts, and Agreements.
Schedule 4.9. Litigation, Etc.
Schedule 4.10. Environmental Matters.
Schedule 4.12. Pension and Welfare Matters.
Schedule 4.13. Related Party Transactions.
Schedule 4.14. No Conflicts with Other Documents.
Schedule 4.17. Insurance Policies, including Financial Institutions Bonds.
Schedule 4.19. Agreement between Columbia Bancorp and Austin Financial
Services, Inc.
Schedule 4.21. Year 2000.
Schedule 6.4(e). Increases in Employee Compensation or Benefit Levels.
Schedule 6.4(z)(ii). Capital Expenditures In Excess of $25,000.
Schedule 6.10. Schedule of Columbia Bancorp's loans classified as
substandard, doubtful, or loss; and real estate owned;
Columbia Bancorp's Allowance for Possible Losses.
56
APPENDIX II
AGREEMENT AND ARTICLES OF MERGER
BETWEEN
COLUMBIA BANCORP
(a Maryland Corporation)
AND
SUBURBAN BANCSHARES, INC.
(a Delaware Corporation)
COLUMBIA BANCORP, a corporation duly organized and existing under the laws
of the State of Maryland ("Columbia Bancorp") and SUBURBAN BANCSHARES, INC., a
corporation duly organized and existing under the laws of the State of Delaware
("Suburban Bancshares"), do hereby certify that:
FIRST: Columbia Bancorp and Suburban Bancshares agree to merge.
SECOND: The name and place of incorporation of each party to this Agreement
and Articles of Merger are Columbia Bancorp, a Maryland corporation, and
Suburban Bancshares, Inc., a Delaware corporation. Columbia Bancorp shall
survive the merger and shall continue under the name "Columbia Bancorp" as a
corporation of the State of Maryland.
THIRD: The date of incorporation of Suburban Bancshares was March 26, 1985.
Suburban Bancshares is incorporated under the Delaware General Corporation Law.
Suburban Bancshares was registered or qualified to do business in Maryland on
May 2, 1993.
FOURTH: Columbia Bancorp has its principal office in ▇▇▇▇▇▇ County,
Maryland. Suburban Bancshares has its principal office in Maryland in Prince
George's County and owns an interest in land in Prince George's County,
___________ County, and _________ County, Maryland.
FIFTH: The terms and conditions of the transaction set forth in these
Articles were advised, authorized, and approved by each corporation party to
this Agreement and Articles of Merger in the manner and by the vote required by
its Charter and the laws of the state of its incorporation. The manner of
approval was as follows:
(a) The Boards of Directors of Columbia Bancorp and Suburban
Bancshares at meetings duly held on September 27, 1999, and September
27, 1999, respectively, adopted a resolution which approved the
57
Agreement and Articles of Merger, declared that the proposed merger
was advisable on substantially the terms and conditions set forth or
referred to in the resolution and directed that the proposed merger be
submitted for consideration at special meetings of the stockholders of
the respective parties.
(b) Notice which stated that a purpose of the stockholders'
meeting was to act on the proposed merger was given by Columbia
Bancorp and Suburban Bancshares as required by law.
(c) The proposed merger was approved by the stockholders of
each of Columbia Bancorp and Suburban Bancshares at special meetings
of stockholders held ___________, 1999 and ___________, 1999,
respectively, by the affirmative vote of two-thirds of all the votes
entitled to be cast on the matter.
SIXTH: No amendment to the Charter of Columbia Bancorp is to be effected as
a part of the merger.
SEVENTH: The total number of shares of stock of all classes which Columbia
Bancorp has authority to issue is 10,000,000 shares of Common Stock (par value
$.01 per share). The aggregate par value of all the shares of stock of all
classes of Columbia Bancorp is $100,000. The total number of shares of stock of
all classes which Suburban Bancshares has authority to issue is 21,000,000
shares, of which 1,000,000 shares are Preferred Stock (par value $.01 per share)
and 20,000,000 shares are Common Stock (par value $.01 per share). The aggregate
par value of all the shares of stock of all classes of Suburban Bancshares is
$210,000.
EIGHTH: The merger does not increase the authorized stock of Columbia
Bancorp.
NINTH: The terms and conditions of the merger, the mode of carrying the
same into effect and the manner and basis of converting or exchanging shares of
Common Stock of Suburban Bancshares into shares of Common Stock of Columbia
Bancorp are as follows:
(a) Each issued and outstanding share of Common Stock of
Columbia Bancorp on the effective date of the merger shall continue,
without change, to be an issued and outstanding share of Common Stock
of Columbia Bancorp.
(b) Each issued and outstanding share of Common Stock of
Suburban Bancshares on the effective date of the merger, shall upon
effectiveness and without further act, be automatically converted
into, and become ________ shares of Common Stock of Columbia Bancorp.
Cash will be paid in lieu of fractional shares at the rate of $______
per share. There will be no issued and outstanding shares of Preferred
Stock of Suburban Bancshares on the effective date of the merger.
(c) After the effective date of the merger, certificates
representing shares of Common Stock of Suburban Bancshares shall
58
represent the right to receive certificates representing shares of
Common Stock of Columbia Bancorp; such Suburban Bancshares
certificates at any time after the effective date of the merger may be
exchanged by the holders thereof for new certificates for the
appropriate number of shares of Common Stock of Columbia Bancorp by
forwarding such Suburban Bancshares Common Stock certificates and the
letter of transmittal provided by Columbia Bancorp to the transfer
agent for Columbia Bancorp Common Stock, and the payment of cash in
lieu of fractions, dividends, and other distributions on said stock
may be withheld until the Suburban Bancshares certificates are
surrendered for exchange to the transfer agent for Columbia Bancorp
Common Stock; and when such new certificates are issued, the holders
thereof shall be entitled to be paid the amount (without any interest
thereon) of all such withheld cash in lieu of fractions, dividends, or
other distributions which have theretofore become payable with respect
to such shares of Common Stock of Columbia Bancorp.
TENTH: The merger shall become effective at _____ _.m. EST on ________,
_____.
ELEVENTH: Columbia Bancorp agrees that it may be served with process in
Delaware in any proceeding for enforcement of any obligation of Suburban
Bancshares, as well as for enforcement of any obligation of Columbia Bancorp
arising from the merger, including any suit or other proceeding to enforce the
right of any stockholder as determined in appraisal proceedings pursuant to the
provisions of section 262 of Title 8 of the Delaware Code of 1953, and
irrevocably appoints the Secretary of State of the State of Delaware as its
agent to accept service of process in any such suit or other proceedings. The
address to which a copy of such process shall be mailed by the Secretary of
State of the State of Delaware is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President and Chief Executive
Officer.
59
IN WITNESS WHEREOF, COLUMBIA BANCORP and SUBURBAN BANCSHARES, INC. have
caused this Agreement and Articles of Merger to be signed in their respective
names and on their respective behalves by their respective presidents or
chairmen and witnessed by their respective secretaries on ________________,
______.
ATTEST: [SEAL] COLUMBIA BANCORP
--------------------------- By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Secretary President and Chief Executive Officer
ATTEST: [SEAL] SUBURBAN BANCSHARES, INC.
--------------------------- By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Secretary Chairman of the Board
and Chief Executive Officer
60
THE UNDERSIGNED, President and Chief Executive Officer of COLUMBIA BANCORP,
a Maryland corporation, who executed on behalf of the Corporation the foregoing
Agreement and Articles of Merger of which this certificate is made a part,
hereby acknowledges in the name and on behalf of said Corporation the foregoing
Agreement and Articles of Merger to be the corporate act of said Corporation and
hereby certifies that to the best of his knowledge, information and belief the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties of
perjury.
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
THE UNDERSIGNED, Chairman of the Board and Chief Executive Officer of
SUBURBAN BANCSHARES, INC., a Delaware corporation, who executed on behalf of the
Corporation the foregoing Agreement and Articles of Merger of which this
certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Agreement and Articles of Merger to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman of the Board
and Chief Executive Officer
THE UNDERSIGNED, Secretary of SUBURBAN BANCSHARES, INC., a Delaware
corporation, hereby certifies that, pursuant to the requirements of Sections
251(c) and 252(c) of the Delaware General Corporation Law, a majority of the
outstanding stock of Suburban Bancshares, Inc. entitled to vote voted in the
affirmative for the adoption of the Agreement and Articles of Merger.
-------------------------------------
Secretary
61
AGREEMENT OF BANK MERGER
BETWEEN
THE COLUMBIA BANK
(a Maryland Trust Company)
AND
SUBURBAN BANK OF MARYLAND
(a Maryland Trust Company)
AGREEMENT OF BANK MERGER made by and between THE COLUMBIA BANK, a Maryland
trust company ("Columbia Bank") and SUBURBAN BANK OF MARYLAND, a Maryland trust
company ("Suburban Bank"), do hereby certify that:
1. The Bank Merger. As of the effective date hereof, Suburban Bank shall be
merged into Columbia Bank under the Charter of Columbia Bank (the "Bank
Merger"), and Columbia Bank shall be the resulting trust company under the name
"The Columbia Bank". The By-Laws of Columbia Bank shall be the By-Laws of the
resulting trust company. The directors of Columbia Bank at the time of the Bank
Merger (together with the following five directors of Suburban Bank) shall
become the directors of the resulting trust company following the Bank Merger
(▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇).
2. Location of Principal Banking Offices.
(a) The principal banking office of Columbia Bank is located
at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The principal banking office of Suburban Bank is located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3. The Resulting Trust Company.
(a) The principal banking office of the resulting trust
company will be located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) Upon the effective date of the Bank Merger, the
authorized capital stock of the resulting trust company shall consist
of 270,000 shares of Common Stock, par value of $10.00 per share.
62
(c) No preferred stock shall be issued by the resulting
trust company pursuant to this Agreement or in connection with the
Bank Merger.
(d) No amendments to the Charter or the By-Laws of the
resulting trust company shall be made pursuant to this Agreement or in
connection with the Bank Merger.
4. Terms of the Exchange. The terms of the exchange of shares of capital
stock of the constituent trust company and commercial bank shall be as follows:
(a) Each issued and outstanding share of Common Stock of
Columbia Bank immediately prior to the effective date of the Bank
Merger shall continue, without change, to be an issued and outstanding
share of Common Stock of Columbia Bank.
(b) Each issued and outstanding share of Common Stock of
Suburban Bank immediately prior to the effective date of the Bank
Merger, shall upon effectiveness and without further act, be
automatically cancelled.
(c) There will be no issued and outstanding shares of
Preferred Stock of Suburban Bank on the effective date of the Bank
Merger.
5. Approval of the Agreement. This Agreement has been declared advisable by
the respective Boards of Directors of each of Columbia Bank and Suburban Bank
and is subject to the approval of the Maryland Commissioner of Financial
Institutions; Columbia Bancorp, the sole stockholder of the issued and
outstanding capital stock of Columbia Bank; and Suburban Bancshares, Inc., the
sole stockholder of the issued and outstanding capital stock of Suburban Bank.
6. Effective Date. The Bank Merger shall become on the date specified by
the Maryland Commissioner of Financial Institutions in the Certificate of Merger
attached hereto.
63
IN WITNESS WHEREOF, COLUMBIA BANK and SUBURBAN BANK have caused this
Agreement of Bank Merger to be duly executed on their respective behalves by
their respective proper officers and witnessed by their respective secretaries
on ________________, ______.
ATTEST: [SEAL] COLUMBIA BANCORP
--------------------------- By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Secretary President and Chief Executive Officer
ATTEST: [SEAL] SUBURBAN BANCSHARES, INC.
--------------------------- By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Secretary Chairman of the Board
64
CERTIFICATE OF MERGER
I, the undersigned ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, the Maryland Commissioner of
Financial Institutions, do hereby certify that Suburban Bank of Maryland, a
trust company existing under the laws of the State of Maryland, with its
principal office located in Greenbelt, Maryland, prior approval having been
given by the Federal Deposit Insurance Corporation, has been merged in The
Columbia Bank, a trust company existing under the laws of the State of Maryland,
with its principal office located in Columbia Maryland, the name of the
resulting institution being The Columbia Bank and the merger shall be and become
effective as of __:__ _.m., _____________,_____, and I hereby give my formal and
complete approval to said Agreement of Bank Merger between these two constituent
institutions.
WITNESS my hand and official seal this _____ day of ______________,
_______.
------------------------------------
Maryland Commissioner
of Financial Institutions
65
APPENDIX III
FORM OF STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Option Agreement") dated as of September
28, 1999, between SUBURBAN BANCSHARES, INC. ("Suburban Bancshares"), a Delaware
corporation, and COLUMBIA BANCORP ("Columbia Bancorp"), a Maryland corporation,
recites and provides:
A. The Board of Directors of Suburban Bancshares and Columbia Bancorp have
approved a Plan and Agreement to Merge dated September 28, 1999 (the "Plan")
providing for the merger (the "Holding Company Merger") of Suburban Bancshares
with and into Columbia Bancorp.
B. As a condition to and as consideration for Columbia Bancorp's entry into
the Plan and to induce such entry, Suburban Bancshares has agreed to grant to
Columbia Bancorp the option set forth herein to purchase authorized but unissued
shares of Suburban Bancshares Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. Capitalized terms defined in the Plan and used herein shall
have the same meanings as in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Suburban Bancshares hereby grants to Columbia Bancorp an option (the "Option")
to purchase up to 2,807,668 shares of Suburban Bancshares Common Stock at an
exercise price of $2.313 per share payable in cash as provided in Section 4;
provided, however, that in the event Suburban Bancshares issues or agrees to
issue any shares of Suburban Bancshares Common Stock (other than as permitted
under the Plan) at a price less than $2.313 per share (as adjusted pursuant to
Section 6), the exercise price shall be such lesser price.
3. Exercise of Option. (a) Unless Columbia Bancorp shall have breached in
any material respect any covenant or representation contained in the Plan and
such breach has not been cured, Columbia Bancorp may exercise the Option, in
whole or part, at any time or from time to time if a Purchase Event (as defined
below) shall have occurred and be continuing; provided, that to the extent the
Option shall not have been exercised, it shall terminate and be of no further
force and effect upon the earliest to occur of (i) the Effective Date of the
Holding Company Merger, or (ii) the termination of the Plan in accordance with
the provisions thereof prior to the occurrence of a Purchase Event (other than
as a result of a willful breach by Suburban Bancshares of any Specified Covenant
or as a result of failure of Suburban Bancshares' stockholders to approve the
Plan by the vote required under applicable law or under Suburban Bancshares'
66
Charter), or (iii) 12 months after termination of the Plan due to a willful
breach by Suburban Bancshares of any Specified Covenant or failure of Suburban
Bancshares' stockholders to approve the Plan by the vote required under
applicable law or under Suburban Bancshares' Charter; provided, however, that
any purchase of shares upon exercise of the Option shall be subject to
compliance with applicable law, including, without limitation, the Bank Holding
Company Act of 1956, as amended. Any exercise of the Option shall be subject to
compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Suburban Bancshares or Suburban Bank of Maryland
("Suburban Bank"), without having received Columbia Bancorp's prior
written consent, shall have entered into an agreement with any person
(x) to merge or consolidate, or enter into any similar transaction,
except as contemplated in the Plan, (y) to purchase, lease, or
otherwise acquire all or substantially all of the assets of Suburban
Bancshares or Suburban Bank, or (z) to purchase or otherwise acquire
(including by way of merger, consolidation, share exchange, or any
similar transaction) securities representing 15% or more of the voting
power of Suburban Bancshares or Suburban Bank;
(ii) any person (other than Suburban Bancshares or Suburban
Bank in a fiduciary capacity, or Columbia Bancorp or Columbia Bank in
a fiduciary capacity) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 15% or more of the
outstanding shares of Suburban Bancshares Common Stock after the date
hereof (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
regulations promulgated thereunder);
(iii) any person shall have made a bona fide proposal to
Suburban Bancshares by public announcement or written communication
that is or becomes the subject of public disclosure to acquire
Suburban Bancshares or Suburban Bank by merger, consolidation,
purchase of all or substantially all of its assets, or any other
similar transaction, and following such bona fide proposal the
stockholders of Suburban Bancshares vote not to adopt the Plan; or
(iv) Suburban Bancshares shall have willfully breached any
Specified Covenant following a bona fide proposal to Suburban
Bancshares or Suburban Bank to acquire Suburban Bancshares or Suburban
Bank by merger, consolidation, purchase of all or substantially all of
its assets, or any other similar transaction, which breach would
entitle Columbia Bancorp to terminate the Plan (without regard to the
cure periods provided for therein) and such breach shall not have been
cured prior to the Notice Date (as defined below).
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or effected, then all such transactions shall give
rise only to one Purchase Event, which Purchase Event shall be deemed continuing
67
for all purposes hereunder until all such transactions are abandoned. As used in
this Option Agreement, "person" shall have the meanings specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Columbia Bancorp wishes to exercise the Option, it shall
send to Suburban Bancshares a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise, and (ii) a place and date not earlier
than three business days nor later than 60 business days after the Notice Date
for the closing of such purchase ("Closing Date"); provided, that if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such purchase, Columbia Bancorp shall promptly file
the required notice or application for approval and shall expeditiously process
the same and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which any required notification
period has expired or been terminated or such approval has been obtained and any
requisite waiting period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant made by
Suburban Bancshares and contained in Section 5 of the Plan.
