AGREEMENT AND PLAN OF REORGANIZATION

 

BY AND BETWEEN

 

HOWARD BANCORP, INC.,

 

HOWARD BANK

 

AND

 

FIRST MARINER BANK

 

 

Dated as of August 14, 2017

			Page
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER			1
	1.1	Merger	1
	1.2	Time and Place of Closing	2
	1.3	Effective Time	2
	1.4	Charter	2
	1.5	Bylaws	2
	1.6	Directors and Officers	2
	1.7	Business; Locations	3
	1.8	Capital Stock
ARTICLE 2 MANNER OF CONVERTING SHARES			3
	2.1	Conversion of Shares	4
	2.2	Anti-Dilution Provisions	4
	2.3	Treatment of First Mariner Equity Awards	4
	2.4	Shares Held by First Mariner or Howard	5
	2.5	Fractional Shares	5
ARTICLE 3 EXCHANGE OF SHARES			5
	3.1	Exchange Procedures	5
	3.2	Dissenting Stockholders	8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF FIRST MARINER			8
	4.1	Organization, Standing, and Power	8
	4.2	Authority of First Mariner; No Breach By Agreement	9
	4.3	Capitalization of First Mariner	9
	4.4	First Mariner Subsidiaries	10
	4.5	Regulatory Reports	11
	4.6	Financial Matters	11
	4.7	Books and Records	13
	4.8	Absence of Undisclosed Liabilities	13
	4.9	Absence of Certain Changes or Events	13
	4.10	Tax Matters	13
	4.11	Assets	15
	4.12	Intellectual Property; Privacy	15
	4.13	Environmental Matters	16
	4.14	Compliance with Laws	17
	4.15	Community Reinvestment Act Compliance	18
	4.16	Foreign Corrupt Practices	18
	4.17	Labor Relations	19
	4.18	Employee Benefit Plans	21
	4.19	Material Contracts	23
	4.20	Agreements with Regulatory Authorities	24
	4.21	Investment Securities	25
	4.22	Derivative Instruments and Transactions	25
	4.23	Legal Proceedings	25
	4.24	Statements True and Correct	26
	4.25	State Takeover Statutes and Takeover Provisions	26
	4.26	Opinion of Financial Advisor	26
	4.27	Tax and Regulatory Matters	27
	4.28	Loan Matters	27

	4.29	Deposits	28
	4.30	Allowance for Loan and Lease Losses	28
	4.31	Insurance	28
	4.32	OFAC; Sanctions	29
	4.33	Brokers and Finders	29
	4.34	Transactions with Affiliates	29
	4.35	Investment Adviser Subsidiary	29
	4.36	No Broker-Dealer Subsidiary	29
	4.37	No Insurance Subsidiary	29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF HOWARD			30
	5.1	The Standard	30
	5.2	Organization, Standing, and Power	30
	5.3	Authority of Howard; No Breach By Agreement	31
	5.4	Capitalization of Howard	32
	5.5	SEC Filings; Financial Statements	32
	5.6	Absence of Undisclosed Liabilities	33
	5.7	Absence of Certain Changes or Events	34
	5.8	Tax Matters	34
	5.9	Compliance with Laws	35
	5.10	Legal Proceedings	36
	5.11	Regulatory Reports	36
	5.12	Community Reinvestment Act Compliance	37
	5.13	Agreements with Regulatory Authorities	37
	5.14	Statements True and Correct	37
	5.15	Tax and Regulatory Matters	38
	5.16	Ownership of First Mariner Common Stock	38
	5.17	Brokers and Finders	38
	5.18	Assets	38
	5.19	Intellectual Property; Privacy	39
	5.20	Environmental Matters	40
	5.21	Foreign Corrupt Practices	40
	5.22	Employee Benefit Plans	40
	5.23	State Takeover Statutes and Takeover Provisions	41
	5.24	Insurance	42
	5.25	OFAC; Sanctions	42
ARTICLE 6 CONDUCT OF BUSINESS PENDING CONSUMMATION			42
	6.1	Affirmative Covenants of First Mariner	42
	6.2	Negative Covenants of First Mariner	43
	6.3	Affirmative Covenants of Howard	46
	6.4	Negative Covenants of Howard	47
	6.5	Reports	48
ARTICLE 7 ADDITIONAL AGREEMENTS			48
	7.1	Registration Statement; Proxy/Information Statement; Stockholder Approval	48
	7.2	Acquisition Proposals	49
	7.3	Exchange Listing	50
	7.4	Consents of Regulatory Authorities	50
	7.5	Investigation and Confidentiality	51
	7.6	Press Releases	52

	7.7	Tax Treatment	52
	7.8	Employee Benefits and Contracts	52
	7.9	Indemnification	54
	7.10	Operating Functions	56
	7.11	Stockholder Litigation	56
	7.12	Legal Conditions to Merger	57
	7.13	Change of Method	57
	7.14	Takeover Laws	57
	7.15	Exemption from Liability Under Section 16(b)	57
	7.16	First Mariner Closing Financial Statements	58
	7.17	Corporate Governance	58
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE			58
	8.1	Conditions to Obligations of Each Party	58
	8.2	Conditions to Obligations of Howard	60
	8.3	Conditions to Obligations of First Mariner	61
ARTICLE 9 TERMINATION			61
	9.1	Termination	61
	9.2	Effect of Termination	64
	9.3	Non-Survival of Representations and Covenants	64
ARTICLE 10 MISCELLANEOUS			64
	10.1	Definitions	64
	10.2	Referenced Pages	72
	10.3	Expenses	74
	10.4	Entire Agreement; Third Party Beneficiaries	76
	10.5	Amendments	76
	10.6	Waivers	76
	10.7	Assignment	77
	10.8	Notices	77
	10.9	Governing Law; Jurisdiction; Waiver of Jury Trial	78
	10.10	Counterparts; Signatures	78
	10.11	Captions; Articles and Sections	78
	10.12	Interpretations	79
	10.13	Enforcement of Agreement	79
	10.14	Severability	79
	10.15	Disclosure	79

 

Exhibit 1	Form of First Mariner Stockholder Agreement
Exhibit 2	List of Signatories to First Mariner Stockholder Consent and First Mariner Stockholder  Agreement
Exhibit 3	Form of First Mariner Stockholder Consent
Exhibit 4	Forms of Employment Agreements

 

First Mariner’s Disclosure Memorandum

Howard’s Disclosure Memorandum

AGREEMENT AND PLAN OF REORGANIZATION

 

THIS AGREEMENT AND PLAN OF REORGANIZATION (this “Agreement”) is made and entered into as of August 14, 2017, by and between Howard Bancorp, Inc., a Maryland corporation (“Howard”), Howard Bank, a Maryland chartered trust company and wholly owned subsidiary of Howard (“Howard Bank”) and First Mariner Bank, a Maryland chartered trust company (“First Mariner”).

 

Preamble

 

Each of the respective boards of directors of First Mariner, Howard, and Howard Bank have approved this Agreement and declared that the Merger, this Agreement and the other transactions contemplated hereby are advisable and in its best interests. This Agreement provides for the acquisition of First Mariner by Howard pursuant to the merger of First Mariner with and into Howard Bank with Howard Bank as the surviving bank.  At the Effective Time of such Merger, the outstanding shares of the capital stock of First Mariner shall be converted into the right to receive a number of shares of Howard Common Stock, subject to the terms and conditions set forth herein. Concurrently with the execution of this Agreement and as an inducement for Howard and Howard Bank to enter into this Agreement, First Mariner is delivering to Howard a stockholder agreement substantially in the form attached hereto as Exhibit 1 (the “First Mariner Stockholder Agreement”) executed by each stockholder of First Mariner listed on Exhibit 2 and immediately following the execution and delivery of this Agreement, First Mariner shall secure from each stockholder of First Mariner listed on Exhibit 2 a written consent substantially in the form attached hereto as Exhibit 3 (the “First Mariner Stockholder Consent”) approving this Agreement (including the transactions contemplated hereby) and approving the principal terms of the Merger. The transactions described in this Agreement are subject to the approvals of the stockholders of First Mariner, Howard and Howard Bank and applicable regulatory authorities and the satisfaction of certain other conditions described in this Agreement.  It is the intention of the Parties to this Agreement that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code. This Agreement is intended by the Parties to be and is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code.

 

Capitalized terms used in this Agreement and not otherwise defined herein are defined in Section 1.106 of this Agreement.

 

NOW, THEREFORE, in consideration of the above and the mutual warranties, representations, covenants, and agreements set forth herein, the Parties agree as follows:

 

ARTICLE 1  
TRANSACTIONS AND TERMS OF MERGER

 

1.1

Merger.

 

Subject to the terms and conditions of this Agreement, at the Effective Time, First Mariner shall be merged with and into Howard Bank in accordance with the provisions of Section 3-701 et. seq. of the Maryland Code, Financial Institutions (including any successor laws, rules, regulations, as amended or supplemented hereafter to the Maryland Code, Financial Institutions or any applicable law, rule, or regulations of the Maryland General Corporations Law, as amended or supplemented hereafter, the “MCFI”), as applicable, with the effects set forth in the MCFI, as applicable (the “Merger”).  Howard Bank shall be the Surviving Bank resulting from the Merger, and shall succeed to and assume all the rights and obligations of First Mariner in accordance with the MCFI. Upon consummation of the Merger the separate corporate existence of First Mariner shall terminate.  The Merger shall be consummated pursuant to the terms of this Agreement, which has been approved by the respective boards of directors of First Mariner, Howard and Howard Bank.

1.2	Time and Place of Closing.

 

The closing of the transactions contemplated hereby (the “Closing”) will take place at 10:00 A.M., Eastern Time, on the date that the Effective Time occurs, or at such other date and time as the Parties, acting through their authorized officers, may mutually agree in writing.  The Closing shall be held at the offices of Howard, located at 2028 East Joppa Road Baltimore, MD 21234 or such other office designated by Howard, unless another location is mutually agreed upon by the Parties.

 

1.3	Effective Time.

 

The Merger and other transactions contemplated by this Agreement shall become effective (the “Effective Time”) on the date and at the time, designated by the Parties, specified in the certificate of merger issued by the Commissioner (the “Commissioner”) of the Maryland Office of the Commissioner of Financial Regulation (“MDOFR”), upon the execution, filing with, and acceptance for record by the State Department of Assessments and Taxation of Maryland of the articles of merger in accordance with the Maryland General Corporation Law (the “MGCL”). Subject to the terms and conditions hereof, unless otherwise mutually agreed upon in writing by the authorized officers of each Party, the Parties shall cause the Effective Time to occur on the last Business Day of the month in which satisfaction or waiver (subject to applicable Law) of the last to occur of the conditions set forth in Article 8 (other than those conditions that by their nature are to be satisfied or waived at the Closing) unless such satisfaction or waiver occurs in the last five Business Days of the month, in which case, the Effective Time shall occur on the last Business Day of the following month. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”

 

1.4

Charter.

