Agreement And Plan of Share Exchange

EXECUTION

COUNTERPART





AGREEMENT AND PLAN OF SHARE EXCHANGE



between



Wilson/Bennett Capital Management, Inc.



and



Cardinal Financial Corporation





April 29, 2005








TABLE OF CONTENTS



ARTICLE 1
The Share Exchange and Related Matters

1.1 The Share Exchange
1.2 The Closing and Effective Date
1.3 Definitions

ARTICLE 2
Effect of Share Exchange on Common Stock

2.1 Conversion of Shares
2.2 Manner of Exchange
2.3 Fractional Shares
2.4 Dividends

ARTICLE 3
Representations and Warranties

3.1 Representations and Warranties of Wilson/Bennett
(a) Organization and Standing
(b) Authority
(c) Capital Structure
(d) Ownership of the Stock
(e) Financial Statements
(f) Absence of Undisclosed Liabilities
(g) Legal Proceedings; Compliance with Laws
(h) Investment Advisory Activities
(i) Reports
(j) Regulatory Approvals
(k) Labor Relations
(l) Tax Matters
(m) Property
(n) Employee Benefit Plans
(o) Investment Securities
(p) Material Contracts
(q) Insurance
(r) Absence of Material Changes and Events
(s) Brokers and Finders









(t) Environmental Matters
(u) Untrue Statements and Omissions
(v) Books and Records

3.2 Representations and Warranties of Cardinal
(a) Organization, Standing and Power
(b) Authority
(c) Capital Structure
(d) Financial Statements
(e) Regulatory Approvals
(f) Absence of Material Changes and Events
(g) Absence of Claims

ARTICLE 4
Conduct Prior to the Effective Date

4.1 Access to Records; Current Information
4.2 Confidentiality
4.3 Forbearances of Wilson/Bennett
(a) Ordinary Course
(b) Capital Stock
(c) Stock Splits, Etc.
(d) Compensation; Employment Agreements; Etc.
(e) Benefit Plans
(f) Dispositions
(g) Acquisitions
(h) Governing Documents
(i) Contracts
(j) Claims
(k) Adverse Actions
(l) Indebtedness
(m) Commitments
(n) Payables
4.4 Forbearances of Cardinal
4.5 No Solicitation
4.6 Regulatory Applications and Approvals
4.7 Client Consents
4.8 Share Exchange Consummation
4.9 Bank Accounts
4.10 Modification of Transaction/Taxes
4.11 Fiscal Year
4.12 Demand Registration




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4.13 Exhibits

ARTICLE 5
Additional Agreements

5.1 Benefit Plans
5.2 Restricted Stock
5.3 Indemnification

ARTICLE 6
Conditions to the Share Exchange

6.1 Conditions to Each Party92s Obligations to Effect the Share Exchange
(a) Regulatory Approvals
(b) Opinions of Counsel
(c) Legal Proceedings
(d) Employment Agreement

6.2 Conditions to Obligations of Cardinal
(a) Representations and Warranties
(b) Performance of Obligations
(c) Client Consents
(d) Life Insurance
(e) Shareholder Vote

6.3 Conditions to Obligations of Wilson/Bennett
(a) Representations and Warranties
(b) Performance of Obligations

ARTICLE 7
Termination

7.1 Termination
7.2 Effect of Termination
7.3 Survival of Representations, Warranties and Covenants
7.4 Expenses

ARTICLE 8
General Provisions

8.1 Entire Agreement
8.2 Waiver and Amendment
8.3 Descriptive Headings




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8.4 Governing Law
8.5 Notices
8.6 Counterparts




Exhibit A - Plan of Share Exchange between Cardinal Financial Corporation and Wilson/Bennett Capital Management, Inc.