4. Payment and Delivery of Certificates. (a) At the closing referred to in
▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ Bancorp shall pay to Suburban Bancshares the aggregate
purchase price for the shares of Suburban Bancshares Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by a wire
transfer to a bank account designated by Suburban Bancshares.
(b) At such closing, simultaneously with the delivery of funds as provided
in subsection (a), Suburban Bancshares shall deliver to Columbia Bancorp a
certificate or certificates representing the number of shares of Suburban
Bancshares Common Stock purchased by Columbia Bancorp, and Columbia Bancorp
shall deliver to Suburban Bancshares a letter agreeing that Columbia Bancorp
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for Suburban Bancshares Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO CERTAIN PROVISIONS OF A STOCK OPTION AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND SUBURBAN BANCSHARES, INC. ("SUBURBAN
BANCSHARES") AND TO RESALE RESTRICTIONS ARISING UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF SUBURBAN BANCSHARES. A COPY OF SUCH AGREEMENT WILL
BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
SUBURBAN BANCSHARES OF A WRITTEN REQUEST."
68
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Columbia Bancorp
shall have delivered to Suburban Bancshares a copy of a letter from the staff of
the Securities and Exchange Commission, or an opinion of counsel, in form and
substance satisfactory to Suburban Bancshares, to the effect that such legend is
not required for purposes of the Securities Act of 1933, as amended (the
"Securities Act").
5. Representations. Suburban Bancshares represents, warrants, and covenants
to Columbia Bancorp as follows:
(a) Suburban Bancshares shall at all times maintain sufficient
authorized but unissued shares of Suburban Bancshares Common Stock so that the
Option may be exercised without authorization of additional shares of Suburban
Bancshares Common Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of
the Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid, and nonassessable.
6. Adjustment Upon Changes in Capitalization. In the event of any change in
Suburban Bancshares Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, exchanges of shares, or the like, the
type and number of shares subject to the Option, and the purchase price per
share, as the case may be, shall be adjusted appropriately. In the event that
any additional shares of Suburban Bancshares Common Stock are issued or
otherwise become outstanding after the date of this Option Agreement (other than
pursuant to this Option Agreement), the number of shares of Suburban Bancshares
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Suburban Bancshares Common
Stock then issued and outstanding without giving effect to any shares subject or
issued pursuant to the Option. Nothing contained in this Section 6 shall be
deemed to authorize Suburban Bancshares to breach any provision of the Plan.
7. Registration Rights. If requested by Columbia Bancorp, Suburban
Bancshares shall as expeditiously as possible file a registration statement on a
form of general use under the Securities Act if necessary in order to permit the
sale or other disposition of the shares of Suburban Bancshares Common Stock that
have been acquired upon exercise of the Option in accordance with the intended
method of sale or other disposition requested by Columbia Bancorp. Columbia
Bancorp shall provide all information reasonably requested by Suburban
Bancshares for inclusion in any registration statement to be filed hereunder.
Suburban Bancshares will use its best efforts to cause such registration
statement first to become effective and then to remain effective for such period
not in excess of 270 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. Only one registration may be effected under this Section 7 at
Suburban Bancshares' expense, and which shall not include underwriting
69
commissions and the fees and disbursements of Columbia Bancorp's counsel
attributable to the registration of such Suburban Bancshares Common Stock. The
filing of any registration statement hereunder may be delayed for such period of
time as may reasonably be required to facilitate any public distribution by
Suburban Bancshares of Suburban Bancshares Common Stock. If requested by
Columbia Bancorp, in connection with any such registration, Suburban Bancshares
will become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities, and other agreements customarily
included in such underwriting agreements. Upon receiving any request from
Columbia Bancorp or assignee thereof under this Section 7, Suburban Bancshares
agrees to send a copy thereof to Columbia Bancorp and to any assignee thereof
known to Suburban Bancshares, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
8. Severability. If any term, provision, covenant, or restriction contained
in this Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, and covenants, and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no way
be affected, impaired, or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit the holder to
acquire the full number of shares of Suburban Bancshares Common Stock provided
in Section 2 (as adjusted pursuant to Section 6), it is the express intention of
Suburban Bancshares to allow the holder to acquire such lesser number of shares
as may be permissible, without any amendment or modification hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants, and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
this Option Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Purchase Event shall have occurred and be
continuing Columbia Bancorp may assign in whole or in part its rights and
obligations hereunder; provided, however, that to the extent required by
70
applicable regulatory authorities, Columbia Bancorp may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the voting shares of Suburban Bancshares, (iii) an assignment to a
single party (e.g., a broker or investment banker) for the purpose of conducting
a widely dispersed public distribution on Columbia Bancorp's behalf, or (iv) any
other manner approved by applicable regulatory authorities.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the address provided for in or pursuant to Section 15 of the Plan.
(e) Counterparts. This Option Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
agreements made and entirely to be performed within such state and such federal
laws as may be applicable.
71
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
SUBURBAN BANCSHARES, INC.
By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman of the Board
and Chief Executive Officer
COLUMBIA BANCORP
By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
72
APPENDIX IV
FORM OF STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Option Agreement") dated as of September
28, 1999, between SUBURBAN BANCSHARES, INC. ("Suburban Bancshares"), a Delaware
corporation, and COLUMBIA BANCORP ("Columbia Bancorp"), a Maryland corporation,
recites and provides:
A. The Board of Directors of Suburban Bancshares and Columbia Bancorp have
approved a Plan and Agreement to Merge dated September 28, 1999 (the "Plan")
providing for the merger (the "Holding Company Merger") of Suburban Bancshares
with and into Columbia Bancorp.
B. As a condition to and as consideration for Suburban Bancshares' entry
into the Plan and to induce such entry, Columbia Bancorp has agreed to grant to
Suburban Bancshares the option set forth herein to purchase authorized but
unissued shares of Columbia Bancorp Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. Capitalized terms defined in the Plan and used herein shall
have the same meanings as in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Columbia Bancorp hereby grants to Suburban Bancshares an option (the "Option")
to purchase up to 497,140 shares of Columbia Bancorp Common Stock at an exercise
price of $13.063 per share payable in cash as provided in Section 4; provided,
however, that in the event Columbia Bancorp issues or agrees to issue any shares
of Columbia Bancorp Common Stock (other than as permitted under the Plan) at a
price less than $13.063 per share (as adjusted pursuant to Section 6), the
exercise price shall be such lesser price.
3. Exercise of Option. (a) Unless Suburban Bancshares shall have breached
in any material respect any covenant or representation contained in the Plan and
such breach has not been cured, Suburban Bancshares may exercise the Option, in
whole or part, at any time or from time to time if a Purchase Event (as defined
below) shall have occurred and be continuing; provided, that to the extent the
Option shall not have been exercised, it shall terminate and be of no further
force and effect upon the earliest to occur of (i) the Effective Date of the
Holding Company Merger, or (ii) the termination of the Plan in accordance with
the provisions thereof prior to the occurrence of a Purchase Event (other than
as a result of a willful breach by Columbia Bancorp of any Specified Covenant or
as a result of failure of Columbia Bancorp's stockholders to approve the Plan by
the vote required under applicable law or under Columbia Bancorp's Charter), or
73
(iii) 12 months after termination of the Plan due to a willful breach by
Columbia Bancorp of any Specified Covenant or failure of Columbia Bancorp's
stockholders to approve the Plan by the vote required under applicable law or
under Columbia Bancorp's Charter; provided, however, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Bank Holding Company Act of 1956, as amended.
Any exercise of the Option shall be subject to compliance with applicable
provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Columbia Bancorp or The Columbia Bank ("Columbia Bank"),
without having received Suburban Bancshares' prior written consent,
shall have entered into an agreement with any person (x) to merge or
consolidate, or enter into any similar transaction, except as
contemplated in the Plan, (y) to purchase, lease, or otherwise acquire
all or substantially all of the assets of Columbia Bancorp or Columbia
Bank, or (z) to purchase or otherwise acquire (including by way of
merger, consolidation, share exchange, or any similar transaction)
securities representing 15% or more of the voting power of Columbia
Bancorp or Columbia Bank;
(ii) any person (other than Columbia Bancorp or Columbia
Bank in a fiduciary capacity, or Suburban Bancshares or Columbia Bank
in a fiduciary capacity) shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 15% or more of the
outstanding shares of Columbia Bancorp Common Stock after the date
hereof (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the
regulations promulgated thereunder);
(iii) any person shall have made a bona fide proposal to
Columbia Bancorp by public announcement or written communication that
is or becomes the subject of public disclosure to acquire Columbia
Bancorp or Columbia Bank by merger, consolidation, purchase of all or
substantially all of its assets, or any other similar transaction, and
following such bona fide proposal the stockholders of Columbia Bancorp
vote not to adopt the Plan; or
(iv) Columbia Bancorp shall have willfully breached any
Specified Covenant following a bona fide proposal to Columbia Bancorp
or Columbia Bank to acquire Columbia Bancorp or Columbia Bank by
merger, consolidation, purchase of all or substantially all of its
assets, or any other similar transaction, which breach would entitle
Suburban Bancshares to terminate the Plan (without regard to the cure
periods provided for therein) and such breach shall not have been
cured prior to the Notice Date (as defined below).
If more than one of the transactions giving rise to a
Purchase Event under this Section 3(b) is undertaken or effected, then
all such transactions shall give rise only to one Purchase Event,
74
which Purchase Event shall be deemed continuing for all purposes
hereunder until all such transactions are abandoned. As used in this
Option Agreement, "person" shall have the meanings specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Suburban Bancshares wishes to exercise the Option, it
shall send to Columbia Bancorp a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise, and (ii) a place and date not earlier
than three business days nor later than 60 business days after the Notice Date
for the closing of such purchase ("Closing Date"); provided, that if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such purchase, Suburban Bancshares shall promptly
file the required notice or application for approval and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
period has expired or been terminated or such approval has been obtained and any
requisite waiting period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant made by
Columbia Bancorp and contained in Section 6 of the Plan.
4. Payment and Delivery of Certificates. (a) At the closing referred to in
Section 3, Suburban Bancshares shall pay to Columbia Bancorp the aggregate
purchase price for the shares of Columbia Bancorp Common Stock purchased
pursuant to the exercise of the Option in immediately available funds by a wire
transfer to a bank account designated by Columbia Bancorp.
(b) At such closing, simultaneously with the delivery of funds as
provided in subsection (a), Columbia Bancorp shall deliver to Suburban
Bancshares a certificate or certificates representing the number of shares of
Columbia Bancorp Common Stock purchased by Suburban Bancshares, and Suburban
Bancshares shall deliver to Columbia Bancorp a letter agreeing that Suburban
Bancshares will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Option Agreement.
(c) Certificates for Columbia Bancorp Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO CERTAIN PROVISIONS OF A STOCK OPTION AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND COLUMBIA BANCORP ("COLUMBIA BANCORP") AND
TO RESALE RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF COLUMBIA BANCORP. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
75
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY COLUMBIA BANCORP OF A
WRITTEN REQUEST."
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Suburban Bancshares
shall have delivered to Columbia Bancorp a copy of a letter from the staff of
the Securities and Exchange Commission, or an opinion of counsel, in form and
substance satisfactory to Columbia Bancorp, to the effect that such legend is
not required for purposes of the Securities Act of 1933, as amended (the
"Securities Act").
5. Representations. Columbia Bancorp represents, warrants, and covenants to
Suburban Bancshares as follows:
(a) Columbia Bancorp shall at all times maintain sufficient authorized
but unissued shares of Columbia Bancorp Common Stock so that the Option may be
exercised without authorization of additional shares of Columbia Bancorp Common
Stock.
(b) The shares to be issued upon due exercise, in whole or in part, of
the Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid, and nonassessable.
6. Adjustment Upon Changes in Capitalization. In the event of any change in
Columbia Bancorp Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares, or the like, the type and
number of shares subject to the Option, and the purchase price per share, as the
case may be, shall be adjusted appropriately. In the event that any additional
shares of Columbia Bancorp Common Stock are issued or otherwise become
outstanding after the date of this Option Agreement (other than pursuant to this
Option Agreement), the number of shares of Columbia Bancorp Common Stock subject
to the Option shall be adjusted so that, after such issuance, it equals 9.936%
of the number of shares of Columbia Bancorp Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 6 shall be deemed to authorize
Columbia Bancorp to breach any provision of the Plan.
7. Registration Rights. If requested by Suburban Bancshares, Columbia
Bancorp shall as expeditiously as possible file a registration statement on a
form of general use under the Securities Act if necessary in order to permit the
sale or other disposition of the shares of Columbia Bancorp Common Stock that
have been acquired upon exercise of the Option in accordance with the intended
method of sale or other disposition requested by Suburban Bancshares. Suburban
Bancshares shall provide all information reasonably requested by Columbia
Bancorp for inclusion in any registration statement to be filed hereunder.
Columbia Bancorp will use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 270 days from the day such registration statement first becomes
76
effective as may be reasonably necessary to effect such sales or other
dispositions. Only one registration may be effected under this Section 7 at
Columbia Bancorp's expense, and which shall not include underwriting commissions
and the fees and disbursements of Suburban Bancshares' counsel attributable to
the registration of such Columbia Bancorp Common Stock. The filing of any
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by Columbia Bancorp
of Columbia Bancorp Common Stock. If requested by Suburban Bancshares, in
connection with any such registration, Columbia Bancorp will become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities, and other agreements customarily included in such underwriting
agreements. Upon receiving any request from Suburban Bancshares or assignee
thereof under this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ Bancorp agrees to send a copy thereof to
Suburban Bancshares and to any assignee thereof known to Columbia Bancorp, in
each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies.
8. Severability. If any term, provision, covenant, or restriction contained
in this Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, and covenants, and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no way
be affected, impaired, or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit the holder to
acquire the full number of shares of Columbia Bancorp Common Stock provided in
Section 2 (as adjusted pursuant to Section 6), it is the express intention of
Columbia Bancorp to allow the holder to acquire such lesser number of shares as
may be permissible, without any amendment or modification hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants, and
counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
this Option Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral. The terms
and conditions of this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
77
party, except that in the event a Purchase Event shall have occurred and be
continuing Suburban Bancshares may assign in whole or in part its rights and
obligations hereunder; provided, however, that to the extent required by
applicable regulatory authorities, Suburban Bancshares may not assign its rights
under the Option except in (i) a widely dispersed public distribution, (ii) a
private placement in which no one party acquires the right to purchase in excess
of 2% of the voting shares of Columbia Bancorp, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on Suburban Bancshares' behalf, or (iv) any
other manner approved by applicable regulatory authorities.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the address provided for in or pursuant to Section 15 of the Plan.
(e) Counterparts. This Option Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland applicable to
agreements made and entirely to be performed within such state and such federal
laws as may be applicable.
78
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
SUBURBAN BANCSHARES, INC.
By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman of the Board
and Chief Executive Officer
COLUMBIA BANCORP
By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
79
APPENDIX V
MEMORANDUM TO PERSONS DEEMED TO BE
AFFILIATED PERSONS
September 28, 1999
This memorandum summarizes certain technical requirements of the federal
securities laws and of the accounting rules relating to treatment as a
pooling-of-interests which will apply following completion of the combination of
SUBURBAN BANCSHARES, INC. ("Suburban Bancshares") by COLUMBIA BANCORP ("Columbia
Bancorp") by effecting the merger of Suburban Bancshares with and into Columbia
Bancorp (the "Holding Company Merger").
Pursuant to the Plan and Agreement to Merge dated as of September 28, 1999
(the "Plan"), shares of the Common Stock of Columbia Bancorp will be issued to
the stockholders of Suburban Bancshares for each issued and outstanding share of
Common Stock of Suburban Bancshares. Columbia Bancorp will file a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act")
with the Securities and Exchange Commission (the "SEC") to register shares of
its Common Stock to be issued in connection with the Holding Company Merger.
Under Section 5.10 of the Plan, Suburban Bancshares has agreed to deliver
to Columbia Bancorp written letter agreements (the "Affiliate Agreements") from
each of the officers and directors of Suburban Bancshares (and has agreed to use
its best efforts to obtain and deliver an Affiliate Agreement from each
stockholder of Suburban Bancshares who may be deemed to be an "affiliate" under
the rules of the SEC). Under the terms of the Affiliate Agreements, each such
officer, director or stockholder is to acknowledge and agree to abide by all
limitations imposed by the Securities 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 the Common Stock of Columbia Bancorp to be received
by such person pursuant to the Plan. Under Section 5.11 of the Plan, Suburban
Bancshares has agreed to use its best efforts not to permit any of the
directors, officers, employees, stockholders, agents, consultants or other
representatives of Suburban Bancshares, Suburban Bank of Maryland, or any of
Suburban Bancshares' other subsidiaries to take any action that would preclude
Columbia Bancorp from treating the Mergers as a "pooling-of-interests" for
financial reporting purposes. The purpose of this memorandum is to more fully
describe the resale restrictions imposed by the Securities Act and by all rules,
regulations and releases promulgated thereunder and the accounting rules
relating to the treatment of the Holding Company Merger as a
pooling-of-interests.