 

The charter of Howard Bank in effect immediately prior to the Effective Time shall be the charter of the Surviving Bank until duly amended or repealed.

 

1.5

Bylaws.

 

The bylaws of Howard Bank in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Bank until duly amended or repealed.

 

1.6	Directors and Officers.

 

Subject to Section 1.99, (a) the directors of Howard and Howard Bank in office immediately prior to the Effective Time shall serve as the directors of the Howard and Surviving Bank, respectively, from and after the Effective Time in accordance with the bylaws of the Howard and the Surviving Bank, respectively; and (b) the officers of Howard and Howard Bank in office immediately prior to the Effective Time shall serve as the officers of Howard and the Surviving Bank, respectively, from and after the Effective Time in accordance with the bylaws of Howard and the Surviving Bank, respectively.

 

1.7	Business; Locations.

 

 

1.8	Capital Stock.

 

 

 

 

 

ARTICLE 2  
MANNER OF CONVERTING SHARES

 

2.1	Conversion of Shares.

 

Subject to the provisions of this Article 2, at the Effective Time, by virtue of the Merger and without any action on the part of Howard, Howard Bank, First Mariner or the stockholders of any of the foregoing, the shares of Howard, Howard Bank and First Mariner shall be treated as follows:

 

 

 

 

 

 

2.2	Anti-Dilution Provisions.

 

Without limiting the other provisions of this Agreement and subject to Section Article 6(hh), in the event Howard should split, combine or otherwise reclassify the shares of Howard Common Stock, or make a dividend or other distribution in shares of Howard Common Stock (including any dividend or other distribution of securities convertible into Howard Common Stock), or engage in a reclassification, reorganization, recapitalization or exchange or other like change (without limiting any other rights of Howard hereunder) and the record date therefor (in the case of a stock dividend) or the effective date thereof (in the case of a stock split or similar recapitalization for which a record date is not established) shall be prior to the Effective Time, the Merger Consideration (including the Exchange Ratio) shall be equitably and proportionately adjusted, if necessary and without duplication, to reflect fully the effect of any such change.

 

2.3	Treatment of First Mariner Equity Awards.

 

 

 

2.4	Shares Held by First Mariner or Howard.

 

Each Canceled Share shall automatically be canceled and retired and shall cease to exist, and no consideration shall be issued or delivered in exchange therefor.

 

2.5	Fractional Shares.

 

No certificate, book-entry share or scrip representing fractional shares of Howard Common Stock shall be issued upon the surrender for exchange of Certificates, no dividend or distribution of Howard shall relate to such fractional share interests, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of Howard.  Notwithstanding any other provision of this Agreement, each holder of shares of First Mariner Common Stock or First Mariner Series A Preferred Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Howard Common Stock (after taking into account all certificates delivered by such holder) shall receive, in lieu thereof, cash rounded up to the nearest cent (without interest) in an amount equal to such fractional part of a share of Howard Common Stock that such holder of shares of First Mariner Common Stock or First Mariner Series A Preferred Stock would otherwise have been entitled multiplied by the Per Share Cash Consideration.  No such holder will be entitled to dividends, voting rights, or any other rights as a stockholder in respect of any fractional shares.

 

ARTICLE 3  
EXCHANGE OF SHARES

 

3.1	Exchange Procedures.

 

 

 

 

 

 

 

3.2	Dissenting Stockholders.

 

 

 

 

ARTICLE 4  
REPRESENTATIONS AND WARRANTIES OF FIRST MARINER

 

Except as Previously Disclosed, First Mariner hereby represents and warrants to Howard and Howard Bank as follows:

 

4.1	Organization, Standing, and Power.

 

4.2	Authority of First Mariner; No Breach By Agreement.

 

 

 

 

 

4.3	Capitalization of First Mariner.

 

 

 

 

4.4	First Mariner Subsidiaries.

 

 

4.5	Regulatory Reports.

 

 

4.6	Financial Matters.

 

 

 

 

4.7	Books and Records.

 

The Books and Records have been and are being maintained in the Ordinary Course in accordance and compliance with all applicable accounting requirements and Laws and are complete and accurate in all material respects to reflect corporate action by First Mariner.

 

4.8	Absence of Undisclosed Liabilities.

 

No First Mariner Entity has incurred any Liability, except for Liabilities (a) incurred in the Ordinary Course since December 31, 2016, (b) incurred in connection with this Agreement and the transactions contemplated hereby, or (c) that are accrued or reserved against in the consolidated balance sheet of First Mariner as of June 30, 2017, included in the First Mariner Financial Statements at and for the period ended June 30, 2017.

 

4.9	Absence of Certain Changes or Events.

 

 

 

4.10	Tax Matters.

 

 

 

 

 

 

 

4.11

Assets.

 

 

 

 

 

4.12	Intellectual Property; Privacy.

 

 

 

4.13	Environmental Matters.

 

 

4.14	Compliance with Laws.

 

 

(i)	is in Default under any of the provisions of its charter, articles of incorporation or bylaws (or other governing instruments);

 

(ii)	is in material Default under any Laws, Orders, or Permits applicable to its business or employees conducting its business; or

 

(iii)

since December 31, 2012, has received any written notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (i) asserting that any First Mariner Entity is not in material compliance with any Laws or Orders, or (ii)  requiring any First Mariner Entity to enter into or consent to the issuance of a cease and desist order, injunction, formal agreement, directive, consent decree, commitment or memorandum of understanding, order of prohibition or suspension or other written statements as described under 12 U.S.C. 1818(u), or to adopt any board resolution or similar undertaking, which materially restricts the conduct of its business.

 

 

 

4.15	Community Reinvestment Act Compliance.

 

First Mariner is an “insured depositary institution” as defined in the FDIA and applicable regulations thereunder, is in compliance in all material respects with the applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated thereunder, has received a Community Reinvestment Act rating of “satisfactory” or “outstanding” in its most recently completed examination, and First Mariner has no Knowledge of the existence of any fact or circumstance or set of facts or circumstances which could reasonably be expected to result in First Mariner having its current rating lowered such that it is no longer “satisfactory” or “outstanding.”

 

4.16	Foreign Corrupt Practices.

 

No First Mariner Entity, or, to the Knowledge of First Mariner, any director, officer, agent, employee or other Person acting on behalf of a First Mariner Entity has, in the course of its actions for, or on behalf of, any First Mariner Entity (a) used any corporate funds of First Mariner or any of its Subsidiaries for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds of First Mariner or any of its Subsidiaries, (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, (d) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business to obtain special concessions for First Mariner or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for First Mariner or any of its Subsidiaries, (e) established or maintained any unlawful fund of monies or other Assets of First Mariner or any of its Subsidiaries, (f) made any fraudulent entry on the Books and Records of First Mariner or any of its Subsidiaries or (g) violated or is in violation of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, the USA PATRIOT ACT of 2001, the money laundering Laws of any jurisdiction and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Regulatory Authority (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any Regulatory Authority or any arbitrator involving any First Mariner Entity with respect to the Money Laundering Laws is pending or, to the Knowledge of First Mariner, threatened.

4.17	Labor Relations.

 

 

 

 

 

 

 

4.18	Employee Benefit Plans.

 

 

 

 

 

 

 

 

 

 

 

4.19	Material Contracts.

 

Except as otherwise reflected in the First Mariner Financial Statements, neither First Mariner nor any of its Assets, businesses, or operations, is a party to, or is bound or affected by, or receives benefits under, (a) any employment, severance, termination, consulting, or retirement Contract providing for aggregate payments to any Person in any calendar year in excess of $500,000, (b) any Contract relating to the borrowing of money by any First Mariner Entity or the guarantee by First Mariner of any such obligation (other than Contracts evidencing deposit liabilities, purchases of federal funds, fully secured repurchase agreements, Federal Home Loan Bank advances of depository institution Subsidiaries, and trade payables) in excess of $5,000,000, (c) any Contract which prohibits or restricts any First Mariner Entity (and/or, following consummation of the transactions contemplated by this Agreement, Howard) from engaging in any business activities in any geographic area, line of business or otherwise in competition with any other Person, (d) any Contract relating to the purchase or sale of any goods or services by any First Mariner Entity (other than Contracts entered into in the Ordinary Course involving payments under any individual Contract not in excess of $100,000 or involving Loans, borrowings or guarantees originated or purchased by a First Mariner Entity in the Ordinary Course), (e) any Contract which obligates any First Mariner Entity to conduct business with any third party on an exclusive or preferential basis, (f) any Contract which requires referrals of business or requires any First Mariner Entity to make available investment opportunities to any Person on a priority or exclusive basis, (g) any Contract which grants any “most favored nation” right, right of first refusal, right of first offer or similar right with respect to any material assets, rights or properties of any First Mariner Entity, (h) any Contract which limits the payment of dividends by any First Mariner Entity, (i) any Contract pursuant to which any First Mariner Entity has agreed with any third party to a change of control transaction such as an acquisition, divestiture or merger or contains a put, call or similar right involving the purchase or sale of any equity interests or Assets of any Person and which contains representations, covenants, indemnities or other obligations (including indemnification, “earn-out” or other contingent obligations) that are still in effect, (j) any Contract pursuant to which any First Mariner Entity has agreed with any third parties to become a member of, manage or control a joint venture, partnership, limited liability company or other similar entity, (k) any Contract which relates to material Intellectual Property of any First Mariner Entity (including permitting the use of the names 1st Mariner or any variant thereof) excluding “shrink wrap” licenses, (l) any Contract that provides for payments to be made by any First Mariner Entity upon a change in control thereof, (m) any Contract that may not be canceled by Howard, First Mariner or any of their respective Subsidiaries (i) at their convenience (subject to no more than 90 days’ prior written notice) or (ii) without payment of a penalty or termination fee equal to or greater than $100,000 (assuming such Contract was terminated on the Closing Date), (n) any Contract containing any standstill or similar agreement pursuant to which any First Mariner Entity has agreed not to acquire Assets or equity interests of another Person, (o) any Contract that provides for indemnification by any First Mariner Entity of any Person, except for non-material Contracts entered into in the Ordinary Course, or (p) any other Contract or amendment thereto that would be required to be filed as an exhibit to a SEC Report filed by First Mariner with the SEC as of the date of this Agreement if First Mariner were required to file or voluntarily filed such SEC Reports (together with all Contracts referred to in Sections 1.27, Article 4(ww) and 1.49, the “First Mariner Contracts”).  With respect to each First Mariner Contract:  (i) the Contract is legal, valid and binding on First Mariner or a Subsidiary of First Mariner and is in full force and effect and is enforceable in accordance with its terms; (ii) no First Mariner Entity is in material Default thereunder; (iii) no First Mariner Entity has repudiated or waived any material provision of any such Contract; (iv) no other party to any such Contract is, to the Knowledge of First Mariner, in Default in any material respect or has repudiated or waived any material provision thereunder, and (v) there is not pending, or to the Knowledge of First Mariner, threatened cancellations of any First Mariner Contract prior to the expiration of the term thereof.  All of the First Mariner Contracts have been Previously Disclosed and complete and correct copies of each First Mariner Contract have been made available to Howard and Howard Bank.  All of the indebtedness of any First Mariner Entity for money borrowed is prepayable at any time by such First Mariner Entity without penalty or premium.

