Exhibit 10(a)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated August 28, 1996, between Summit
Bancorp., a New Jersey business corporation ("Summit"), and B.M.J. Financial
Corp., a New Jersey business corporation ("BMJ").
W I T N E S S E T H:
WHEREAS, the respective boards of directors of Summit and BMJ deem it
advisable and in the best interests of their respective shareholders to merge
BMJ into Summit ("Merger") pursuant to the laws of the State of New Jersey and
this Agreement and Plan of Merger ("Agreement");
WHEREAS, the Board of Directors of Summit and BMJ have each determined
that the Merger and the other transactions contemplated hereby are consistent
with, and in furtherance of, their respective business strategies and goals;
WHEREAS, to effectuate the Merger, the parties hereby adopt a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ( "Code");
WHEREAS, Summit and BMJ intend on the date after the date of this
Agreement and in consideration of this Agreement to enter into the Stock Option
Agreement ("Option Agreement") attached hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and
also to prescribe certain other terms and conditions of the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and in
the Option Agreement, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I.
GENERAL PROVISIONS
Section 1.01. The Merger.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Effective Time (as defined at Section 1.06), BMJ shall be
merged with and into Summit pursuant to and in accordance with the provisions
of, and with the effect provided in, the New Jersey Business Corporation Act, as
amended ("New Jersey Act") (Summit as the surviving corporation being
hereinafter sometimes referred to as the "Surviving Corporation").
Section 1.02. Capital Stock of Summit. All shares of the capital stock
of Summit outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and shall remain outstanding immediately thereafter.
Section 1.03. Terms of Conversion of BMJ Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of any shareholder of BMJ:
(1) All shares of the Common Stock, par value $1.00 per share, of BMJ
("BMJ Stock") which immediately prior to the Effective Time are either owned
beneficially by Summit or a subsidiary of Summit (other than BMJ Stock held in a
fiduciary capacity or as a result of debts previously contracted), if any, or
held in the treasury of BMJ, if any, shall be canceled and retired and no cash,
securities or other consideration shall be paid or delivered under this
Agreement in exchange for such BMJ Stock; and
(2) Subject to Sections 1.03(a)(1) and 1.08, each share of BMJ Stock
outstanding immediately prior to the Effective Time shall be converted in
accordance with the New Jersey Act into .56 shares (the "Exchange Ratio") of the
Common Stock, par value $1.20 per share, of Summit ("Summit Stock").
(b) In the event that, from the date hereof to the Effective Time, the
outstanding Summit Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or there occur other like changes in the outstanding shares
of Summit Stock, the Exchange Ratio and, if necessary, the form and amount of
Summit capital stock issuable in the Merger in exchange for BMJ Stock shall be
appropriately adjusted so that BMJ shareholders who are entitled to receive
Summit Stock pursuant to the provisions hereof shall be entitled to receive such
number of shares of Summit Stock or other stock as they would have received if
the Effective Time had occurred prior to the happening of such event.
Section 1.04. Reservation of Summit Stock; Issuance of Shares Pursuant
to the Merger. Summit shall reserve and make available for issuance to holders
of BMJ Stock in connection with the Merger, on the terms and subject to the
conditions of this Agreement, sufficient shares of Summit Stock (which shares,
when issued and delivered, will be duly authorized, legally and validly issued,
fully paid and non-assessable and subject to no preemptive rights). The shares
of Summit Stock to be issued in accordance with this Agreement are sometimes
referred to herein as the "Shares". Upon the terms and subject to the conditions
of this Agreement, including the conversion of BMJ Stock according to the
Exchange Ratio, Summit shall issue the Shares upon the effectiveness of the
Merger to BMJ Shareholders (as defined in Section 1.07).
Section 1.05. Exchange Agent Arrangements. Prior to the Effective Time,
Summit shall appoint First Chicago Trust Company of New York, or another entity
reasonably satisfactory to BMJ, as the exchange agent ("Exchange Agent")
responsible for exchanging, in connection with and upon consummation of the
Merger and subject to Sections 1.03 and 1.08, certificates representing whole
shares of Summit Stock ("Summit Certificates") and cash in lieu of fractional
shares of Summit Stock for certificates representing shares of BMJ Stock ("BMJ
Certificates") and Summit shall deliver to the Exchange Agent sufficient Summit
Certificates and cash as shall be required to satisfy Summit's obligations to
BMJ Shareholders under the last sentence of Section 1.07 (c), at the time such
obligations arise.
Section 1.06. Effective Time. The Merger shall be effective at the hour
and on the date ("Effective Time") specified in the Certificate of Merger of
Summit and BMJ required by this Agreement to be filed with the Secretary of
State of the State of New Jersey in accordance with Section 14A:10-4.1 of the
New Jersey Act ("Certificate of Merger"). Summit shall file the Certificate of
Merger as promptly as practicable following the Closing (as defined at Section
9.01) but in no event later than one business day following the Closing Date (as
defined at Section 9.01).
Section 1.07. Exchange of BMJ Certificates.
(a) After the Effective Time, each BMJ Shareholder (except Summit to
the extent provided in Section 1.03), upon surrender of all BMJ Certificates to
the Exchange Agent, shall be entitled to receive in exchange therefor a Summit
Certificate representing the number of whole shares of Summit Stock such BMJ
Shareholder is entitled, pursuant to the conversion effected by Section 1.03 and
the terms of Section 1.08, to receive and the cash payment (by check) such BMJ
Shareholder may be entitled, pursuant to Section 1.08, to receive in lieu of a
fractional share of Summit Stock. Until so surrendered, outstanding BMJ
Certificates held by each BMJ Shareholder, other than BMJ Stock not converted
pursuant to Section 1.03, shall be deemed for all purposes (other than as
provided below with respect to unsurrendered BMJ Certificates and Summit's right
to refuse payment of dividends or other distributions, if any, in respect of
Summit Stock) to represent the number of whole shares of Summit Stock into which
the shares of BMJ Stock have been converted and the right to receive cash in
lieu of fractional shares of Summit Stock, if any, all as provided in Section
1.08. Until so surrendered, Summit may, at its option, refuse to pay to the
holders of the unsurrendered BMJ Certificates dividends or other distributions,
if any, payable to holders of Summit Stock; provided, however, that upon the
surrender and exchange of BMJ Certificates following a dividend or other
distribution by Summit there shall be paid to such BMJ Shareholders the amount,
without interest, of dividends and other distributions, if any, which became
payable prior thereto but which were not paid.
(b) Holders of BMJ Certificates as of the Effective Time shall cease to
be, and shall have no further rights as, shareholders of BMJ.
(c) As promptly as practicable, but in no event more than 10 days,
after the Exchange Agent receives an accurate and complete list of all holders
of record of outstanding BMJ Stock as of the Effective Time ("BMJ Shareholders")
(including the address and social security number of and the number of shares of
BMJ Stock held by each BMJ Shareholder) from BMJ ("Final Shareholder List"),
Summit shall cause the Exchange Agent to send to each BMJ Shareholder
instructions and transmittal materials for use in surrendering and exchanging
BMJ Certificates for the Merger Consideration (as defined in Section 1.08
below). If BMJ Certificates are properly presented to the Exchange Agent (with
proper presentation including satisfaction of all requirements of the letter of
transmittal), Summit shall as soon as practicable, but in no event more than 10
days, after the later to occur of such presentment or the receipt by the
Exchange Agent of an accurate and complete Final Shareholder List from BMJ cause
the Exchange Agent to cancel and exchange BMJ Certificates for Summit
Certificates and Cash In Lieu Amounts (as defined in Section 1.08 below), if
any.
(d) At and after the Effective Time there shall be no transfers on the
stock transfer books of BMJ of the shares of BMJ Stock which were outstanding
immediately prior to the Effective Time.
Section 1.08. Fractional Shares. All BMJ Stock held in the aggregate by
each BMJ Shareholder shall be multiplied by the Exchange Ratio to determine the
number of shares of Summit Stock each such BMJ Shareholder is entitled to
receive in the Merger. Each BMJ Shareholder shall be entitled to receive a
Summit Certificate for the number of whole shares of Summit Stock resulting from
such multiplication and cash in lieu of any fractional share of Summit Stock
resulting from such multiplication in an amount ("Cash In Lieu Amount")
determined by multiplying the fractional share interest to which such BMJ
Shareholder would otherwise be entitled by the closing price of one share of
Summit Stock on the New York Stock Exchange-Composite Transactions List, on the
last trading day prior to the Effective Time. The Shares and any Cash In Lieu
Amounts payable in the Merger are sometimes collectively referred to herein as
the "Merger Consideration".
Section 1.09. Restated Certificate of Incorporation and By-Laws. The
Restated Certificate of Incorporation of Summit in force immediately prior to
the Effective Time shall be the Restated Certificate of Incorporation of the
Surviving Corporation, except as duly amended thereafter and except to the
extent such is deemed by law to be affected by the Certificate of Merger. The
By-Laws of Summit in force immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation, except as duly amended thereafter.
Section 1.10. Board of Directors and Officers. The Board of Directors
of the Surviving Corporation shall consist of the members of the Board of
Directors of Summit at the Effective Time. The officers of the Surviving
Corporation shall consist of the officers of Summit at the Effective Time. Such
directors and officers shall serve as such for the terms prescribed in the
Restated Certificate of Incorporation and By-Laws of Summit, or otherwise as
provided by law or until their earlier deaths, resignation or removal.
Section 1.11. BMJ Stock Options.
(a) At the Effective Time, each BMJ Option (as defined below) shall be
deemed to constitute, and shall automatically be converted in accordance with
the Exchange Ratio into, stock options relating to Summit Stock ("Summit
Options") and each Summit Option shall be administered in accordance with the
terms and conditions provided for in the BMJ Option Plan under which the
corresponding BMJ Option was granted and the stock option agreement by which it
was evidenced, including terms and provisions regarding exercisability. The
number of shares of Summit Stock covered by each Summit Option shall be the
number of shares of Summit Stock which would have been issued in the Merger if
the shares of BMJ Stock subject to the corresponding BMJ Option were issued and
outstanding immediately prior to the Effective Time; provided, however, that the
number of shares of Summit Stock that may be purchased upon exercise of a Summit
Option shall not include any fractional share interest but shall be rounded down
to the next lower full share. The exercise price per share of Summit Stock
subject to a Summit Option shall equal the exercise price per share of BMJ Stock
subject to the corresponding BMJ Option so converted divided by the Exchange
Ratio, rounded to the fourth decimal place (subject to any adjustments provided
for in this Agreement). Within 30 days after the receipt by Summit of an
accurate and complete list of all holders of BMJ Options (including the address
and social security number of each such holder and a description of the BMJ
Options held by such holder specifying at a minimum the plan under which issued,
type (incentive or nonqualified), grant date, expiration date, exercise price
and the number of shares of BMJ Stock subject thereto) ("Final Option List"),
Summit shall issue to the holders of such BMJ Options appropriate instruments
confirming the rights of such holders with respect to Summit Stock, on the terms
and conditions provided by this Section 1.11, upon surrender of the outstanding
instruments representing such BMJ Options; provided, however, that Summit shall
not be obligated to issue any such confirming instruments which relate to the
issuance of Summit Stock, or issue any shares of Summit Stock, until such time
as the shares of Summit Stock issuable upon exercise of Summit Options shall
have been registered with the Securities and Exchange Commission (the "SEC")
pursuant to an effective registration statement and authorized for listing on
the New York Stock Exchange and for sale by any appropriate state securities
regulators, which Summit shall use its best efforts to effect within 30 days
after BMJ shall have delivered to Summit the Final Option List. Summit shall use
its best efforts to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as the Summit Options remain outstanding. At or prior to
the Effective Time, Summit shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of Summit Stock for delivery upon
exercise of Summit Options.
(b) For purposes of this Section 1.11, "BMJ Option" is hereby defined
to mean a stock option for BMJ Stock outstanding on the date hereof granted
under the BMJ Director Stock Option Plan, BMJ 1994 Employee Stock Option Plan or
BMJ Executive Long-Term Incentive Plan ("BMJ Option Plans") and not subsequently
exercised, terminated or expired prior to the Effective Time.
Section 1.12. Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of BMJ acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of BMJ or otherwise, all such deeds, bills of sale, assignments and
assurances and to take, in the name and on behalf of BMJ, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.13. Unclaimed Merger Consideration. If, upon the expiration
of one year following the Effective Time, Merger Consideration remains with the
Exchange Agent due to the failure of BMJ Shareholders to surrender and exchange
BMJ Certificates for Merger Consideration, Summit may, at its election, continue
to retain the Exchange Agent for purposes of the surrender and exchange of BMJ
Certificates or take possession of such unclaimed Merger Consideration, in which
such latter case, BMJ Shareholders who have theretofore failed to surrender and
exchange BMJ Certificates shall thereafter look only to Summit for payment of
the Merger Consideration and the unpaid dividends and distributions on the
Summit Stock constituting some or all of the Merger Consideration, without any
interest thereon. Notwithstanding the foregoing, none of Summit, BMJ, the
Exchange Agent or any other person shall be liable to any former holder of
shares of BMJ Stock for any property properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
Section 1.14. Lost BMJ Certificates. In the event any BMJ Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such BMJ Certificate to be lost, stolen or
destroyed and the posting by such person of a bond in such amount as Summit may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such BMJ Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed BMJ Certificate the Merger
Consideration deliverable in respect thereof pursuant to this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF BMJ
BMJ represents and warrants to Summit as follows:
Section 2.01. Organization, Capital Stock.
(a) Each of BMJ and its nonbank subsidiaries, including the nonbank
subsidiaries of bank subsidiaries (the term "subsidiary", as used in this
Agreement, shall mean any corporation or other organization of which 25% or more
of the shares or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or other group performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned), all of which are listed, together with their respective
states of incorporation and direct and indirect beneficial owners, on BMJ
Schedule 2.01(a), is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, qualified to transact
business under the laws of all jurisdictions where the failure to be so
qualified would be likely to have a material adverse effect on (i) the business,
results of operations, assets or financial condition of BMJ and its subsidiaries
on a consolidated basis, or (ii) the ability of BMJ to perform its obligations
under, and to consummate the transactions contemplated by, this Agreement ("BMJ
Material Adverse Effect" or "BMJ Material Adverse Change"). However, an BMJ
Material Adverse Effect or BMJ Material Adverse Change will not include a change
resulting from a change in law, rule, regulation or generally accepted or
regulatory accounting principles, or from any other matter affecting banking
institutions or their holding companies generally. Each of BMJ and its nonbank
subsidiaries has all corporate power and authority and all material licenses,
franchises, certificates, permits and other governmental authorizations which
are legally required to own and lease its properties and assets, to occupy its
premises and to engage in its business and activities as presently engaged in,
and each has complied in all material respects with all applicable laws,
regulations and orders.
(b) BMJ is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA").