Resale Restrictions Imposed by Subparagraph (d) of SEC Rule 145.
For the one-year period following the effective date of the Holding Company
Merger, a person who is an affiliate of Suburban Bancshares at the time of the
80
Holding Company Merger may dispose of his shares of the Common Stock of Columbia
Bancorp only pursuant to SEC Rule 145. The limitations are as follows:
1. Such sale must be effected (a) in transactions directly with a
market maker or (b) in unsolicited brokerage transactions (i.e.,
neither you nor the broker handling the sale of your shares may
solicit a purchaser for the shares being sold). As there are usually a
number of market makers for the Common Stock of Columbia Bancorp, this
requirement should not impair your ability to find a purchaser. In
each case it is quite important to let your broker know that the sale
is to be made under SEC Rule 145; otherwise, compliance with the
restrictions will not be assured.
2. The rule also restricts the number of shares which may be sold
during any three-month period. The rule would permit up to 1% of the
outstanding shares of the Common Stock of Columbia Bancorp to be sold
by each affiliate during any three-month period.
3. The rule requires current public information on Columbia
Bancorp to be available at the time of your sales. Columbia Bancorp is
required by law to file with the SEC reports which are designed to
present on a current basis the affairs of Columbia Bancorp. The filing
of these reports will satisfy the current public information
requirements. Since it is possible, however, that a required filing
may be late, at the time of any sale you should check with the
Secretary of Columbia Bancorp to ascertain whether public information
on Columbia Bancorp is then available. The Secretary of Columbia
Bancorp is ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., whose telephone number is (401)
418-8656.
After the one-year period has run, so long as (a) you are not an affiliate
of Columbia Bancorp (that is, not a major stockholder, director, or principal
officer of Columbia Bancorp) at the time of the sale, (b) Columbia Bancorp
continues to be required to file certain periodic reports with the SEC, and (c)
all such reports required to be filed in the 12 months prior to your sale have
been filed, there will be no restriction on the sale of the shares of the Common
Stock of Columbia Bancorp. Prior to a contemplated sale you should check with
the General Counsel of Columbia Bancorp to determine if requirements (b) and (c)
have been met. In the unlikely event that the three requirements set forth above
are not met at the time of your sale, the procedures for sales consummated
before the end of the one-year period would still apply.
After two years from the Effective Date of the Holding Company Merger, so
long as you are not, at the time of sale, and have not been during the preceding
three months, an affiliate of Columbia Bancorp, you may sell your shares of the
Common Stock of Columbia Bancorp with no restrictions.
81
Restrictions Imposed by Accounting Rules Regarding Treatment as a
Pooling-of-Interests.
In order for the Mergers to be treated as a pooling-of-interests for
accounting purposes, affiliates of Columbia Bancorp and affiliates of Suburban
Bancshares are required to observe certain restrictions on disposition of their
shares of the Common Stock of Columbia Bancorp and of the Common Stock of
Suburban Bancshares. Specifically, such affiliates must agree not to sell,
pledge, transfer or otherwise dispose of any shares of the Common Stock of
Columbia Bancorp or any shares of the Common Stock of Suburban Bancshares during
the 30-day period prior to the effective date of the Holding Company Merger and
until after such time as results covering at least 30 days of combined
operations of Columbia Bancorp and Suburban Bancshares after the effective date
of the Mergers have been published by Columbia Bancorp in the form of a
quarterly earnings report, an effective registration statement filed with the
SEC, a report to the SEC on Forms 10-K, 10-Q or 8-K, or any other public
issuance which includes such combined results or operations.
To signify your consent to these restrictions a copy of an Undertaking and
Agreement is attached hereto and is to be executed by you (and where any such
shares are owned jointly, by the joint owner or owners) and returned to Suburban
Bancshares, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Chairman of the Board and Chief Executive
Officer.
82
UNDERTAKING AND AGREEMENT
The undersigned has received a copy of a memorandum dated September 28,
1999 concerning the provisions of the federal securities laws and certain
accounting rules which relate to the Common Stock of SUBURBAN BANCSHARES, INC.
("Suburban Bancshares") and to resales of shares of the Common Stock of Columbia
Bancorp to be received by the undersigned in connection with the Holding Company
Merger of Suburban Bancshares into Columbia Bancorp. The undersigned hereby
undertakes to comply fully with the provisions of the federal securities laws as
outlined in the memorandum and hereby agrees to the additional restrictions on
sales of the Common Stock of Suburban Bancshares and resale of shares of the
Common Stock of Columbia Bancorp outlined in the paragraph entitled
"Restrictions Imposed by Accounting Rules Regarding Treatment as a
Pooling-of-Interests."
In Witness Whereof, I have hereunto signed my name as of September 28,
1999.
--------------------------, as joint owner
--------------------------, as joint owner
--------------------------, as joint owner
83
APPENDIX VI
MEMORANDUM TO PERSONS DEEMED TO BE
AFFILIATED PERSONS
September 28, 1999
This memorandum summarizes certain technical requirements of the federal
securities laws and of the accounting rules relating to treatment as a
pooling-of-interests which will apply following completion of the combination of
SUBURBAN BANCSHARES ("Suburban Bancshares") and COLUMBIA BANCORP ("Columbia
Bancorp") by effecting the merger of Suburban Bancshares with and into Columbia
Bancorp (the "Holding Company Merger").
Pursuant to the Plan and Agreement to Merge dated as of September 28, 1999
(the "Plan"), shares of the Common Stock of Columbia Bancorp will be issued to
the stockholders of Suburban Bancshares for each issued and outstanding share of
Common Stock of Suburban Bancshares. Columbia Bancorp will file a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act")
with the Securities and Exchange Commission (the "SEC") to register shares of
its Common Stock to be issued in connection with the Holding Company Merger.
Under Section 6.10 of the Plan, Columbia Bancorp has agreed to deliver to
Suburban Bancshares written letter agreements (the "Affiliate Agreements") from
each of the officers and directors of Columbia Bancorp (and has agreed to use
its best efforts to obtain and deliver an Affiliate Agreement from each
stockholder of Columbia Bancorp who may be deemed to be an "affiliate" under the
rules of the SEC). Under Section 6.11 of the Plan, Columbia Bancorp has agreed
to use its best efforts not to permit any of the directors, officers, employees,
stockholders, agents, consultants or other representatives of Columbia Bancorp,
The Columbia Bank, or any of Columbia Bancorp's other subsidiaries to take any
action that would preclude Columbia Bancorp from treating the Mergers as a
"pooling-of-interests" for financial reporting purposes. The purpose of this
memorandum is to more fully describe the accounting rules relating to the
treatment of the Mergers as a pooling-of-interests.
Restrictions Imposed by Accounting Rules Regarding Treatment as a
Pooling-of-Interests.
In order for the Mergers to be treated as a pooling-of-interests for
accounting purposes, affiliates of Columbia Bancorp and affiliates of Suburban
Bancshares are required to observe certain restrictions on disposition of their
shares of the Common Stock of Columbia Bancorp and of the Common Stock of
Suburban Bancshares. Specifically, such affiliates must agree not to sell,
pledge, transfer or otherwise dispose of any shares of the Common Stock of
Columbia Bancorp or any shares of the Common Stock of Suburban Bancshares during
the 30-day period prior to the effective date of the Mergers and until after
84
such time as results covering at least 30 days of combined operations of
Columbia Bancorp and Suburban Bancshares after the effective date of the Mergers
have been published by Columbia Bancorp in the form of a quarterly earnings
report, an effective registration statement filed with the SEC, a report to the
SEC on Forms 10-K, 10-Q or 8-K, or any other public issuance which includes such
combined results or operations.
To signify your consent to these restrictions a copy of an Undertaking and
Agreement is attached hereto and is to be executed by you (and where any such
shares are owned jointly, by the joint owner or owners) and returned to Columbia
Bancorp, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention
of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Secretary.
85
UNDERTAKING AND AGREEMENT
The undersigned has received a copy of a memorandum dated September 28,
1999 concerning the provisions of certain accounting rules which relate to the
Common Stock of COLUMBIA BANCORP in connection with the Holding Company Merger
of Suburban Bancshares into Columbia Bancorp. The undersigned hereby undertakes
and agrees to comply fully to the restrictions on sales of the Common Stock
outlined in the paragraph entitled "Restrictions Imposed by Accounting Rules
Regarding Treatment as a Pooling-of-Interests."
In Witness Whereof, I have hereunto signed my name as of September 28,
1999.
--------------------------, as joint owner
--------------------------, as joint owner
--------------------------, as joint owner
86
APPENDIX VII
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this "Agreement") dated as of September 28, 1999,
between COLUMBIA BANCORP, a Maryland corporation and registered bank holding
company ("Columbia Bancorp"), and each of the individuals listed on Schedule A
attached hereto (collectively, the "Suburban Bancshares Stockholders").
W I T N E S S E T H:
WHEREAS, the Suburban Bancshares Stockholders (i) collectively possess the
sole or joint right to vote, or direct the voting of, an aggregate of
___________ shares of common stock, par value $.01 per share (the "Shares"), of
Suburban Bancshares, Inc., a Delaware corporation and registered bank holding
company ("Suburban Bancshares"), which constitute approximately _____ % of the
outstanding capital stock of Suburban Bancshares, and (ii) individually possess
the right to vote, or to direct the voting of, the number of Shares set forth
opposite such Suburban Bancshares Stockholder's name on Schedule A hereto; and
WHEREAS, the Suburban Bancshares Stockholders (i) collectively possess the
sole or joint power to dispose of, or to direct the disposition of, an aggregate
of ___________ Shares, which constitute approximately _____ % of the outstanding
capital stock of Suburban Bancshares, and (ii) individually possess the power to
dispose of, or direct the disposition of, the number of Shares set forth
opposite such Suburban Bancshares Stockholder's name on Schedule A hereto; and
WHEREAS, Columbia Bancorp has entered into a Plan and Agreement to Merge
with Suburban Bancshares, dated as of the business day immediately prior to the
date hereof (the "Plan"), pursuant to which Suburban Bancshares would merge with
and into Columbia Bancorp (the "Holding Company Merger"), with shares of the
Common Stock of Columbia Bancorp to be issued to the stockholders of Suburban
Bancshares; and
WHEREAS, pursuant to Section 5.10 of the Plan, Suburban Bancshares has
covenanted to obtain agreements from each of its officers and directors (and to
use commercially reasonable efforts to obtain agreements from any such other
person identified herein as a Suburban Bancshares Stockholder) in which the
officers and directors of Suburban Bancshares (in their capacity as Suburban
Bancshares Stockholders) and the Suburban Bancshares Stockholders would agree to
support the Holding Company Merger; and the Suburban Bancshares Stockholders
have in accordance with such covenant agreed to support the Holding Company
Merger.
NOW, THEREFORE, to induce Columbia Bancorp to enter into the Plan and in
consideration of the mutual covenants and agreements set forth herein and in the
Plan and the mutual benefits to be derived herefrom and therefrom, the parties
agree as follows:
87
1. Representations of the Suburban Bancshares Stockholders. Each of the
Suburban Bancshares Stockholders, severally, and not jointly, represents that:
(a)(1) such Suburban Bancshares Stockholder possesses the sole or
joint right to vote, or direct the voting of, all of the Shares set
forth on Schedule A opposite the Suburban Bancshares Stockholder's
name, (2) such number of Shares constitutes all of the Shares with
respect to which the Suburban Bancshares Stockholder possesses the
sole or joint right to vote, or direct the voting of, as the case may
be, and (3) except as to Shares held only under a power of attorney or
as guardian or custodian, such Suburban Bancshares Stockholder has
good and merchantable title to all of the Shares indicated on said
list opposite the Suburban Bancshares Stockholder's name, free of all
restrictions and encumbrances of every kind and character, except as
indicated on Schedule A.
(b)(1) such Suburban Bancshares Stockholder possesses the sole or
joint power to dispose of, or direct the disposition of, the Shares
set forth on Schedule A opposite the Suburban Bancshares Stockholder's
name, (2) such number of Shares constitutes all of the Shares with
respect to which the Suburban Bancshares Stockholder possesses or will
possess the sole or joint power to dispose of or direct the
disposition of, and (3) except as to Shares held only under a power of
attorney, such Suburban Bancshares Stockholder has good and
merchantable title to all of the Shares indicated on said list
opposite the Suburban Bancshares Stockholder's name free of all
restrictions and encumbrances of any kind or character except as
indicated on Schedule A.
(c) such Suburban Bancshares Stockholder does not own, of record
or beneficially, any Shares that are not reflected on Schedule A. For
the purposes of this Agreement, beneficial ownership has the meaning
set forth in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended.
(d) such Suburban Bancshares Stockholder has full right, power,
and authority to enter into, deliver and perform this Agreement; this
Agreement has been duly executed and delivered by such Suburban
Bancshares Stockholder; and this Agreement constitutes the legal,
valid, and binding obligation of the Suburban Bancshares Stockholder,
and is enforceable in accordance with its terms.
2. Covenants of the Suburban Bancshares Stockholders. Each of the Suburban
Bancshares Stockholders, severally and not jointly, covenants as follows:
(a) Restrictions on Transfer. With respect to Shares listed on
Schedule A, during the term of this Agreement, such Suburban
Bancshares Stockholder shall not voluntarily pledge, hypothecate,
grant a security interest in, sell, transfer, or otherwise dispose of
88
or encumber any of such Shares and will not enter into any agreement,
arrangement, or understanding (other than a proxy for the purpose of
voting his or her Shares in accordance with Subparagraph 2(c) hereof)
which would, during that term (i) restrict, (ii) establish a right of
first refusal to, or (iii) otherwise relate to the transfer or voting
of such Shares; provided, however, this restriction shall not apply to
a transfer of any of the Shares by the Suburban Bancshares Stockholder
to his or her spouse, children, or grandchildren, subject to the
conditions that any transferee, recipient, or custodian of any such
transferee or recipient must execute an agreement substantially in the
form of this Agreement in a form satisfactory to Columbia Bancorp, and
Schedule A hereto may be revised by Columbia Bancorp to reflect such
transfer.
(b) Other Restrictions. During the term of this Agreement, such
Suburban Bancshares Stockholder, as a Suburban Bancshares Stockholder,
shall not, directly or indirectly, solicit, initiate, or encourage
inquiries or proposals from, or participate in any discussions or
negotiations with, or provide any information to, any individual,
corporation, partnership, or other person, entity, or group (other
than Columbia Bancorp, any of its subsidiaries, and their respective
officers, employees, representatives, and agents) concerning any sale
of assets, sale of shares of capital stock, merger, consolidation,
share exchange, or similar transactions involving Suburban Bancshares.
Such Suburban Bancshares Stockholder shall promptly advise Columbia
Bancorp of, and communicate to Columbia Bancorp the terms of, any such
inquiry or proposal addressed either to such Suburban Bancshares
Stockholder or to Suburban Bancshares that such Suburban Bancshares
Stockholder receives or of which such Suburban Bancshares Stockholder
has knowledge.
(c) Holding Company Merger. With respect to the Shares listed on
Schedule A pursuant to Subparagraph 1(a) hereof, each of the Suburban
Bancshares Stockholders shall vote such Shares to ratify and confirm
the Plan and the Holding Company Merger and the transactions
contemplated thereby. Each of the Suburban Bancshares Stockholders, as
a Suburban Bancshares Stockholder, further agrees to use all
commercially reasonable efforts to cause the Mergers to be effected.
(d) Additional Shares. The provisions of subparagraphs (a) and
(c) above shall apply to all Shares currently owned and hereafter
acquired, of record or beneficially, by each of the Suburban
Bancshares Stockholders.
3. Termination. This Agreement shall terminate upon the termination of the
Plan.
4. Governing Law. This Agreement shall in all respects be governed by and
construed under the laws of Maryland, all rights and remedies being governed by
such laws.
89
5. Benefit of Agreement. This Agreement shall be binding upon and inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective personal representatives, successors, and assigns, except that
neither party may transfer or assign any of its respective rights or obligations
hereunder without the prior written consent of the other party or, if by
Columbia Bancorp, in accordance with the Plan.
6. Counterparts. For convenience of the parties hereto, this Agreement may
be executed in several counterparts, each of which shall be deemed an original,
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Columbia Bancorp and the Suburban Bancshares
Stockholders have caused this Agreement to be duly executed as of the day and
year first above written.
COLUMBIA BANCORP
By:-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
SUBURBAN BANCSHARES STOCKHOLDERS:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
90
SCHEDULE A
Name Number of Shares Number of Shares Number of Shares As Number of Shares As Encumbrance
As to which As to which to which Holder Has to Which Holder Has
Holder has Sole Holder has Joint Direct or Indirect Sole or Shared Power to
Power to Vote Power to Vote Control of Power to Dispose or Direct
Vote Disposition
* Pending confirmation on __________.