Exhibit B - Schedule of Required Third Party Consents*

Exhibit B-1- Equity Securities Owned*

Exhibit B-2- Wilson/Bennett Financial Statements*

Exhibit C - Schedule of Registrations Under Securities Laws*

Exhibit D - Investment Advisory Contracts*

Exhibit D-1 - Investment Advisory Contracts (Clients)*

Exhibit D-2 - Investment Advisory Contracts (Terminating and Reducing Clients)*

Exhibit D-3 - Investment Advisory Contracts (ERISA and IRA)*

Exhibit D-4 - Investment Advisory Contracts (Reduced Fees)*

Exhibit D-5- Investment Advisory Contracts (Wrap Fee Programs)*

Exhibit D-6- Investment Advisory Contracts (Assets Under Management/Fee Arrangements)*

Exhibit E - Securities Violations*

Exhibit F - Contracts Involving Annual Payments in Excess of $25,000.00*

Exhibit G 96 Insurance*

Exhibit H - Registration Rights Agreement

Exhibit I 96 Employment Agreement







* As permitted by Regulation S-K, the Company has not included this exhibit in the filing. The Company agrees to furnish supplementally a copy of this exhibit to the Commission upon request.



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AGREEMENT AND PLAN OF SHARE EXCHANGE



THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") is made and entered into as of April 29, 2005 by and between Wilson/Bennett Capital Management, Inc., a Virginia corporation ("Wilson/Bennett") and Cardinal Financial Corporation, a Virginia corporation ("Cardinal").





WITNESSETH:





WHEREAS, Wilson/Bennett is an investment advisor, registered with the Securities and Exchange Commission; and





WHEREAS, Cardinal is a financial holding company and the sole shareholder of Cardinal Bank; and





WHEREAS, Wilson/Bennett and Cardinal desire to combine their respective businesses; and





WHEREAS, the boards of directors of Cardinal and Wilson/Bennett deem it advisable for Wilson/Bennett to become a wholly owned subsidiary of Cardinal pursuant to this Agreement, the Plan of Share Exchange attached as Exhibit A (the "Plan") and the provisions of Va. Code Section 13.1-717, whereby the holders of shares of common stock of Wilson/Bennett will receive cash and common stock of Cardinal in exchange therefor; and





WHEREAS, the respective Boards of Directors of Wilson/Bennett and Cardinal have resolved that the transactions described herein are in the best interests of the parties and their respective shareholders and have authorized and approved the execution and delivery of this Agreement.





NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereby agree as follows:





ARTICLE 1



The Share Exchange and Related Matters



1.1 The Share Exchange . Subject to the terms and conditions of this Agreement, at the Effective Date as defined in Section 1.2 hereof, each share of Wilson/Bennett Stock (as hereinafter defined) will be exchanged for cash and Cardinal Common Stock (as hereinafter defined) in accordance with Section 2.1 (the "Share Exchange"). At the Effective Date, the Reorganization shall have the effect provided in Section 13.1-721 of the Virginia Stock Corporation Act.





1.2 The Closing and Effective Date. The closing of the transactions contemplated by this Agreement and the Plan shall take place at the offices of Cardinal Financial Corporation, 8270 Greensboro Drive, Suite 500, McLean, VA 22102, Virginia or at such other place as may be



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mutually agreed upon by the parties. Provided all of the conditions to the parties92 obligations to consummate the Share Exchange have been satisfied, the closing shall occur sixty-five (65) days following the first notice Wilson/Bennett sends to its clients pursuant to Section 4.8 hereof. The Share Exchange shall become effective on the date shown on the Certificate of Share Exchange issued by the State Corporation Commission of Virginia effecting the Share Exchange (the "Effective Date"). The closing date and the Effective Date shall be the same. All documents required by the terms of this Agreement to be delivered at or prior to consummation of the Share Exchange will be exchanged by the parties at the closing of the Share Exchange (the "Share Exchange Closing"), which shall be held on or before the Effective Date. At the Share Exchange Closing, Cardinal and Wilson/Bennett shall execute and deliver to the Virginia State Corporation Commission (the "SCC") Articles of Share Exchange containing a Plan of Share Exchange in substantially the form of Exhibit A hereto.



1.3 Definitions. Any term defined anywhere in this Agreement shall have the meaning ascribed to it for all purposes of this Agreement (unless expressly noted to the contrary). In addition:





(a) the term "Affiliate" shall mean, with respect to Cardinal, any corporation of which Cardinal beneficially owns a majority of the voting stock.