(c) BMJ or one of its subsidiaries is the holder and beneficial owner
of all of the outstanding capital stock of all of BMJ's direct and indirect
nonbank subsidiaries.
(d) (1) The authorized capital stock of BMJ consists of 25,000,000
shares of Common Stock, par value $1.00 per share, and as of the date hereof
7,506,462 shares of BMJ Stock were issued and outstanding and 178,000 shares of
BMJ Stock were held in the Treasury of BMJ. All issued and outstanding shares of
the capital stock of BMJ and of each of its nonbank subsidiaries have been fully
paid, were duly authorized and validly issued, are non-assessable and have been
issued pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act") or an appropriate exemption from
registration under the Securities Act and were not issued in violation of the
preemptive rights of any shareholder. Except as set forth in this Section
2.01(d), except for director and employee stock options outstanding under the
BMJ Option Plans and except for BMJ Stock issuable in connection with the BMJ
Option Plans and the BMJ Dividend Reinvestment and Stock Purchase Plan ("BMJ
Dividend Plan"), there are no Equity Securities of BMJ or any nonbank subsidiary
of BMJ outstanding, in existence, the subject of an agreement or reserved for
issuance.
(2) "Equity Securities" of an issuer means (i) the capital
stock or other equity securities of such issuer, options, warrants, scrip,
interests in, rights (including preemptive rights) to subscribe to, purchase or
acquire, calls on or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock, shares of any other equity security or shares of any security or right
convertible into or exchangeable for the capital stock or other equity security
of such issuer, and (ii) contracts, commitments, obligations, agreements,
understandings or arrangements entitling anyone to acquire from the issuer, or
by which such issuer is or may become bound to issue, shares of capital stock,
shares of any other equity security or shares of any security or right
convertible into or exchangeable for the capital stock or other equity security
of such issuer.
(3) There are no plans of BMJ providing for the granting of
BMJ Stock, stock options, stock appreciation rights or other securities,
derivative securities or stock-based cash rights to any person other than the
BMJ Option Plans. The BMJ Option Plans, including all amendments thereto, have
been duly approved by the shareholders of BMJ in compliance with any applicable
laws or applicable regulations of governmental or self-regulatory authorities.
Copies of the BMJ Option Plans, including all amendments thereto, have been
previously provided to Summit. All information relating to outstanding grants
and awards under the BMJ Option Plans, including director and employee stock
options and stock appreciation rights ("SARs"), if any, not contained in the BMJ
Option Plans (including without limitation date of grant, expiration date, plan
under which granted, type (if option, whether nonqualified or incentive; if SAR,
whether or not granted in tandem with an option and, if so, the type of tandem
option), exercise price, number of shares subject thereto), is set forth in BMJ
Schedule 2.01(d).
(e) BMJ owns no bank subsidiary other than the Bank of Mid-Jersey
("Bank") ("bank" is hereby defined to include commercial banks, savings banks,
private banks, trust companies, savings and loan associations, building and loan
associations and similar institutions receiving deposits and making loans). Bank
is a bank duly organized, validly existing, and in good standing under the laws
of the State of New Jersey, qualified to transact business under the laws of all
jurisdictions where the failure to be so qualified would be likely to have an
BMJ Material Adverse Effect. Bank is duly authorized to conduct all activities
and exercise all powers of a commercial bank and trust company as contemplated
by applicable laws of the State of New Jersey, is an insured bank as defined in
the Federal Deposit Insurance Act, and has all corporate power and authority and
all material licenses, franchises, certificates, permits and other governmental
authorizations which are legally required to own and lease its properties and
assets, to occupy its premises, and to engage in its business and activities as
presently engaged in, and has complied in all material respects with all
applicable laws, regulations and orders.
(f) The authorized and outstanding capital stock of Bank is as set
forth on BMJ Schedule 2.01(f). BMJ is the holder and beneficial owner of all
shares of the issued and outstanding capital stock of Bank. All issued and
outstanding shares of the capital stock of Bank have been fully paid, were duly
authorized and validly issued, are non-assessable, and were not issued in
violation of the preemptive rights of any shareholder. All Equity Securities of
Bank outstanding, in existence, the subject of an agreement or reserved for
issuance are described in all material respects on BMJ Schedule 2.01(f).
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by BMJ or a subsidiary of BMJ are held free and clear of any
claims, liens, encumbrances or security interests.
Section 2.02. Financial Statements. The financial statements and
schedules contained or incorporated in (a) BMJ's annual report to shareholders
for the fiscal year ended December 31, 1995, (b) BMJ's annual report on Form
10-K filed pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act") for the fiscal year ended December 31, 1995 and (c) BMJ's
quarterly reports on Form 10-Q filed pursuant to the Exchange Act for the fiscal
quarters ended March 31, 1996 and June 30, 1996 (the "BMJ Financial Statements")
are true and correct in all material respects as of their respective dates and
each fairly presents (subject, in the case of unaudited statements, to recurring
audit adjustments normal in nature and amount), in accordance with generally
accepted accounting principles, the consolidated statements of condition,
income, changes in stockholders' equity and cash flows of BMJ and its
subsidiaries at its respective date and for the period to which it relates,
except as may otherwise be described therein. The BMJ Financial Statements do
not, as of the dates thereof, include any material asset or omit any material
liability, absolute or contingent, or other fact, the inclusion or omission of
which renders the BMJ Financial Statements, in light of the circumstances under
which they were made, misleading in any respect.
Section 2.03. No Conflicts. BMJ and each of its subsidiaries is not in,
and has received no notice of, violation or breach of, or default under, nor
will the execution, delivery and performance of this Agreement by BMJ, or the
consummation of the transactions contemplated hereby including the Merger by BMJ
upon the terms provided herein (assuming receipt of the Required Consents, as
that term is defined in Section 4.01), violate, conflict with, result in the
breach of, constitute a default under, give rise to a claim or right of
termination, cancellation, revocation of, or acceleration under, or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
material rights, permits, licenses, assets or properties of BMJ or any of its
subsidiaries or upon any of the Equity Securities of BMJ or any of its
subsidiaries, or constitute an event which could, with the lapse of time, action
or inaction by BMJ or any of its subsidiaries or a third party, or the giving of
notice and failure to cure, result in any of the foregoing, under any of the
terms, conditions or provisions, as the case may be, of:
(a) the Certificate of Incorporation or the By-Laws of BMJ or any of
its subsidiaries;
(b) any applicable law, statute, rule, ruling, determination, ordinance
or regulation of or agreement with any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction or decree of any court
or other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement or other instrument; to
which BMJ or any of its subsidiaries is a party or by which BMJ or any of its
subsidiaries or any of their assets or properties are bound or committed, the
consequences of which individually or in the aggregate would be likely to result
in a BMJ Material Adverse Change, or enable any person to enjoin the
transactions contemplated hereby.
Section 2.04. Absence of Undisclosed Liabilities. BMJ and its
subsidiaries have no liabilities, whether contingent or absolute, direct or
indirect, matured or unmatured (including but not limited to liabilities for
federal, state and local taxes, penalties, assessments, lawsuits or claims
against BMJ or any of its subsidiaries), and no loss contingency (as defined in
Statement of Financial Accounting Standards No. 5), other than (a) those
reflected in the BMJ Financial Statements or disclosed in the notes thereto, (b)
commitments made by BMJ or any of its subsidiaries in the ordinary course of its
business which are not in the aggregate material to BMJ and its subsidiaries,
taken as a whole, and (c) liabilities arising in the ordinary course of its
business since December 31, 1995, which are not in the aggregate material to BMJ
and its subsidiaries, taken as a whole. Other than as reported in the Forms 10-Q
of BMJ referred to in Section 2.02, neither BMJ nor any of its subsidiaries has,
since December 31, 1995, become obligated on any debt due in more than one year
from the date of this Agreement in excess of $250,000, other than
intra-corporate debt and deposits received, repurchase agreements and borrowings
from the Federal Reserve Bank of New York or the Federal Home Loan Bank of New
York entered into in the ordinary course of business.
Section 2.05. Absence of Litigation; Agreements with Bank Regulators.
There is no outstanding order, injunction or decree of any court or governmental
or self-regulatory body against or affecting BMJ or its subsidiaries which
materially and adversely affects BMJ and its subsidiaries, taken as a whole, and
there are no actions, arbitrations, claims, charges, suits, investigations or
proceedings (formal or informal) material to BMJ and its subsidiaries, taken as
a whole, pending or, to BMJ's knowledge, threatened, against or involving BMJ or
any of its subsidiaries or their officers or directors (in their capacity as
such) in law or equity or before any court, panel or governmental agency, except
as disclosed in the Forms 10-K and 10-Q of BMJ referred to in Section 2.02.
Neither Bank nor BMJ is a party to any agreement or memorandum of understanding
with, or is a party to any commitment letter to, or has submitted a board of
directors resolution or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of its business, or in any manner relates to material statutory or regulatory
noncompliance discovered in any regulatory examinations, its capital adequacy,
its credit or reserve policies or its management. Neither Bank nor BMJ has been
advised by any governmental or regulatory authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any of the foregoing. Neither Bank nor BMJ has failed to resolve to
the satisfaction of the applicable regulatory agency any significant
deficiencies cited by any such agency in its most recent examinations of each
aspect of Bank's and BMJ's business.
Section 2.06. Brokers' Fees. BMJ has entered into this Agreement with
Summit as a result of direct negotiations without the assistance or efforts of
any finder, broker, financial advisor or investment banker, other than Bear,
Stearns & Co. Inc. ("Bear Stearns"). BMJ Schedule 2.06 consists of true and
complete copies of all agreements between BMJ and Bear Stearns with respect to
the transactions contemplated by this Agreement.
Section 2.07. Material Filings. At the time of filing, all filings made
by BMJ and its subsidiaries after December 31, 1989 with the SEC and the
appropriate bank regulatory authorities do not or did not contain any untrue
statement of a material fact and do not or did not omit to state any material
fact required to be stated herein or therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. BMJ has since December 31, 1992 timely made all filings
required by the Securities Act and the Exchange Act.
Section 2.08. Corporate Action. Assuming due execution and delivery by
Summit, and subject to the requisite approval by the shareholders of BMJ of this
Agreement, the Merger and the other transactions contemplated hereby in
accordance with BMJ's Certificate of Incorporation and the New Jersey Act at a
meeting of such holders to be duly called and held, BMJ has the corporate power
and is duly authorized by all necessary corporate action to execute, deliver and
perform this Agreement. The Board of Directors of BMJ has taken all action
required by law, its Certificate of Incorporation, its By-Laws or otherwise (i)
to authorize the execution and delivery of this Agreement and (ii) for
shareholders of BMJ to approve this Agreement and the transactions contemplated
hereby including the Merger by a simple majority of the votes cast at the
meeting held in accordance with Section 4.03. This Agreement is a valid and
binding agreement of BMJ enforceable in accordance with its terms except as such
enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, fraudulent transfer, moratorium or other similar laws of
general applicability presently or hereafter in effect affecting the enforcement
of creditors' rights generally and banks the deposits of which are insured by
the Federal Deposit Insurance Corporation. The Board of Directors of BMJ in
authorizing the execution of this Agreement has determined to recommend to the
shareholders of BMJ the approval of this Agreement, the Merger and the other
transactions contemplated hereby.
Section 2.09. Absence of Changes. There has not been, since December
31, 1995, any BMJ Material Adverse Change except as may be reported in the Forms
10-Q of BMJ referred to in Section 2.02. Except as may be reported in said Forms
10-Q of BMJ, neither BMJ nor any of its subsidiaries has since December 31,
1995: (a) (i) declared, set aside or paid any dividend or other distribution in
respect of its capital stock, other than dividends from subsidiaries to BMJ or
other subsidiaries of BMJ and an ordinary cash dividend of $0.10 per share per
fiscal quarter, or, (ii) directly or indirectly, purchased, redeemed or
otherwise acquired any shares of such stock held by persons other than BMJ and
its subsidiaries, other than the redemption by BMJ of its 7.5% Convertible
Notes, due July 15, 1996, and related conversion into BMJ Stock; (b) incurred
current liabilities since that date other than in the ordinary course of
business; (c) sold, exchanged or otherwise disposed of any of their assets
except in the ordinary course of business; (d) made any officers' salary
increase or wage increase not consistent with past practices, entered into any
employment, consulting, severance or change of control contract with any present
or former director, officer or salaried employee, or instituted any employee or
director welfare, bonus, stock option, profit-sharing, retirement, severance or
other benefit plan or arrangement or modified any of the foregoing so as to
increase its obligations thereunder in any material respect; (e) suffered any
taking by condemnation or eminent domain or other damage, destruction or loss in
excess of $50,000, whether or not covered by insurance, adversely affecting its
business, property or assets, or waived any rights of value in excess of
$50,000; (f) entered into transactions other than in the ordinary course of
business which in the aggregate exceeded $250,000; or (g) acquired assets or
capital stock of another company of whatsoever amount, except in a fiduciary
capacity or in the course of securing or collecting loans or leases.
Section 2.10. Allowance for Loan and Lease Losses. At December 31, 1995
and thereafter the allowances for loan and lease losses of BMJ and its
subsidiaries were and are adequate in all material respects to provide for all
losses on loans and leases outstanding and, to the best of BMJ's knowledge, the
loan and lease portfolios of BMJ in excess of such allowances are collectible in
the ordinary course of business. BMJ Schedule 2.10 constitutes a list of all
loans and leases made by BMJ or any of its subsidiaries that have been
"classified" as to quality by any internal or external auditor, accountant or
examiner, and such list is accurate and complete in all material respects.
Section 2.11. Taxes and Tax Returns. Neither BMJ nor any of its
subsidiaries has at any time filed a consent pursuant to Section 341(f) of the
Code or consented to have the provisions of Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by BMJ or any of its subsidiaries. None of the
property being acquired by Summit or its subsidiaries in the Merger is property
which Summit or its subsidiaries will be required to treat as being owned by any
other person pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of Section 168(h)(1) of the Code. All amounts required to be
withheld have been withheld from employees by BMJ and each of its subsidiaries
for all periods in compliance with the tax, social security, unemployment and
other applicable withholding provisions of applicable federal, state and local
law. Proper and accurate federal, state and local returns have been timely filed
by BMJ and each of its subsidiaries for all periods for which returns were due,
including with respect to employee income tax withholding, social security,
unemployment and other applicable taxes, and the amounts shown thereon to be due
and payable have been paid in full or adequate provision therefor has been
included on the books of BMJ or its appropriate subsidiary. Neither BMJ nor any
of its subsidiaries is required to file tax returns with any state other than
the State of New Jersey. Provision has been made on the books of BMJ or its
appropriate subsidiary for all unpaid taxes, whether or not disputed, that may
become due and payable by BMJ or any of its subsidiaries in future periods in
respect of transactions, sales or services previously occurring or performed.