91
APPENDIX VIII
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this "Agreement") dated as of September 28, 1999,
between SUBURBAN BANCSHARES INC., a Delaware corporation and registered bank
holding company ("Suburban Bancshares"), and each of the individuals listed on
Schedule A attached hereto (collectively, the "Columbia Bancorp Stockholders").
W I T N E S S E T H:
WHEREAS, the Columbia Bancorp Stockholders (i) collectively possess the
sole or joint right to vote, or direct the voting of, an aggregate of
___________ shares of common stock, par value $.01 per share (the "Shares"), of
Columbia Bancorp, a Maryland corporation and registered bank holding company
("Columbia Bancorp"), which constitute approximately _____ % of the outstanding
capital stock of Columbia Bancorp, and (ii) individually possess the right to
vote, or to direct the voting of, the number of Shares set forth opposite such
Columbia Bancorp Stockholder's name on Schedule A hereto; and
WHEREAS, the Columbia Bancorp Stockholders (i) collectively possess the
sole or joint power to dispose of, or to direct the disposition of, an aggregate
of ___________ Shares, which constitute approximately _____ % of the outstanding
capital stock of Columbia Bancorp, and (ii) individually possess the power to
dispose of, or direct the disposition of, the number of Shares set forth
opposite such Columbia Bancorp Stockholder's name on Schedule A hereto; and
WHEREAS, Columbia Bancorp has entered into a Plan and Agreement to Merge
with Suburban Bancshares, dated as of the business day immediately prior to the
date hereof (the "Plan"), pursuant to which Suburban Bancshares would merge with
and into Columbia Bancorp (the "Holding Company Merger"), with shares of the
Common Stock of Columbia Bancorp to be issued to the stockholders of Suburban
Bancshares; and
WHEREAS, pursuant to Section 6.10 of the Plan, Columbia Bancorp has
covenanted to obtain agreements from each of its officers and directors (and to
use commercially reasonable efforts to obtain agreements from any such other
person identified herein as a Columbia Bancorp Stockholder) in which the
officers and directors of Columbia Bancorp (in their capacity as Columbia
Bancorp Stockholders) and the Columbia Bancorp Stockholders would agree to
support the Holding Company Merger; and the Columbia Bancorp Stockholders have
in accordance with such covenant agreed to support the Holding Company Merger.
NOW, THEREFORE, to induce Columbia Bancorp to enter into the Plan and in
consideration of the mutual covenants and agreements set forth herein and in the
Plan and the mutual benefits to be derived herefrom and therefrom, the parties
agree as follows:
1. Representations of the Columbia Bancorp Stockholders. Each of the
Columbia Bancorp Stockholders, severally, and not jointly, represents that:
92
(a)(1) such Columbia Bancorp Stockholder possesses the sole or
joint right to vote, or direct the voting of, all of the Shares set
forth on Schedule A opposite the Columbia Bancorp Stockholder's name,
(2) such number of Shares constitutes all of the Shares with respect
to which the Columbia Bancorp Stockholder possesses the sole or joint
right to vote, or direct the voting of, as the case may be, and (3)
except as to Shares held only under a power of attorney or as guardian
or custodian, such Columbia Bancorp Stockholder has good and
merchantable title to all of the Shares indicated on said list
opposite the Columbia Bancorp Stockholder's name, free of all
restrictions and encumbrances of every kind and character, except as
indicated on Schedule A.
(b)(1) such Columbia Bancorp Stockholder possesses the sole or
joint power to dispose of, or direct the disposition of, the Shares
set forth on Schedule A opposite the Columbia Bancorp Stockholder's
name, (2) such number of Shares constitutes all of the Shares with
respect to which the Columbia Bancorp Stockholder possesses or will
possess the sole or joint power to dispose of or direct the
disposition of, and (3) except as to Shares held only under a power of
attorney, such Columbia Bancorp Stockholder has good and merchantable
title to all of the Shares indicated on said list opposite the
Columbia Bancorp Stockholder's name free of all restrictions and
encumbrances of any kind or character except as indicated on Schedule
A.
(c) such Columbia Bancorp Stockholder does not own, of record or
beneficially, any Shares that are not reflected on Schedule A. For the
purposes of this Agreement, beneficial ownership has the meaning set
forth in Rule 13d-3 of the Securities Exchange Act of 1934, as
amended.
(d) such Columbia Bancorp Stockholder has full right, power, and
authority to enter into, deliver and perform this Agreement; this
Agreement has been duly executed and delivered by such Columbia
Bancorp Stockholder; and this Agreement constitutes the legal, valid,
and binding obligation of the Columbia Bancorp Stockholder, and is
enforceable in accordance with its terms.
2. Covenants of the Columbia Bancorp Stockholders. Each of the Columbia
Bancorp Stockholders, severally and not jointly, covenants as follows:
(a) Restrictions on Transfer. With respect to Shares listed on
Schedule A, during the term of this Agreement, such Columbia Bancorp
Stockholder shall not voluntarily pledge, hypothecate, grant a
security interest in, sell, transfer, or otherwise dispose of or
encumber any of such Shares and will not enter into any agreement,
arrangement, or understanding (other than a proxy for the purpose of
voting his or her Shares in accordance with Subparagraph 2(c) hereof)
which would, during that term (i) restrict, (ii) establish a right of
93
first refusal to, or (iii) otherwise relate to the transfer or voting
of such Shares; provided, however, this restriction shall not apply to
a transfer of any of the Shares by the Columbia Bancorp Stockholder to
his or her spouse, children, or grandchildren, subject to the
conditions that any transferee, recipient, or custodian of any such
transferee or recipient must execute an agreement substantially in the
form of this Agreement in a form satisfactory to Columbia Bancorp, and
Schedule A hereto may be revised by Columbia Bancorp to reflect such
transfer.
(b) Other Restrictions. During the term of this Agreement, such
Columbia Bancorp Stockholder, as a Columbia Bancorp Stockholder, shall
not, directly or indirectly, solicit, initiate, or encourage inquiries
or proposals from, or participate in any discussions or negotiations
with, or provide any information to, any individual, corporation,
partnership, or other person, entity, or group (other than Suburban
Bancshares, any of its subsidiaries, and their respective officers,
employees, representatives, and agents) concerning any sale of assets,
sale of shares of capital stock, merger, consolidation, share
exchange, or similar transactions involving Columbia Bancorp. Such
Columbia Bancorp Stockholder shall promptly advise Suburban Bancshares
of, and communicate to Suburban Bancshares the terms of, any such
inquiry or proposal addressed either to such Columbia Bancorp
Stockholder or to Columbia Bancorp that such Columbia Bancorp
Stockholder receives or of which such Columbia Bancorp Stockholder has
knowledge.
(c) Holding Company Merger. With respect to the Shares listed on
Schedule A pursuant to Subparagraph 1(a) hereof, each of the Columbia
Bancorp Stockholders shall vote such Shares to ratify and confirm the
Plan and the Holding Company Merger and the transactions contemplated
thereby. Each of the Columbia Bancorp Stockholders, as a Columbia
Bancorp Stockholder, further agrees to use all commercially reasonable
efforts to cause the Holding Company Merger to be effected.
(d) Additional Shares. The provisions of subparagraphs (a) and
(c) above shall apply to all Shares currently owned and hereafter
acquired, of record or beneficially, by each of the Columbia Bancorp
Stockholders.
3. Termination. This Agreement shall terminate upon the termination of the
Plan.
4. Governing Law. This Agreement shall in all respects be governed by and
construed under the laws of Maryland, all rights and remedies being governed by
such laws.
5. Benefit of Agreement. This Agreement shall be binding upon and inure to
the benefit of, and shall be enforceable by, the parties hereto and their
respective personal representatives, successors, and assigns, except that
neither party may transfer or assign any of its respective rights or obligations
hereunder without the prior written consent of the other party or, if by
Columbia Bancorp, in accordance with the Plan.
94
6. Counterparts. For convenience of the parties hereto, this Agreement may
be executed in several counterparts, each of which shall be deemed an original,
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Suburban Bancshares, Inc. and the Columbia Bancorp
Stockholders have caused this Agreement to be duly executed as of the day and
year first above written.
SUBURBAN BANCSHARES, INC.
By:-------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Chairman of the Board
and Chief Executive Officer
COLUMBIA BANCORP STOCKHOLDERS:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
95
SCHEDULE A
Name Number of Shares Number of Shares Number of Shares As Number of Shares As Encumbrance
As to which As to which to which Holder Has to Which Holder Has
Holder has Sole Holder has Joint Direct or Indirect Sole or Shared Power to
Power to Vote Power to Vote Control of Power to Dispose or Direct
Vote Disposition
* Pending confirmation on __________.
96
APPENDIX IX
FORM OF OPINION OF TAX COUNSEL
(1) The transfer of all of the assets of Suburban Bancshares to
Columbia Bancorp, and the assumption by Columbia Bancorp of the liabilities of
Suburban Bancshares pursuant to the terms of the Plan, will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Code. Suburban
Bancshares and Columbia Bancorp will each be a "party to the reorganization"
within the meaning of Section 368(b) of the Code.
(2) A holder of Suburban Bancshares Common Stock who receives solely
shares of Columbia Bancorp Common Stock in exchange for his Suburban Bancshares
Common Stock (including fractional shares of Columbia Bancorp Common Stock
deemed issued as described below) will not recognize any gain or loss upon the
exchange.
(3) A holder of Suburban Bancshares Common Stock who receives cash in
lieu of a fractional share of Columbia Bancorp Common Stock will be treated as
if he received a fractional share of Columbia Bancorp Common Stock pursuant to
the Holding Company Merger and Columbia Bancorp then redeemed such fractional
share for the cash received. Such a holder will recognize capital 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.
(4) The basis of the Columbia Bancorp Common Stock received by the
Suburban Bancshares stockholders (including fractional shares of Columbia
Bancorp Common Stock deemed issued as described above) will be the same as the
basis of the Suburban Bancshares Common Stock surrendered in exchange therefor.
(5) The holding period of the Columbia Bancorp Common Stock received
by the Suburban Bancshares stockholders will include the period during which the
Suburban Bancshares Common Stock surrendered in exchange therefor was held,
provided that the Suburban Bancshares Common Stock is held as a capital asset in
the hands of the Suburban Bancshares stockholders on the date of the exchange.
(6) No gain or loss will be recognized by Suburban Bancshares upon the
transfer of all of its assets to Columbia Bancorp in exchange for shares of the
Common Stock of Columbia Bancorp and the assumption by Columbia Bancorp of the
liabilities of Suburban Bancshares.
(7) No gain or loss will be recognized by Columbia Bancorp upon the
receipt by Columbia Bancorp of all of the assets of Suburban Bancshares in
exchange for shares of the Common Stock of Columbia Bancorp and the assumption
by Columbia Bancorp of the liabilities of Suburban Bancshares.
97
(8) The basis of each asset of Suburban Bancshares in the hands of
Columbia Bancorp will be the same as the basis of such asset in the hands of
Suburban Bancshares immediately prior to the Holding Company Merger; the holding
period of each such asset in the hands of Columbia Bancorp will include the
periods during which such asset was held by Suburban Bancshares.
(9) No gain or loss will be recognized to the stockholders of Columbia
Bancorp as a result of the transactions contemplated by the Plan.
(10) The accumulated earnings and profits of Suburban Bancshares on
the Effective Date will be added to the accumulated earnings and profits of
Columbia Bancorp and will be available for subsequent distributions of dividends
within the meaning of Section 316 of the Code.
98
APPENDIX X
FORM OF OPINION OF COUNSEL TO SUBURBAN BANCSHARES
(a) Suburban Bancshares has been duly organized and is validly
existing as a corporation under the laws of the State of Delaware, and Suburban
Bank has been duly organized and is validly existing as a banking institution
under the laws of the State of Maryland.
(b) The execution and delivery of the Plan and the Stock Option
Agreement by Suburban Bancshares and the consummation of Suburban Bancshares of
the transactions provided for therein have been duly authorized by all requisite
corporate and stockholder action on the part of Suburban Bancshares. Suburban
Bancshares has the corporate power and corporate authority to execute and
deliver the Plan and the Stock Option Agreement and to consummate the
transactions contemplated thereby.
(c) The Plan and the Stock Option Agreement have been executed and
delivered by Suburban Bancshares and are valid and binding obligations of
Suburban Bancshares, enforceable against Suburban Bancshares in accordance with
their terms, except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or other similar laws now or hereinafter in effect relating to
or affecting the enforcement of creditors' rights generally or the rights of
creditors of insured depository institutions or their holding companies and (ii)
general principles of equity, regardless of whether such enforceability is
considered in a proceeding at law or in equity.
(d) The execution and delivery and performance by Suburban Bancshares
of the Plan and the Stock Option Agreement will not violate the Certificate of
Incorporation or By Laws of Suburban Bancshares.
(e) No consent or approval of, or other action by or filing with, any
court or administrative or governmental body which has not been obtained, taken
or made is required under the Subject Laws (as defined below), or any court
order or judgment specifically applicable to Suburban Bancshares and actually
known to such counsel, for Suburban Bancshares to execute and deliver the Plan
and the Stock Option Agreement and to consummate the transactions provided for
therein. Such counsel need express no opinion, however, as to any such consent,
approval, action or filing which may be required as the result of Columbia
Bancorp's involvement in the transactions contemplated by the Plan and the Stock
Option Agreement because of such entities' legal or regulatory status or because
of other facts specifically pertaining to Columbia Bancorp.
(f) Assuming due authorization of the Holding Company Merger by
Columbia Bancorp and the Columbia Bancorp stockholders, upon the filing of an
Agreement and Articles of Merger with the Maryland State Department of
Assessments and Taxation and the Delaware Secretary of State in accordance with
the Plan, the Holding Company Merger will be effective in accordance with the
laws of the State of Maryland and of the State of Delaware.
99
(g) Assuming due authorization of the Bank Merger by Columbia Bank and
the Columbia Bank stockholders, upon issuance of a Certificate of Merger by the
Maryland Commissioner of Financial Institutions and the filing of an Agreement
of Bank Merger and the Certificate of Merger with and acceptance for record by
the Maryland State Department of Assessments and Taxation in accordance with the
Plan, the Bank Merger will be effective in accordance with the laws of the State
of Maryland.
(h) The Proxy Statement/Prospectus, insofar as it constituted a proxy
statement for the special meeting (the "Special Meeting") of Suburban
Bancshares' stockholders held on _____________, 1999, as of the date thereof,
complied as to form in all material respects to the requirements of the Exchange
Act, and the rules and regulations promulgated thereunder, except that such
counsel need express no opinion as to (i) the financial statements, schedules
and other financial, statistical and tabular data included in or incorporated
into the Proxy Statement/Prospectus, (ii) any document incorporated by reference
into the Proxy Statement/Prospectus, (iii) the exhibits to any document
incorporated by reference into the Proxy Statement/Prospectus, (iv) the
description of the analyses performed by the investment banker in rendering its
fairness opinion, or (v) information relating to Columbia Bancorp or the
Columbia Subsidiaries which was included in the Proxy Statement/Prospectus. Such
counsel need not assume any responsibility for the accuracy, completeness of
fairness of the statements contained in the Proxy Statement/Prospectus or any
documents incorporated by reference therein except as set forth in the paragraph
immediately following this one.
In connection with the Mergers, such counsel shall state that it
participated in conferences with certain officers and other representatives of
Suburban Bancshares and Suburban Bank at which the contents of the Proxy
Statement/Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, fairness or completeness of the statements contained in the Proxy
Statement/Prospectus and made no independent check or verification of the
existence or absence of any matter set forth therein, on the basis of the
foregoing, such counsel shall state that no facts have come to its attention
that leads it to believe that the Proxy Statement/Prospectus as of the date it
was mailed to Suburban Bancshares' stockholders and on the date of the Special
Meeting contemplated thereby, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that such counsel need not express any belief
with respect to (i) the financial statements, schedules and other financial,
statistical and tabular data included in or incorporated into the Proxy
Statement/Prospectus, (ii) the exhibits thereto and the exhibits to any document
incorporated by reference into the Proxy Statement/Prospectus, (iii) the
documents incorporated by reference therein, (iv) the description of the
analyses performed by the investment banker in rendering its fairness opinion,
or (v) any information relating to Columbia Bancorp or the Columbia Subsidiaries
contained therein. In rendering such statement, such counsel may state that it
has served only as special counsel to Suburban Bancshares and Suburban Bank,
that such representation of such entities has been limited to acting as their
special counsel with respect to the Mergers and on certain other unrelated
100
matters on which such counsel has been consulted by the management of Suburban
Bancshares or Suburban Bank, and that such counsel has relied solely upon the
examination and inquiries stated therein.