(b) the term "Assets Under Management" shall mean the dollar amount of client assets as of the date of this Agreement with respect to which Wilson/Bennett provides services as an investment adviser.





(c) the term "Cardinal" shall mean Cardinal Financial Corporation, a Virginia corporation, and any corporation with which it may merge prior to the Effective Date.





(d) the term "Cardinal Common Stock" shall mean common stock of Cardinal, par value $1.00 per share.





(e) the term "Consent" or "Consented" shall mean the written consent of a Wilson/Bennett client to the Share Exchange or, in the case of an Investment Contract which prohibits assignment or states by its terms that it terminates upon assignment, the execution of an amendment to the existing Investment Contract or a new Investment Contract effective upon the Effective Date. The form and substance of the Consent shall be determined by Wilson/Bennett, subject to the approval of Cardinal which shall not be unreasonably withheld.





(f) the term "Fair Market Value", with respect to shares of Cardinal Common Stock, shall mean the average closing sale price on the Nasdaq National Market for sales of Cardinal Common Stock for the twenty (20) days on which Cardinal Common Stock trades immediately preceding the fifth day before the Share Exchange Closing, adjusted, if necessary, for any stock split or stock dividend, during such twenty (20) day period; provided, however, that if such average is less than $9.00, Fair Market Value shall mean $9.00 and if such average is greater than $11.00, Fair Market Value shall mean $11.00. The preceding floor and ceiling



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prices shall be adjusted for any stock split or stock dividend that occurs after the date of this Agreement and prior to the Effective Date.



(g) "Knowledge" of a Person shall mean what the Person should have known after a reasonable investigation.





(h) "Material Adverse Effect," when used in reference to any party, shall mean or describe an event, occurrence, or circumstance (including without limitation, any breach of a representation or warranty contained herein by such party) which (1) has an effect on the financial condition, results of operations, or business of such party and its subsidiaries, that, if reduced to monetary damages, would be in excess of $25,000 or (2) would materially impair any party92 s ability to timely perform its obligations under this Agreement or the consummation of any of the transactions contemplated hereby; provided , that a Material Adverse Effect with respect to a party shall not include events or conditions generally affecting the securities industry or the banking industry or effects resulting from general economic conditions (including changes in interest rates), changes in accounting practices or changes to statutes, regulations or regulatory policies, that do not have a materially more adverse effect on such party than that experienced by similarly situated financial services companies or investment advisers.



(i) the term "Person" shall mean any individual or entity.



(j) the term "Previously Disclosed" by a party shall mean information set forth in a written disclosure letter that is delivered by that party to the other party prior to or contemporaneously with the execution of this Agreement and on a date not more than 30 days prior to the Effective Date and, in each case, specifically designated as information "Previously Disclosed" pursuant to this Agreement.





(k) the term "Shareholders" shall mean John W. Fisher and James B. Moloney.





(l) the term Wilson/Bennett Stock shall mean the Class A Stock, no par value, and Class B Stock, no par value, of Wilson/Bennett.



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(m) The capitalized terms set forth below are defined in the following sections:





Company Reports Section 3.1(i)
Investment Contracts Section 3.1(h)(1)
Lien Section 3.1(b)(2)
Losses Section 5.3(b)
NASD Section 3.1(i)
Regulatory Authorities Section 3.1(g)(7)
SEC Section 3.1(g)(7)
Self-Regulatory Bodies Section 3.1(i)
Territory Section 3.1(m)(2)
Wilson/Bennett Financial Statements Section 3.1(e)




ARTICLE 2



Effect of Share Exchange on Common Stock



2.1 Conversion of Shares. (a) Upon, and by reason of the Share Exchange becoming effective pursuant to the issuance of a Certificate of Share Exchange by the Virginia State Corporation Commission each share of Wilson/Bennett Stock issued and outstanding on the Effective Date shall be exchanged for a pro rata share of (y) shares of Cardinal Common Stock with a Fair Market Value of Five Million Five Hundred Thousand Dollars ($5,500,000.00) and (z) One Million One Hundred Thousand Dollars ($1,100,000.00) in cash, subject to the adjustments described in Sections 2.1(b) and 2.1(c).