The Internal Revenue Service ("IRS") has audited the consolidated federal income
tax returns of BMJ for all taxable years ended on or prior to 1993 and the State
of New Jersey has audited the New Jersey income tax returns of BMJ and its
subsidiaries for all taxable years ended on or prior to 1993. Neither BMJ nor
any of its subsidiaries is subject to an audit or review of its tax returns by
any state other than the State of New Jersey. BMJ is not and has not been a
United States real property holding corporation as defined in Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. Neither BMJ nor any of its subsidiaries is currently a party to any
tax sharing or similar agreement with any third party. There are no material
matters, assessments, notices of deficiency, demands for taxes, proceedings,
audits or proposed deficiencies pending or, to BMJ's knowledge, threatened
against BMJ or any of its subsidiaries and there have been no waivers of
statutes of limitations or agreements related to assessments or collection in
respect of any federal, state or local taxes. Neither BMJ nor any of its
subsidiaries has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code by reason of a change in accounting method initiated
by BMJ or any of its subsidiaries, and neither BMJ nor any of its subsidiaries
has any knowledge that the IRS has proposed any such adjustment or change in
accounting method. BMJ and its subsidiaries have complied in all material
respects with all requirements relating to information reporting and withholding
(including back-up withholding) and other requirements relating to the reporting
of interest, dividends and other reportable payments under the Code and state
and local tax laws and the regulations promulgated thereunder and other
requirements relating to reporting under federal law including record keeping
and reporting on monetary instruments transactions.
Section 2.12. Properties. BMJ has, directly or through its
subsidiaries, good and marketable title to all of its properties and assets,
tangible and intangible, including those reflected in the most recent
consolidated balance sheet included in the BMJ Financial Statements (except
individual properties and assets disposed of since that date in the ordinary
course of business), which properties and assets are not subject to any
mortgage, pledge, lien, charge or encumbrance other than as reflected in the BMJ
Financial Statements or which in the aggregate do not materially adversely
affect or impair the operation of BMJ and its subsidiaries taken as a whole. BMJ
and each of its subsidiaries enjoys peaceful and undisturbed possession under
all material leases under which it or any of its subsidiaries is the lessee,
where the failure to enjoy such peaceful and undisturbed possession would be
likely to have a BMJ Material Adverse Effect, and none of such leases contains
any unusual or burdensome provision which would be likely to materially and
adversely affect or impair the operations of BMJ and its subsidiaries taken as a
whole.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by BMJ or any of its subsidiaries or used by BMJ or
any of its subsidiaries in its business are in a good state of maintenance and
repair, are in good operating condition, subject to normal wear and tear,
conform in all material respects to all applicable ordinances, regulations and
zoning laws, and are adequate for the business conducted by BMJ or such
subsidiary subject to exceptions which are not, in the aggregate, material to
BMJ and its subsidiaries, taken as a whole. BMJ and each of its subsidiaries
maintains insurance (with companies which, to the best of BMJ's knowledge, are
authorized to do business in New Jersey) against loss relating to such
properties in amounts which are customary, usual and prudent for corporations or
banks, as the case may be, of their size. Such policies are in full force and
effect and are carried in an amount and form and are otherwise adequate to
protect BMJ and each of its subsidiaries from any adverse loss resulting from
risks and liabilities reasonably foreseeable at the date hereof, and are
disclosed on BMJ Schedule 2.13. All material claims thereunder have been filed
in a due and timely fashion. Since January 1 1991, neither BMJ nor any of its
subsidiaries has ever been refused insurance for which it has applied or had any
policy of insurance terminated (other than at its request).
Section 2.14. Contracts.
(a) Except as set forth in BMJ Schedule 2.14(a), neither BMJ nor any of
its subsidiaries is a party to and neither they nor any of their assets are
bound by any written or oral lease or license with respect to any property, real
or personal, as tenant or licensee involving an annual consideration in excess
of $50,000.
(b) Except as set forth in BMJ Schedule 2.14(b), neither BMJ nor any of
its subsidiaries is a party to and neither they nor any of their assets is bound
by any written or oral: (i) employment or severance contract (including, without
limitation, any collective bargaining contract or union agreement) which is not
terminable without penalty by BMJ or a subsidiary, as appropriate, on 60 days or
less notice; (ii) contract or commitment for capital expenditures in excess of
$75,000 in the aggregate for any one project or in excess of $250,000 in the
aggregate for all projects; (iii) contract or commitment whether or not made in
the ordinary course of business for the purchase of materials or supplies or for
the performance of services involving consideration in excess of $50,000
(including advertising and consulting agreements, data processing agreements,
and retainer agreements with attorneys, accountants, actuaries, or other
professionals); (iv) contract or option to purchase or sell any real or personal
property other than OREO property involving consideration in excess of $75,000;
or (v) other contracts material to the business of BMJ and its subsidiaries
taken as a whole and not made in the ordinary course of business.
(c) Neither BMJ nor any of its subsidiaries is a party to or otherwise
bound by any contract, agreement, plan, lease, license, commitment or
undertaking which, in the reasonable opinion of management of BMJ, is materially
adverse, onerous, or harmful to any aspect of the business of BMJ and its
subsidiaries taken as a whole.
Section 2.15. Pension and Benefit Plans.
(a) Neither BMJ nor any of its subsidiaries maintains an employee
pension benefit plan, within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or has made any
contributions to any such employee pension benefit plan, except employee pension
benefit plans listed in BMJ Schedule 2.15(a) (individually a "BMJ Plan" and
collectively the "BMJ Plans"). In its present form each BMJ Plan complies in all
material respects with all applicable requirements under ERISA and the Code.
Each BMJ Plan and the trust created thereunder is qualified and exempt under
Sections 401(a) and 501(a) of the Code, and BMJ or the subsidiary whose
employees are covered by such BMJ Plan has received from the IRS a determination
letter to that effect. No event has occurred and there has been no omission or
failure to act which would adversely affect such qualification or exemption.
Each BMJ Plan has been administered and communicated to the participants and
beneficiaries in all material respects in accordance with its terms and ERISA.
No employee or agent of BMJ or any subsidiary whose employees are covered by a
BMJ Plan has engaged in any action or failed to act in such manner that, as a
result of such action or failure, (i) the IRS could revoke, or refuse to issue
(as the case may be), a favorable determination as to such BMJ Plan's
qualification and the associated trust's exemption or impose any liability or
penalty under the Code, or (ii) a participant or beneficiary or a
nonparticipating employee has been denied benefits properly due or to become due
under such BMJ Plan or has been misled as to his or her rights under such BMJ
Plan. No BMJ Plan is subject to Section 412 of the Code or Title IV of ERISA. No
person has engaged in any prohibited transaction involving any BMJ Plan or
associated trust within the meaning of Section 406 of ERISA or Section 4975 of
the Code. There are no pending or threatened claims (other than routine claims
for benefits) against the BMJ Plans or any fiduciary thereof which would subject
BMJ or any of its subsidiaries to a material liability. All reports, filings,
returns and disclosures and other communications which have been required to be
made to the participants and beneficiaries, other employees, the Pension Benefit
Guaranty Corporation ("PBGC"), the SEC, the IRS, the U.S. Department of Labor or
any other governmental agency pursuant to the Code, ERISA, or other applicable
statute or regulation have been made in a timely manner and all such reports,
communications, filings, returns and disclosures were true and correct in all
material respects. No liability has been, or is likely to be, incurred on
account of delinquent or incomplete compliance or failure to comply with such
requirements. "ERISA Affiliate" where used in this Agreement means any trade or
business (whether or not incorporated) which is a member of a group of which BMJ
is a member and which is under common control within the meaning of Section 414
of the Code. There are no unfunded benefit or pension plans or arrangements, or
any individual agreements whether qualified or not, to which BMJ or any of its
subsidiaries or ERISA Affiliates has any obligation to contribute. There has
been no change in control of any BMJ Plan since the last effective date of any
such change of control disclosed to Summit in Schedule 2.15(a).
(b) All bonus, deferred compensation, profit-sharing, retirement,
pension, stock option, stock award and stock purchase plans and all other
employee benefit plans, including medical, major medical, disability, life
insurance or dental plans covering employees generally maintained by BMJ or any
of its subsidiaries other than the BMJ Plans with an annual cost in excess of
$25,000 (collectively "Benefit Plans") are listed in BMJ Schedule 2.15(b)
(unless already listed in BMJ Schedule 2.15(a)) and comply in all material
respects with all applicable requirements imposed by the Securities Act, the
Exchange Act, ERISA, the Code, and all applicable rules and regulations
thereunder. The Benefit Plans have been administered and communicated to the
participants and beneficiaries in all material respects in accordance with their
terms and ERISA, and no employee or agent of BMJ or any of its subsidiaries has
engaged in any action or failed to act in such manner that, as a result of such
action or failure: (i) the IRS could revoke, or refuse to issue, a favorable
determination as to a Benefit Plan's qualification and any associated trust's
exemption or impose any liability or penalty under the Code; or (ii) a
participant or beneficiary or a nonparticipating employee has been denied
benefits properly due or to become due under the Benefit Plans or has been
misled as to their rights under the Benefit Plans. There are no pending or
threatened claims (other than routine claims for benefits) against the Benefit
Plans which would subject BMJ or any of its subsidiaries to liability. Any trust
which is intended to be tax-exempt has received a determination letter from the
IRS to that effect and no event has occurred which would adversely affect such
exemption. All reports, filings, returns and disclosures required to be made to
the participants and beneficiaries, other employees of BMJ or any of its
subsidiaries, the PBGC, the SEC, the IRS, the U.S. Department of Labor and any
other governmental agency pursuant to the Code, ERISA, or other applicable
statute or regulation, if any, have been made in a timely manner and all such
reports, filings, returns and disclosures were true and correct in all material
respects. No material liability has been, or is likely to be, incurred on
account of delinquent or incomplete compliance or failure to comply with such
requirements.
Section 2.16. Fidelity Bonds. Since at least January 1, 1991, BMJ and
each of its subsidiaries has continuously maintained fidelity bonds insuring
them against acts of dishonesty in such amounts as are customary, usual and
prudent for organizations of its size and business. All material claims
thereunder have been filed in a due and timely fashion. Since January 1, 1991,
the aggregate amount of all claims under such bonds has not exceeded the policy
limits of such bonds (excluding, except in the case of excess coverage, a
deductible amount of not more than $50,000) and neither BMJ nor any of its
subsidiaries is aware of any facts which would form the basis of a claim or
claims under such bonds aggregating in excess of the applicable deductible
amounts under such bonds. Neither BMJ nor any of its subsidiaries has reason to
believe that its respective fidelity coverage will not be renewed by its carrier
on substantially the same terms as the existing coverage, except for possible
premium increases unrelated to BMJ's and its subsidiaries' past claim
experience.
Section 2.17. Labor Matters. Hours worked by and payment made to
employees of BMJ and each of its subsidiaries have not been in violation of the
Fair Labor Standards Act or any applicable law dealing with such matters; and
all payments due from BMJ and each of its subsidiaries on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of BMJ or its appropriate subsidiary. BMJ is in compliance with all other
laws and regulations relating to the employment of labor, including all such
laws and regulations relating to collective bargaining, discrimination, civil
rights, safety and health, plant closing (including the Worker Adjustment
Retraining and Notification Act), workers' compensation and the collection and
payment of withholding and Social Security and similar taxes. No labor dispute,
strike or other work stoppage has occurred and is continuing or is to its
knowledge threatened with respect to BMJ or any of its subsidiaries. Since
December 31, 1992, no employee of BMJ or any of its subsidiaries has been
terminated, suspended, disciplined or dismissed under circumstances that are
reasonably likely to result in a material liability. No employees of BMJ or any
of its subsidiaries are unionized nor has such union representation been
requested by any group of employees or any other person within the last two
years. There are no organizing activities involving BMJ pending with, or, to the
knowledge of BMJ, threatened by, any labor organization or group of employees of
BMJ.
Section 2.18. Books and Records. The minute books of BMJ and each of
its subsidiaries contain complete and accurate records of and fairly reflect all
actions taken at all meetings and accurately reflect all other corporate action
of the shareholders and the boards of directors and each committee thereof. The
books and records of BMJ and each of its subsidiaries fairly and accurately
reflect the transactions to which BMJ and each of its subsidiaries is or has
been a party or by which their properties are subject or bound, and such books
and records have been properly kept and maintained.
Section 2.19. Concentrations of Credit. Except as previously disclosed
in the June 30, 1996 BMJ Board of Directors Report previously delivered to
Summit or set forth in BMJ Schedule 2.19, no customer or affiliated group of
customers (i) is owed by BMJ or any subsidiary of BMJ an aggregate amount in
excess of $4,500,000 (including deposits, other debts and contingent
liabilities) or (ii) owes to BMJ or any of its subsidiaries an aggregate amount
in excess of $4,500,000 (including loans and other debts, guarantees of debts of
third parties, and other contingent liabilities).
Section 2.20. Trademarks and Copyrights. Neither BMJ nor any of its
subsidiaries has received notice or otherwise knows that the manner in which BMJ
or any of its subsidiaries conducts its business including its current use of
any material trademark, trade name, service mark or copyright violates asserted
rights of others in any trademark, trade name, service mark, copyright or other
proprietary right.
Section 2.21. Equity Interests. Neither BMJ nor any of its subsidiaries
owns, directly or indirectly, except for the equity interest of BMJ in Bank and
of BMJ and Bank in the nonbank subsidiaries of BMJ listed on BMJ Schedule
2.01(a), any equity interest, other than by virtue of a security interest
securing an obligation not presently in default, in any bank, corporation,
partnership or other entity, except: (a) in a fiduciary capacity; or (b) an
interest valued at less than $25,000 acquired in connection with a debt
previously contracted.
Section 2.22. Environmental Matters.
(a) Except as may be disclosed in the Forms 10-K and 10-Q of BMJ
referred to in Section 2.02 hereof:
(1) No Hazardous Substances (as hereinafter defined) have been
stored, treated, dumped, spilled, disposed, discharged, released or deposited
at, under or on (1) any property now owned, occupied, leased or held or managed
in a representative or fiduciary capacity ("Present Property") by BMJ or any of
its subsidiaries, (2) any property previously owned, occupied, leased or held or
managed in a representative or fiduciary capacity ("Former Property") by BMJ or
any of its subsidiaries during the time of such previous ownership, occupancy,
lease; holding or management or (3) any Participation Facility (as hereinafter
defined) during the time that BMJ or any of its subsidiaries participated in the
management of, or may be deemed to be or to have been an owner or operator of,
such Participation Facility;
(2) Neither BMJ nor any of its subsidiaries has disposed of,
or arranged for the disposal of, Hazardous Substances from any Present Property,
Former Property or Participation Facility, and no owner or operator of a
Participation Facility disposed of, or arranged for the disposal of, Hazardous
Substances from a Participation Facility during the time that BMJ or any of its
subsidiaries participated in the management of, or may be deemed to be or to
have been an owner or operator of, such Participation Facility;
(3) No Hazardous Substances have been stored, treated, dumped,
spilled, disposed, discharged, released or deposited at, under or on any Loan
Property (as hereinafter defined), nor is there, with respect to any such Loan
Property, any violation of environmental law which could materially adversely
affect the value of such Loan Property to an extent which could prevent or delay
BMJ or any of its subsidiaries from recovering the full value of its loan in the
event of a foreclosure on such Loan Property.