In rendering such opinion, such counsel may, without independent
verification, assume: (i) the genuineness of all signatures and the authenticity
of all documents submitted to such counsel as originals, the conformity to
original documents of all documents submitted to such counsel as certified,
conformed or reproduction copies, and the authenticity of such originals of such
latter documents; (ii) the execution of such documents, acknowledgment as
indicated thereon and receipt of the consideration recited therein by Columbia
Bancorp, (iii) that Columbia Bancorp has the full power, authority and legal
right under its articles of incorporation and other governing documents and
applicable laws, as the case may be, to execute and to perform its obligations
under all documents executed by it in connection with the transactions
contemplated by the Plan and the Stock Option Agreement; (iv) that the foregoing
documents, in the forms submitted to such counsel for review, have not been
altered or amended in any respect material to such counsel's opinion as stated
herein; (v) that there are no other agreements or understandings among the
parties that would modify the terms of the proposed transactions or the
respective rights or obligations of the parties thereunder; (vi) the accuracy of
the representations and warranties of Suburban Bancshares and Suburban Bank as
set forth in the Plan; (vii) the accuracy of all certifications made available
to such counsel from public officials and officers of Suburban Bancshares and
Suburban Bank on which such counsel is relying in rendering the opinions set
forth above; and (viii) the validity of all laws and regulations applicable to
the transactions contemplated by the Plan and the Stock Option Agreement.
Furthermore, to the extent not inconsistent with the other assumptions,
qualifications and limitations set forth in such counsel's opinion, such
counsel's opinion shall be governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the American Bar Association
Section of Business Law (1991). As a consequence, such opinion shall be subject
to a number of qualifications, exceptions, definitions, limitations on coverage
and other limitations, all as more particularly described in the Accord, and
such counsel's opinion should be read in conjunction therewith. The term "actual
knowledge" when used in such counsel's opinion shall have the meaning set forth
in the Accord. For purposes of the opinion in (e) above, Subject Laws shall mean
the Maryland General Corporation Law, the Delaware General Corporation Law, the
Financial Institutions Article of the Annotated Code of Maryland, and the
Exchange Act, and the rules and regulations promulgated thereunder.
101
APPENDIX XI
FORM OF OPINION OF COUNSEL TO COLUMBIA BANCORP
(a) Columbia Bancorp has been duly organized and is validly existing
as a corporation under the laws of the State of Maryland, and Columbia Bank has
been duly organized and is validly existing as a banking institution under the
laws of the State of Maryland.
(b) The execution and delivery of the Plan and the Stock Option
Agreement by Columbia Bancorp and the consummation by Columbia Bancorp of the
transactions provided for therein have been duly authorized by all requisite
corporate (including stockholder) action on the part of Columbia Bancorp.
Columbia Bancorp has the corporate power and corporate authority to execute and
deliver the Plan and the Stock Option Agreement and to consummate the
transactions contemplated thereby.
(c) The Plan and the Stock Option Agreement have been executed and
delivered by Columbia Bancorp and are valid and binding obligations of Columbia
Bancorp, enforceable against Columbia Bancorp in accordance with their terms,
except to the extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, receivership, conservatorship or other
similar laws now or hereinafter in effect relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of insured
depository institutions or their holding companies and (ii) general principles
of equity, regardless of whether such enforceability is considered in a
proceeding at law or in equity.
(d) The execution, delivery and performance by Columbia Bancorp of the
Plan and the Stock Option Agreement do not violate the Charter or By-Laws of
Columbia Bancorp.
(e) No consent or approval of, or other action by or filing with, any
court or administrative or governmental body which has not been obtained, taken
or made is required under the Subject Laws (as defined below), or any court
order or judgment specifically applicable to Columbia Bancorp and known to such
counsel, for Columbia Bancorp to execute and deliver the Plan and the Stock
Option Agreement and to consummate the transactions provided for therein. Such
counsel need express no opinion, however, as to any such consent, approval,
action or filing which may be required as the result of Suburban Bancshares'
involvement in the transactions contemplated by the Plan and the Stock Option
Agreement because of such entities' legal or regulatory status or because of
other facts specifically pertaining to Suburban Bancshares.
(f) Assuming due authorization of the Holding Company Merger by
Suburban Bancshares and the Suburban Bancshares stockholders, upon the filing of
an Agreement and Articles of Merger with and acceptance for record by the
Maryland State Department of Assessments and Taxation and the Delaware Secretary
of State in accordance with the Plan, the Holding Company Merger will be
effective in accordance with the laws of the State of Maryland and of the State
of Delaware.
102
(g) Assuming due authorization of the Bank Merger by Suburban Bank and
the Suburban Bank stockholders, upon issuance of a Certificate of Merger by the
Maryland Commissioner of Financial Institutions and the filing of an Agreement
of Bank Merger and the Certificate of Merger with and acceptance for record by
the Maryland State Department of Assessments and Taxation in accordance with the
Plan, the Bank Merger will be effective in accordance with the laws of the State
of Maryland.
(h) The Columbia Bancorp Common Stock to be issued in connection with
the Holding Company Merger in accordance with Section 9.2 of the Plan is duly
reserved for issuance, and when so issued, will be duly authorized and validly
issued, fully paid and non-assessable, free of preemptive rights, and free and
clear of all liens, encumbrances or restrictions created by or through Columbia
Bancorp.
(i) The Registration Statement of Columbia Bancorp has been declared
effective by the SEC under the Securities Act and, to our knowledge, no stop
order suspending the effectiveness of the Registration Statement has been issued
under the Securities Act or proceedings therefor initiated or threatened by the
SEC.
(j) The terms and provisions of the Columbia Bancorp Common Stock
conform to the description thereof contained in the Proxy Statement/Prospectus.
The form of stock certificate used to evidence the Columbia Bancorp Common Stock
is in due and proper form.
(k) The Proxy Statement/Prospectus, insofar as it constitutes a final
prospectus under the Securities Act and a definitive proxy statement under the
Exchange Act for the special meeting (the "Special Meeting") of Columbia
Bancorp's stockholders held on ________________, 1999, as of the date thereof,
complied as to form in all material respects to the requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder, except that such counsel need express no opinion as to (i) the
financial statements, schedules and other financial, statistical and tabular
data included in or incorporated into the Registration Statement and the Proxy
Statement/Prospectus, (ii) any document incorporated by reference into the
Registration Statement and the Proxy Statement/Prospectus, (iii) the exhibits to
any document incorporated by reference into the Registration Statement and the
Proxy Statement/Prospectus, or (iv) information relating to Suburban Bancshares
or the Suburban Subsidiaries which was included in the Registration Statement
and the Proxy Statement/Prospectus. In addition, such counsel need not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Proxy Statement/Prospectus or
any documents incorporated by reference therein except as set forth in the
paragraph immediately following this one.
In connection with the Mergers, such counsel shall state that it
participated in conferences with certain officers and other representatives of
Columbia Bancorp and the Columbia Subsidiaries at which the contents of the
Registration Statement and the Proxy Statement/Prospectus and related matters
were discussed and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, fairness or completeness of the
103
statements contained in the Registration Statement and the Proxy
Statement/Prospectus and has made no independent check or verification of the
existence or absence of any matter set forth therein, on the basis of the
foregoing, such counsel shall state that no facts have come to its attention
which leads it to believe that the Registration Statement and the Proxy
Statement/Prospectus as of the date of the effectiveness of the Registration
Statement and through the Effective Date contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that such counsel need not express
any belief with respect to (i) the financial statements, schedules and other
financial, statistical and tabular data included in or incorporated into the
Registration Statement and the Proxy Statement/Prospectus, (ii) the exhibits
thereto and the exhibits to any document incorporated by reference into the
Registration Statement and the Proxy Statement/Prospectus, (iii) the documents
incorporated by reference therein, or (iv) any information relating to Suburban
Bancshares or the Suburban Subsidiaries contained therein. In rendering such
statement, such counsel may state that it has served only as special counsel to
Columbia Bancorp and the Columbia Subsidiaries, that such representation of such
entities has been limited to acting as their special counsel with respect to the
Mergers and on certain other unrelated matters on which such counsel has been
consulted by the management of Columbia Bancorp or the Columbia Subsidiaries,
and that such counsel has relied solely upon the examination and inquiries
stated therein.
In rendering such opinion, such counsel may, without independent
verification, assume: (i) the genuineness of all signatures and the authenticity
of all documents submitted to such counsel as originals, the conformity to
original documents of all documents submitted to such counsel as certified,
conformed or reproduction copies, and the authenticity of such originals of such
latter documents; (ii) the execution of such documents, acknowledgment as
indicated thereon and receipt of the consideration recited therein by Suburban
Bancshares, (iii) that Suburban Bancshares has the full power, authority and
legal right under its articles of incorporation and other governing documents
and applicable laws, as the case may be, to execute and to perform its
obligations under all documents executed by it in connection with the
transactions contemplated by the Plan and the Stock Option Agreement; (iv) that
the foregoing documents, in the forms submitted to such counsel for review, have
not been altered or amended in any respect material to such counsel's opinion as
stated herein; (v) that there are no other agreements or understandings among
the parties that would modify the terms of the proposed transactions or the
respective rights or obligations of the parties thereunder; (vi) the accuracy of
the representations and warranties of Columbia Bancorp and the Columbia
Subsidiaries as set forth in the Plan; (vii) the accuracy of all certifications
made available to such counsel from public officials and officers of Columbia
Bancorp and the Columbia Subsidiaries on which such counsel is relying in
rendering the opinions set forth above; and (viii) the validity of all laws and
regulations applicable to the transactions contemplated by the Plan and the
Stock Option Agreement.
Furthermore, to the extent not inconsistent with the other assumptions,
qualifications and limitations set forth in such counsel's opinion, such
counsel's opinion shall be governed by, and shall be interpreted in accordance
104
with, the Legal Opinion Accord (the "Accord") of the American Bar Association
Section of Business Law (1991). As a consequence, such opinion shall be subject
to a number of qualifications, exceptions, definitions, limitations on coverage
and other limitations, all as more particularly described in the Accord, and
such counsel's opinion should be read in conjunction therewith. The term "actual
knowledge" when used in such counsel's opinion shall have the meaning set forth
in the Accord. For purposes of the opinion in (e) above, Subject Laws shall mean
the Bank Holding Company Act of 1956, the General Corporation Law of Maryland,
the Financial Institutions Article of the Annotated Code of Maryland, and the
Exchange Act, and the rules and regulations promulgated thereunder.
105
APPENDIX XII
AMENDMENTS TO THE BY-LAWS OF COLUMBIA BANCORP
SECTION 2.04 Qualification. No person shall stand for election as a
director who would be 70 years of age on or before the date of the election
(with no age limit in the case of any person who is serving as the Chairman of
the Board, the Vice-Chairman of the Board, the chairman of any standing
committee of the Board of Directors or the President just prior to his election
or in the case of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇).
SECTION 4.01. Executive and Other Officers. The Corporation shall have a
President, a Secretary, and a Treasurer who shall be the executive officers of
the Corporation. It may also have a Chairman of the Board; the Chairman of the
Board shall be an executive officer if he or she is designated as the chief
executive officer of the Corporation. Provided the Corporation has a Chairman of
the Board it may also have a Vice Chairman of the Board. The Vice Chairman of
the Board shall not be an executive officer of the Corporation. The Corporation
may also have a Chairman of the Executive Committee. The Chairman of the
Executive Committee shall not be an executive officer of the Corporation. The
Board of Directors may designate who shall serve as chief executive officer,
having general supervision of the business and affairs of the Corporation, or as
chief operating officer, having supervision of the operations of the
Corporation; in the absence of designation the President shall serve as chief
executive officer and chief operating officer. It may also have one or more
Vice-Presidents, assistant officers, and subordinate officers as may be
established by the Board of Directors. A person may hold more than one office in
the Corporation except that no person may serve concurrently as both President
and Vice-President nor Chairman of the Board and Vice Chairman of the Board of
the Corporation. The Chairman of the Board, the Vice Chairman of the Board, the
Chairman of the Executive Committee and the President shall be directors; the
other officers may be directors.
SECTION 4.04. Chairman of the Executive Committee. The Chairman of the
Executive Committee, if one be elected, shall preside at all meetings of the
Executive Committee of the Board of Directors at which he or she shall be
present; and, in general, he or she shall perform all such duties as are from
time to time assigned to him or her by the Board of Directors.
[The remaining sections in Article IV shall be renumbered.]
SECTION 4.11 4.10. Election, Tenure and Removal of the Chairman of the
Board, and the Vice Chairman of the Board and the Chairman of the Executive
Committee. The Board of Directors shall elect the Chairman of the Board, and the
Vice Chairman of the Board and the Chairman of the Executive Committee, if any
be elected. The Chairman of the Board, and the Vice Chairman of the Board and
the Chairman of the Executive Committee shall be appointed to hold their
offices, respectively, for two years, but not beyond their respective terms as
directors. The Board of Directors may remove the Chairman of the Board, and the
106
Vice Chairman of the Board and the Chairman of the Executive Committee from
their respective office at any time. The removal of the Chairman of the Board
and/or the Vice Chairman of the Board and/or the Chairman of the Executive
Committee does not prejudice his/their rights as a director and stockholder of
the Corporation conveyed by the Charter and By-Laws of the Corporation or under
any employment agreement.
107
APPENDIX XIII
AMENDMENTS TO THE BY-LAWS OF COLUMBIA BANK
SECTION 2.04. Qualification. Each of the directors shall own in good faith
and of record unencumbered shares of capital stock of the Trust Company or a
corporation that owns more than 80% of the capital stock of the Trust Company.
The unencumbered capital stock which the director owns shall be in the amount of
at least $500. To determine the amount of capital stock owned by a director the
par value, market value or book value of Common Stock and Preferred Stock
(determined at the date of purchase or the date of becoming a director,
whichever value is the greater) may be considered and debt instruments of the
Trust Company may not be considered. No person shall stand for election who
would be 70 years of age on or before the date of the election (WITH NO AGE
LIMIT IN THE CASE OF ANY PERSON WHO IS SERVING AS THE CHAIRMAN OF THE BOARD, THE
VICE-CHAIRMAN OF THE BOARD, THE CHAIRMAN OF ANY STANDING COMMITTEE OF THE BOARD
OF DIRECTORS OR THE PRESIDENT JUST PRIOR TO HIS ELECTION OR IN THE CASE OF
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇).
SECTION 4.01. Executive and Other Officers. The Trust Company shall have a
President, a Secretary, and a Treasurer who shall be the executive officers of
the Trust Company. It may also have a Chairman of the Board; the Chairman of the
Board shall be an executive officer if he is designated as the chief executive
officer of the Trust Company. Provided the Trust Company has a Chairman of the
Board it may also have a Vice Chairman of the Board. The Vice Chairman of the
Board shall not be an executive officer of the Trust Company. The Trust Company
may also have a Chairman of the Executive Committee. The Chairman of the
Executive Committee shall not be an executive officer of the Trust Company. The
Board of Directors may designate who shall serve as chief executive officer,
having general supervision of the business and affairs of the Trust Company, or
as chief operating officer, having supervision of the operations of the Trust
Company; in the absence of designation the President shall serve as chief
executive officer and chief operating officer. It may also have one or more Vice
Presidents, assistant officers, and subordinate officers as may be established
by the Board of Directors. A person may hold more than one office in the Trust
Company but may not serve concurrently as both President and Vice President nor
Chairman of the Board and Vice Chairman of the Board of the Trust Company. The
Chairman of the Board, the Vice Chairman of the Board, the Chairman of the
Executive Committee and the President shall be directors; the other officers may
be directors.
SECTION 4.04. Chairman of the Executive Committee. The Chairman of the
Executive Committee, if one be elected, shall preside at all meetings of the
Executive Committee of the Board of Directors at which he or she shall be
present; and, in general, he or she shall perform all such duties as are from
time to time assigned to him or her by the Board of Directors.
[The remaining sections in Article IV shall be renumbered.]
108
SECTION 4.11 4.10. Election, Tenure and Removal of the Chairman of the
Board, and the Vice Chairman of the Board and the Chairman of the Executive
Committee. The Board of Directors shall elect the Chairman of the Board, and the
Vice Chairman of the Board and the Chairman of the Executive Committee, if any
be elected. The Chairman of the Board, and the Vice Chairman of the Board and
the Chairman of the Executive Committee shall be appointed to hold their
offices, respectively, for two years, but not beyond their respective terms as
directors. The Board of Directors may remove the Chairman of the Board, and the
Vice Chairman of the Board and the Chairman of the Executive Committee from
their respective office at any time. The removal of the Chairman of the Board
and/or the Vice Chairman of the Board and/or the Chairman of the Executive
Committee does not prejudice his/their rights as a director and stockholder of
the Trust Company conveyed by the Charter and By-Laws of the Trust Company or
under any employment agreement.
109
APPENDIX XIV
COLUMBIA BANCORP AND COLUMBIA BANK
BOARD AND EXECUTIVE OFFICER ASSIGNMENTS AT
THE EFFECTIVE DATE
Designated Directors of Columbia Bancorp:
Name Class Designated by
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 2002 Suburban Bancshares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2002 Suburban Bancshares
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001 Suburban Bancshares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001 Suburban Bancshares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2000 Suburban Bancshares
The other 17 directors will be those persons serving as directors of
Columbia Bancorp at the time of the Effective Date and will continue to
serve in their respective classes.