(b) If the tangible net worth of Wilson/Bennett on the Effective Date is less than $42,000, the value of the exchange consideration described in Section 2.1(a) shall be reduced by $1.00 for every dollar of the deficiency. If the tangible net worth of Wilson/Bennett on the Effective Date exceeds $42,000, the value of the exchange consideration shall be increased by $1.00 for every dollar of such excess. Cardinal shall have the right after the Effective Date to audit the net worth of Wilson/Bennett as of the Effective Date. The exchange consideration shall be retroactively adjusted if such audit discloses any error or inaccuracy in the balance sheet of Wilson/Bennett on the Effective Date. Any such adjustment shall be settled by a cash payment to or by the Shareholders. The parties intend that this subsection operate such that the net income of Wilson/Bennett, computed according to generally accepted accounting principles, earned with respect to services performed by it before the Effective Date shall be paid out to the shareholders, as long as such payments do not reduce the tangible net worth of Wilson/Bennett to less than $42,000. For purposes of this Section 2.1(b), accounts receivable are included in tangible net worth.



(c) If at the Effective Date, clients of Wilson/Bennett representing more than ten percent (10%) of Assets Under Management shall have terminated or notified Wilson/Bennett of an intent to terminate Investment Contracts, the exchange consideration described in Section 2.1 shall be reduced. The reduced exchange consideration shall be



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calculated by multiplying $6,600,000 by a fraction, the numerator of which is one hundred percent (100%) minus the percentage of Assets Under Management held by clients who have terminated or given notice of an intent to terminate Investment Contracts and the denominator of which is 90%.



(d) If the exchange consideration described in Section 2.1(a) is adjusted pursuant to Section 2.1(b) or 2.1(c), the adjustment shall be to the cash portion of the exchange consideration and not to the aggregate Fair Market Value of the shares of Cardinal Common Stock to be issued.



(e) Shares of Wilson/Bennett Stock issued and outstanding shall, by virtue of the Reorganization, continue to be issued and outstanding shares and shall be held by Cardinal.





2.2 Manner of Exchange. As promptly as practicable after the Effective Date, Cardinal shall cause its stock transfer agent, acting as the exchange agent ("Exchange Agent"), to send to each former shareholder of record of Wilson/Bennett immediately prior to the Effective Date transmittal materials for use in exchanging such shareholder92s certificates of Wilson/Bennett Stock for the consideration set forth in Section 2.1 above and Section 2.3 below. Any fractional share checks which a Wilson/Bennett shareholder shall be entitled to receive in exchange for such shareholder92s shares of Wilson/Bennett Stock, and all dividends paid on any shares of Cardinal Common Stock that such shareholder shall be entitled to receive prior to the delivery to the Exchange Agent of such shareholder92s certificates representing all of such shareholder92s shares of Wilson/Bennett Stock will be delivered to such shareholder only upon delivery to the Exchange Agent of the certificates representing all of such shares (or indemnity satisfactory to Cardinal and the Exchange Agent, in their judgment, if any of such certificates are lost, stolen or destroyed). No interest will be paid on any such fractional share checks or dividends to which the holder of such shares shall be entitled to receive upon such delivery.





2.3 Fractional Shares. Cardinal shall not issue fractional shares. Cardinal will pay the value of such fractional shares in cash on the basis of the Fair Market Value per share of Cardinal Common Stock.





2.4 Dividends. No dividend or other distribution payable to the holders of record of Cardinal Common Stock at or as of any time after the Effective Date shall be paid to the holder of any certificate representing shares of Wilson/Bennett Stock issued and outstanding at the Effective Date until such holder physically surrenders such certificate for exchange as provided in Section 2.2 of this Agreement, promptly after which time all such dividends or distributions shall be paid (without interest).