(b) Neither BMJ nor any subsidiary (i) is aware of any investigations
contemplated, pending or completed by any environmental regulatory authority
with respect to any Present Property, Former Property, Loan Property or
Participation Facility, (ii) has received any information requests from any
environmental regulatory authority, or (iii) been named as a potentially
responsible or liable party in any Superfund, Resource Conservation and Recovery
Act, Toxic Substances Control Act or Clean Water Act proceeding or other
equivalent state or federal proceeding.
(c) As used in this Agreement, (a) "Participation Facility" shall mean
any property or facility of which the relevant person or entity (i) has at any
time participated in the management or (ii) may be deemed to be or to have been
an owner or operator, (b) "Loan Property" shall mean any real property in which
the relevant person or entity holds a security interest in an amount greater
than $30,000 and (c) "Hazardous Substances" shall mean (i) any flammable
substances, explosives, radioactive materials, hazardous materials, hazardous
substances, hazardous wastes, toxic substances, pollutants, contaminants and any
related materials or substances specified in any applicable Federal or state law
or regulation relating to pollution or protection of human health or the
environment (including, without limitation, ambient or indoor air, surface
water, groundwater, land surface or subsurface strata) and (ii) friable
asbestos, polychlorinated biphenyls, urea formaldehyde, and petroleum and
petroleum-containing products and wastes.
It shall be considered material for all purposes of this Agreement if
the cost of taking all remedial or other corrective actions and measures (as
required by applicable law, as recommended or suggested by phase two
investigation reports or as may be prudent in light of serious life, health or
safety concerns) with respect to matters required to be disclosed pursuant to
this Section 2.22 but not so disclosed, is in the aggregate in excess of
$2,000,000, as reasonably estimated by an environmental expert retained for such
purpose by Summit at its sole expense, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert to be such amount or
less with any reasonable degree of certainty.
Section 2.23. Accounting, Tax and Regulatory Matters. Neither BMJ nor
any of its subsidiaries has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would (i) prevent the transactions
contemplated hereby from qualifying (A) for pooling-of-interest accounting
treatment, or (B) as a reorganization within the meaning of Section 368 of the
Code, or (ii) materially impede or delay receipt of any approval referred to in
Section 4.01 or the consummation of the transactions contemplated by this
Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SUMMIT
Summit represents and warrants to BMJ as follows:
Section 3.01. Organization, Capital Stock.
(a) Summit is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey with authorized capital
stock consisting of 130,000,000 shares of Common Stock, each of par value $1.20
with attached rights issued pursuant to the Summit Shareholder Rights Plan, of
which 93,725,953 shares were issued and outstanding as of July 31, 1996 and
4,000,000 shares of Preferred Stock, each without par value, of which 600,166
shares of Series B Adjustable Rate Cumulative Preferred Stock ($50 stated value)
and 504,481 shares of Series C Adjustable Rate Cumulative Preferred Stock ($25
stated value) were issued and outstanding and 1,000,000 shares of Series R
Preferred Stock were reserved for issuance as of July 31, 1996.
(b) Summit is qualified to transact business in and is in good standing
under the laws of all jurisdictions where the failure to be so qualified would
have a material adverse effect on (i) the business, results of operations,
assets or financial condition of Summit and its subsidiaries on a consolidated
basis, or (ii) the ability of Summit to perform its obligations under, and to
consummate the transactions contemplated by, this Agreement (a "Summit Material
Adverse Effect" or "Summit Material Adverse Change"). However, a Summit Material
Adverse Effect or Summit Material Adverse Change will not include a change
resulting from a change in law, rule, regulation or generally accepted or
regulatory accounting principles, or from any other matter affecting financial
institutions or their holding companies generally. The bank subsidiaries of
Summit are duly organized, validly existing and in good standing under the laws
of their jurisdiction of organization. Summit and its bank subsidiaries have all
corporate power and authority and all material licenses, franchises,
certificates, permits and other governmental authorizations which are legally
required to own and lease their respective properties, occupy their respective
premises, and to engage in their respective businesses and activities as
presently engaged in. Summit is duly registered as a bank holding company under
the BHCA.
(c) All issued shares of the capital stock of Summit and of each of its
bank subsidiaries have been fully paid, were duly authorized and validly issued,
are non-assessable, have been issued pursuant to an effective registration
statement under the Securities Act or an appropriate exemption from registration
under the Securities Act and were not issued in violation of the preemptive
rights of any shareholder. Summit or one of its subsidiaries is the holder and
beneficial owner of all of the issued and outstanding Equity Securities of its
bank subsidiaries. There are no Equity Securities of Summit outstanding, in
existence, the subject of an agreement, or reserved for issuance, except as set
forth at Section 3.01(a) and except for Summit Stock issuable upon the exercise
of employee stock options granted under stock option plans of Summit, Summit
Stock issuable pursuant to Summit's Dividend Reinvestment and Stock Purchase
Plan, Savings Incentive Plan and 1993 Incentive Stock and Option Plan and the
Agreement and Plan of Merger, dated May 22, 1996, between Summit and Central
Jersey Financial Corporation ("CJFC Merger Agreement") and Series R Preferred
Stock issuable pursuant to the Summit Shareholder Rights Plan.
(d) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Summit or a subsidiary of Summit are held free and clear
of any claims, liens, encumbrances or security interests.
Section 3.02. Financial Statements. The financial statements and
schedules contained or incorporated in Summit's (a) annual report to
shareholders for the fiscal year ended December 31, 1995, (b) annual report on
Form 10-K pursuant to the Exchange Act for the fiscal year ended December 31,
1995 and (c) quarterly reports on Form 10-Q pursuant to the Exchange Act for the
fiscal quarters ended March 31, 1996 and June 30, 1996 (the "Summit Financial
Statements") are true and correct in all material respects as of their
respective dates and each fairly presents, in accordance with generally accepted
accounting principles consistently applied, the consolidated balance sheets,
statements of income, statements of shareholders' equity and statements of cash
flows of Summit and its subsidiaries at its respective date and for the period
to which it relates. Except as may otherwise be described therein or in the
related notes or in accountants' reports thereon, the Summit Financial
Statements were prepared in accordance with generally accepted accounting
principles consistently applied. The Summit Financial Statements do not, as of
the dates thereof, include any material asset or omit any material liability,
absolute or contingent, or other fact, the inclusion or omission of which
renders the Summit Financial Statements, in light of the circumstances under
which they were made, misleading in any respect.
Section 3.03. No Conflicts. Summit is not in, and has received no
notice of, violation or breach of, or default under, nor will the execution,
delivery and performance of this Agreement by Summit, or the consummation of the
Merger by Summit upon the terms and conditions provided herein (assuming receipt
of the Required Consents), violate, conflict with, result in the breach of,
constitute a default under, give rise to a claim or right of termination,
cancellation, revocation of, or acceleration under, or result in the creation or
imposition of any lien, charge or encumbrance upon any rights, permits,
licenses, assets or properties material to Summit and its subsidiaries, taken as
a whole, or upon any of the capital stock of Summit, or constitute an event
which could, with the lapse of time, action or inaction by Summit, or a third
party, or the giving of notice and failure to cure, result in any of the
foregoing, under any of the terms, conditions or provisions, as the case may be,
of:
(a) the Restated Certificate of Incorporation or the By-Laws of Summit;
(b) any law, statute, rule, ruling, determination, ordinance, or
regulation of any governmental or regulatory authority;
(c) any judgment, order, writ, award, injunction, or decree of any
court or other governmental authority; or
(d) any material note, bond, mortgage, indenture, lease, policy of
insurance or indemnity, license, contract, agreement, or other instrument; to
which Summit is a party or by which Summit or any of its assets or properties
are bound or committed, the consequences of which would be a Summit Material
Adverse Change, or enable any person to enjoin the transactions contemplated
hereby.
Section 3.04. Absence of Litigation, Agreements with Bank Regulators.
There is no outstanding order, injunction, or decree of any court or
governmental or self-regulatory body against or affecting Summit or its
subsidiaries which materially and adversely affects Summit and its subsidiaries,
taken as a whole, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to Summit and
its subsidiaries, taken as a whole, pending or, to Summit's knowledge,
threatened, against or involving Summit or their officers or directors (in their
capacity as such) in law or equity or before any court, panel or governmental
agency, except as may be disclosed in the Forms 10-K and 10-Q of Summit referred
to in Section 3.02. Neither Summit nor any bank subsidiary of Summit is a party
to any agreement or memorandum of understanding with, or is a party to any
commitment letter to, or has submitted a board of directors resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its business, or
in any manner relates to its capital adequacy, its credit or reserve policies or
its management. Neither Summit nor any bank subsidiary of Summit, has been
advised by any governmental or regulatory authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any of the foregoing. Summit and the bank subsidiaries of Summit
have resolved to the satisfaction of the applicable regulatory agency any
significant deficiencies cited by any such agency in its most recent
examinations of each aspect of Summit or such bank subsidiary's business except
for examinations, if any, received within the 30 days prior to the date hereof.
Section 3.05. Material Information. At the time of filing, all filings
made by Summit and its subsidiaries after December 31, 1989 with the SEC and
appropriate bank regulatory authorities do not contain any untrue statement of a
material fact and do not omit to state any material fact required to be stated
herein or therein or necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. To the extent such filings were subject to the Securities Act or
Exchange Act, such filings complied in all material respects with the Securities
Act or Exchange Act, as appropriate, and all applicable rules and regulations
thereunder of the SEC. Summit has since December 31, 1992 timely made all
filings required by the Securities Act and the Exchange Act.
Section 3.06. Corporate Action. Assuming due execution and delivery by
BMJ, Summit has the corporate power and is duly authorized by all necessary
corporate action to execute, deliver, and perform this Agreement. The Board of
Directors of Summit has taken all action required by law or by the Restated
Certificate of Incorporation or By-Laws of Summit or otherwise to authorize the
execution and delivery of this Agreement. Approval by the shareholders of Summit
of this Agreement, the Merger or the transactions contemplated by this Agreement
are not required by applicable law. This Agreement is a valid and binding
agreement of Summit enforceable in accordance with its terms except as such
enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, moratorium or other similar laws presently or hereafter
in effect affecting the enforcement of creditors' rights generally and banks the
deposits of which are insured by the Federal Deposit Insurance Corporation.
Section 3.07. Absence of Changes. Except as disclosed in the Summit
Financial Statements, there has not been, since December 31, 1995, any Summit
Material Adverse Change and there is no matter or fact which may result in any
such Summit Material Adverse Change in the future.
Section 3.08. Non-bank Subsidiaries. The non-bank subsidiaries of
Summit did not, taken in the aggregate, constitute a "significant subsidiary" of
Summit, as that term is defined in Rule 1-02(v) of Regulation S-X of the SEC (17
CFR ss.210.1-02(v)), at December 31, 1995.
Section 3.09. Absence of Undisclosed Liabilities. The Summit Financial
Statements are prepared on an accrual basis and reflect all known assets and
liabilities. There are no material undisclosed liabilities, whether contingent
or absolute, direct or indirect..
Section 3.10. Environmental Matters.
(a) Except as may be disclosed in the Forms 10-K and 10-Q of Summit
referred to in Section 3.02 hereof:
(1) no Hazardous Substances have been stored, treated, dumped,
spilled, disposed, discharged, released or deposited at, under or on any (i)
Present Property of Summit or a subsidiary, (ii) Former Property of Summit or a
subsidiary during the time of previous ownership, occupancy or lease, or (iii)
Participation Facility during the time that Summit or a subsidiary participated
in the management of, or may be deemed to be or to have been an owner or
operator of, such facility, where such storage, treatment, dumping, spilling,
disposing, discharging, releasing, or depositing would have a material adverse
effect on Summit and its subsidiaries, taken as a whole;
(2) neither Summit nor any subsidiary has disposed of or
arranged for the disposal of Hazardous Substances from any Present Property,
Former Property or Participation Facility, and no owner or operator of a
Participation Facility disposed of, or arranged for the disposal of, Hazardous
Substances from a Participation Facility during the time that Summit or any
subsidiary participated in the management of, or may be deemed to be or to have
been an owner or operator of such Participation Facility, where such disposal or
arranging for disposal would have a material adverse effect on Summit and its
subsidiaries, taken as a whole;
(3) no Hazardous Substances have been stored, treated, dumped,
spilled, disposed, discharged, released or deposited at, under or on any Loan
Property, nor is there with respect to any Loan Property any violation of an
environmental law, where such storage, treatment, dumping, spilling, disposing,
discharging, releasing, depositing or violation would have a material adverse
effect on Summit and its subsidiaries, taken as a whole.
(b) Neither Summit nor any subsidiary (i) is aware of any
investigations contemplated, pending or completed by any environmental
regulatory authority with respect to any Present Property, Former Property, Loan
Property or Participation Facility which would result in a Summit Material
Adverse Change, (ii) has received any information requests from any
environmental regulatory authority with respect to a matter which would result
in a Summit Material Adverse Change, or (iii) been named as a potentially
responsible or liable party in any Superfund, Resource Conservation and Recovery
Act, Toxic Substances Control Act or Clean Water Act proceeding or other
equivalent state or federal proceeding which would result in a Summit Material
Adverse Change.
ARTICLE IV.
COVENANTS OF BMJ
BMJ hereby covenants and agrees with Summit that:
Section 4.01. Preparation of Registration Statement and Applications
for Required Consents. BMJ will cooperate with Summit in the preparation of a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
with the SEC under the Securities Act for the registration of the offering of
Summit Stock to be issued in connection with the Merger and the proxy
statement-prospectus constituting part of the Registration Statement
("Proxy-Prospectus") that will be used by BMJ to solicit shareholders of BMJ for
approval of the Merger. In connection therewith, BMJ will furnish all financial
or other information, including using best efforts to obtain customary consents,
certificates, opinions of counsel and other items concerning BMJ reasonably
deemed necessary by counsel to Summit for the filing or preparation for filing
under the Securities Act and the Exchange Act of the Registration Statement
(including the proxy statement portion thereof). BMJ will cooperate with Summit
and provide such information as may be advisable in obtaining an order of
effectiveness for the Registration Statement, appropriate permits or approvals
under state securities and "blue sky" laws, the required approval under the BHCA
of the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), the listing of the Shares on the New York Stock Exchange (subject to
official notice of issuance) and any other governmental or regulatory consents
or approvals or the taking of any other governmental or regulatory action
necessary to consummate the Merger without a material adverse effect on the
business, results of operations, assets or financial condition of the Surviving
Corporation and its subsidiaries, taken as a whole (the "Required Consents").