Designated Directors of Columbia Bank:
Name Class Designated by
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 2000 Suburban Bancshares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2000 Suburban Bancshares
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2000 Suburban Bancshares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2000 Suburban Bancshares
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2000 Suburban Bancshares
The other 17 directors will be those persons serving as directors of
Columbia Bank at the time of the Effective Date and will continue to serve
until 2000.
Designated titles (director titles and executive officer titles) of Columbia
Bancorp:
Name Title
Director Titles:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Chairman of the Board
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Vice Chairman of the Board
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Chairman of the Executive Committee
Executive Officer Titles:
▇▇▇▇ ▇. ▇▇▇▇, ▇▇. President, Chief Executive Officer, and
Treasurer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Executive Vice President, Chief Financial
Officer, and Secretary
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Designated titles (director titles and executive officer titles) of Columbia
Bank:
Name Title
Director Titles:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Chairman of the Board
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Chairman of the Executive Committee
Executive Officer Titles:
▇▇▇▇ ▇. ▇▇▇▇, ▇▇. President, Chief Executive Officer, and
Treasurer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Executive Vice President, Chief Financial
Officer, and Secretary
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Executive Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Executive Vice President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Executive Vice President/Washington Region
Head
Additional Contract Employee of Columbia Bancorp:
Name
New Employment Agreement:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Additional Contract Employees of Columbia Bank:
Name
New Employment Agreement:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Assumption of Existing Severance Agreement:
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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APPENDIX XV
BOARD CHAIRMAN'S SERVICES AGREEMENT
THIS SERVICE AGREEMENT (hereinafter this "Agreement") is entered into on
this ____ day of ____________________, by and between:
(1) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter "▇▇▇▇▇") and
(2) Columbia Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter "Columbia Bancorp"), and its subsidiary, The Columbia Bank
(hereinafter "Columbia Bank").
W I T N E S S E T H:
WHEREAS, Columbia Bancorp desires to provide to ▇▇▇▇▇ and ▇▇▇▇▇ desires to
receive from Columbia Bancorp a continuing services agreement so as to retain
and secure Kelly's services as Chairman of the Board of Directors of Columbia
Bancorp and Chairman of the Board of Directors of Columbia Bank, upon the terms
and conditions set forth in this Agreement.
NOW THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Definitions. As used in this Agreement, the following terms have the
meanings set forth below:
(a) Commencement Date. _________________.
(b) Bank Regulatory Agency. As used in this Agreement, "Bank
Regulatory Agency" shall mean any governmental authority, regulatory agency,
ministry, department, statutory corporation, central bank or other body of the
United States or of any other country or of any state or other political
subdivision of any of them having jurisdiction over Columbia Bancorp or any
transaction contemplated, undertaken or proposed to be undertaken by Columbia
Bancorp hereunder or otherwise. Bank Regulatory Agency shall include, but not
necessarily be limited to:
(1) The Federal Deposit Insurance Corporation or any other
federal or state depository insurance organization or fund; and
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(2) The Federal Reserve System, the Comptroller of the
Currency, The Maryland Division of Financial Regulation, or any other
federal or state bank regulatory or commissioner's office; and
(3) The Resolution Trust Corporation, the Resolution Funding
Corporation, the Financing Corporation or any other entity created
pursuant to The Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time; and
(4) Any corporation, bridge bank, fund association, or other
entity established, organized, owned (in whole or in part) or
controlled by any of the foregoing; and
(5) Any predecessor, successor or assignee of the foregoing.
2. Term.
(a) Initial Term. Except as provided for below under "Rights to
Terminate Agreement", the Initial Term of this Agreement shall expire upon the
expiration of Kelly's current term as a director of Columbia Bancorp.
(1) Renewals and Extensions; Subsequent Annual Terms. After
the Initial Term of this Agreement, this Agreement shall automatically
renew with the reelection of ▇▇▇▇▇ as BOARD CHAIRMAN in accordance
with Columbia Bancorp's and Columbia Bank's By-Laws and Charter,
unless:
(A) ▇▇▇▇▇ provides notice to Columbia Bancorp and
Columbia Bank at least on or before the end of any term that
he does not wish to renew the contract for an additional
annual term, in which event this Agreement will expire at
the end of the contract term in which ▇▇▇▇▇ gives such
notice to Columbia Bancorp and Columbia Bank; or
(B) ▇▇▇▇▇ fails to be reelected as BOARD CHAIRMAN
in accordance with Columbia Bancorp's and Columbia Bank's
By-Laws and Charter.
3. Duties and Authority of ▇▇▇▇▇.
(a) Performance of Services. ▇▇▇▇▇ shall discharge his duties as Board
Chairman to the best of his ability for and on behalf of Columbia Bancorp and
Columbia Bank. ▇▇▇▇▇ shall comply with all laws, statutes, ordinances, rules and
regulations relating to his services and duties. During the term of this
Agreement, ▇▇▇▇▇ shall not at any time or place directly or indirectly engage or
agree to engage in any business or practice related to the banking business with
or for any other person or entity to any extent whatsoever, other than to the
extent required by the terms and conditions of this Agreement.
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(b) Constructive Termination. Excepting any action precipitated by
reason of regulatory requirements as provided in Section 5(b) below, substantial
curtailment of the duties and authority of ▇▇▇▇▇ as Board Chairman hereunder by
Columbia Bancorp and Columbia Bank shall constitute a termination without cause
in breach of this Agreement.
4. Payment Amount; Terms. As full compensation for all services rendered to
Columbia Bancorp and Columbia Bank pursuant to this Agreement and the covenants
contained herein, Columbia Bancorp and Columbia Bank shall pay to ▇▇▇▇▇ the
following:
(a) Base Compensation. Kelly's base compensation (the "Base
Compensation") shall be $60,000 per annum. The Board of Directors shall review
such base compensation at least annually and may grant such raises as in its
discretion are deemed warranted.
(1) Base Compensation Rate. Compensation to begin on the
Commencement Date at the above annual rate.
(2) Method of Payment. Columbia Bancorp and/or Columbia Bank
shall pay Kelly's said base compensation in equal monthly installments
or ----------------- more frequently.
(b) Vacation and Leave. ▇▇▇▇▇ shall be entitled to such vacation and
leave as may be provided for under the current and future leave and vacation
policies of Columbia Bancorp and Columbia Bank for executive officers.
(c) Office Space. Columbia Bancorp will provide customary executive
office space and executive office support to ▇▇▇▇▇ beginning on the Commencement
Date.
(d) D & O Insurance. Columbia Bancorp and Columbia Bank will provide
▇▇▇▇▇ with directors and officers liability insurance coverage on terms
comparable to that provided to Columbia Bancorp's and Columbia Bank's other
officers and directors.
(e) Additional Compensation. Upon the earlier to occur of (i) any sale
or exchange of stock in Columbia Bancorp with any third party which results in a
change in a controlling interest of Columbia Bancorp, or (ii) five years from
the Commencement Date, Columbia Bancorp shall thereupon immediately pay to ▇▇▇▇▇
the sum of $200,000 as additional compensation to ▇▇▇▇▇ or his heirs. In
addition, in the event Columbia is required to pay such additional compensation
as a result of a change in a controlling interest of Columbia Bancorp and such a
change in a controlling interest occurs prior to the time when ▇▇▇▇▇ shall have
become fully vested in any stock option plan established for his benefit, ▇▇▇▇▇
shall thereupon also become immediately vested in all options theretofore issued
to him or accrued to his benefit. For purposes of construing the foregoing, the
term "change in a controlling interest" shall be defined as provided in
applicable Federal Reserve Board regulations.
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5. Rights to Terminate Agreement.
(a) Breach or Default Under Agreement. Either party may terminate this
Agreement for breach or default as provided hereinbelow.
(b) Termination Without Cause/Severance. ▇▇▇▇▇ may terminate this
Agreement in accordance with Paragraph 2(a)(1)(A), above. Columbia Bancorp and
Columbia Bank may terminate this Agreement in accordance with Paragraph
2(a)(l)(B), above. Otherwise, if ▇▇▇▇▇ is not in breach or default of this
Agreement and Columbia Bancorp or Columbia Bank terminates Kelly's services for
any reason and under any procedures other than those specified in paragraph (c),
below, then Columbia Bancorp or Columbia Bank shall thereupon immediately pay to
▇▇▇▇▇ the sum of $120,000 as severance compensation to ▇▇▇▇▇; being equal to
twice his Base Compensation for a 12 month period. In addition, should such
termination occur prior to the time when ▇▇▇▇▇ shall have become fully vested in
any stock option plan established for his benefit, ▇▇▇▇▇ shall thereupon also
become immediately vested in all options theretofore issued to him or accrued to
his benefit.
(c) Termination of ▇▇▇▇▇ With Cause; Procedure.
(1) Termination of Compensation. If Columbia Bancorp and
Columbia Bank terminates ▇▇▇▇▇ for cause as set forth in this
paragraph, then the compensation payments provided for herein shall
cease.
(2) Definition of Cause. Under this Agreement, "cause" shall
be defined to be:
(A) Any willful act or action on the part of ▇▇▇▇▇
done in connection with or associated with the services
rendered by ▇▇▇▇▇ under this Agreement for which a criminal
prosecution (other than traffic and misdemeanor actions) is
commenced by the prosecuting authorities in the jurisdiction
in which such act or action occurred. For the purposes of
this Agreement, the commencement of a criminal prosecution
shall be deemed to have occurred upon the filing of a
criminal information against ▇▇▇▇▇ or the indictment of
▇▇▇▇▇ by any local, state or federal authority.
(B) Any act of theft, fraud, deceit, material
misrepresentation, assault or battery done by ▇▇▇▇▇ in
connection with or associated with the services rendered by
▇▇▇▇▇ to Columbia Bancorp or Columbia Bank under this
Agreement.
(C) Any act, action, failure to act or omission
which constitutes gross misconduct or gross negligence in
connection with or associated with the services rendered by
▇▇▇▇▇ under this Agreement, provided that the procedures of
paragraph 5(c)(3) are followed.
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(D) Any termination following a default of this
Agreement by ▇▇▇▇▇, pursuant to the provisions of Paragraph
10 below.
(E) Any Bank Regulatory Agency action with respect
to this Agreement, or any failure of this Agreement to
comply with any Bank Regulatory Agency requirements.
(3) Procedure for Termination With Cause. The procedure for
termination with cause shall be as follows:
(A) For any reason specified in paragraph
5(c)(2)(A), ▇▇▇▇▇ shall be terminated upon the commencement
of prosecution, as of the date of the act to which that
paragraph applies.
(B) For any reason specified in Paragraphs
5(c)(2)(B), 5(c)(2)(C), 5(c)(2)(D) or 5(c)(2)(E), unless
ordered by or agreed to differently between Columbia Bancorp
and/or Columbia Bank, and a Bank Regulatory Agency, or
unless a criminal prosecution has commenced as provided in
Paragraphs 5(c)(2)(A) and 5(c)(3)(A) above, Columbia Bancorp
and/or Columbia Bank shall give ▇▇▇▇▇ written notice of the
cause alleged to be the basis for Kelly's termination. ▇▇▇▇▇
shall thereafter have a period of 30 days from the date of
the receipt of Columbia Bancorp's and/or Columbia Bank's
written notice in which to dispute and/or explain the
situation(s) referred to in Columbia Bancorp's and/or
Columbia Bank's written noticed, including, if appropriate,
a response to Bank Regulatory Agencies. If ▇▇▇▇▇ does not
respond to Columbia Bancorp's and/or Columbia Bank's notice,
▇▇▇▇▇ shall be deemed to have agreed to Columbia Bancorp's
and/or Columbia Bank's and/or the Bank Regulatory Agency's
allegations and the termination shall be effective as of the
date of Columbia Bancorp's and/or Columbia Bank's written
notice. If ▇▇▇▇▇ disputes the allegations contained in
Columbia Bancorp's and/or Columbia Bank's and/or the Bank
Regulatory Agency's notice, ▇▇▇▇▇ shall notify Columbia
Bancorp and/or Columbia Bank in writing within the time
period set forth above and Columbia Bancorp and/or Columbia
Bank and ▇▇▇▇▇ shall set a meeting to discuss a resolution
of the dispute. If the parties and/or any Bank Regulatory
Agency do not reach agreement as to Kelly's termination,
within 45 days of Columbia Bancorp's and/or Columbia Bank's
notice, Columbia Bancorp and/or Columbia Bank, by a majority
of its Board of Directors, shall have the right to terminate
▇▇▇▇▇ and to discontinue the compensation payments to ▇▇▇▇▇.
If ▇▇▇▇▇ nevertheless still disagrees that his termination
was proper under the terms of this Agreement, both parties
hereto by their execution hereof agree, unless otherwise
ordered by or agreed to differently between any Bank
Regulatory Agency and Columbia Bancorp and/or Columbia Bank,
to submit to binding arbitration under the rules,
regulations and procedures of the American Arbitration
Association.
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(d) Termination of Agreement by ▇▇▇▇▇ for Cause. If Columbia Bancorp
and/or Columbia Bank shall become in breach or default of any of the material
provisions hereof, including especially any constructive termination [as
provided in Paragraph 3(b), above] and fails to cure such breach as provided in
Paragraph 10, below, then ▇▇▇▇▇ may, at his option at any time thereafter, elect
to terminate this Agreement for cause, in which event Columbia Bancorp or
Columbia Bank shall thereupon immediately pay to ▇▇▇▇▇ the sum of $60,000 as
severance compensation to ▇▇▇▇▇; being equal to his Base Compensation for a 12
month period. In addition, should such termination occur prior to the time when
▇▇▇▇▇ shall have become fully vested in any stock option plan established for
his benefit, ▇▇▇▇▇ shall thereupon also become immediately vested in all options
theretofore issued to him or accrued to his benefit.
(e) Death or Disability. If ▇▇▇▇▇ should be unable to perform his
professional duties due to disability, then the compensation provided for
hereinabove shall continue at its full level for a period not to exceed 120 days
and, if the disability is temporary, shall resume upon Kelly's return to his
duties hereunder. In the event of Kelly's death, such compensation payments
shall cease.
(f) Survival of Restrictions. In the event of a termination of the
offer set forth in this Agreement, or in the event of a termination of this
Agreement after acceptance hereof by ▇▇▇▇▇, all covenants and restrictions
contained herein shall survive the termination and shall continue in full force
and effect as provided for herein.
6. Representations and Warranties of ▇▇▇▇▇. ▇▇▇▇▇ represents and warrants
to Columbia Bancorp and Columbia Bank the following:
(a) Information Supplied to Columbia Bancorp and Columbia Bank. All
information and data, including but not limited to, personal data, work
histories, salaries and responsibilities, represented and provided to Columbia
Bancorp and Columbia Bank by ▇▇▇▇▇ in his application for the position provided
for herein are true and correct in all material respects and ▇▇▇▇▇ has not
stated any facts or circumstances, nor has he failed to disclose any facts or
circumstances to Columbia Bancorp and Columbia Bank the statement or omission of
which would cause Kelly's application to be false or misleading in any material
respect.
(b) Prior Agreements. ▇▇▇▇▇ is not now a party to or bound by any
employment, consulting or other type of agreement, nor has he been a party to or
bound by any such agreement, which would be breached by, or of which ▇▇▇▇▇ would
be in default, by virtue of any provision contained in this Agreement with
Columbia Bancorp and Columbia Bank, nor is ▇▇▇▇▇ a party to any such agreement
which would compete with or constitute a conflict of interest with this
Agreement and Kelly's duties and obligations to Columbia Bancorp and Columbia
Bank.
(c) Bank Regulatory Agency Approval. To the best of Kelly's knowledge,
information and belief, there are no facts or circumstances contained in Kelly's
personal or professional history which are likely to, or which in fact will,
cause any Bank Regulatory Agency having jurisdiction over Columbia Bancorp or
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Columbia Bank to withdraw, suspend or substantially modify its approval of ▇▇▇▇▇
as BOARD CHAIRMAN of Columbia Bancorp or Columbia Bank.
7. Representations and Warranties of Columbia Bancorp and Columbia Bank.
To the best of Columbia Bancorp's and Columbia Bank's knowledge,
information and belief, there are no facts or circumstances to which Columbia
Bancorp or Columbia Bank is privy, which are likely to, or which in fact will,
cause any Bank Regulatory Agency having jurisdiction over Columbia Bancorp or
Columbia Bank to withdraw, suspend or substantially modify its approval of ▇▇▇▇▇
as BOARD CHAIRMAN of Columbia Bancorp and Columbia Bank.