4.20	Agreements with Regulatory Authorities.

 

Neither First Mariner nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any formal or informal written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been a recipient of any supervisory letter from, or has adopted any policies, procedures or board resolutions at the request or suggestion of any Regulatory Authority that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in First Mariner’s Disclosure Memorandum, a “First Mariner Regulatory Agreement”), nor has First Mariner or any of its Subsidiaries any Knowledge that any Regulatory Authority is considering issuing, initiating, ordering, or requesting any such First Mariner Regulatory Agreement.

4.21	Investment Securities.

 

 

 

4.22	Derivative Instruments and Transactions.

 

All Derivative Transactions (as defined below) whether entered into for the account of any First Mariner Entity or for the account of a customer of any First Mariner Entity (a) were entered into in the Ordinary Course and in accordance with customary banking practice and applicable rules, regulations and policies of all applicable Regulatory Authorities, (b) are legal, valid and binding obligations of the First Mariner Entity party thereto and, to the Knowledge of First Mariner, each of the counterparties thereto, and (c) are in full force and effect and enforceable in accordance with their terms.  First Mariner or its Subsidiaries and, to the Knowledge of First Mariner, the counterparties to all such Derivative Transactions, have duly performed, in all material respects, their obligations thereunder to the extent that such obligations to perform have accrued.  To the Knowledge of First Mariner, there are no material breaches, violations or Defaults or allegations or assertions of such by any party pursuant to any such Derivative Transactions.  The financial position of First Mariner and its Subsidiaries on a consolidated basis under or with respect to each such Derivative Transaction has been reflected in the Books and Records of First Mariner and such Subsidiaries in accordance with GAAP.  For purposes of this Agreement, the term “Derivative Transaction” means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions.

 

4.23	Legal Proceedings.

 

There is no Litigation instituted or pending, or, to the Knowledge of First Mariner, threatened against any First Mariner Entity, or against any current or former director, officer or employee of a First Mariner Entity in their capacities as such or Employee Benefit Plan of any First Mariner Entity, or against any Asset, interest, or right of any of them, nor are there any Orders outstanding against any First Mariner Entity, in each case, that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on First Mariner.  Section 1.38 of First Mariner’s Disclosure Memorandum sets forth a list of all Litigation as of the date of this Agreement to which any First Mariner Entity is a party. Section 1.38 of First Mariner’s Disclosure Memorandum sets forth a list of all Orders to which any First Mariner Entity is subject.

4.24	Statements True and Correct.

 

 

 

4.25	State Takeover Statutes and Takeover Provisions.

 

First Mariner has taken all action required to be taken by it in order to exempt Howard, Howard Bank, First Mariner, this Agreement, the First Mariner Stockholder Consent, the First Mariner Stockholders Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are exempt from, the requirements of any “moratorium,” “fair price,” “affiliate transaction,” “business combination,” “control share acquisition” or similar provision of the MCFI and any successor thereto (collectively, “Takeover Laws”).  No First Mariner Entity is the beneficial owner (directly or indirectly) of more than 10% of the outstanding capital stock of Howard entitled to vote in the election of Howard’s directors.

 

4.26	Opinion of Financial Advisor.

 

The board of directors of First Mariner has received the opinion of Keefe, Bruyette & Woods, Inc., which, if initially rendered verbally has been or will be confirmed by a written opinion, dated the same date, to the effect that, as of the date of the opinion, and based upon and subject to the factors, assumptions and limitations set forth therein , the Exchange Ratio in the Merger is fair, from a financial point of view, to the holders of First Mariner Common Stock.  Such opinion has not been amended or rescinded as of the date of this Agreement.

4.27	Tax and Regulatory Matters.

 

No First Mariner Entity or, to the Knowledge of First Mariner, any Affiliate thereof has taken or agreed to take any action, and First Mariner does not have any Knowledge of any agreement, plan or other circumstance, that is reasonably likely to (a) prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, or (b) materially impede or delay receipt of any of the Requisite Regulatory Approvals.

 

4.28	Loan Matters.

 

 

 

 

 

 

4.29

Deposits.

 

All of the deposits held by First Mariner (including the records and documentation pertaining to such deposits) have been established and are held in compliance in all material respects with (a) all applicable policies, practices and procedures of First Mariner, and (b) all applicable Laws, including Money Laundering Laws and  anti-terrorism, or embargoed persons requirements.  All of the deposits held by First Mariner are insured to the maximum limit set by the FDIC and the applicable FDIC premium and all assessments due or payable have been fully paid, and no proceedings for the termination or revocation of such insurance are pending, or, to the Knowledge of First Mariner, threatened.

 

4.30	Allowance for Loan and Lease Losses.

 

The allowance for loan and lease losses (“ALLL”) reflected in the First Mariner Financial Statements was, as of the date of each of the First Mariner Financial Statements, in the judgment of management of First Mariner, in compliance with First Mariner’s existing methodology for determining the adequacy of its ALLL and in compliance in all material respects with the standards established by the applicable Regulatory Authority, the Financial Accounting Standards Board and GAAP and is adequate.

 

4.31	Insurance.

 

First Mariner Entities are insured with reputable insurers against such risks and in such amounts as the management of First Mariner reasonably has determined to be prudent and consistent with industry practice.  Section 1.46 of First Mariner’s Disclosure Memorandum contains a true, correct and complete list and a brief description (including the name of the insurer, agent, coverage and the expiration date) of all insurance policies (except for private mortgage insurance policies obtained in the Ordinary Course) in force on the date hereof with respect to the business and Assets of the First Mariner Entities, true, correct and complete copies of which policies have been made available to Howard prior to the date hereof.  The First Mariner Entities are in material compliance with their insurance policies and are not in Default under any of the material terms thereof.  Each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees of the First Mariner Entities. First Mariner is the sole beneficiary of such policies.  All premiums and other payments due under any such policy have been paid, and all material notices and claims thereunder have been filed in due and timely fashion.  To First Mariner’s Knowledge, no First Mariner Entity has received any written notice of cancellation or non-renewal of any such policies, nor, to First Mariner’s Knowledge, is the termination of any such policies threatened.

4.32	OFAC; Sanctions.

 

No First Mariner Entity, or any director, or officer, or to the Knowledge of First Mariner, any agent, employee, Affiliate or other Person acting on behalf of any First Mariner Entity is (a) engaged in any services (including financial services), transfers of goods, software, or technology, or any other business activity related to (i) Cuba, Iran, North Korea, Sudan, Syria or the Crimea region of Ukraine claimed by Russia (“Sanctioned Countries”), (ii) the government of any Sanctioned Country, (iii) any Person located in, resident in, formed under the laws of, or owned or controlled by the government of, any Sanctioned Country, or (iv) any Person made subject of any sanctions administered or enforced by the United States Government, including, without limitation, the list of Specially Designated Nationals of the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or by the United Nations Security Council, the European Union, the United Kingdom’s Office of Financial Sanctions Implementation (Her Majesty’s Treasury), or other relevant sanctions authority (collectively, “Sanctions”), (b) engaged in any transfers of goods, technologies or services (including financial services) that may assist the governments of Sanctioned Countries or facilitate money laundering or other activities proscribed by United States Law, (c) is a Person currently the subject of any Sanctions or (d) located, organized or resident in any Sanctioned Country.

 

4.33	Brokers and Finders.

 

Except for Keefe, Bruyette & Woods, Inc., neither First Mariner nor any of its officers, directors, employees, or Affiliates has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers’ fees, brokerage fees, commissions, or finders’ fees in connection with this Agreement or the transactions contemplated hereby.

 

4.34	Transactions with Affiliates.

 

There are no Contracts, plans, arrangements or other transactions between any First Mariner Entity, on the one hand, and (a) any officer or director of any First Mariner Entity, or (b) to First Mariner’s Knowledge, any (i) record or beneficial owner of five percent or more of the voting securities of First Mariner, (ii) Affiliate or immediate family member of any such officer, director or record or beneficial owner or (iii) any other Affiliate of First Mariner, on the other hand, except those of a type available to employees of First Mariner generally.

 

4.35	Investment Adviser Subsidiary.

 

Neither First Mariner nor any of its Subsidiaries provides investment management, investment advisory or sub-advisory services to any Person (including management and advice provided to separate accounts and participation in wrap fee programs) that is required to register with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended.

 

4.36	No Broker-Dealer Subsidiary.

 

Neither First Mariner nor any of its Subsidiaries is a broker-dealer required to be registered under the Exchange Act with the SEC.

 

4.37	No Insurance Subsidiary.

 

Neither First Mariner nor any of its Subsidiaries conducts insurance operations that require a license from any Regulatory Authority under any applicable Law.

ARTICLE 5  
REPRESENTATIONS AND WARRANTIES OF HOWARD

 

Except as Previously Disclosed, Howard hereby represents and warrants to First Mariner as follows:

 

5.1	The Standard.

 

No representation or warranty of Howard contained in Article 5 shall be deemed untrue or incorrect, and Howard shall not be deemed to have breached a representation or warranty, in each case for all purposes hereunder, including the condition set forth in Section Article 8(o), in any case as a consequence or result of the existence or absence of any fact, circumstance, change or event unless such fact, circumstance, change or event, individually or taken together with all other facts, circumstances, changes or events inconsistent with any representation or warranty contained in Article 5 has had or is reasonably likely to have a Material Adverse Effect on Howard.

 

5.2	Organization, Standing, and Power.

 

 

 

 

(i)

Except for 301 South Dupont Hwy., LLC, which Howard owns 60% of the issued and outstanding capital stock, Howard owns all of the issued and outstanding shares of capital stock (or other equity interests) of the Subsidiaries of Howard. No capital stock (or other equity interest) of a Subsidiary of Howard is or may become required to be issued (other than to another Howard Entity) by reason of any Equity Rights of Howard, and there are no Contracts by which a Subsidiary of Howard is bound to issue (other than to another Howard Entity) additional shares of its capital stock (or other equity interests) or Equity Rights of Howard or by which any Howard Entity is or may be bound to transfer any shares of the capital stock (or other equity interests) of a Subsidiary of Howard (other than to another Howard Entity). All of the shares of capital stock (or other equity interests) of each Subsidiary of Howard held by a Howard Entity are fully paid and nonassessable and are owned by the Howard Entity free and clear of any Lien. The articles or certificate of incorporation, bylaws, or other governing documents of each Subsidiary of Howard comply with applicable Law.