Summit, reasonably in advance of making such filings, will provide BMJ and its
counsel a reasonable opportunity to comment on such filings and regulatory
applications and will give due consideration to any comments of BMJ and its
counsel before making any such filing or application; and Summit will provide
BMJ and its counsel with copies of all such filings and applications at the time
filed if such filings and applications are made at any time before the Effective
Time. BMJ covenants and agrees that all information furnished by BMJ for
inclusion in the Registration Statement, the Proxy-Prospectus, all applications
to appropriate regulatory agencies for approval of the Merger, and all
information furnished by BMJ to Summit pursuant to this Agreement or in
connection with obtaining Required Consents, will comply in all material
respects with the provisions of applicable law, including the Securities Act and
the Exchange Act and the rules and regulations of the SEC thereunder, and will
not contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. BMJ will furnish to Bear Stearns such information as
Bear Stearns may reasonably request for purposes of the opinion referred to in
Section 8.07.
Section 4.02. Notice of Adverse Changes. BMJ will promptly advise
Summit in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of BMJ contained in
this Agreement or the BMJ Schedules or the materials furnished pursuant to the
Post-Signing Disclosure List (as defined in Section 4.09), if made on or as of
the date of such event or the Closing Date, untrue or inaccurate in any material
respect, (b) any BMJ Material Adverse Change, (c) any inability or perceived
inability of BMJ to perform or comply with the terms or conditions of this
Agreement, (d) the institution or threat of institution of litigation or
administrative proceedings involving BMJ or any of its subsidiaries or assets,
which, if determined adversely to BMJ or any of its subsidiaries, would have a
material adverse effect upon BMJ and its subsidiaries taken as a whole or the
ability of the parties to timely consummate the Merger and the related
transactions, (e) any governmental complaint, investigation, hearing, or
communication indicating that such litigation or administrative proceeding is
contemplated, (f) any written notice of, or other communication relating to, a
default or event which, with notice or lapse of time or both, would become a
default, received by BMJ or a subsidiary subsequent to the date hereof and prior
to the Effective Time, under any agreement, indenture or instrument to which BMJ
or a subsidiary is a party or is subject and which is material to the business,
operation or condition (financial or otherwise) of BMJ and its subsidiaries
taken as a whole, and (g) any written notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement including the
Merger. BMJ agrees that the delivery of such notice shall not constitute a
waiver by Summit of any of the provisions of Articles VI or VII.
Section 4.03. Meeting of Shareholders. BMJ will call a meeting of its
shareholders for the purpose of voting upon this Agreement, the Merger and the
transactions contemplated hereby to be held as promptly as practicable and, in
connection therewith, will comply with the New Jersey Act and the Exchange Act
and all regulations promulgated thereunder governing shareholder meetings and
proxy solicitations. In connection with such meeting, BMJ shall mail the
Proxy-Prospectus to its shareholders and use, unless in the written opinion of
counsel such action would be a breach of the fiduciary duties by the directors
under applicable law, its best efforts to obtain shareholder approval of this
Agreement, the Merger and the transactions contemplated hereby.
Section 4.04. Copies of Filings. Without limiting the provisions of
Section 4.01, BMJ will deliver to Summit, at least twenty-four hours prior to an
anticipated date of filing or distribution, all documents to be filed with the
SEC or any bank regulatory authority or to be distributed in any manner to the
shareholders of BMJ or the public.
Section 4.05. No Material Transactions. Until the Effective Time, BMJ
will not and will not allow any of its subsidiaries to, without the prior
written consent of Summit:
(a) pay (or make a declaration which creates an obligation to pay) any
cash dividends, other than dividends from subsidiaries of BMJ to BMJ or other
subsidiaries of BMJ except that BMJ may declare, set aside and pay a dividend of
$0.10 per quarter or the dividend most recently (as of such date) declared by
Summit multiplied by the Exchange Ratio;
(b) declare or distribute any stock dividend or authorize or effect a
stock split;
(c) merge with, consolidate with, or sell any material asset to any
other corporation, bank, or person (except for mergers of subsidiaries of BMJ
into other subsidiaries of BMJ) or enter into any other transaction not in the
ordinary course of business;
(d) incur any liability or obligation other than intracompany
obligations, make or agree to make any commitment or disbursement, acquire or
dispose or agree to acquire or dispose of any property or asset (tangible or
intangible), make or agree to make any contract or agreement or engage or agree
to engage in any other transaction, except transactions in the ordinary course
of business or other transactions involving not more than $100,000;
(e) subject any of its properties or assets to any lien, claim, charge,
option or encumbrance, except in the ordinary course of business and for amounts
not material in the aggregate to BMJ and its subsidiaries taken as a whole;
(f) (i) pay any employee cash bonuses, other than (x) bonuses for 1996
performance under and in accordance with the formulas provided in the BMJ
Short-Term Incentive Plan, which shall be paid in February of 1997 and shall be
paid only to employees who continue to be employees of BMJ or a subsidiary on
such payment date, and (y) "stay bonuses" to be paid on the earlier to occur of
(A) the merger of Bank with Summit Bank or (B) six months after the Closing
Date, to employees designated by the Board of Directors of BMJ (after
consultation with Summit) who continue to be employees of BMJ or a subsidiary or
affiliate on such payment date and execute a release of claims against Summit
and its affiliates, provided, that the sum of (x) and (y) not shall exceed
$450,000 in the aggregate, or (ii) increase or enter into any agreement to
increase the rate of compensation of any employee on the date hereof which is
not consistent with past practices and policies and which when considered with
all such increases or agreements to increase constitutes an average annualized
rate not exceeding four percent (4%);
(g) except as provided in Section 4.05(f), create, adopt or modify any
employment, termination or severance arrangement or any pension or profit
sharing plan, bonus, deferred compensation, death benefit, retirement or other
employee or director benefit or welfare plan of whatsoever nature, or change the
level of benefits under any such arrangement or plan, or increase any severance
or termination pay benefit or any other fringe benefit, or make, increase or
amend in any manner any grant or award under any compensation plan, including
stock incentive and stock option plans;
(h) distribute, issue, sell or grant any of its Equity Securities, any
stock appreciation rights, derivative securities or stock-based cash rights
except pursuant to the terms of the BMJ Dividend Plan and pursuant to the
exercise of director and employee stock options under the BMJ Option Plans;
(i) except in a fiduciary capacity, purchase, redeem, retire,
repurchase, or exchange, or otherwise acquire or dispose of, directly or
indirectly, any of its Equity Securities, whether pursuant to the terms of such
Equity Securities or otherwise, or enter into any agreement providing for any of
the foregoing transactions;
(j) amend its Certificate of Incorporation or By-Laws;
(k) modify, amend or cancel any of its existing borrowings other than
intra-corporate borrowings and borrowings of federal funds from correspondent
banks and the Federal Reserve Bank of New York or the Federal Home Loan Bank of
New York or enter into any contract, agreement, lease or understanding, or any
contracts, agreements, leases or understandings other than those in the ordinary
course of business or which do not involve the creation of any material
obligation or release of any material right of BMJ or any of its subsidiaries,
taken as a whole;
(l) create, or accelerate the exercisability of, any stock appreciation
rights or options or the release of any restrictions on stock issued under the
BMJ Benefit Plans;
(m) make any employer contribution to a BMJ Plan or a Benefit Plan
which under the terms of the particular plan is voluntary and within the sole
discretion of BMJ to make, except matching employer contributions made in
accordance with plan terms in effect on the date hereof;
(n) make any determination or take any action, by its Compensation
Committee or otherwise, under or with respect to any BMJ Option Plan other than
routine administration of outstanding awards thereunder;
(o) amend or exercise any discretion to change the current terms of the
BMJ Dividend Plan or issue any BMJ Stock under the BMJ Dividend Plan at a
discount.
Section 4.06. Operation of Business in Ordinary Course. BMJ, on behalf
of itself and its subsidiaries, covenants and agrees that from and after the
date hereof and until the Effective Time, it and its subsidiaries: (a) will
carry on their business substantially in the same manner as heretofore and will
not institute any unusual or novel methods of management or operation of their
properties or business and will maintain such in their customary manner; (b)
will use their best efforts to continue in effect their present insurance
coverage on all properties, assets, business and personnel; (c) will use their
best efforts to preserve their business organization intact, preserve their
present relationships with customers, suppliers, and others having business
dealings with them, and keep available their present employees, provided,
however, that BMJ or any of its subsidiaries may terminate any employee for
unsatisfactory performance or other reasonable business purpose, and provided
further, however, that BMJ will notify and consult with Summit prior to
terminating any of the five highest paid employees of BMJ; (d) will use their
best efforts to continue to maintain fidelity bonds insuring BMJ and its
subsidiaries against acts of dishonesty by each of their employees in such
amounts (not less than present coverage) as are customary, usual and prudent for
corporations or banks, as the case may be, of their size; (e) will not do
anything or fail to do anything which will cause a breach of or default under
any representation, warranty or covenant of BMJ or any contract, agreement,
commitment or obligation to which they or any one of them is a party or by which
they or any of their assets or properties may be bound or committed if the
consequence of such, individually or in the aggregate, would be likely to have a
material adverse effect on BMJ and its subsidiaries taken as a whole; and (f)
will not change their methods of accounting in effect at December 31, 1995, or
change any of their methods of reporting income and deductions for Federal
income tax purposes from those employed in the preparation of their Federal
income tax returns for the taxable year ending December 31, 1995, except as
required by changes in laws, regulations or generally accepted accounting
principles or changes that are to a preferable accounting method, and approved
in writing by BMJ's independent certified public accountants.
Section 4.07. Further Actions. BMJ will: (a) execute and deliver such
instruments and take such other actions as Summit may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of Summit set forth in
Articles VI and VII hereof are satisfied.
Section 4.08. Cooperation. Until the Effective Time, BMJ will give to
Summit and to its representatives, including its accountants, KPMG Peat Marwick
LLP, and its legal counsel, full access during normal business hours to all of
its property, documents, contracts and records relevant to this Agreement and
the Merger, will provide such information with respect to its business affairs
and properties as Summit from time to time may reasonably request, and will
cause its managerial employees, and will use its best efforts to cause its
counsel and independent certified public accountants, to be available on
reasonable request to answer questions of Summit's representatives covering the
business and affairs of BMJ or any of its subsidiaries.
Section 4.09. Copies of Documents. As promptly as practicable, but not
later than 45 days after the date hereof, BMJ will furnish to or make available
to Summit all the documents, contracts, agreements, papers, and writings
referred to in the BMJ Schedules or called for by the list attached hereto as
Exhibit B (the "Post-Signing Disclosure List").
Section 4.10. Applicable Laws. BMJ and its subsidiaries will use their
best efforts to comply promptly with all requirements which federal or state law
may impose on BMJ or any of its subsidiaries with respect to the Merger and will
promptly cooperate with and furnish information to Summit in connection with any
such requirements imposed upon Summit or on any of its subsidiaries in
connection with the Merger.
Section 4.11. Agreements of Affiliated Shareholders. BMJ agrees to
furnish to Summit, not later than 10 business days prior to the date of mailing
of the Proxy-Prospectus, a list of all persons who, in the opinion of Covington
& Burling, special counsel to BMJ, are affiliates of BMJ for the purposes of
Rule 145 under the Securities Act (a "BMJ Affiliate") and shall use its best
efforts to cause each BMJ Affiliate to enter into, prior to the date of mailing
of the Proxy-Prospectus, an agreement, satisfactory in form and substance to
Summit, substantially in the form of Exhibit C hereto, and effective prior to
such date (an "Affiliate Agreement").
Section 4.12. Loans and Leases to Affiliates. All loans and leases
hereafter made by BMJ or any of its subsidiaries to any of its present or former
directors or executive officers or their respective related interests shall be
made only in the ordinary course of business and on the same terms and at the
same interest rates as those prevailing for comparable transactions with others
and shall not involve more than the normal risk of repayment or present other
unfavorable features.
Section 4.13. Confidentiality. All information furnished by Summit to
BMJ or its representatives pursuant hereto shall be treated as the sole property
of Summit and, if the Merger shall not occur, BMJ and its representatives shall
return to Summit all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information, except that any such confidential information or notes
or abstracts therefrom presented to the Board of Directors of BMJ or any
committee thereof for the purpose of considering this Agreement, the Merger and
the related transactions may be kept and maintained by BMJ with other records of
Board, and Board committee, meetings subject to a continuing obligation of
confidentiality. BMJ shall, and shall use its best efforts to cause its
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned and shall
not apply to: (i) any information which (x) was legally in BMJ's possession
prior to the disclosure thereof by Summit, (y) was then generally known to the
public, or (z) was disclosed to BMJ by a third party not bound by an obligation
of confidentiality; or (ii) disclosures made as required by law. It is further
agreed that if, in the absence of a protective order or the receipt of a waiver
hereunder, BMJ is nonetheless, in the written opinion of its outside counsel,
compelled to disclose information concerning Summit to any tribunal or
governmental body or agency or else stand liable for contempt or suffer other
censure or penalty, BMJ may disclose such information to such tribunal or
governmental body or agency without liability hereunder and shall so notify
Summit. This Section 4.13 shall survive any termination of this Agreement.
Section 4.14. Dividends. BMJ will coordinate with Summit the
declaration of any dividends and the record and payment dates thereof so that
the holders of BMJ Stock will not be paid two dividends for a single calendar
quarter with respect to their shares of BMJ Stock and any shares of Summit Stock
they become entitled to receive in the Merger or fail to be paid one dividend in
each calendar quarter between the date hereof and the Effective Time. BMJ will
notify Summit at least five business days prior to any proposed dividend
declaration date.