8. Restrictive Covenants.
(a) Proprietary Information. ▇▇▇▇▇ acknowledges that upon acceptance
of this Agreement, ▇▇▇▇▇ will be making use of, acquiring and adding to Columbia
Bancorp's and Columbia Bank's confidential and proprietary information of a
special and unique nature and value relating to such matters as, but not limited
to Columbia Bancorp's and Columbia Bank's business operations, internal
structure, financial affairs, programs, software, systems, procedures, manuals,
confidential reports, and sales and marketing methods, as well as the amount,
nature and type of services, equipment and methods used and preferred by
Columbia Bancorp's and Columbia Bank's suppliers, and customers, all of which
shall be deemed to be confidential information. ▇▇▇▇▇ acknowledges that such
confidential information has been and will continue to be of central importance
to the business of Columbia Bancorp and Columbia Bank and that disclosure of it
or its use by others could cause substantial loss to Columbia Bancorp and
Columbia Bank. In consideration of his anticipated and thereafter continued
contract with Columbia Bancorp and Columbia Bank, upon acceptance hereof, ▇▇▇▇▇
agrees that during the entire term of this Agreement, and upon and for a period
of two years after such term, ▇▇▇▇▇ shall not, for any purpose whatsoever,
directly or indirectly, divulge, reveal, report, publish, transfer, or disclose
to any person or entity any of such confidential information which was obtained
by ▇▇▇▇▇ as a result of Kelly's services to Columbia Bancorp and Columbia Bank,
nor shall ▇▇▇▇▇ reveal to any person or entity any trade secrets of Columbia
Bancorp or Columbia Bank, but ▇▇▇▇▇ shall hold all of the same confidential and
inviolate. For purposes of construing the foregoing, "proprietary information"
shall not be construed to include information generally available in the public
domain through sources other than ▇▇▇▇▇.
(b) Property of Columbia Bancorp or Columbia Bank. All contracts,
agreements, forms, financial books, records, instruments and documents, supplier
lists, memoranda, data, reports, programs, software, tapes, rolodexes, telephone
and address books, letters, research, listings, programming, and any other
instruments, records or documents relating or pertaining to Columbia Bancorp or
Columbia Bank (hereinafter referred to as "Records") shall at all times be and
remain the property of Columbia Bancorp and Columbia Bank. Upon termination or
expiration of the term of this Agreement for any reason whatsoever, ▇▇▇▇▇ shall
return to Columbia Bancorp or Columbia Bank all Records (whether furnished by
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Columbia Bancorp, by Columbia Bank, by a third party or prepared by ▇▇▇▇▇), and
▇▇▇▇▇ shall neither make nor retain any copies of any such Records after such
termination.
(c) Inventions and Creations. All inventions and other creations,
whether or not patentable or copyrightable, and all ideas, reports and other
creative works, including, without limitation, innovations, manuals or other
materials, made or conceived in whole or in part by ▇▇▇▇▇ during the term of
this Agreement, which relate in any manner whatsoever to the business, existing
or proposed of Columbia Bancorp, Columbia Bank or any other business or research
development effort in which Columbia Bancorp or any of its subsidiaries or
affiliates engages during the term of this Agreement, will be disclosed promptly
by ▇▇▇▇▇ to Columbia Bancorp and Columbia Bank and shall be the sole and
exclusive property of Columbia Bancorp and Columbia Bank.
(d) Non-Solicitation of Customers and Employees. ▇▇▇▇▇ agrees during
the term of this Agreement and for a period of two years immediately following
the expiration of the term hereof, that he shall not for his account or on
behalf of any other person or legal entity, hire or solicit to hire any employee
of Columbia Bancorp (or any of its affiliates or subsidiaries) or solicit the
banking business of any person or entity known to him to be a customer of
Columbia Bancorp (or any of its affiliates or subsidiaries).
9. Indemnification. ▇▇▇▇▇ agrees to indemnify and hold harmless Columbia
Bancorp and Columbia Bank from and against any and all claims made against
Columbia Bancorp and Columbia Bank by any party by virtue of Kelly's past
employment, whether such claims are made by a past employer or by another party
with whom ▇▇▇▇▇ has dealt in the past. Columbia Bancorp and Columbia Bank agree
to indemnify and hold harmless ▇▇▇▇▇ from and against any and all claims made
against ▇▇▇▇▇ arising directly or indirectly from any fact or matter which
contradicts (or as alleged would contradict) any representation or warranty of
Columbia Bancorp and Columbia Bank hereunder. Promptly after receipt of any
party hereto (the "Indemnitee") of notice of any demand, claim or circumstance
which, or which with the lapse of time, would or might give rise to a claim or
the commencement (or threatened commencement) of any action, proceeding pr
investigation (an "Asserted Liability") that may result in a loss, the
Indemnitee shall give notice thereof (the "Claims Notice") to the other party
(the "Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount (estimated, if
necessary and to the extent feasible) of the loss that has been or may be
suffered by the Indemnitee. The Indemnifying Party may elect to assume
responsibility for and to compromise or defend, at its own expense and by its
own counsel (which counsel shall be reasonably satisfactory to the Indemnitee),
any Asserted Liability, unless in the reasonable judgment of the Indemnitee
there may be one or more legal defenses available to it that are different from
or in addition to those available to the Indemnifying Party and, therefore, it
is advisable for the Indemnitee to be represented by separate counsel. Then, in
such event, the Indemnitee shall have the right to employ separate counsel to
represent it (which shall be reasonably satisfactory to the Indemnifying Party),
in which event the fees and disbursements of such counsel shall be subject to
indemnification hereunder. If such Indemnifying Party elects to compromise or
defend such Asserted Liability, it shall within 30 days (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall have no further liability for such
119
Asserted Liability but shall cooperate, at the expense of the Indemnifying
Party, in the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided, or contests
its obligation to indemnify under this Agreement, the Indemnitee may pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any claim, the Indemnitee shall make available to the Indemnifying Party
any books, records or other documents within its control that are necessary or
appropriate for such defense.
10. Right to Cure; Default. In the event either party shall be alleged to
be in breach of this Agreement, written notice shall be given by the other party
and a 10 day opportunity to cure shall be provided. After such 10 day cure
period, if the breach is not cured and remains as alleged, the breaching party
shall be deemed in default and this Agreement may be terminated in the manner
provided in Paragraph 5, above.
11. Entire Agreement. This Agreement represents the entire agreement of the
parties relating to the services of ▇▇▇▇▇. All prior negotiations between the
parties are merged into this Agreement and there are no understandings or
agreements other than those incorporated herein.
12. Miscellaneous.
(a) Severability; Court Enforcement. The parties hereto covenant and
agree that to the extent any provisions or portion of this Agreement shall be
held, found or deemed to be unreasonable, unlawful or unenforceable, by any
Court of law, then the parties hereto expressly covenant and agree that any such
provision or portion thereof shall be modified to the extent necessary in order
that any such provision or portion thereof shall be legally enforceable to the
fullest extent permitted by applicable law and that any court of competent
jurisdiction shall, and the parties hereto do hereby expressly authorize any
court of competent jurisdiction to, enforce any such provision or portion
thereof or to modify any such provision thereof shall be enforced by such court
to the fullest extent permitted by applicable law.
(b) Waiver. Columbia Bancorp and Columbia Bank and ▇▇▇▇▇ each reserve
the right to waive any of the terms of this Agreement which benefits the party
waiving same. Any such waiver must be in a writing signed by the party waiving
the same.
(c) Choice of Law. It is the intention of the parties hereto that this
Agreement shall be governed by the laws of the State of Maryland. --------- ---
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(d) Successors. The terms of this Agreement shall inure to the benefit
of and be binding upon Columbia Bancorp and Columbia Bank, their successors and
assigns, and upon ▇▇▇▇▇, his heirs, guardians and personal and legal
representatives.
(e) Gender. The use of the masculine gender herein shall be deemed to
be or include the feminine gender, wherever appropriate.
(f) Notices. All notices, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or if sent registered or certified mail, return receipt requested,
properly addressed and postage prepaid to the addresses set forth hereinabove.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(h) Headings. The Section and paragraph headings used herein are for
convenience and reference only and shall not enter into the interpretation
hereof.
(i) Representation by Counsel. The parties hereto acknowledge that
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., of the law firm of Piper & Marbury, L.L.P., has acted as
counsel to Columbia Bancorp and Columbia Bank in this matter.
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IN WITNESS WHEREOF this Agreement has been executed by the undersigned as
of the day and year first above written.
ATTEST/WITNESS: COLUMBIA BANCORP
-------------------------------- By:------------------------------------
President
THE COLUMBIA BANK
-------------------------------- By:-------------------------------------
President
-------------------------------- ----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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APPENDIX XVI
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of __________________, between THE COLUMBIA
BANK, a Maryland trust company and a principal subsidiary of COLUMBIA BANCORP, a
Maryland corporation, (the "Bank"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. (the "Executive").
The Employment Agreement dated as of December 9, 1996, between the Bank as
successor in interest to Suburban Bank of Maryland and the Executive, is hereby
terminated effective with the execution of this Employment Agreement.
W I T N E S S E T H:
The Executive will serve as the Executive Vice President - Washington
Region of the Bank and will possess an intimate knowledge of the business and
affairs of the Bank. The Bank recognizes the Executive's contribution to the
organization and its predecessor by merger, Suburban Bank of Maryland, growth
and success of the Bank and desire to enter into an employment agreement with
the Executive in order to assure to the Bank the benefits of the Executive's
expertise and knowledge. The Executive, in turn, desires to enter into full-time
employment with the Bank on the terms provided herein.
Accordingly, in consideration of the mutual covenants and representations
contained herein and the mutual benefits derived herefrom, the parties hereto
agree as follows:
1. Full-Time Employment of Executive.
1.1.Duties and Status.
(a) The Bank hereby engages the Executive as a full-time
executive employee for the period (the "Employment Period")
specified in paragraph 4.1, and the Executive accepts such
employment, on the terms and conditions set forth in this
Agreement. During the Employment Period, the Executive shall
exercise authority and perform executive duties as an Executive
Vice President of the Bank.
(b) During the Employment Period, the Executive shall (i)
not engage in consulting work or any trade or business for his own
account or for or on behalf of any other person, firm or
corporation which competes, conflicts or materially interferes
with the performance of his duties hereunder in any way and (ii)
accept such additional office or offices to which he may be
elected by the Board of Directors of the Bank, provided that the
performance of the duties of such office or offices shall be
consistent with the scope of the duties provided for in paragraph
1.1(a).
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(c) The Executive shall be required to perform the
services and duties provided for in paragraph 1.1(a) only at the
principal office of the Bank in Columbia, Maryland, or at such
other locations acceptable to the Executive. The Executive shall
be entitled to vacation, leave of absence, and leave for illness
or temporary disability in accordance with the policies to be
established for the Bank, which shall be similar to those commonly
offered at comparable banking institutions, and any leave on
account of illness or temporary disability shall not constitute a
breach by the Executive of his agreements hereunder.
1.2. Compensation and General Benefits. As compensation for his
services under this Agreement, the Executive shall be compensated as follows:
(a) The Bank shall pay the Executive an annual salary which
is not less than the greater of (i) a base salary of $150,000.00
per annum, or (ii) any subsequently established higher annual base
salary. Such salary shall be payable in periodic equal
installments which are no less frequent than monthly. Such salary
shall be subject to normal periodic review at least annually for
increases based on the salary policies of the Bank and
contributions to the enterprises.
(b) The Executive shall be entitled to participate in such
pension, profit sharing, stock incentive, stock option, stock
purchase, incentive, group and individual disability, group and
individual life, survivor income, sickness, accident, dental,
medical or health insurance and other plans of the Bank which are
in effect immediately prior to the effective date of this
Agreement or in any other or additional benefit programs, plans or
arrangements of the Bank which may be established by the Bank, as
and to the extent any such benefit programs, plans or arrangements
are or may from time to time be in effect, as determined by the
Bank and terms hereof. The Bank shall neither (i) terminate or
amend any benefit program, plan or arrangement of the Bank
pursuant to which the Executive, or his dependents, beneficiaries
or estate, is or shall be entitled to benefits, nor (ii) terminate
or amend any formula or method set forth in any benefit program,
plan or arrangement of the Bank pursuant to which the amount and
type of benefits to which the Executive, or his dependents,
beneficiaries or estate, is or shall be entitled thereunder are
determined, if such termination or amendment would in any way
modify or deprive the Executive, or his dependents, beneficiaries
or estate, of any benefits to which he, or his dependents,
beneficiaries or estate, is or shall be entitled under any benefit
program, plan or arrangement of the Bank, unless (a) the Executive
expressly consents in writing to such termination or amendment or
(B) the amendment is required by law or regulation and the Bank
shall, to the extent necessary, provide, pay or provide for
payment of amounts equal to any benefits lost or reduced by such
amendment. Throughout the period of his employment hereunder, the
Executive shall be entitled to the receipt of any personal
benefits from the Bank at the Bank's expense including, but not
limited to, any other perquisites provided by the Bank to
executives with comparable authority or duties. The term "benefit
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programs, plans, or arrangements of the Bank" as used in this
Agreement refers to the matters in this paragraph 1.2(b).
2. Competition; Confidential Information. The Executive and the
Bank recognize that due to the nature of his association with the Bank and of
his engagements hereunder, and the relationship of the Executive to the Bank,
both in the past as an organizer and in the future hereunder, the Executive has
had access to and has acquired, will have access to and will acquire, and has
assisted in and may assist in developing, confidential and proprietary
information relating to the business and operations of the Bank and its
affiliates, including, without limiting the generality of the foregoing,
information with respect to its present and prospective systems, customers,
agents, accounts, deposits, loans, and sales and marketing methods. The
Executive acknowledges that such information has been and will continue to be of
central importance to the business of the Bank and its affiliates and that
disclosure of it to or its use by others could cause substantial loss to the
Bank. The Executive and the Bank also recognize that an important part of the
Executive's duties will be to develop goodwill for the Bank and its affiliates
through his personal contact with customers, agents and others having business
relationships with the Bank and its affiliates, and that there is a danger that
this goodwill, a proprietary asset of the Bank and its affiliates, may follow
the Executive if and when his relationship with the Bank is terminated. The
Executive accordingly agrees as follows:
2.1.Non-Competition.
(a) During the Non-Competition Period, the Executive will
not, directly or indirectly, either individually or as owner,
partner, agent, employee, consultant or otherwise, except for the
account of and on behalf of the Bank or its affiliates
("affiliates" is defined solely for purposes of this paragraph 2
as "Columbia Bancorp and its subsidiaries"), engage in any
activity competitive with the business of the Bank or its
affiliates, nor during the Non-Competition Period will he, in
competition with the Bank or its affiliates, solicit or otherwise
attempt to establish for himself or any other person, firm or
entity, any business relationships with any person, firm or
corporation which was, at any time during the Non-Competition
Period, (i) a state or national bank, (ii) a bank holding company,
or (iii) a direct or indirect subsidiary of a state or national
bank or a bank holding company, in each case which has its
principal operations located in ▇▇▇▇▇▇ County, ▇▇▇▇▇▇▇▇▇▇ County
and Prince George's County, Maryland or within a 15 mile radius of
the principal office of the Corporation in Columbia, Maryland,
excepting both the City of Baltimore and Washington, D.C.
(b) The Non-Competition Period shall commence on the date
of this Agreement and shall terminate on:
(i) The date of the termination of the Employment
Period; or
(ii) If the Executive resigns in circumstances other
than those described in paragraph 4.3(a)(ii), two years
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after the date of such resignation; provided, however,
that if the Executive resigns during a Change in Control
Period in circumstances other than those described in
paragraph 4.3(a)(ii), the Non-Competition Period shall
terminate on the date of such resignation; or
(iii) If the Executive is terminated for cause (as
defined in paragraph 4.3(b)), two years after the date of
such termination for cause.
(c) Nothing in this paragraph 2 shall be construed to
prevent the Executive from owning, as an investment, not more than
1% of a class of equity securities issued by any issuer and
publicly traded and registered under Section 12 of the Securities
Exchange Act of 1934.
2.2. Trade Secrets. The Executive will keep confidential any trade
secrets or confidential or proprietary information of the Bank and
its affiliates which are now known to him or which hereafter may
become known to him as a result of his employment or association
with the Bank and shall not at any time directly or indirectly
disclose any such information to any person, firm or corporation,
or use the same in any way other than in connection with the
business of the Bank or its affiliates during and at all times
after the expiration of the Employment Period. For purposes of
this Agreement, "trade secrets or confidential or proprietary
information" means information unique to the Bank or any of its
affiliates which has a significant business purpose and is not
known or generally available from sources outside the Bank or any
of its affiliates or typical of industry practice.
3. Bank's Remedies for Breach. It is recognized that damages in
the event of breach of paragraph 2 by the Executive would be difficult, if not
impossible, to ascertain, and it is therefore agreed that the Bank, in addition
to and without limiting any other remedy or right it may have, shall have the
right to an injunction or other equitable relief in any federal or state court
of competent jurisdiction in the State of Maryland, enjoining any such breach,
and the Executive hereby waives any and all defenses he may have on the ground
of lack of jurisdiction or competence of the court to grant such an injunction
or other equitable relief. The existence of this right shall not preclude any
other rights and remedies at law or in equity which the Bank may have. In the
event the Bank seeks an injunction against the Executive and lose, then the Bank
shall be liable for damages and for any legal fees incurred by the Executive in
defending the action.