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ARTICLE 3



Representation and Warranties





3.1 Representations and Warranties of Wilson/Bennett. Each Shareholder and Wilson/Bennett represents and warrants to Cardinal as follows:





(a) Organization and Standing . (1) Wilson/Bennett is a corporation, duly organized, validly existing and in good standing under Virginia law and is duly qualified to do business and is in good standing in the states of the United States and foreign jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified. Wilson/Bennett has the corporate power and authority necessary to carry on its business as it is now being conducted and to own all its material properties and assets. Wilson/Bennett has in effect all federal, state, local, and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted.



(2) All of the shares of capital stock of Wilson/Bennett are fully paid and nonassessable.





(b) Authority. (1) The execution and delivery of this Agreement and the Plan and the consummation of the Share Exchange have been duly and validly authorized by all necessary corporate action on the part of Wilson/Bennett. The Agreement represents the legal, valid, and binding obligations of Wilson/Bennett, enforceable against Wilson/Bennett in accordance with its terms (except in all such cases as enforceability may be limited by applicable bankruptcy, insolvency, Share Exchange, moratorium or similar laws affecting the enforcement of creditors92 rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought).





(2) The execution, delivery and performance of this Agreement by Wilson/Bennett, and the consummation of the transactions contemplated hereby, do not and will not (i) constitute a breach or violation of, or a default under, or cause or allow the acceleration or creation of any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance (a "Lien") (with or without the giving of notice, passage of time or both) pursuant to any law, rule or regulation or any judgment, decree, order, governmental or non-governmental permit or license, or agreement, indenture or instrument of Wilson/Bennett, or to which Wilson/Bennett, or Wilson/Bennett92s properties is subject or bound, (ii) constitute a breach or violation of, or a default under, Wilson/Bennett92s charter or by-laws, or (iii) except as set forth in Exhibit B, require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental or non-governmental permit or license, or the consent or approval of any other party to any such agreement, indenture or instrument.





(c) Capital Structure. The authorized capital stock of Wilson/Bennett consists of ten shares of Class A Stock, no par value, and ten shares of Class B Stock, no par value, all of



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which, as of the date hereof, are issued, outstanding, fully paid and nonassessable, not subject to shareholder preemptive rights and were not issued in violation of any agreement to which Wilson/Bennett is a party or otherwise bound, or of any registration or qualification provisions of any federal or state securities laws. John W. Fisher is the record holder and beneficial owner of ten shares of Class A Stock and eight shares of Class B Stock. James B. Moloney is the owner of two shares of Class B Stock. There are no outstanding options, warrants or other rights to subscribe for or purchase from Wilson/Bennett any capital stock of Wilson/Bennett or securities convertible into or exchangeable for capital stock of Wilson/Bennett.



(d) Ownership of the Stock. Except set forth in Exhibit B-1, Wilson/Bennett does not beneficially own, directly or indirectly, any of the outstanding capital stock or other voting securities of any corporation or other organization.





(e) Financial Statements . Exhibit B-2 contains copies of the following financial statements of Bank (the " Wilson/Bennett Financial Statements"):



(i) Balance Sheets as of March 31, 2005 and December 31, 2004 and 2003;



(ii) Statements of Income for each of the quarters ended March 31, 2005 and 2005 and each of the three years ended December 31, 2004, 2003 and 2002;



(iii) Statements of Changes in Stockholders92 Equity for each of the quarters ended March 31, 2005 and 2004 and each of the three years ended December 31, 2004, 2003 and 2002; and



(iv) Statements of Cash Flows for each of the three years ended December 31, 2004, 2003 and 2002.



Such financial statements and the notes thereto have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated. Each of such statements of financial condition, together with the notes thereto, presents fairly as of its date the financial condition and assets and liabilities of Wilson/Bennett. Such statements of operations, statements of stockholders92 equity and statements of cash flows, together with the notes thereto present fairly the results of operations of Wilson/Bennett for the periods indicated.



(f) Absence of Undisclosed Liabilities. At March 31, 2005, Wilson/Bennett had no obligation or liability (contingent or otherwise) of any nature which was not reflected in the Wilson/Bennett Financial Statements, except for those which in the aggregate are immaterial or have been Previously Disclosed.





(g) ...