Section 4.15. Acquisition Proposals. BMJ agrees that neither BMJ nor
any of its subsidiaries nor any of the respective officers and directors of BMJ
or its subsidiaries shall, and BMJ shall direct and use its best effort to cause
its employees, affiliates, agents and representatives (including, without
limitation, any investment banker, broker, financial or investment advisor,
attorney or accountant retained by BMJ or any of its subsidiaries) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries, proposals
or offers with respect to, or engage in any negotiations or discussions with any
person, provide any nonpublic information, or authorize or enter into any
agreement or agreement in principle concerning, or recommend, endorse or
otherwise facilitate any effort or attempt to induce or implement any
Acquisition Proposal (as defined below); provided however, that the Board of
Directors of BMJ may furnish or cause to be furnished nonpublic information and
may participate in such discussions directly or through its representatives
concerning an Acquisition Proposal, if such Board of Directors has determined,
after having consulted with and received the written opinion of outside counsel
to the effect, that the failure to provide such nonpublic information or
participate in such discussions would cause the members of such Board of
Directors to breach their fiduciary duties under applicable laws. "Acquisition
Proposal" is hereby defined to be any offer, including an exchange offer or
tender offer, or proposal concerning a merger, consolidation, or other business
combination or takeover transaction involving BMJ or any of its subsidiaries or
the acquisition of any assets (otherwise than as permitted by Section 4.05) or
securities of BMJ or any of its subsidiaries. BMJ will immediately cease and
cause to be terminated any existing activities, discussion or negotiations with
any parties conducted heretofore with respect to any of the foregoing. BMJ will
take the necessary steps to inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section. In
addition, BMJ will notify Summit by telephone to its chief executive officer or
general counsel promptly upon receipt of any communication with respect to a
proposed Acquisition Proposal with another person or receipt of a request for
information from any governmental or regulatory authority with respect to a
proposed acquisition of BMJ or any of its subsidiaries or assets by another
party, and will immediately deliver as soon as possible by facsimile
transmission, receipt acknowledged, to the Summit officer notified as required
above a copy of any document relating thereto promptly after any such document
is received by BMJ.
Section 4.16 Tax Opinion Certificates. BMJ shall execute and deliver to
Thompson Coburn any tax opinion certificate reasonably required by Thompson
Coburn in connection with the issuance of the Tax Opinions (as defined at
Section 6.03), dated as of the date of effectiveness of the Registration
Statement and as of the Closing Date, and BMJ shall cause each of its executive
officers, directors and holders of five percent (5%) or more of outstanding BMJ
Stock (including shares beneficially held) to execute and deliver to Thompson
Coburn any tax opinion certificate reasonably required by Thompson Coburn in
connection with the issuance of one or more of the Tax Opinions, dated as of the
date of effectiveness of the Registration Statement and as of the Closing Date.
Section 4.17 Best Efforts to Ensure Pooling. BMJ agrees to use, and
agrees to cause each of its subsidiaries to use, its and their best efforts to
cause the Merger to qualify for pooling-of-interests accounting treatment.
ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with BMJ that:
Section 5.01. Approvals and Registrations. Based on such assistance of
and cooperation BMJ as Summit shall reasonably request, Summit will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement, (b)
with the Federal Reserve Board, an application for approval of the Merger, and
(c) with the New York Stock Exchange, an application for the listing of the
shares of Summit Stock issuable upon the Merger, subject to official notice of
issuance, except that Summit shall have no obligation to file a new registration
statement or a post-effective amendment to the Registration Statement covering
any reoffering of Summit Stock by BMJ Affiliates. Summit covenants and agrees
that all information furnished by Summit for inclusion in the Registration
Statement, the Proxy-Prospectus, and all applications and submissions for the
Required Consents will comply in all material respects with the provisions of
applicable law, including the Securities Act and the Exchange Act and the rules
and regulations of the SEC and the Federal Reserve Board and will not contain
any untrue statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Summit will furnish to Bear Stearns, investment bankers advising
BMJ, such information as they may reasonably request for purposes of the opinion
referred to in Section 8.07.
Section 5.02. Notice of Adverse Changes. Summit will promptly advise
BMJ in writing of (a) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of Summit contained
in this Agreement or the Summit Schedules, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect, (b) any
Summit Material Adverse Change, (c) any inability or perceived inability of
Summit to perform or comply with the terms or conditions of this Agreement, (d)
the institution or threat of institution of material litigation or
administrative proceeding involving Summit or its assets which, if determined
adversely to Summit, would have a material adverse effect on Summit and its
subsidiaries taken as a whole or the Merger, (e) any governmental complaint,
investigation, or hearing or communication indicating that such litigation or
administrative proceeding is contemplated, (f) any written notice of, or other
communication relating to, a default or event which, with notice or lapse of
time or both, would become a default, received by Summit subsequent to the date
hereof and prior to the Effective Time, under any agreement, indenture or
instrument to which Summit is a party or is subject and which is material to the
business, operation or condition (financial or otherwise) of Summit and its
subsidiaries taken as a whole, and (g) any written notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement
including the Merger. Summit agrees that the delivery of such notice shall not
constitute a waiver by BMJ of any of the provisions of Articles VI or VIII.
Section 5.03. Copies of Filings. Summit shall promptly provide to BMJ
and its counsel copies of the applications filed with the Federal Reserve Board
and all reports filed by it with the SEC on Forms 10-Q, 8-K and 10-K.
Section 5.04. Further Actions. Summit will: (a) execute and deliver
such instruments and take such other actions as BMJ may reasonably require to
carry out the intent of this Agreement; (b) use all reasonable efforts to obtain
consents of all third parties and governmental bodies necessary or reasonably
desirable for the consummation of the transactions contemplated by this
Agreement; (c) diligently support this Agreement in any proceeding before any
regulatory authority whose approval of any of the transactions contemplated
hereby is required or reasonably desirable or before any court in which
litigation in respect thereof is pending; and (d) use its best efforts so that
the other conditions precedent to the obligations of BMJ set forth in Articles
VI and VIII hereof are satisfied.
Section 5.05. Applicable Laws. Summit will use its best efforts to
comply promptly with all requirements which federal or state law may impose on
Summit with respect to the Merger and will promptly cooperate with and furnish
information to BMJ in connection with any such requirements imposed upon BMJ or
on any of its subsidiaries in connection with the Merger.
Section 5.06. Unpaid BMJ Dividends. By virtue of the Merger and without
further action on anyone's part, Summit shall assume the obligation of BMJ to
pay dividends, if any, on BMJ Stock which have a record date prior to the
Effective Time but which are not payable until after the Effective Time.
Section 5.07. Cooperation. Until the Effective Time, Summit will
provide such information with respect to its business affairs and properties as
BMJ from time to time may reasonably request, and will cause its managerial
employees, counsel and independent certified public accountants to be available
on reasonable request to answer questions of BMJ's representatives covering the
business and affairs of Summit or any of its subsidiaries.
Section 5.08. Confidentiality. All information furnished by BMJ to
Summit or its representatives pursuant hereto shall be treated as the sole
property of BMJ and, if the Merger shall not occur, Summit and its
representatives shall return to BMJ all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information, except that any such
confidential information or notes or abstracts therefrom presented to the Board
of Directors of Summit or any committee thereof for the purpose of considering
this Agreement, the Merger and the related transactions may be kept and
maintained by Summit with other records of Board, and Board committee, meetings
subject to a continuing obligation of confidentiality. Summit shall, and shall
use its best efforts, to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to: (i) any information which
(x) was legally in Summit's possession prior to the disclosure thereof by BMJ,
(y) was then generally known to the public, or (z) was disclosed to Summit by a
third party not bound by an obligation of confidentiality; or (ii) disclosures
made as required by law. It is further agreed that if, in the absence of a
protective order or the receipt of a waiver hereunder, Summit is nonetheless, in
the written opinion of its counsel, compelled to disclose information concerning
BMJ to any tribunal or governmental body or agency or else stand liable for
contempt or suffer other censure or penalty, Summit may disclose such
information to such tribunal or governmental body or agency without liability
hereunder and shall so notify BMJ in advance to the extent practicable. This
Section 5.08 shall survive any termination of this Agreement.
Section 5.09. Further Transactions. Summit continually evaluates
possible acquisitions and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate the acquisition by it of another
bank, association, bank holding company, savings and loan holding company or
other company (or the assets thereof) for consideration that may include Summit
Stock. In addition, prior to the Effective Time, Summit may, depending on market
conditions and other factors, otherwise determine to issue equity-linked or
other securities for financing purposes. Notwithstanding the foregoing, Summit
will not take any such action that would (i) prevent the transactions and
contemplated hereby from qualifying as a reorganization within the meaning of
Section 368 of the Code or (ii) materially impede or delay receipt of any
Required Consent or the consummation of the transactions contemplated by this
Agreement for more than 60 days.
Section 5.10. Indemnification.
(a) Summit shall indemnify, and advance expenses in matters that may be
subject to indemnification to, persons who served as directors and officers of
BMJ or any subsidiary of BMJ on or before the Effective Time with respect to
liabilities and claims (and related expenses, including fees and disbursements
of counsel) made against them resulting from their service as such prior to the
Effective Time in accordance with and subject to the requirements and other
provisions of the Restated Certificate of Incorporation and By-Laws of Summit in
effect on the date of this Agreement and applicable provisions of law to the
same extent as Summit is obliged thereunder to indemnify and advance expenses to
its own directors and officers with respect to liabilities and claims made
against them resulting from their service for Summit.
(b) For a period of six (6) years after the Effective Time, Summit will
use its best efforts to provide to the persons who served as directors or
officers of BMJ or any subsidiary of BMJ on or before the Effective Time
insurance against liabilities and claims (and related expenses) made against
them resulting from their service as such prior to the Effective Time comparable
in coverage to that provided by Summit to its own directors and officers, but,
if not available on commercially reasonable terms, then coverage substantially
similar in all material respects to the insurance coverage provided to them in
such capacities at the date hereof; provided, however, that in no event shall
Summit be required to expend more than 200% of the current amount expended by
BMJ (the "Insurance Amount") to maintain or procure insurance coverage pursuant
hereto, and, further provided, that if Summit is unable to maintain or obtain
the insurance called for by this Section 5.10, Summit shall use its best efforts
to obtain as much comparable insurance as is available for the Insurance Amount.
BMJ shall renew any existing insurance or purchase any "discovery period"
insurance provided for thereunder at Summit's request.
(c) This Section 5.10 shall be construed as an agreement as to which
the directors and officers of BMJ referred to herein are intended to be third
party beneficiaries and shall be enforceable by the such persons and their heirs
and representatives.
Section 5.11. Employee Matters.
(a) After the Effective Time, Summit may in its discretion maintain,
terminate, merge or dispose of (i) the BMJ Plans, (ii) the Benefit Plans, and
(iii) any and all other medical, major medical, disability, life insurance,
accidental death and dismemberment insurance, dental, vision care, or other
health or welfare plan maintained by BMJ (the "Health or Welfare Plans");
provided, however, that any action taken by Summit shall comply with ERISA and
any other applicable laws, including laws regarding the preservation of employee
pension benefit plan benefits and, provided further, that if Summit maintains a
plan available to all its employees generally which is similar in benefits,
character or nature to, or which covers risks similar to those covered by, a BMJ
Plan, a Benefit Plan or a Health or Welfare Plan available to all BMJ employees
generally, then, if such BMJ plan is terminated by Summit or is otherwise
rendered inactive by Summit, Summit shall offer to the former employees of BMJ
affected by such plan termination or cessation of activity the opportunity to
participate in the similar plan of Summit without being subject to any
exclusions due to pre-existing conditions and such employees shall be given
credit for years of service with BMJ for purposes of eligibility, vesting and
benefit accrual purposes, except benefit accruals under the Summit Retirement
Plan, Summit supplemental employee retirement plans and Summit severance plans.
(b) After the Effective Time, BMJ employees shall not be entitled to
participate automatically in benefits plans, programs or arrangements of Summit
not maintained by Summit for its employees generally, including without
limitation bonus plans, stock option plans, stock award plans, severance plans
and reduction in force plans, but shall be allowed to participate if and only if
selected for participation by the persons authorized by the terms of such plans
to select participants.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF
SUMMIT AND BMJ
The respective obligations of Summit and BMJ under this Agreement to
consummate the Merger are subject to the satisfaction of all the following
conditions, compliance with which or the occurrence of which may only be waived
in whole or in part in writing by Summit and BMJ in accordance with Section
10.09:
Section 6.01. Receipt of Required Consents. Summit and BMJ shall have
received the Required Consents; the Required Consents shall not, in the
reasonable opinion of Summit or BMJ, contain restrictions or limitations which
would materially adversely affect the financial condition of Summit after
consummation of the Merger; the Required Consents and the transactions
contemplated hereby shall not on the Closing Date be contested by any federal or
state governmental authority; and on the Closing Date the Required Consents
needed for the Merger shall have been obtained and shall not have been withdrawn
or suspended.
Section 6.02. Effective Registration Statement. The Registration
Statement shall have been declared effective by the SEC; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and remain in effect on the Closing Date; and no proceeding for that
purpose shall have been initiated or, to the knowledge of Summit or BMJ, shall
be contemplated or threatened by the SEC on the Closing Date.
Section 6.03. Tax Matters. At the time of effectiveness of the
Registration Statement and at the Closing Date, Summit and BMJ shall have
received from Thompson Coburn an opinion (the "Tax Opinion"), reasonably
satisfactory in form and substance to them, to the effect that (a) the Merger
will constitute a tax-free reorganization within the meaning of Section 368 of
the Code, (b) except with respect to fractional share interests, holders of BMJ
Stock who receive solely Summit Stock in the Merger will not recognize gain or
loss for federal income tax purposes, (c) the basis of such Summit Stock
(including any fractional share for which cash is received) will equal the basis
of the BMJ Stock for which it is exchanged and (d) the holding period of such
Summit Stock (including any fractional share for which cash is received) will
include the holding period of the BMJ Stock for which it is exchanged, assuming
that such BMJ Stock is a capital asset in the hands of the holder thereof at the
Effective Time.
In addition, no condition or set of facts or circumstances shall exist
at the Closing Date which will either (x) preclude any of the parties to this
Agreement from satisfying the terms or conditions of, or assumptions made in,
the Tax Opinions, as the case may be, or (y) result in any of the factual
assumptions contained in the Tax Opinions being untrue.
Section 6.04. Absence of Litigation. At the Closing Date, no
investigation by any state or federal agency, and no action, suit, arbitration
or proceeding before any court, state or federal agency, panel or governmental
or regulatory body or authority, shall have been instituted or threatened
against Summit or any of its subsidiaries, or BMJ or any of its subsidiaries,
that is material to the Merger or to the financial condition of Summit and its
subsidiaries taken as a whole or BMJ and its subsidiaries taken as a whole, as
the case may be. At the Closing Date, no order, decree, judgment, or regulation
shall have been entered or law or regulation adopted by any such agency, panel,
body or authority which enjoined or has a material adverse effect upon the
Merger or on the financial condition of Summit and its subsidiaries taken as a
whole or BMJ and its subsidiaries taken as a whole, as the case may be.
Section 6.05. NYSE Listing. At the Closing Date, the shares of Summit
Stock to be issued in the Merger shall have been listed on the New York Stock
Exchange, subject to official notice of issuance.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SUMMIT
The obligation of Summit to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by Summit in writing in
accordance with Section 10.09:
Section 7.01. No Adverse Changes. During the period from December 31,
1995 to the Closing Date there shall not have been any BMJ Material Adverse
Change, and BMJ and its subsidiaries shall have not sustained any material loss
or damage to their properties, whether or not insured, which materially affects
the ability of BMJ and its subsidiaries, taken as a whole, to conduct their
business.