(ii)

Each Subsidiary of Howard is duly organized, validly existing, and in good standing under the Laws of the state of its organization, is authorized under applicable Laws to engage in its business and otherwise has the corporate power and authority to own or lease all of its Assets and to conduct its business in the manner in which its business is now being conducted, except for any failure to be in compliance that would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Howard.

 

5.3	Authority of Howard; No Breach By Agreement.

 

 

 

5.4	Capitalization of Howard.

 

 

 

 

5.5	SEC Filings; Financial Statements.

 

 

 

 

 

5.6	Absence of Undisclosed Liabilities.

 

No Howard Entity has incurred any Liability, except for such Liabilities (a) incurred in the Ordinary Course of such Howard Entity since December 31, 2016, (b) incurred in connection with this Agreement and the transactions contemplated hereby, or (c) that are accrued or reserved against in the consolidated balance sheets of Howard as of June 30, 2017, included in the Howard Financial Statements at and for the period ended June 30, 2017.

5.7	Absence of Certain Changes or Events.

 

 

 

5.8	Tax Matters.

 

 

 

 

 

 

 

5.9	Compliance with Laws.

 

 

(i)	is in Default under any of the provisions of its charter, articles of incorporation or bylaws (or other governing instruments); or

 

(ii)	is in material Default under any Laws, Orders or Permits applicable to its business or employees conducting its business; or

 

(iii)

since December 31, 2012, has received any written notification or communication from any agency or department of federal, state, or local government or any Regulatory Authority or the staff thereof (i) asserting that any Howard Entity is not in material compliance with any Laws or Orders, or (ii) requiring any Howard Entity to enter into or consent to the issuance of a cease and desist order, injunction, formal agreement, directive, consent decree, commitment or memorandum of understanding, order of prohibition or suspension or other written statements as described under 12 U.S.C. 1818(u), or to adopt any board resolution or similar undertaking, which materially restricts the conduct of its business

 

 

 

5.10	Legal Proceedings.

 

There is no Litigation instituted or pending, or, to the Knowledge of Howard, threatened against any Howard Entity, or against any director, employee or Employee Benefit Plan of any Howard Entity, or against any Asset, interest, or right of any of them, nor are there any Orders outstanding against any Howard Entity.

 

5.11	Regulatory Reports.

 

Each of Howard and Howard Bank has duly filed with the Federal Reserve, the FDIC, the MDOFR and any other applicable Regulatory Authorities, as the case may be, all reports, returns, filings, information, data, registrations, submissions, statements, required to be filed under any applicable Law (other than the SEC), including any and all federal and state banking Laws, and the requirements of the applicable Regulatory Authority, and such reports were complete and accurate in all material respects and in compliance in all material respects with the requirements of any applicable Law. There (i) is no unresolved violation, criticism, or exception by any Regulatory Authority with respect to any report or statement relating to any examinations, inspections or investigations of Howard or any of its Subsidiaries and (ii) has been no formal or informal inquiries by, or unresolved disagreements or disputes with, any Regulatory Authority with respect to the business, operations, policies or procedures of Howard or any of its Subsidiaries.

5.12	Community Reinvestment Act Compliance.

 

Howard Bank is an “insured depositary institution” as defined in the FDIA and applicable regulations thereunder, is in compliance in all material respects with the applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated thereunder and has received a Community Reinvestment Act rating of “satisfactory” or “outstanding” in its most recently completed examination, and Howard has no Knowledge of the existence of any fact or circumstance or set of facts or circumstances which could reasonably be expected to result in Howard Bank having its current rating lowered such that it is no longer “satisfactory” or “outstanding.”

 

5.13	Agreements with Regulatory Authorities.

 

Neither Howard nor any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action issued by, or is a party to any formal or informal written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been a recipient of any supervisory letter from, or has adopted any policies, procedures or board resolutions at the request or suggestion of any Regulatory Authority that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in Howard’s Disclosure Memorandum, a “Howard Regulatory Agreement”), nor has Howard or any of its Subsidiaries been advised in writing or, to Howard’s Knowledge, orally, since December 31, 2012, by any Regulatory Authority that it is considering issuing, initiating, ordering, or requesting any such Howard Regulatory Agreement.

 

5.14	Statements True and Correct.

 

 

5.15	Tax and Regulatory Matters.

 

No Howard Entity or, to the Knowledge of Howard, any Affiliate thereof has taken or agreed to take any action, and Howard does not have any Knowledge of any agreement, plan or other circumstance, that is reasonably likely to (i) prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code, or (ii) materially impede or delay receipt of any of the Requisite Regulatory Approvals.

 

5.16	Ownership of First Mariner Common Stock.

 

Except as contemplated by the terms of this Agreement, neither Howard nor any of its Subsidiaries (i) beneficially owns, directly or indirectly, or (ii) is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, any shares of capital stock of First Mariner.

 

5.17	Brokers and Finders.

 

Except for Stephens Inc., none of Howard, Howard Bank nor any of their respective officers, directors, employees, or Affiliates has employed any broker or finder or incurred any Liability for any financial advisory fees, investment bankers’ fees, brokerage fees, commissions, or finders’ fees in connection with this Agreement or the transactions contemplated hereby.

 

5.18

Assets.

 

 

 

 

5.19	Intellectual Property; Privacy.

 

 

 

5.20	Environmental Matters.

 

 

 

5.21	Foreign Corrupt Practices.

 

No Howard Entity, or, to the Knowledge of Howard, any director, officer, agent, employee or other Person acting on behalf of a Howard Entity has, in the course of its actions for, or on behalf of, any Howard Entity (a) used any corporate funds of Howard or any of its Subsidiaries for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds of Howard or any of its Subsidiaries, (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, (d) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment to any Person, private or public, regardless of form, whether in money, property or services, to obtain favorable treatment in securing business to obtain special concessions for Howard or any of its Subsidiaries, to pay for favorable treatment for business secured or to pay for special concessions already obtained for Howard or any of its Subsidiaries, (e) established or maintained any unlawful fund of monies or other Assets of Howard or any of its Subsidiaries, (f) made any fraudulent entry on the Books and Records of Howard or any of its Subsidiaries or (g) violated or is in violation of any of the Money Laundering Laws and no action, suit or proceeding by or before any Regulatory Authority or any arbitrator involving any Howard Entity with respect to the Money Laundering Laws is pending or, to the Knowledge of Howard, threatened.

 

5.22	Employee Benefit Plans.

 

 

 

 

 

 

5.23	State Takeover Statutes and Takeover Provisions.

 

Howard has taken all action required to be taken by it in order to exempt Howard, Howard Bank, First Mariner, this Agreement, the First Mariner Stockholder Consent, the First Mariner Stockholders Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are exempt from, the requirements of any Takeover Laws.  No Howard Entity is the beneficial owner (directly or indirectly) of more than 10% of the outstanding capital stock of First Mariner entitled to vote in the election of First Mariner’s directors.

5.24	Insurance.

 

Howard Entities are insured with reputable insurers against such risks and in such amounts as the management of Howard reasonably has determined to be prudent and consistent with industry practice. The Howard Entities are in material compliance with their insurance policies and are not in Default under any of the material terms thereof.  Each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees of the Howard Entities, Howard is the sole beneficiary of such policies.  All premiums and other payments due under any such policy have been paid, and all material notices and claims thereunder have been filed in due and timely fashion.  To Howard’s Knowledge, no Howard Entity has received any written notice of cancellation or non-renewal of any such policies, nor, to Howard’s Knowledge, is the termination of any such policies threatened.

 

5.25	OFAC; Sanctions.

 

None of Howard, any Howard Entity, or any director, or officer, or to the Knowledge of Howard, any agent, employee, Affiliate or other Person acting on behalf of any Howard Entity is (a) engaged in any services (including financial services), transfers of goods, software, or technology, or any other business activity related to (i) Sanctioned Countries, (ii) the government of any Sanctioned Country, (iii) any Person located in, resident in, formed under the laws of, or owned or controlled by the government of, any Sanctioned Country, or (iv) any Person made subject of any Sanctions, (b) engaged in any transfers of goods, technologies or services (including financial services) that may assist the governments of Sanctioned Countries or facilitate money laundering or other activities proscribed by United States Law, (c) is a Person currently the subject of any Sanctions or (d) located, organized or resident in any Sanctioned Country.

 

ARTICLE 6  
CONDUCT OF BUSINESS PENDING CONSUMMATION

 

6.1	Affirmative Covenants of First Mariner.

 

 

 

6.2	Negative Covenants of First Mariner.

 

From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written consent of Howard shall have been obtained (which consent will not be unreasonably withheld, conditioned or delayed), and except as otherwise expressly contemplated herein or as set forth in Section 1.79 of First Mariner’s Disclosure Memorandum, First Mariner covenants and agrees that it will not do or agree or commit to do, or permit any of its Subsidiaries to do or agree or commit to do, any of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.3	Affirmative Covenants of Howard.

 

From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written consent of First Mariner shall have been obtained, and except as otherwise expressly contemplated herein or as set forth in Section 1.80 of Howard’s Disclosure Memorandum, Howard shall, and shall cause each Subsidiary of Howard to, (a) operate its business only in the usual, regular, and ordinary course, consistent with past practice, (b) use its reasonable best efforts to (i) preserve intact its business (including its organization, Assets, goodwill and insurance coverage), (ii) maintain its rights, authorizations, franchises, advantageous business relationships with customers, vendors, strategic partners, suppliers, distributors and others doing business with it, and the services of its executive officers and key employees, (c) take no action which would reasonably be expected to impede or materially delay (i) the receipt of any approvals of any Regulatory Authority required to consummate the transactions contemplated by this Agreement, (ii) the consummation of the transactions contemplated by this Agreement or (iii) the performance of its covenants and agreements in this Agreement, and (d) consult with First Mariner as to the financial and regulatory implications of a Howard Acquisition Transaction and consider in good faith any concerns raised by First Mariner with respect to the financial and regulatory implications of a Howard Acquisition Transaction at least ten Business Days prior to entry into the definitive agreement related to a Howard Acquisition Transaction.

6.4	Negative Covenants of Howard.

 

From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, unless the prior written consent of First Mariner shall have been obtained (which consent will not be unreasonably withheld, conditioned or delayed), and except as otherwise expressly contemplated herein or as set forth in Howard’s Disclosure Memorandum, Howard covenants and agrees that it shall not do or agree or commit to do, or permit any of its Subsidiaries to do or agree or commit to do, any of the following:

 

 

 

 

 

 

 

 

(ll)            knowingly take any action that is reasonably likely to result in any of the conditions set forth in Article 8 not being satisfied, or materially impair its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby, except as required by applicable Law; or

 

6.5

Reports.