4. Employment Period.
4.1. Duration. The Employment Period shall commence on the date of
this Agreement (the "Effective Date") and shall continue until the
earlier of (i) the close of business on the date which is two
years after the date on which, during the Employment Period, the
Bank gives written notice of termination to the Executive or the
Executive gives written notice of termination to the Bank but not
later than the close of business on [65th Birthday] (ii)
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termination of this Agreement (as defined in paragraph 4.3(a)),
(iii) death of the Executive, (iv) total disability of the
Executive (as defined in paragraph 4.3(c)), (v) resignation of the
Executive in circumstances other than those described under
paragraph 4.3(a)(ii), or (vi) discharge of the Executive for cause
(as defined in paragraph 4.3(b)).
4.2. Payments after Employment Period.
(a) In the event of a termination of this Agreement under
paragraph 4.1(ii), the Bank shall pay to the Executive and
provide him with the following:
(i) During the remainder of the Employment Period
(determined without regard to paragraph 4.1(ii)), but not
less than one year following the occurrence of any event
of termination under paragraph 4.1(ii), the Bank shall
continue to pay the Executive his salary at the rate and
as required by paragraph 1.2(a) and in effect immediately
prior to the date of termination plus (in any year after
the first year) an annual bonus payable at the time or
times customary during the Employment Period, which bonus
shall be equivalent to a certain percentage of his salary
paid to him by the Bank for each such year during the
remainder of the Employment Period (determined without
regard to paragraph 4.1(ii) but with regard to paragraphs
4.1(iii) and (iv)), such percentage to be equal to the
average of the percentage of his salary which his annual
bonus represented during each of the three years
immediately preceding termination of this Agreement.
(ii) During the remainder of the Employment Period
(determined without regard to paragraph 4.1(ii) but with
regard to paragraphs 4.1(iii) and (iv)), the Executive
shall continue to be treated as an executive (at the level
provided for in paragraph 1.1(a)) under all of the benefit
programs, plans or arrangements of the Bank described in
paragraph 1.2(b). In addition, the Executive shall
continue to be entitled to all benefits and service
credits for benefits under all of the benefit programs,
plans or arrangements of the Bank described in paragraph
1.2(d) as if he were still employed during such period
under this Agreement.
(iii) If, despite the provisions of subparagraph (ii)
above, benefits, service credits, or the right to accrue
further benefits or service credits under any benefit
programs, plans or arrangements of the Bank described in
paragraph 1.2(b) shall not be payable or provided to the
Executive, or his dependents, beneficiaries and estate,
because he is not longer an employee of one or both of the
Bank, the Bank shall, to the extent necessary, provide,
pay or provide for payment of equivalent benefits, service
credits and rights to accrue further benefits or service
credits to or for the benefit of the Executive, his
dependents, beneficiaries and estate.
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(b) In the event of a termination of this Agreement under
paragraph 4.1(ii), the Executive in his discretion may elect,
within 60 days after such termination, to be paid a lump sum
or other agreed severance allowance in lieu of termination
payments provided for in paragraph 4.2(a) in an amount of cash
which shall be negotiated and agreed upon in writing between
the Executive and the Bank. Among the forms which the
severance allowance may take, if negotiated and agreed upon in
writing between the Executive and the Bank, shall be payment
of equal installments to the Executive the present value of
which, computed at the time required by Section 4999 of the
Internal Revenue Code of 1986 (the "Code"), is below the
threshold necessary to trigger applicability of Section 4999
of the Code which imposes a nondeductible excise tax on any
recipient of an "excess parachute payment" equal to 20% of the
amount of such payment. In the event that the Executive makes
an election pursuant to this paragraph 4.2(b), the severance
allowance shall represent the present fair market value of the
amount of salary, bonuses and all benefit programs, plans and
arrangements of the Bank which the Executive would be entitled
to during the Employment Period (determined without regard to
paragraph 4.1(iii)) under this Agreement. Upon the date that
the Bank and the Executive enter into a written agreement
providing for a severance payment, the Bank's obligations to
the Executive pursuant to paragraph 4.2(a) shall terminate. In
the event that the Executive and the Bank are unable to
negotiate a mutually satisfactory agreement concerning the
amount of a severance payment pursuant to this paragraph
4.2(b), then the Executive shall receive termination payments
and benefits as provided in paragraphs 4.2(a). Payments made
under this paragraph 4.2(b) shall continue notwithstanding the
subsequent death or disability of the Executive.
(c) In the event of a termination of this Agreement under
paragraph 4.1(iii), (i) the Bank shall pay the Executive's
estate an amount equal to six months' salary at the rate and
as required by paragraph 1.2(a) and in effect immediately
prior to the date of death, (ii) the Bank shall continue
benefits under the Bank's sickness, accident or health
insurance for a period of six months following death of the
Executive for those dependents and beneficiaries of the
Executive who were covered by such programs, plans or
arrangements at the date of the Executive's death, and (iii)
the Executive's dependents, beneficiaries and estate, as the
case may be, will receive such survivor and other benefits as
they may be entitled under the terms of the benefit programs,
plans, and arrangements described in paragraph 1.2(b) which
provide benefits upon death of the Executive.
(d) In the event of a termination of this Agreement under
paragraph 4.1(iv), (i) the Bank shall pay the Executive an
amount equal to six months' salary at the rate and as required
by paragraph 1.2(a) and in effect immediately prior to the
date of total disability, (ii) the Bank shall continue
benefits under the Bank's sickness, accident and health
insurance for two years following the date of total disability
128
for the Executive and his dependents and beneficiaries who are
covered by such programs, plans and arrangements during the
two-year period; and (iii) the Executive, and his dependents,
beneficiaries and estate, as the case may be, will receive
such benefits as they may be entitled under the terms of the
benefit programs, plans, and arrangements described in
paragraph 1.2(b) which provided benefits upon total disability
of the Executive.
(e) In the event of a termination of this Agreement under
paragraph 4.1(v) or (vi), the Executive, and his dependents,
beneficiaries and estate, as the case may be, will receive
such benefits as they may be entitled under the terms of the
benefit programs, plans, and arrangements of the Bank
described in paragraph 1.2(b) which provide benefits upon
retirement, resignation or discharge for cause, as the case
may be.
(f) The Executive shall not be required to mitigate the
amount of any payment provided for in this paragraph 4.2 by
seeking employment or otherwise, nor shall the amount of any
payment provided for in this paragraph 4.2 be reduced by any
compensation or remuneration earned by the Executive as the
result of employment by another employer, or self-employment,
or as a partner, after the date of termination or otherwise.
Any payment provided for in this paragraph 4.2 shall be deemed
"liquidated damages" rather than a "penalty."
4.3. Definitions. The following words shall have the specified
meanings when used in the paragraphs specified:
(a) In paragraphs 4.1(ii), 4.2(a) and (b) and 5, the term
"termination" means termination (i) by the Bank of the
employment of the Executive with the Bank for any reason other
than death or total disability of the Executive or other than
for cause, or (ii) by resignation of the Executive due to a
significant change in the nature or scope of his authorities
or duties from those contemplated in paragraph 1.1, a
reduction in total compensation from that provided in
paragraph 1.2, or the breach by the Bank of any other
provision of this Agreement.
(b) In paragraphs 4.1(vi) and 4.3(a)(i), the term "cause"
means (i) substantiated fraud, or substantiated
misappropriation resulting in material damage to the property
or business of the Bank; conviction for commission of a
felony; (ii) continuance of either willful and repeated
failure or grossly negligent and repeated failure by the
Executive to perform his duties in compliance with this
Agreement after written notice to the Executive by the Board
of Directors specifying such failure, provided that such
"cause" shall have been found by a majority vote of the Board
of Directors of the Bank (who are not serving as a designee of
a person having an interest in excess of 25% of the
outstanding stock of Columbia Bancorp) after at least 10 days'
written notice to the Executive specifying the cause proposed
to be claimed and after an opportunity for the Executive to be
129
heard at meetings of such Board of Directors; or (iii) a
continued violation of paragraph 2 after written notice to the
Executive by the Board of Directors specifying such violation
and providing the Executive the opportunity to cease such
violation within 20 days from the date of receipt by the
Executive of such notice.
(c) In paragraphs 1.1(c), 4.1(iv), 4.2(d) and 4.3(a)(i),
the term "total disability" means total disability as defined
in the Bank's group and individual disability plans. If there
is no such plan, then "total disability" means total
disability as defined in the Executive's individual disability
policy, and if there is no such policy, as defined in the
group disability plan for the law firm of Piper & Marbury
L.L.P., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
4.4. (a) If prior to the first anniversary date of this Agreement,
the Executive resigns for any reason, the Bank will pay, or cause
to be paid, to the Executive an amount equal to one times the
Executive's annual base salary immediately before the Executive's
resignation.
(b) Such payment shall be made in one lump sum within 15
business days after the Executive's resignation.
5. Payments for Termination or Resignation after a Change in
Control.
5.1. Definitions.
(a) A "Change in Control," as used in this Agreement,
shall be deemed to have occurred when:
(i) Any person (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder) is or becomes the
beneficial owner, directly or indirectly, of 25% or more of the
voting equity stock of Columbia Bancorp, or any person (as such
term is used in Sections 13(d) and 14(d)of the Securities Exchange
Act of 1934, as amended, and the regulations promulgated
thereunder) other than Columbia Bancorp is or becomes the
beneficial owner, directly or indirectly, of 25% or more of the
Common Stock of the Bank; or
(ii) Any person (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder) gains control of the
election of a majority of the Board of Directors of Columbia
Bancorp, or any person (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, and the
regulations promulgated thereunder) other than Columbia Bancorp
gains control of the election of a majority of the Board of
Directors of the Bank; or
130
(iii) Any person (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder) gains control of the
management or policies of the Bank; or
(iv) the Bank consolidates with, or merges with or into,
another entity (including a corporation, bank, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein) or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its
assets, or another such entity consolidates with, or merges with
or into, the Bank, in any such event pursuant to a transaction in
which the issued and outstanding shares of the voting equity stock
of the Bank are converted into or exchanged for cash, securities
or other property; or
(v) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of
Directors of the Bank (together with any directors who are members
of the Board of Directors on the date hereof and any new directors
whose election by such Board of Directors or whose nomination for
election by the stockholders of the Bank was approved by a vote of
66-2/3% of the directors then still in office who were either
directors at the beginning of such period of whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the
Bank then in office.
(b) A "Change in Control Period" shall mean the period
commencing 90 days before a Change in Control and ending 365 days
after such Change in Control.
5.2. Amount of Payments. Except as provided in paragraph 5.2(e),
and in lieu of amounts payable under paragraph 4, the Bank will pay the
Executive the following amounts in the following circumstances:
(a) (i) If the Executive is terminated by the Bank in the
circumstances described under paragraph 4.3(a)(i), or if the
Executive resigns during a Change in Control Period in the
circumstances described under paragraph 4.3(a)(ii), or if during a
Change in Control Period the Executive resigns in circumstances
other than those described under paragraph 4.3(a)(ii) without
having been offered an employment agreement the terms of which are
comparable to those of this Agreement, the Bank will pay, or cause
to be paid, to the Executive: (a) if the Executive's termination
or resignation occurs before the Executive has attained the age of
63 years, an amount equal to two times the sum of (i) the
Executive's annual base salary immediately before the Change in
Control and (ii) the average of the bonuses paid to the Executive
over the past three years (including years in which no bonus was
awarded); or (b) if the Executive's termination or resignation
occurs on or after the Executive has attained the age of 63 years,
an amount equal to the amount set forth in paragraph 5.2(a)(i)(a)
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multiplied by a fraction, the numerator of which shall be 730
minus the number of days which have passed since the Executive's
63rd birthday, and the denominator of which shall be 730.
(ii) Such payment shall be made in one lump sum
within 15 business days after the Executive's termination or
resignation.
(b) (i) If the Executive resigns during a Change in
Control Period in circumstances other than those described under
paragraph 4.3(a)(ii) after having been offered an employment
agreement the terms of which are comparable to those of this
Agreement, the Bank will pay, or cause to be paid, to the
Executive: (a) if the Executive's resignation occurs before the
Executive has attained the age of 64 years, an amount equal to the
sum of (i) the Executive's annual base salary immediately before
the Change in Control and (ii) the average of the bonuses paid to
the Executive over the past three years (including years in which
no bonus was awarded); or (b) if the Executive's resignation
occurs on or after the Executive has attained the age of 64 years,
an amount equal to the amount set forth in paragraph 5.2(b)(i)(a)
multiplied by a fraction, the numerator of which shall be 365
minus the number of days which have passed since the Executive's
64th birthday, and the denominator of which shall be 365.
(ii) Such payment shall be made in one lump sum
within 15 business days after the Executive's resignation.
(c) Except as provided in paragraph 5.2(e), if the
Executive is terminated by the Bank or resigns as described in
paragraph 5.2(a), or resigns as described in paragraph 5.2(b), the
Executive shall continue to receive all health, life, and
disability insurance benefits available to him pursuant to
paragraph 1.2(b) of this Agreement immediately before such
termination or resignation. The Executive shall continue to
receive such benefits until the earliest of (a) such time as the
Executive shall have been receiving substantially similar
insurance benefits for six months under subsequent employment, (b)
24 months after the date of a termination or resignation described
in paragraph 5.2(a) or 12 months after the date of a resignation
described in paragraph 5.2(b), or (c) such date as the Executive
shall have attained the age of 65 years.
(d) All options granted to the Executive under the Bank's
stock option award arrangements providing for the granting of
options to acquire common stock to founders, directors and key
employees shall immediately become fully vested in the event of a
Change in Control.
(e) The Executive is to receive no payments under
paragraph 5.2(a) or (b) and no benefits under paragraph 5.2(c) if
the Executive is terminated during a Change in Control Period
after having already attained the age of 65 years, or if the
Executive is terminated by the Bank during a Change in Control
132
Period upon the death or total disability of the Executive or for
cause. In an instance of death or total disability of the
Executive, however, the Executive and his dependents,
beneficiaries and estate shall receive any benefits payable to
them under paragraphs 4.2 (c) and 4.2 (d).
(f) Notwithstanding the foregoing, in the event that any
of the amounts payable to the Executive under paragraph 5.2 would,
if made, cause the Executive to have tax under Section 4999 of the
Code, the Executive may elect, at his discretion, to reduce the
amount payable to him under paragraph 5.2(a) or (b) by an amount
such that the aggregate after-tax amounts the Executive will
receive under paragraph 5.2 will be equal to the aggregate
after-tax amounts the Executive would receive without the
reduction he elected (i.e., the aggregate amounts after the
application of the tax under Section 4999 of the Code and other
taxes)."
6. Legal Costs. If (i) the Bank shall fail to pay or provide
for payment of any amounts required to be paid or provided for hereunder at any
time, (ii) the Executive desires to consult with or retain counsel as to any
possible breach by the Bank of this Agreement or as to any of his rights under
this Agreement, or (iii) the Executive desires to retain counsel to review or
negotiate the terms of this Agreement prior to the effective date of this
Agreement, the Executive shall be entitled to consult with counsel, and the Bank
agree to pay the reasonable fees and expenses of independent counsel for the
Executive in reviewing or negotiating this Agreement, advising him or in
bringing any proceedings, or in defending any proceedings, involving the
Executive's rights under this Agreement, such right to reimbursement to be
immediate upon the presentment by Executive of written ▇▇▇▇▇▇▇▇ for such
reasonable fees and expenses. The Executive shall be entitled to receive
interest (at the prime rate of interest established from time to time at The
First National Bank of Maryland) on any payments of such expenses, or any other
payments under this Agreement, that are overdue.
7. Notices. Any notice, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail/return receipt to the Executive at
the last address he has filed in writing with either of the Bank or, in the case
of the Bank, at its principal executive offices.
8. Binding Agreement. This Agreement shall be effective as of
the date hereof and shall be binding upon and inure to the benefit of the
Executive, his executors, administrators and personal representatives. The
rights and obligations of the Corporation and of the Bank under this Agreement
shall inure to the benefit of and shall be binding upon the Bank, and shall be
transferred to and be binding upon any successor of the Bank including, but not
limited to, any successor of the Bank pursuant to a merger, conversion,
consolidation, or transfer of assets; provided, that this Agreement may not be
assigned by the Bank without the consent of the Executive, and in the case of a
successor by transfer of all or substantially all of the assets of the Bank, or
any other successor in which the Bank does not cease to exist by operation of
the transaction in question as a matter of law, the Bank shall not be relieved
of its obligations hereunder; provided further, that in the case of dissolution
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and winding up of the business of the Bank, this Agreement and the obligations
hereunder shall be binding upon the trustee of the Bank's assets.
9. Entire Agreement. This Agreement constitutes the entire
understanding of the Executive and the Bank with respect to the subject matter
hereof and supersedes any and all prior understandings, written or oral,
including any prior employment agreements between the Bank and the Executive.
This Agreement may not be changed, modified, or discharged orally, but only by
an instrument in writing signed by the parties. This Agreement shall be governed
by the laws of the State of Maryland and the invalidity or unenforceability of
any provisions hereof shall in no way affect the validity or enforceability of
any other provision.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on ____________ _____.
ATTEST: THE COLUMBIA BANK
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▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
President and Chief Executive Officer
WITNESS:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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