Section 7.02. Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this Agreement,
all representations and warranties made by BMJ in this Agreement and the BMJ
Schedules and the material furnished pursuant to the Post-Signing Disclosure
List shall be true and correct in all material respects on the date of this
Agreement, and in all material respects on the Closing Date with the same force
and effect as if such representations and warranties were made on the Closing
Date. BMJ shall have complied in all material respects with all covenants and
agreements contained herein to be performed by BMJ on or before the Closing
Date.
Section 7.03. Secretary's Certificate. BMJ shall have furnished to
Summit a certificate dated the Closing Date to which shall be attached copies of
all resolutions adopted or minutes of actions taken by the Board of Directors
(including committees thereof) and shareholders of BMJ relating to this
Agreement, the Option Agreement and the Merger and related transactions, which
such certificate shall be signed by the Secretary of BMJ and certify to the
satisfaction of the condition set forth in Section 7.09 and the trueness,
correctness, completeness and continuing effectiveness of all resolutions and
actions contained or referenced in the aforementioned attachments.
Section 7.04. Officer's Certificate. BMJ shall have furnished to Summit
a certificate signed by the President of BMJ, dated the Closing Date, certifying
to the satisfaction of the conditions set forth at Sections 6.01, 6.02 (last
clause), 6.03 (last paragraph) and Section 6.04, as they relate to BMJ, and at
Sections 7.01, 7.02, 7.07, 7.10 and 7.13.
Section 7.05. Opinion of BMJ's Counsel. Summit shall have received an
opinion of counsel to BMJ, dated the Closing Date and reasonably satisfactory in
form and substance to counsel for Summit, substantially to the effect provided
in Exhibit D.
Section 7.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to Summit, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 7.07. Consents to BMJ Contracts. All consents, approvals or
waivers, in form and substance reasonably satisfactory to Summit, required to be
obtained in connection with the Merger from other parties to each mortgage,
note, lease, permit, franchise, loan or other agreement or contract to which BMJ
or any of its subsidiaries is a party or by which they or any of their assets or
properties may be bound or committed, which contract is material to the
business, franchises, operations, assets or financial condition (financial or
otherwise) of BMJ and its subsidiaries on a consolidated basis, shall have been
obtained.
Section 7.08. FIRPTA Affidavit. BMJ shall have delivered to Summit an
affidavit of an executive officer of BMJ stating, under penalties of perjury,
that BMJ is not and has not been a United States real property holding company
(as defined in Section 897(c)(2) of the Code) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
Section 7.09. Shareholder Approval. The shareholders of BMJ, at the
meeting contemplated by this Agreement, shall have authorized and approved the
Merger and this Agreement and all transactions contemplated by this Agreement as
and to the extent required by all applicable laws and regulations and the
provisions of BMJ's Certificate of Incorporation and By-Laws.
Section 7.10. Absence of Regulatory Agreements. Neither BMJ nor any BMJ
subsidiary shall be a party to any agreement or memorandum of understanding
with, or commitment letter to, or board of directors resolution submitted to or
similar undertaking made to, or be subject to any order or directive by, or be a
recipient of any extraordinary supervisory letter from, any governmental or
regulatory authority which restricts materially the conduct of its respective
business or has a material adverse effect upon the Merger or upon the financial
condition of Bank or BMJ and its subsidiaries taken as a whole, and neither BMJ
nor Bank shall have been advised by any governmental or regulatory authority
that such authority is contemplating issuing or requesting, or considering the
appropriateness of issuing or requesting, any of the foregoing.
Section 7.11. [omitted]
Section 7.12. Affiliate Agreements. Each person who is a BMJ Affiliate
shall have delivered to Summit an executed Affiliate Agreement.
Section 7.13. [omitted]
The receipt of the documents required by this Article VII by Summit
shall in no way constitute a waiver by Summit of any of the provisions of or its
rights under this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF BMJ
The obligation of BMJ to consummate the Merger is subject to the
satisfaction of all of the following conditions, compliance with which or the
occurrence of which may be waived in whole or in part by BMJ in writing in
accordance with Section 10.09:
Section 8.01. No Adverse Changes. During the period from December 31,
1995 to the Closing Date there shall not have been any Summit Material Adverse
Change, and Summit and its subsidiaries shall not have sustained any material
loss or damage to their properties, whether or not insured, which materially
affects the ability of Summit and its subsidiaries, taken as a whole, to conduct
their business.
Section 8.02. Representations and Covenants. Except with respect to
matters resulting from transactions specifically contemplated by this Agreement,
all representations and warranties made by Summit in this Agreement shall be
true and correct in all material respects on the date of this Agreement and, in
all material respects, on the Closing Date with the same force and effect as if
such representations and warranties were made on the Closing Date. Summit shall
have complied in all material respects with all covenants and agreements
contained herein or therein to be performed by Summit on or before the Closing
Date. The entry by Summit after the date hereof into any agreement to acquire
any company or other entity, the issuance of up to $1 billion of debt or equity
or a combination of debt and equity in public or private offerings, and the
issuance of Series R Preferred Stock pursuant to Summit's Shareholder Rights
Plan, the redemption or repurchase by Summit of its Common Stock, Series B
Adjustable Rate Cumulative Preferred Stock, Series C Adjustable Rate Cumulative
Preferred Stock, the Rights attached to Summit Common Stock or the Series R
Preferred Stock issuable pursuant to Summit's Shareholder Rights Plan, and any
transactions reasonably necessary or appropriate in connection therewith, are
specifically permitted by this Agreement.
Section 8.03. Secretary's Certificate. Summit shall have furnished to
BMJ a certificate dated the Closing Date to which shall be attached copies of
all resolutions adopted or minutes of actions taken by the Board of Directors
(including committees thereof) of Summit relating to this Agreement, the Merger
Agreement and the Merger and related transactions, which such certificate shall
be signed by the Secretary of Summit and certify to the trueness, correctness,
completeness and continuing effectiveness of all resolutions and actions
contained or referenced in the aforementioned attachments.
Section 8.04. Officer's Certificate. Summit shall have furnished to BMJ
a certificate signed by the Chairman, Vice Chairman, President or an Executive
Vice President of Summit, dated the Closing Date, certifying to the satisfaction
of the conditions set forth at Sections 6.01 and 6.02, the last paragraph of
Section 6.03, and Sections 6.04 and 6.05, as they relate to Summit, and Sections
8.01, 8.02 and 8.08.
Section 8.05. Opinion of Summit Counsel. BMJ shall have received an
opinion of the General Counsel of Summit, dated the Closing Date and reasonably
satisfactory in form and substance to counsel for BMJ, substantially to the
effect provided in Exhibit E.
Section 8.06. Approvals of Legal Counsel. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated by
this Agreement or incidental thereto and all related legal matters shall be
reasonably satisfactory to counsel to BMJ, and such counsel shall have been
furnished with certified copies of actions and proceedings and such other
documents and instruments as they shall have reasonably requested.
Section 8.07. Fairness Opinion. The Proxy-Prospectus shall have
contained the favorable signed opinion of Bear Stearns, dated the date of the
Proxy-Prospectus or a date not more than five business days prior thereto,
regarding the fairness from a financial point of view of the consideration to be
received by the shareholders of BMJ in the Merger.
Section 8.08. Absence of Regulatory Agreements. Neither Summit nor any
of its bank subsidiaries shall be a party to any agreement or memorandum of
understanding with, or commitment letter to, or board of directors resolution
submitted to or similar undertaking made to, or be subject to any order or
directive by, or be a recipient of any extraordinary supervisory letter from,
any governmental or regulatory authority which restricts materially the conduct
of Summit's business or has a material adverse effect upon the Merger or upon
the financial condition of Summit and its subsidiaries taken as a whole, and
neither Summit nor any of its bank subsidiaries shall have been advised by any
governmental or regulatory authority that such authority is contemplating
issuing or requesting, or considering the appropriateness of issuing or
requesting, any of the foregoing.
Section 8.09. BMJ Shareholder Approval. The shareholders of BMJ, at the
meeting contemplated by this Agreement, shall have authorized and approved the
Merger and this Agreement and all transactions contemplated by this Agreement as
and to the extent required by all applicable laws and regulations and the
provisions of BMJ's Certificate of Incorporation and By-Laws.
The receipt of the documents required by this Article VIII by BMJ shall
in no way constitute a waiver by BMJ of any of the provisions of or its rights
under this Agreement.
ARTICLE IX CLOSING; TERMINATION RIGHTS
Section 9.01. Closing. Unless a different place and time are agreed to
by the parties hereto, the closing of the Merger (the "Closing") shall take
place on a date determined by Summit on at least five business days notice (the
"Closing Notice") given to BMJ, at the office of Summit, 301 Carnegie Center,
Princeton, New Jersey, commencing at 10:00 a.m., which date shall not be later
than 45 business days after the last to occur of the following:
(a) the date of the approval of the Merger by the shareholders of BMJ
in accordance with Section 7.09;
(b) if the transactions contemplated by this Agreement are being
contested in any legal proceeding, the date that such proceeding has been
brought to a conclusion favorable, in the judgment of Summit and BMJ, to the
consummation of the transactions contemplated herein or such prior date as
Summit and BMJ shall elect, whether or not such proceeding has been brought to a
conclusion; or
(c) the date of receipt of the last of the Required Consents (and the
expiration of any required waiting period required by statute or incorporated
into such Required Consents); such date is sometimes referred to herein as the
"Closing Date". At the Closing, the parties will exchange certificates, legal
opinions and other documents for the purpose of determining whether the
conditions precedent to the obligations of the parties set forth herein have
been satisfied or waived. After all such conditions have been satisfied or
waived, Summit shall cause the Certificate of Merger to be filed with the New
Jersey Secretary of State in accordance with Section 1.06. All proceedings to be
taken and all documents to be executed and delivered by all parties at the
Closing shall be deemed so taken, executed and delivered simultaneously, and no
proceedings shall be deemed taken or any documents executed or delivered until
all have been taken, executed or delivered.
Section 9.02. Termination Rights.
(a) The Boards of Directors of BMJ and Summit may terminate this
Agreement by mutual consent at any time prior to the Effective Time. In
addition, if either party shall refuse to close because, on the date on which
the Closing must be held as determined by Section 9.01, all the conditions
precedent to its obligation to close under Article VI shall not have been met,
the Board of Directors of such party may terminate this Agreement by giving
written notice of such termination to the other party. Furthermore, the Board of
Directors of either party may terminate this Agreement in the event that:
(i) the shareholders of BMJ at the meeting of shareholders contemplated
by Section 4.03, called for the purpose of approving the Merger, this Agreement
and the transactions contemplated by this Agreement, upon voting, shall have
failed to approve the Merger, this Agreement and the transactions contemplated
hereby by the requisite vote, or
(ii) a material breach of a warranty or representation or covenant made
by the other party shall have occurred and such breach has not been cured, or is
not capable of being cured, within 30 days after written notice of the existence
thereof shall have been given to the other party (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein);
(iii) BMJ's investment banker is unable to deliver to BMJ by January
31, 1997 the opinion required by Section 8.07; or
(iv) the Closing is not consummated on or before June 30, 1997, unless
the failure of such occurrence shall be due solely to the failure of the party
seeking to terminate this Agreement to perform or observe its agreements set
forth in this Agreement required to be performed or observed by such party on or
before the Closing Date.
(b) If either party shall refuse to close because, on the date on which
the Closing must be held as determined by Section 9.01, all the conditions to
its obligation to close (other than a condition set forth in Article VI) shall
not have been met (other than a failure of the condition set forth at Section
7.09 or 8.09 due to the circumstances set forth in Section 9.02(a)(i) hereof or
a failure of the condition set forth at Section 8.07 due to the circumstances
set forth at Section 9.02(a)(iii) hereof), the Board of Directors of such party
may terminate this Agreement by giving written notice of such termination to the
other party.
(c) Upon a termination of this Agreement pursuant to this Section 9.02
hereof:
(i) the obligations of the parties under this Agreement (except for
those under this Section 9.02 and Sections 4.13 and 5.08) shall terminate and be
of no further force or effect and each party shall be mutually released and
discharged from liability to the other party or to any third parties hereunder,
and
(ii) no party shall be liable to any other party for any costs or
expenses paid or incurred in connection herewith by such other party, except
that expenses incurred in connection with printing the Proxy-Prospectus and the
Registration Statement, and the filing fees of regulatory authorities or
self-regulatory organizations, shall be borne equally by Summit and BMJ;
provided, however, that: (A) if BMJ terminates this Agreement pursuant to
Section 9.02(a)(ii) or Section 9.02(b), Summit shall reimburse BMJ for its
out-of-pocket expenses reasonably incurred in connection with this Agreement,
including counsel fees and the printing and filing fees referred to above, but
excluding any brokers', finders' or investment bankers' fees; and (B) if Summit
terminates this Agreement pursuant to Section 9.02(a)(ii), Section 9.02(b) or
Section 9.02(d), BMJ shall reimburse Summit for its out-of-pocket expenses
reasonably incurred in connection with this Agreement, including counsel fees
and the printing and filing fees referred to above, but excluding any brokers',
finders' or investment bankers' fees.
(d) The Board of Directors of Summit may terminate this Agreement if
BMJ does not execute and deliver the Option Agreement by the day immediately
following the date hereof.
(e) Notwithstanding any termination of this Agreement, (i) BMJ shall
indemnify and hold Summit harmless from and against any claim by any broker or
finder asserting a right to brokerage commissions or finders' fees as a result
of any action allegedly taken by or understanding allegedly reached with BMJ and
(ii) Summit shall indemnify and hold BMJ harmless from and against any claim by
any broker or finder asserting a right to brokerage commissions or finders' fees
as a result of any action allegedly taken by or understanding allegedly reached
with Summit.
(f) Except as provided otherwise herein in the event of a termination
of this Agreement, BMJ and its subsidiaries shall bear their own expenses
incident to preparing, entering into and carrying out this Agreement and to
consummating the Merger, provided, however, that Summit shall pay all printing
expenses and filing fees associated with the Registration Statement, the
Proxy-Prospectus and regulatory applications.
ARTICLE X
MISCELLANEOUS
Section 10.01. Press Releases. At all times until the Closing Date or
the termination of this Agreement, each party shall promptly advise and consult
with the other prior to issuing, or permitting any of its subsidiaries,
directors, officers, employees or agents to issue, any press release or other
information to the press or any third party with respect to this Agreement or
the transactions contemplated hereby.
Section 10.02. Article and Section Headings. Article and section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Section 10.03. Entire Agreement; Amendments. This Agreement, the BMJ
Schedules, and the Exhibits hereto and the Option Agreement to be entered into
by the parties hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein or therein. No
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby (or in the
case of a termination occurring pursuant to Section 9.02 hereof by the party
exercising a right to terminate this Agreement). No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof or thereof (whether or not similar), nor shall any waiver
constitute a continuing waiver unless otherwise expressly provided in the
instrument granting such waiver. The parties hereto may amend or modify this
Agreement in such manner as may be agreed upon by a written instrument executed
by the parties, except that, after the meeting described in Section 7.09 hereof,
no such amendment or modification shall reduce the amount of, or change the
forms of consideration to be received by the shareholders of BMJ contemplated by
this Agreement, unless such modification is submitted to a vote of the
shareholders of BMJ.