 

Each Party and its Subsidiaries shall file all reports, including Call Reports, required to be filed by it with Regulatory Authorities between the date of this Agreement and the Effective Time and shall deliver to the other Party copies of all such reports promptly after the same are filed.  If financial statements are contained in any such reports filed with the SEC and with respect to the financial statements in the Call Reports, such financial statements will fairly present the consolidated financial position of the entity filing such statements as of the dates indicated and the consolidated results of operations, changes in stockholders’ equity, and cash flows for the periods then ended in accordance with GAAP (subject in the case of interim financial statements to normal recurring year-end adjustments that are not material) or applicable regulatory accounting principles (with respect to the financial statements contained in the Call Reports) consistently applied, except as may be otherwise indicated in the notes thereto and except for the omission of footnotes.

 

ARTICLE 7  
ADDITIONAL AGREEMENTS

 

7.1	Registration Statement; Proxy/Information Statement; Stockholder Approval.

 

 

 

(d)            Howard shall, and shall cause Howard Bank to, take all corporate actions necessary to cause Howard Bank and Howard, as the sole stockholder of Howard Bank, to approve this Agreement and the Merger and grant Howard Bank the corporate authority necessary to consummate the Merger and the other transactions contemplated by this Agreement as soon as reasonably practicable following the execution of this Agreement.

 

7.2	Acquisition Proposals.

 

 

7.3	Exchange Listing.

 

Howard shall use its reasonable best efforts to list, prior to the Effective Time, on Nasdaq the shares of Howard Common Stock to be issued to the holders of First Mariner Common Stock and First Mariner Series A Preferred Stock pursuant to the Merger, and Howard shall give all notices and make all filings with Nasdaq required in connection with the transactions contemplated herein.

 

7.4	Consents of Regulatory Authorities.

 

 

7.5	Investigation and Confidentiality.

 

 

 

 

7.6	Press Releases.

 

First Mariner, Howard and Howard Bank agree that no press release or other public disclosure or communication (including communications to employees, agents and contractors of First Mariner) related to this Agreement or the transactions contemplated hereby shall be issued by either Party (or its Affiliates) without the prior written consent of the other Party (which consent shall not be unreasonably withheld, delayed or conditioned); provided, that nothing in this Section 1.88 shall be deemed to prohibit any Party from making any press release or other public disclosure required by Law or the rules or regulations of any United States or non-United States securities exchange, in which case the Party required to make the release or disclosure shall use its reasonable best efforts to allow the other Party reasonable time to comment on such release or disclosure in advance of the issuance thereof.  The Parties have agreed upon the form of a joint press release announcing the execution of this Agreement.

 

7.7	Tax Treatment.

 

 

 

7.8	Employee Benefits and Contracts.

 

 

 

 

 

 

 

 

7.9	Indemnification.

 

 

 

 

 

7.10	Operating Functions.

 

First Mariner, Howard and Howard Bank shall cooperate with each other in connection with planning for the efficient and orderly combination of the Parties and the operation of Howard Bank (including the former operations of First Mariner) after the Merger, and in preparing for the consolidation of appropriate operating functions to be effective at the Effective Time or such later date as Howard may decide.  First Mariner shall take any action Howard may reasonably request prior to the Effective Time to facilitate the combination of the operations of First Mariner with Howard.  Each Party shall cooperate with the other Party in preparing to execute after the Effective Time conversion or consolidation of systems and business operations generally (including by entering into customary confidentiality, non-disclosure and similar agreements with such service providers and/or the other party).  Without limiting the foregoing, senior officers of First Mariner and Howard shall meet from time to time as First Mariner or Howard may reasonably request to review the financial and operational affairs of First Mariner, and First Mariner shall give due consideration to Howard’s input on such matters, with the understanding that, notwithstanding any other provision contained in this Agreement, (a) neither Howard nor Howard Bank shall under any circumstance be permitted, directly or indirectly, to exercise control of First Mariner or any of its Subsidiaries prior to the Effective Time, (b) First Mariner shall not be under any obligation to act in a manner that could reasonably be deemed to constitute anti-competitive behavior under federal or state antitrust Laws, and (c) First Mariner shall not be required to agree to any material obligation that is not contingent upon the consummation of the Merger.

 

7.11	Stockholder Litigation.

 

Each of Howard and First Mariner shall promptly notify each other in writing of any action, arbitration, audit, hearing, investigation, litigation, suit, subpoena or summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Regulatory Authority or arbitrator pending or, to the Knowledge of Howard or First Mariner, as applicable, threatened against Howard, First Mariner or any of their respective Subsidiaries that (a) questions or would reasonably be expected to question the validity of this Agreement or the other agreements contemplated hereby or thereby or any actions taken or to be taken by Howard, First Mariner or their respective Subsidiaries with respect hereto or thereto, or (b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. First Mariner shall permit Howard  to participate in the defense or settlement of any stockholder litigation against First Mariner and/or its directors relating to the transactions contemplated by this Agreement, and no settlement of any such litigation shall be agreed to without Howard’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).

7.12	Legal Conditions to Merger.

 

Subject in all respects to Sections 1.83 and 1.86 of this Agreement, each of Howard and First Mariner shall, and shall cause its Subsidiaries to, use their reasonable best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements that may be imposed on such party or its Subsidiaries with respect to the Merger and, subject to the conditions set forth in Article 8 hereof, to consummate the transactions contemplated by this Agreement, and (b) to obtain (and to cooperate with the other Party to obtain) any Consent or Order by, any Regulatory Authority and any other third party that is required to be obtained by First Mariner or Howard or any of their respective Subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement.  In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including, any merger between a Subsidiary of Howard, on the one hand, and a Subsidiary of First Mariner, on the other hand) or to vest the Surviving Bank with full title to all properties, assets, rights, approvals, immunities and franchises of any of the Parties to the Merger, the proper officers and directors of each Party and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by Howard.

 

7.13	Change of Method.

 

Howard may at any time change the method of effecting the Merger if and to the extent requested by Howard, and First Mariner agrees to enter into such amendments to this Agreement as Howard may reasonably request in order to give effect to such restructuring; provided, that no such change or amendment shall (i) alter or change the amount or kind of the Merger Consideration provided for in this Agreement, (ii) adversely affect the Tax treatment of the Merger with respect to First Mariner’s stockholders or (iii) be reasonably likely to cause the Closing to be materially delayed or the receipt of the Requisite Regulatory Approvals to be prevented or materially delayed.

 

7.14	Takeover Laws.

 

None of Howard, Howard Bank or First Mariner shall take any action that would cause any Takeover Law to become applicable to this Agreement, the Merger, or any of the other transactions contemplated hereby, and each of Howard, Howard Bank and First Mariner shall take all necessary steps to exempt (or ensure the continued exemption of) the Merger and the other transactions contemplated hereby from any applicable Takeover Law now or hereafter in effect. If any Takeover Law may become, or may purport to be, applicable to the transactions contemplated hereby, each of Howard, Howard Bank and First Mariner will grant such approvals and take such actions as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Law on any of the transactions contemplated by this Agreement, including, if necessary, challenging the validity or applicability of any such Takeover Law.

 

7.15	Exemption from Liability Under Section 16(b).

 

The board of directors of Howard, or a committee of non-employee directors thereof (as such term is defined for purposes of Rule 16b-3(d) under the Exchange Act), shall promptly, and in any event prior to the Effective Time, take all such steps as may be necessary or appropriate to cause (i) any dispositions of First Mariner Common Stock, First Mariner Series A Preferred Stock or First Mariner Stock Options and (ii) any acquisitions of Howard Common Stock pursuant to the transactions contemplated by this Agreement and by those officers and directors of First Mariner subject to the reporting requirements of Section 16(a) of the Exchange Act who, immediately following the Merger, will be officers or directors of Howard subject to the reporting requirements of Section 16(a) of the Exchange Act, to be exempt from liability pursuant to Rule 16b-3 under the Exchange Act to the fullest extent permitted by applicable Law.

7.16	First Mariner Closing Financial Statements.

 

 At least eight Business Days prior to the Effective Time, First Mariner shall provide Howard with First Mariner’s consolidated financial statements presenting the financial condition of First Mariner and its Subsidiaries as of the close of business on the last day of the last month ended prior to the Effective Time and First Mariner’s consolidated results of operations, cash flows, and stockholders’ equity for the period from January 1, 2017 through the close of business on the last day of the last month ended prior to the Effective Time (the “First Mariner Closing Financial Statements”); provided, that if the Effective Time occurs in the month of January or on or before the 15th Business Day of any other month or there are less than 10 Business Days between the satisfaction of the conditions in Article 8 and the Effective Time, First Mariner shall have provided consolidated financial statements as of and through the second month preceding the Effective Time.  Such financial statements shall be accompanied by a certificate of First Mariner’s chief financial officer, dated as of the Effective Time, to the effect that such financial statements continue to reflect accurately, as of the date of the certificate, the financial condition of First Mariner in all material respects. Such financial statements shall have been prepared in accordance with GAAP and regulatory accounting principles and other applicable legal and accounting requirements, in each case except as may be otherwise indicated in the notes thereto or the omission of footnotes (where applicable) and subject to normal year-end adjustments.  Such First Mariner Closing Financial Statements shall also reflect as of their date accruals for all fees, costs, and expenses incurred or expected to be incurred (whether or not doing so is in accordance with GAAP) in connection (directly or indirectly) with the transactions contemplated by this Agreement and shall be accompanied by a certificate of First Mariner’s chief financial officer, dated as of the Effective Time, to the effect that such financial statements meet the requirements of this Section 1.98 and continue to reflect accurately, as of the date of such certificate, the consolidated financial condition, results of operations, cash flows and stockholders’ equity of First Mariner in all material respects, in each case except as may be otherwise indicated in the notes thereto or the omission of footnotes (where applicable) and subject to normal year-end adjustments.

 

7.17	Corporate Governance.

 

 

 

 

ARTICLE 8  
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

 

8.1	Conditions to Obligations of Each Party.

 

The respective obligations of each Party to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by both Parties pursuant to Section 1.111:

 

(i)	The stockholders of First Mariner shall have approved this Agreement, and the consummation of the transactions contemplated hereby, including the Merger, as and to the extent required by Law or by the provisions of any governing instruments.

 

(ii)	The stockholders of Howard shall have approved this Agreement, and the consummation of the transactions contemplated hereby, including the Merger, as and to the extent required by Law or by the provisions of any governing instruments.

 

(iii)

The stockholder of Howard Bank shall have approved this Agreement, and the consummation of the transactions contemplated hereby, including the Merger, as and to the extent required by Law or by the provisions of any governing instruments.

 

 

 

 

 

 

8.2	Conditions to Obligations of Howard.

 

The obligations of Howard to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by Howard pursuant to Section 10.6(a):

 

 

 

 

 

 

 

8.3	Conditions to Obligations of First Mariner.

 

The obligations of First Mariner to perform this Agreement and consummate the Merger and the other transactions contemplated hereby are subject to the satisfaction of the following conditions, unless waived by First Mariner pursuant to Section 10.6(b):

 

 

 

 

ARTICLE 9  
TERMINATION

 

9.1	Termination.

 

Notwithstanding any other provision of this Agreement, and notwithstanding the approval of this Agreement by the stockholders of First Mariner, this Agreement may be terminated and the Merger abandoned at any time prior to the Effective Time:

 

 

 

 

 

(f)         By Howard in the event that any of the conditions precedent to the obligations of Howard to consummate the Merger contained in Section 8.2 cannot be satisfied or fulfilled by the date specified in Section Article 9(c) (provided that the failure of such condition to be satisfied or fulfilled is not a result of Howard’s failure to perform, in any material respect, any of its material covenants or agreements contained in this Agreement or the breach by Howard of any of its material representations or warranties contained in this Agreement);

 

(g)        By First Mariner in the event that any of the conditions precedent to the obligations of First Mariner to consummate the Merger contained in Section 8.2 cannot be satisfied or fulfilled by the date specified in Section Article 9(c) (provided that the failure of such condition to be satisfied or fulfilled is not a result of First Mariner’s failure to perform, in any material respect, any of its material covenants or agreements contained in this Agreement or the breach by First Mariner of any of its material representations or warranties contained in this Agreement);

 

 

(i)	The number obtained by dividing the Average Closing Price by the Starting Price (as defined below) (the “Howard Ratio”) shall be less than 0.80; and

 

(ii)

(x) the Howard Ratio shall be less than (y) the number obtained by dividing the Final Index Price by the Index Price on the Starting Date (each as defined below) and subtracting 0.20 from the quotient in this clause (ii) (y) (such number in this clause (ii) (y) being referred to herein as the “Index Ratio”);

 

subject, however, to the following three sentences. If First Mariner elects to exercise its termination right pursuant to this Section 9.1(j), it shall give written notice to Howard (provided that such notice of election to terminate may be withdrawn at any time within the aforementioned five-day period). During the five-day period commencing with its receipt of such notice, Howard shall have the option to increase the consideration to be received by the holders of First Mariner Common Stock and First Mariner Series A Preferred Stock hereunder, by adjusting the Exchange Ratio (calculated to the nearest one one-thousandth) to equal the lesser of (x) a number (rounded to the nearest one one-thousandth) obtained by dividing (A) the product of the Starting Price, 0.80 and the Exchange Ratio (as then in effect) by (B) the Average Closing Price and (y) a number (rounded to the nearest one one-thousandth) obtained by dividing (A) the product of the Index Ratio and the Exchange Ratio (as then in effect) by (B) the Howard Ratio. If Howard so elects within such five-day period, it shall give prompt written notice to First Mariner of such election and the revised Exchange Ratio, whereupon no termination shall have occurred pursuant to this Section 9.1(j) and this Agreement shall remain in effect in accordance with its terms (except as the Exchange Ratio shall have been so modified).

 

For purposes of this Section 9.1(j) the following terms shall have the meanings indicated:

 

“Average Closing Price” shall mean the average of the daily closing prices for the shares of Howard Common Stock for the 20 consecutive full trading days on which such shares are actually traded on NASDAQ (as reported by The Wall Street Journal or, if not reported thereby, any other authoritative source) ending at the close of trading on the Determination Date.

 

“Determination Date” shall mean the 10th day prior to the Closing Date, provided that if shares of the Howard Common Stock are not actually traded on NASDAQ on such day, the Determination Date shall be the immediately preceding day to the 10th day prior to the Closing Date on which shares of Howard Common Stock actually trade on NASDAQ.

“Final Index Price” shall mean the average of the Index Prices for the 20 consecutive full trading days ending on the trading day prior to the Determination Date.

 

“Index Group” shall mean the NASDAQ Bank Index.

 

“Index Price” shall mean the closing price on such date of the Index Group.

 

“Starting Date” shall mean the last trading day immediately preceding the date of the first public announcement of entry into this Agreement.

 

“Starting Price” shall mean the closing price of a share of Howard Common Stock on NASDAQ (as reported in The Wall Street Journal, or if not reported therein, in another authoritative source) on the Starting Date.

 

9.2	Effect of Termination.

 

In the event of the termination and abandonment of this Agreement pursuant to Section 1.103, this Agreement shall become void and have no further force or effect and there shall be no Liability on the part of any Party hereto for any matters addressed herein or other claim relating to this Agreement and the transactions contemplated hereby, except that (i) the provisions of this Section 1.104, Section 7.5(d), and Article 10, shall survive any such termination and abandonment, and (ii) no such termination shall relieve the breaching Party from Liability resulting from any fraud or intentional breach by that Party of this Agreement occurring prior to such termination or abandonment. In addition, in the event of the termination and abandonment of this Agreement pursuant to Section Article 9(b)(iii) or Section Article 9(d) and, within 12 months of the date of termination of the Agreement, First Mariner enters into an Acquisition Agreement with respect to an Acquisition Transaction or consummates an Acquisition Transaction, then Section 7 and Section 10 of the Confidentiality Agreement, shall become void and have no further force or effect if such sections are not otherwise terminated by their terms.

 

9.3	Non-Survival of Representations and Covenants.

 

The respective representations, warranties, obligations, covenants, and agreements of the Parties shall not survive the Effective Time except this Section 1.105, Sections 7.5(d), 7.7, 7.8 and 7.9, and Articles 1, 2, 3 and 10.

 

ARTICLE 10  
MISCELLANEOUS

 

10.1	Definitions.

 

 

“Acquisition Agreement” means a letter of intent, agreement in principle, merger agreement, acquisition agreement, stock purchase agreement, option agreement or other similar agreement.

 

“Acquisition Proposal” means any offer, inquiry, proposal or indication of interest (whether communicated to First Mariner or publicly announced to First Mariner’s stockholders and whether binding or non-binding) by any Person (other than a Howard Entity) for an Acquisition Transaction.

“Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) involving: (i) any acquisition or purchase, direct or indirect, by any Person or “Group” (other than a Howard Entity) of 20% or more in interest of the total outstanding voting securities of First Mariner or any of its Subsidiaries, or any tender offer or exchange offer that if consummated would result in any Person or “Group” (other than a Howard Entity) beneficially owning 20% or more in interest of the total outstanding voting securities of First Mariner or any of its Subsidiaries, or any merger, consolidation, business combination or similar transaction involving First Mariner or any of its Subsidiaries pursuant to which the stockholders of First Mariner immediately preceding such transaction hold less than 80% of the equity interests in the surviving or resulting entity (which includes the parent corporation of any constituent corporation to any such transaction) of such transaction; (ii) any sale, lease, exchange, transfer, license, acquisition or disposition of 20% or more of the consolidated Assets of First Mariner and its Subsidiaries, taken as a whole; or (iii) any liquidation or dissolution of First Mariner.

 

“Affiliate” of a Person means any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person and “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a person, whether through the ownership of voting securities, as trustee or executor, by contract or any other means.

 

“Assets” of a Person means all of the assets, properties, businesses and rights of such Person of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued or contingent, or otherwise relating to or utilized in such Person’s business, directly or indirectly, in whole or in part, whether or not carried on the books and records of such Person, and whether or not owned in the name of such Person or any Affiliate of such Person and wherever located.

 

“BHC Act” means the Bank Holding Company Act of 1956, as amended.

 

“Books and Records” means all files, ledgers and correspondence, all manuals, reports, texts, notes, memoranda, invoices, receipts, accounts, accounting records and books, financial statements and financial working papers and all other records and documents of any nature or kind whatsoever, including those recorded, stored, maintained, operated, held or otherwise wholly or partly dependent on discs, tapes and other means of storage, including any electronic, magnetic, mechanical, photographic or optical process, whether computerized or not, and all software, passwords and other information and means of or for access thereto, belonging to the applicable Party and its Subsidiaries or relating to their business.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which all banking institutions in Baltimore, Maryland are authorized or obligated by Law or executive order to close.

 

 “Call Reports” mean the applicable Party’s Consolidated Reports of Condition and Income (FFIEC Form 041) or any successor form of the Federal Financial Institutions Examination Council.

 

“Change Date” means June 17, 2014.

 

“Code” means the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means the confidentiality agreement by and between First Mariner and Howard, dated as of May 11, 2017.

 

“Consent” means any consent, approval, authorization, clearance, exemption, waiver, or similar affirmation by any Person pursuant to any Contract, Law, Order, or Permit.

 

“Contract” means any written or oral agreement, arrangement, authorization, commitment, contract, indenture, instrument, lease, license, obligation, plan, practice, restriction, understanding, or undertaking of any kind or character, or other document to which any Person is a party or that is binding on any Person or its capital stock, Assets or business.

 

“Contractors” means each independent contractor, consultant, freelancer or other service provider.

 

“Costs and Expenses” means any and all judgments, penalties, fines and amounts paid in settlement and all expenses actually incurred, including, reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, arbitration and mediation costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on an Indemnified Party as a result of the actual or deemed receipt of any payments under Section 1.91, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Litigation for which an Indemnified Party is entitled to indemnification pursuant to Section 1.91. 

 

“Default” means (i) any breach or violation of, default under, contravention of, conflict with, or failure to perform any obligations under any Contract, Law, Order, or Permit, (ii) any occurrence of any event that with the passage of time or the giving of notice or both would constitute a breach or violation of, default under, contravention of, or conflict with, any Contract, Law, Order, or Permit, or (iii) any occurrence of any event that with or without the passage of time or the giving of notice would give rise to a right of any Person to exercise any remedy or obtain any relief under, terminate or revoke, suspend, cancel, or modify or change the current terms of, or renegotiate, or to accelerate the maturity or performance of, or to increase or impose any Liability under, any Contract, Law, Order, or Permit.

 

“Disclosure Memorandum” of a Party means a letter delivered by such Party to the other Party prior to execution of this Agreement, setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Articles 4 and 5, as applicable. or to one or more of its covenants contained in this Agreement; provided, that (i) no such item is required to be set forth in a Disclosure Memorandum as an exception to a representation or warranty if its absence would not be reasonably likely to result in the related representation or warranty being deemed untrue or incorrect and (ii) the mere inclusion of an item in a Disclosure Memorandum as an exception to a representation or warranty shall not be deemed an admission by a Party that such item represents a material exception or fact, event or circumstance or that such item is reasonably likely to result in a Material Adverse Effect on the Party making the representation or warranty.

 

“Employee Benefit Plan” means each pension, retirement, profit-sharing, deferred compensation, stock option, restricted stock, phantom equity, employee stock ownership, share purchase, severance, retention, vacation, bonus, commission, incentive compensation, change in control or other incentive plan, medical, vision, dental or other health plan, any life insurance plan, flexible spending account, cafeteria plan, vacation, holiday, disability or any other employee benefit plan or fringe benefit plan, including any “employee benefit plan,” as that term is defined in Section 3(3) of ERISA and any other plan, policy, program or arrangement providing compensation or other benefits, including employment and change in control agreements (but excluding offer letters or oral agreements in each case for at-will employment without any severance rights), whether or not such Employee Benefit Plan is or is intended to be (i) covered or qualified under the Code, ERISA or any other applicable Law, (ii) written or oral, (iii) funded or unfunded, (iv) actual or contingent, or (v) arrived at through collective bargaining or otherwise.

“Environmental Laws” means all Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface, or subsurface strata) including the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq., and other Laws relating to emissions, discharges, releases, or threatened releases of any Hazardous Material, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of any Hazardous Material.

 

“Equity Rights” means all arrangements, calls, commitments, Contracts, options, rights (including preemptive rights or redemption rights), stock appreciation rights, restricted stock units, scrip, understandings, warrants, or other binding obligations of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, shares of the capital stock or equity interest of a Person or by which a Person is or may be bound to issue additional shares of its capital stock or other equity interests.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any entity which together with a First Mariner Entity would be treated as a single employer under Code Section 414.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exhibit” means the Exhibits so marked, copies of which are attached to this Agreement.  Such Exhibits are hereby incorporated by reference herein and made a part hereof, and may be referred to in this Agreement and any other related instrument or document without being attached hereto.

 

“Federal Reserve” means the Board of Governors of the Federal Reserve System or a Federal Reserve Bank acting under the appropriately delegated authority thereof, as applicable.

 

“First Mariner Common Stock” means the shares of common stock, $10.00 par value per share, of First Mariner.

 

“First Mariner Entities” means, collectively, First Mariner and all of its Subsidiaries.

 

“First Mariner Financial Statements” means (i) the consolidated statement of financial condition (including related notes and schedules, if any) of First Mariner as of June 30, 2017, and as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for the three and six months ended June 30, 2017, and for each of the fiscal years ended December 31, 2016, 2015, and 2014, as filed by First Mariner in Call Reports (and, in the case of the annual financial statements, as audited and made available to the stockholders of First Mariner) and (ii) the consolidated statements of financial condition of First Mariner (including related notes and schedules, if any) and related statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) included in Call Reports filed by First Mariner with respect to periods ended subsequent to June 30, 2017.

“First Mariner Series A Preferred Stock” means the shares of the Series A Non-Voting Non-Cumulative Perpetual Preferred Stock, par value $10.00 per share, of First Mariner.

 

“First Mariner Stock Option Plan” means the 1^st Mariner Bank 2015 Equity Incentive Plan.

 

“GAAP” means U.S. generally accepted accounting principles, consistently applied during the periods involved.

 

“Hazardous Material” means (i) any hazardous substance, hazardous material, hazardous waste, regulated substance, or toxic substance (as those terms are defined by any applicable Environmental Laws) and (ii) any chemicals, pollutants, contaminants, petroleum, petroleum products, or oil, asbestos-containing materials and any polychlorinated biphenyls.

 

“Howard Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by this Agreement) whereby Howard, Howard Bank or any of their Subsidiaries: (i) acquires or purchases, directly or indirectly, 50% or more in interest of the total outstanding voting securities of any Person, whether by merger, consolidation, business combination, acquisition of securities or similar transaction or (ii) purchase, lease, exchange, license or acquire 50% or more of the consolidated Assets of a Person.

 

“Howard Capital Stock” means, collectively, Howard Common Stock, any preferred stock of Howard and any other class or series of capital stock of Howard.

 

“Howard Common Stock” means the shares of common stock, par value $0.01 per share, of Howard.

 

“Howard Entities” means, collectively, Howard, Howard Bank and all of their Subsidiaries.

 

“Howard Financial Statements” means (i) the consolidated balance sheets (including related notes and schedules, if any) of Howard as of June 30, 2017, and as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) for the quarter and six months ended June 30, 2017, and for each of the three fiscal years ended December 31, 2016, 2015, and 2014, as filed by Howard in SEC Documents, and (ii) the consolidated balance sheets of Howard (including related notes and schedules, if any) and related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows (including related notes and schedules, if any) included in SEC Documents filed with respect to periods ended subsequent to June 30, 2017.

 

“Howard Options” means each option or other Equity Right to purchase shares of Howard Common Stock pursuant to stock options or stock appreciation rights.

“Howard Stock Plans” means the existing stock option and other stock-based compensation plans of Howard designated as follows: Howard Bancorp 2004 Incentive Stock Option Plan, Howard Bancorp 2004 Incentive Stock Option Plan, and Howard Bancorp, Inc. 2013 Equity Incentive Plan.

 

 “Intellectual Property” means copyrights, patents, trademarks, service marks, service names, trade names, brand names, internet domain names, logos together with all goodwill associated therewith, registrations and applications therefor, technology rights and licenses, computer software (including any source or object codes therefor or documentation relating thereto), trade secrets, franchises, know-how, inventions, and other intellectual property rights.

 

“Knowledge” or “knowledge” as used with respect to a Person (including references to such Person being aware of a particular matter) means the actual knowledge of the chairman, president, chief financial officer, chief risk officer (in the case of Howard), chief accounting officer (in the case of Howard), chief operating officer, chief credit officer, general counsel (in the case of Howard), or any senior, executive or other vice president in charge of human resources of such Person and the knowledge of any such Persons obtained or which would have been obtained from a reasonable investigation.

 

“Law” means any code, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its Assets, Liabilities, or business, including those promulgated, interpreted or enforced by any Regulatory Authority.

 

“Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the Ordinary Course) of any type, whether accrued, absolute or contingent, liquidated or unliquidated, matured or unmatured, or otherwise.

 

“Lien” means any conditional sale agreement, default of title, easement, encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge, option, right of first refusal, reservation, restriction, security interest, title retention or other security arrangement, or any adverse right or interest, charge, or claim of any nature whatsoever of, on, or with respect to any property or property interest, other than Permitted Liens.

 

“Litigation” means any action, arbitration, cause of action, lawsuit, claim, complaint, criminal prosecution, governmental or other examination or investigation, audit (other than regular audits of financial statements by outside auditors), compliance review, inspection, hearing, administrative or other proceeding relating to or affecting a Party, its business, its records, its policies, its practices, its compliance with Law, its actions, its Assets (including Contracts related to it), or the transactions contemplated by this Agreement, but shall not include regular, periodic examinations of depository institutions and their Affiliates by Regulatory Authorities.

 

“Loans” means any written or oral loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, guarantees and interest bearing assets) to which a Party or any of its Subsidiaries is party as a creditor.

 

“Losses” means any and all demands, claims, actions or causes of action, assessments, losses, diminution in value, damages (including special and consequential damages), liabilities, costs, and expenses, including interest, penalties, cost of investigation and defense, and reasonable attorneys’ and other professional fees and expenses.

“Material” or “material” for purposes of this Agreement shall be determined in light of the facts and circumstances of the matter in question; provided that any specific monetary amount stated in this Agreement shall determine materiality in that instance.

 

“Material Adverse Effect” means with respect to any Party and its Subsidiaries, any fact, circumstance, event, change, effect, development or occurrence that, individually or in the aggregate together with all other facts, circumstances, events, changes, effects, developments or occurrences, directly or indirectly, (i) has had or would reasonably be expected to result in a material adverse effect on the condition (financial or otherwise), results of operations, Assets, liabilities or business of such Party and its Subsidiaries taken as a whole; provided, that a “Material Adverse Effect” shall not be deemed to include effects to the extent resulting from (A) changes after the date of this Agreement in GAAP or regulatory accounting requirements, (B) changes after the date of this Agreement in Laws of general applicability to companies in the financial services industry, (C) changes after the date of this Agreement in global, national or regional political conditions or general economic or market conditions in the United States (and with respect to each of Howard, Howard Bank and First Mariner, in the respective markets in which they operate), including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets affecting other companies in the financial services industry, (D) after the date of this Agreement, general changes in the credit markets or general downgrades in the credit markets, (E) failure, in and of itself, to meet earnings projections or internal financial forecasts, but not including any underlying causes thereof unless separately excluded hereunder, or changes in the trading price of a Party’s common stock, in and of itself, but not including any underlying causes unless separately excluded hereunder, (F) the public disclosure of this Agreement and the impact thereof on relationships with customers or employees, (G) any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, or (H) actions or omissions taken with the prior written consent of the other Party hereto or expressly required by this Agreement; except, with respect to clauses (A), (B), (C), (D) and (G), to the extent that the effects of such change disproportionately affect such Party and its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such Party and its Subsidiaries operate, or (ii) prevents or materially impairs the ability of such Party to timely consummate the transactions contemplated hereby.

 

“Nasdaq” means the NASDAQ Capital Market.

 

“Ordinary Course” means the conduct of the business of the applicable Party in substantially the same manner as such business was operated on the date of this Agreement, including operations in conformance and consistent with the applicable Party’s practices and procedures prior to and as of such date.

 

“Operating Property” means any property owned, leased, or operated by the Party in question or by any of its Subsidiaries or in which such Party or Subsidiary holds a security interest or other interest (including an interest in a fiduciary capacity), and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

 

“Order” means any administrative decision or award, decree, injunction, judgment, order, consent decree, quasi-judicial decision or award, ruling, or writ of any federal, state, local or foreign or other court, arbitrator, mediator, tribunal, administrative agency, or Regulatory Authority.

 

“OREO” means “other real estate owned” or words of similar import as reflected in the First Mariner Financial Statements or Howard Financial Statements, as applicable.

“Participation Facility” means any facility or property in which the Party in question or any of its Subsidiaries participates in the management and, where required by the context, said term means the owner or operator of such facility or property, but only with respect to such facility or property.

 

“Party” means any of First Mariner, Howard or Howard Bank, and “Parties” means First Mariner, Howard, and Howard Bank.

 

“Permit” means any federal, state, local, or foreign governmental approval, authorization, certificate, easement, filing, franchise, license, notice, permit, or right to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, Assets, or business.

 

“Per Share Cash Amount” means $32.50 per share.

 

“Person” means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a Representative capacity.

 

“Previously Disclosed” by a Party means information set forth in its Disclosure Memorandum or information set forth in its SEC Documents that were filed prior to the date hereof.

 

“Registration Statement” means the Registration Statement on Form S‑4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto, to be filed with the SEC by Howard under the Securities Act with respect to the shares of Howard Common Stock to be issued to the stockholders of First Mariner pursuant to this Agreement.

 

“Regulatory Authorities” means, collectively, the SEC, the Nasdaq, state securities authorities, the Financial Industry Regulatory Authority, the Securities Investor Protector Corporation, applicable securities, commodities and futures exchanges, and other industry self-regulatory organizations, the Federal Reserve, the OCC, the FDIC, the MDOFR, the IRS, the DOL, the PBGC, the Consumer Financial Protection Bureau and all other foreign, federal, state, county, local or other governmental, banking or regulatory agencies, authorities (including taxing and self-regulatory authorities), instrumentalities, commissions, boards, courts, administrative agencies, commissions or bodies.

 

“Representative” means, with respect to any Person, any officer, director, employee, investment banker, financial or other advisor, attorney, accountant, consultant, or other representative or agent of or engaged or retained by such Person.

 

“SEC” means the United States Securities and Exchange Commission.

 

“SEC Documents” means all forms, proxy statements, registration statements, prospectuses, reports, schedules, and other documents filed, together with any amendments thereto, by Howard or any of Howard’s Subsidiaries with the SEC on or after January 1, 2017.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securities Laws” means the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules and regulations of any Regulatory Authority promulgated thereunder.

“Subsidiaries” means all those corporations, associations, or other business entities of which the entity in question either (i) owns or controls more than 50% of the outstanding equity securities or other ownership interests either directly or through an unbroken chain of entities as to each of which more than 50% of the outstanding equity securities is owned directly or indirectly by its parent (provided, there shall not be included any such entity the equity securities of which are owned or controlled in a fiduciary capacity), including such corporations, associations, or other business entities acquired as a Subsidiary of the entity in question after the date hereof and held as a Subsidiary at the Effective Time, (ii) in the case of partnerships, serves as a general partner, (iii) in the case of a limited liability company, serves as a managing member, or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof.

 

“Superior Proposal” means any unsolicited bona fide written Acquisition Proposal with respect to which the board of directors of First Mariner determines in its good faith judgment (based on, among other things, the advice of outside legal counsel and a financial advisor) to be more favorable, from a financial point of view, to First Mariner’s stockholders than the Merger and the other transactions contemplated by this Agreement (as it may be proposed to be amended by Howard), taking into account all relevant factors (including the Acquisition Proposal and this Agreement (including any proposed changes to this Agreement that may be proposed by Howard in response to such Acquisition Proposal)); provided, that for purposes of the definition of “Superior Proposal,” the references to “20%” and “80%” in the definitions of Acquisition Proposal and Acquisition Transaction shall be deemed to be references to “100%”.

 

 “Surviving Bank” means Howard Bank as the surviving Maryland trust company resulting from the Merger.

 

 “Tax” or “Taxes” means any federal, state, county, local, or foreign taxes, or, to the extent in the nature of a tax, any charges, fees, levies, imposts, duties, or other assessments, including income, gross receipts, excise, employment, sales, use, transfer, recording license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, commercial rent, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax, imposed or required to be withheld by the United States or any state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties, and additions imposed thereon or with respect thereto.

 

“Tax Return” means any report, return, information return, or other document required to be supplied to a Regulatory Authority in connection with Taxes, including any return of an affiliated or combined or unitary group that includes a Party or its Subsidiaries.

 

10.2	Referenced Pages.

 

The terms set forth below shall have the meanings ascribed thereto in the referenced pages:

 

280G Stockholder Approval	54
401(k) Plan	53
Agreement	1
ALLL	28

Average Closing Price	63
Burdensome Condition	50
Canceled Shares	3
Certificate	3
Change in the First Mariner Recommendation	49
Chosen Courts	78
Closing	2
Closing Date	2
Commissioner	2
Covered Employees	52
Derivative Transaction	25
Determination Date	64
DOL	21
Effective Time	2
Exchange Agent	5
Exchange Fund	5
Exchange Ratio	3
FDIA	11
FDIC	11
Final Index Price	64
First Mariner	1
First Mariner Benefit Plans	21
First Mariner Contracts	24
First Mariner Dissenting Shares	8
First Mariner Recommendation	49
First Mariner Regulatory Agreement	25
First Mariner Stock Option	4
First Mariner Stockholder Agreement	1
First Mariner Stockholder Approval	9
First Mariner Stockholder Consent	1
First Mariner Termination Fee	75
First Mariner Warrant	4
Howard	1
Howard Bank	1
Howard Benefit Plans	41
Howard Certificates	5
Howard Ratio	63
Howard Real Property	38
Howard Recommendation	49
Howard Regulatory Agreement	37
Howard Reimbursement Amount	75
Howard SEC Reports	32
Howard Stockholder Approval	49
Howard Systems	39
Howard Termination Fee	75
Howard’s Stockholders’ Meeting	49
Indemnified Party	54
Index Group	64
Index Price	64
Index Ratio	63
IRS	21

Maximum Amount	55
MCFI	1
MDOFR	2
Merger	1
Merger Consideration	3
MGCL	2
Money Laundering Laws	19
OFAC	29
PBGC	21
Permitted Liens	15
Pool	27
Proxy/Information Statement	48
Real Property	15
Regulatory Communication	50
Requisite Regulatory Approvals	59
Sanctioned Countries	29
Sanctions	29
Sarbanes-Oxley Act	18
Starting Date	64
Starting Price	64
Systems	16
Takeover Laws	26
Tax Opinion	60

 

Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation.”  The words “hereby,” “herein,” “hereof,” “hereunder” and similar terms refer to this Agreement as a whole and not to any specific Section.  All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. If a word or phrase is defined, the other grammatical forms of such word or phrase have a corresponding meaning. Any capitalized terms used in any schedule or Exhibit but not otherwise defined therein shall have the meaning set forth in this Agreement.  All references to “dollars” or “$” in this Agreement are to United States dollars.  All references to “the transactions contemplated by this Agreement” (or similar phrases) include the transactions provided for in this Agreement, including the Merger.  Any Contract or Law defined or referred to herein or in any Contract that is referred to herein means such Contract or Law as from time to time amended, modified or supplemented, including (in the case of Contracts) by waiver or consent and (in the case of Law) by succession of comparable successor Law and references to all attachments thereto and instruments incorporated therein.  The term “made available” means any document or other information that was (a) provided (whether by physical or electronic delivery)  by one Party or its representatives to the other Party and its representatives at least two Business Days prior to the date hereof, (b) included in the virtual data room (on a continuation basis without subsequent modification) of a Party at least two Business Days prior to the date hereof or (c) filed by a Party with the SEC and publicly available on EDGAR at least two Business Days prior to the date hereof.

 

10.3

Expenses.

 

 

(i)

Either First Mariner or Howard terminates this Agreement pursuant to Sections Article 9(b)(iii) or Article 9(c) or Howard terminates this Agreement pursuant to Section Article 9(f), and at the time of such termination, any Person has made and not withdrawn an Acquisition Proposal or has publicly announced an intention (whether or not conditional) to make an Acquisition Proposal, and within 12 months of such termination First Mariner shall either (A) consummate an Acquisition Transaction or (B) enter into an Acquisition Agreement with respect to an Acquisition Transaction (provided, that for purposes of this Section Article 10(c)(i), each reference to “20%” and “80%” in the definition of Acquisition Transaction shall be deemed to be a reference to “50%”), whether or not such Acquisition Transaction is subsequently consummated; or

 

(ii)	Howard shall terminate this Agreement pursuant to Section Article 9(d),

 

then First Mariner shall pay to Howard an amount equal to $7,500,000 (the “Howard Termination Fee”).  In the event First Mariner terminates this Agreement pursuant to Section 9.1(e), then Howard shall pay to First Mariner an amount equal to $7,500,000 (the “First Mariner Termination Fee”).  In the event that Howard or First Mariner terminates this Agreement pursuant to Section Article 9(b)(iv), then Howard shall reimburse First Mariner for all of its all fees, costs, and expenses incurred in connection with the transactions contemplated by this Agreement upon delivery by First Mariner of written evidence of receipts and invoices and written confirmation of payments of such fees, costs and expenses (the “First Mariner Reimbursement Amount”); provided, that Howard shall not be obligated to pay any of such fees, costs and expenses that exceeds $750,000, in the aggregate.  The payment of the Howard Termination Fee by First Mariner or the First Mariner Termination Fee or First Mariner Reimbursement Amount by Howard pursuant to this Section 10.3(b) constitutes liquidated damages and not a penalty, and shall be the sole monetary remedy of Howard in the event of termination of this Agreement pursuant to Sections Article 9(b)(iii), Article 9(c), Article 9(d) or Article 9(f), and First Mariner in the event of termination of this Agreement pursuant to Sections Article 9(b)(iv) or Article 9(e). If the Howard Termination Fee shall be payable pursuant to subsection (i) of this Section Article 10(c), the Howard Termination Fee shall be paid in same-day funds at or prior to the earlier of the date of consummation of such Acquisition Transaction or the date of execution of an Acquisition Agreement with respect to such Acquisition Transaction. If the Howard Termination Fee or First Mariner Termination Fee shall otherwise be payable pursuant to this Section 10.3(b), the Howard Termination Fee or First Mariner Termination Fee, as applicable, shall be paid in same-day funds within two Business Days from the date of termination of this Agreement.  Howard shall pay the Howard Reimbursement Amount within two Business Days of receipt of written evidence of all invoices, receipts and confirmations of payment.

 

10.4	Entire Agreement; Third Party Beneficiaries.

 

Except as otherwise expressly provided herein, this Agreement (including the Disclosure Memorandum of each of First Mariner and Howard, the exhibits, the schedules, and the other documents and instruments referred to herein) constitutes 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, including the Confidentiality Agreement.  Nothing in this Agreement expressed or implied, is intended to confer upon any Person, other than the Parties or their respective successors, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, other than as provided in Section 1.91 and Section 7.17. The representations and warranties in this Agreement are the product of negotiations among the Parties hereto and are for the sole benefit of the Parties.  Any inaccuracies in such representations and warranties are subject to waiver by the Parties hereto in accordance herewith without notice or liability to any other Person.  In some instances, the representations and warranties in this Agreement may represent an allocation among the Parties hereto of risks associated with particular matters regardless of the knowledge of any of the Parties hereto.  Consequently, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.  Notwithstanding any other provision hereof to the contrary, no consent, approval or agreement of any third party beneficiary will be required to amend, modify to waive any provision of this Agreement.

 

10.5	Amendments.

 

To the extent permitted by Law, this Agreement may be amended by a subsequent writing signed by each of the Parties upon the approval of each of the Parties, whether before or after First Mariner Stockholder Approval, Howard Stockholder Approval, or approval by the sole stockholder of Howard Bank of this Agreement has been obtained; provided, that after obtaining First Mariner Stockholder Approval, Howard Stockholder Approval or approval of the sole stockholder of Howard Bank, there shall be made no amendment that requires further approval by such First Mariner stockholders, Howard Bank stockholder or Howard stockholders, respectively, unless such further approval of such stockholders is obtained.

 

10.6

Waivers.

 

 

 

By:
Name:
Title:

By:
Name:
Title:

	Stockholder:
	(Print Name of Stockholder)
	(Signature)
	(Print name and title if signing on behalf of an entity)
	(Print Address)
	(Print Address)
	(Print Telephone Number)
	(Social Security or Tax I.D. Number)

	shares of Bank Common Stock
	shares of Bank Series A Preferred Stock