Section 10.04. Survival of Representations, Warranties and Covenants.
No investigation made by the parties hereto made heretofore or hereafter shall
affect the representations and warranties of the parties which are contained
herein and each such representation and warranty shall survive such
investigation. None of the representations, warranties, covenants and agreements
in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time, except for those representations, covenants
and agreements contained herein and therein which by their terms apply in whole
or in part after the Effective Time.
Section 10.05. Notices. Any notice or other communication required or
permitted hereunder shall be in writing, and shall be deemed to have been given,
unless otherwise specified in a particular provision of this Agreement, if
placed in the mail, registered or certified, postage prepaid, or if delivered
personally or by courier, receipt requested, or by facsimile transmission,
receipt acknowledged addressed as follows:
Summit: Summit Bancorp.
Attn: John G. Collins
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3422
Facsimile No.: 609-987-3435
With a copy to: Richard F. Ober, Jr., Esq.
Summit Bancorp.
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Telephone No.: 609-987-3430
Facsimile No.: 609-987-3435
BMJ: B.M.J. Financial Corp.
243 Route 130
P.O. Box 1001
Bordentown, NJ 08505-1001
Attention: Elmer J. Elias
Telephone No.: 609-291-5117
Facsimile No.: 609-298-1270
With a copy to: Wesley S. Williams Jr., Esq.
Covington & Burling
Suite 1155A
1201 Pennsylvania Avenue, NW
Washington, DC 20004
Telephone No.: 202-662-5628
Facsimile No.: 202-778-5628
or to such other address as such party may designate by notice to the others,
which change of address shall be deemed to have been given upon receipt.
A notice or other communication hereunder shall be deemed delivered (i)
if mailed by certified or registered mail to the proper address, with adequate
postage prepaid, on the fifth business day following posting or (ii) if
delivered by other means, when received by the party to whom it is directed.
Section 10.06. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey,
without giving effect to the provisions, policies or principles thereof relating
to choice or conflict of laws.
Section 10.07. Counterparts. This Agreement is being executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
Section 10.08. Binding Effect. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
Section 10.09. Extensions; Waivers and Consents. Either party hereto,
by written instrument signed by its Chairman, Vice Chairman, President, or Chief
Financial Officer, may extend the time for the performance of any of the
obligations of the other party hereto, and may waive, at any time before or
after approval of this Agreement and the transactions contemplated hereby by the
shareholders of BMJ, subject to the provisions of Section 10.03 hereof: (i) any
inaccuracies of the other party in the representations and warranties in this
Agreement or any other document delivered pursuant hereto or thereto; (ii)
compliance with any of the covenants or agreements of the other party contained
in this Agreement; (iii) the performance (including performance to the
satisfaction of a party or its counsel) by the other party of any of its
obligations hereunder or thereunder; and (iv) the satisfaction of any conditions
to the obligations of the waiving party hereunder or thereunder. Any consent or
approval of a party hereunder shall be effective only if signed by the Chairman,
Vice Chairman, President or Chief Financial Officer of such party. Subject to
Section 10.03, no such instrument, consent or approval may modify the form or
amount of consideration to be received by the shareholders of BMJ.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in counterparts by their duly authorized officers as of the date first
above written.
SUMMIT BANCORP.
By: /s/ Robert G. Cox
Robert G. Cox
President
B.M.J. FINANCIAL CORP.
By: /s/ Edwin W. Townsend
Edwin W. Townsend
Chairman of the Board
EXHIBIT A
B.M.J. FINANCIAL CORP. STOCK OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED BY THIS AGREEMENT IS SUBJECT TO RESALE
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
STOCK OPTION AGREEMENT, dated as of the 29th day of August, 1996 (this
"Agreement"), between Summit Bancorp., a New Jersey corporation ("Grantee"), and
B.M.J. Financial Corp., a New Jersey corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer have on a date prior to the date hereof,
entered into an Agreement and Plan of Merger, dated as of the 28th day of
August, 1996 (the "Merger Agreement"). (Capitalized terms used in this Agreement
and not defined herein but defined in the Merger Agreement shall have the
meanings assigned thereto in the Merger Agreement); and
WHEREAS, as a condition and inducement to Grantee's entering into the
Merger Agreement, and in consideration therefor, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined
below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee an
unconditional, irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 1,490,000 fully paid and nonassessable shares of the common
stock, par value $1.00 per share, of Issuer ("Common Stock") at a price per
share equal to the last sale price on the trading day immediately preceding the
date of the Merger Agreement of a share of Common Stock on the NASDAQ National
Market (such price, as adjusted as hereinafter provided, the "Option Price").
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
In no event shall the number of shares of Common Stock for which this Option is
exercisable exceed 19.9% of the number of shares of Common Stock then issued and
outstanding (without consideration of any shares of Common Stock subject to or
issued pursuant to the Option).
SECTION 2. Exercise of Option. (a) Grantee may exercise the Option, in
whole or part, at any time and from time to time following the occurrence of a
Purchase Event (as defined below); provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur of (i) the time
immediately prior to the Effective Time, (ii) the termination of the Merger
Agreement in accordance with the terms thereof prior to the occurrence of an
Extension Event, other than a termination of the Merger Agreement by the Grantee
pursuant to Section 9.02(a)(ii) thereof, or (iii) 12 months after the
termination of the Merger Agreement following the occurrence of an Extension
Event (as defined below), other than a termination of the Merger Agreement by
the Grantee pursuant to Section 9.02(a)(ii) thereof (if the breach by Issuer
giving rise to such right of termination is volitional), or the termination of
the Merger Agreement by Grantee pursuant to Section 9.02(a)(ii) thereof (unless
the breach by Issuer giving rise to such right of termination is
non-volitional), and provided further, that any purchase of Common Stock upon
exercise of the Option shall be subject to applicable law, and provided further,
that the Option may not be exercised, nor may Grantee require Issuer to
repurchase the Option (as set forth in Section 7 hereof), if, at the time of
exercise or repurchase, Grantee is in material breach of any material covenant
or obligation contained in the Merger Agreement and, if the Merger Agreement has
not terminated prior thereto, such breach would entitle Issuer to terminate the
Merger Agreement. The events described in clauses (i) - (iii) in the preceding
sentence are hereinafter collectively referred to as Exercise Termination
Events. As provided in Section 8, the rights set forth therein shall terminate
upon an Exercise Termination Event and, as provided in Sections 6 and 7 hereof,
the rights to deliver requests pursuant to Sections 6 or 7 shall terminate 12
months after an Exercise Termination Event, subject, in each such case, to the
provisions of Section 9.
(b) The term "Extension Event" shall mean any of the following events
or transactions occurring without the Grantee's prior written consent after the
date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary"), shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for purposes
of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder, including but not limited to a
group of related family members and any entity in which they own all of the
beneficial interest) other than Grantee or any of its subsidiaries (each a
"Grantee Subsidiary") or the Board of Directors of Issuer shall have recommended
that the shareholders of Issuer approve or accept any Acquisition Transaction
with any person other than Grantee or any Grantee Subsidiary. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any of Issuer's
banking subsidiaries ("Bank Subsidiaries"), (x) a purchase, lease or other
acquisition of 10% or more of the aggregate value of the assets or deposits of
Issuer or any Bank Subsidiary, (y) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or a Bank Subsidiary, or
(z) any substantially similar transaction, provided, however, that in no event
shall (i) any merger, consolidation or similar transaction involving Issuer or
any Bank Subsidiary in which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (either by remaining outstanding
or being converted into voting securities of the surviving entity of any such
transaction) at least 75% of the combined voting power of the voting securities
of the Issuer or the surviving entity outstanding after the consummation of such
merger, consolidation, or similar transaction, or (ii) any internal merger or
consolidation involving only Issuer and/or Issuer Subsidiaries, be deemed to be
an Acquisition Transaction, provided that any such transaction is not entered
into in violation of the terms of the Merger Agreement;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of securities representing 10% or more of the aggregate voting power
of Issuer or any Bank Subsidiary (the term "beneficial ownership" for purposes
of this Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction (including, without
limitation, any situation in which any person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a tender offer
or exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such person would own or control securities
representing 10% or more of the aggregate voting power of Issuer or any Bank
Subsidiary);
(iv) After any person other than Grantee or any Grantee
Subsidiary has made or disclosed an intention to make a proposal to Issuer or
its shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and such
breach (x) would entitle Grantee to terminate the Merger Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(v) Any person other than Grantee or any Grantee Subsidiary
shall have filed an application with, or given a notice to, whether in draft or
final form, the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other governmental authority or regulatory or administrative
agency or commission, domestic or foreign (each, a "Governmental Authority"),
for approval to engage in an Acquisition Transaction; or
(vi) any Purchase Event (as defined below).
(c) The term "Purchase Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of securities representing 25% or
more of the aggregate voting power of Issuer or any Bank Subsidiary;
(ii) the holders of Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been called by the
Board of Directors of Issuer in accordance with Section 4.03 of the Merger
Agreement or held or shall have been canceled prior to termination of the Merger
Agreement or Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to the consummation of the Merger the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case after an
Extension Event;
(iii) The occurrence of an Extension Event described in
Section 2(b)(i) except that the percentage referred to in clauses (x) and (y)
shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Extension Event or Purchase Event; provided however, that the giving of
such notice by Issuer shall not be a condition to the right of Grantee to
exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares of
Common Stock it will purchase pursuant to such exercise, (ii) a place and date
not earlier than three business days nor later than 90 business days from the
Notice Date for the closing of such purchase (the "Closing Date") and (iii) that
the proposed exercise of the Option shall be revocable by Grantee in the event
that the transaction constituting a Purchase Event that gives rise to such
written notice shall not have been consummated prior to exercise of the Option;
provided that if prior notification to or approval of the Federal Reserve Board
or any other Governmental Authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run from the later of (x)
the date on which any required notification periods have expired or been
terminated and (y) the date on which such approvals have been obtained and any
requisite waiting period or periods shall have expired. For purposes of Section
2(a), any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Grantee shall have the right to revoke its proposed exercise
of the Option in the event that the transaction constituting a Purchase Event
that gives rise to such right to exercise shall not have been consummated prior
to exercise of the Option, pursuant to the statement of such right in the
written notice exercising the Option as provided in clause 2(e)(iii) above.
(f) At the closing referred to in Section 2(e), Grantee shall surrender
this Agreement (and the Option granted hereby) to Issuer and pay to Issuer the
Option Price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer; provided, however, that failure or refusal of Issuer to
designate such a bank account shall not preclude Grantee from exercising the
Option.
(g) At such closing, simultaneously with the delivery of the Option
Price in immediately available funds as provided in Section 2(f), Issuer shall
deliver to Grantee a certificate or certificates representing the number of
shares of Common Stock purchased by Grantee and, if the Option should be
exercised in part only, a new Option Agreement granting a new Option evidencing
the rights of Grantee thereof to purchase the balance of the shares of Common
Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder
shall be endorsed with a restrictive legend substantially as follows:
"The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Summit
Bancorp. and B.M.J. Financial Corp. ("Issuer") dated as of the 29th day
of August, 1996. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof without
charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of counsel, in form and substance
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by Grantee to Issuer of the written notice
of exercise of the Option provided for in Section 2(e) and the tender of the
Option Price on the Closing Date in immediately available funds, Grantee shall
be deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of Issuer shall
then be closed or that certificates representing such shares of Common Stock
shall not then actually be delivered to Grantee. Issuer shall pay all expenses
and any and all United States federal, state and local taxes and other charges
that may be payable in connection with the preparation, issue and delivery of
stock certificates under this Section 2 in the name of Grantee or its nominee.
SECTION 3. Reservation of Shares. Issuer agrees: (i) that it shall at
all times until the termination of this Agreement have reserved for issuance
upon the exercise of the Option that number of authorized shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not, by
amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. ss.18a and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"), or the Change in Bank Control Act of 1978, as amended,
or any state banking law, prior approval of or notice to the Federal Reserve
Board or to any other Governmental Authority is necessary before the Option may
be exercised, cooperating with Grantee in preparing such applications or notices
and providing such information to the Federal Reserve Board and each other
Governmental Authority as they may require) in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) to take all action provided herein to protect
the rights of Grantee against dilution.
SECTION 4. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any agreements and related options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
SECTION 5. Adjustment upon Change of Capitalization. The number of
shares of Common Stock purchasable upon the exercise of the Option shall be
subject to adjustment from time to time as follows:
(a) Subject to the last sentence of Section 1, in the event of any
change in the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise to become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding (without consideration of any shares of Common
Stock subject to or issued pursuant to the Option).
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment. In no event
shall the Option Price be adjusted to less than the par value of the Common
Stock to be issued at such Option Price.
(c) It is intended by the parties hereto that the adjustments provided
by this Section 5 shall fully preserve the economic benefits of this Agreement
for Grantee.
SECTION 6. Registration Rights.
(a) Demand Registration Rights. After the occurrence of a Purchase
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee (whether on its own behalf or on behalf of any subsequent
holder of the Option (or part thereof) delivered prior to an Exercise
Termination Event or at the request of a holder from time to time of any of the
shares of Common Stock issued pursuant hereto (an "Owner")) delivered no later
than 12 months after an Exercise Termination Event, promptly prepare, file and
keep current a shelf registration statement under the Securities Act covering
this Option and any shares issued and issuable pursuant to the Option (the
"Option Shares") and shall use its best efforts to cause such registration
statement to become effective and remain current and to qualify this Option or
any such Option Shares or other securities for sale under any applicable state
securities laws in order to permit the sale or other disposition of this Option
or any Option Shares in accordance with any plan of disposition requested by
Grantee; provided, however, that Issuer may postpone filing a registration
statement relating to a registration request by Grantee under this Section 6 for
a period of time (not in excess of 90 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Issuer will use its best
efforts to cause such registration statement first to become effective as soon
as practicable after the filing thereof and then to remain effective for such
period not in excess of 180 days from the day such registration statement first
becomes effective, or such shorter time as may be necessary to effect such sales
or other dispositions. Grantee shall have the right to demand two such
registrations. Grantee and Owners shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration, Issuer and Grantee and
Owners shall provide representations, warranties, and other agreements
customarily given in connection with such registrations. If requested by any
Grantee in connection with such registration, Issuer and Grantee and Owners
shall become a party to any underwriting agreement relating to the sale of
Option rights or Option Shares, but only to the extent of obligating themselves
in respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements. Notwithstanding the
foregoing, if Grantee revokes any exercise notice or fails to exercise any
Option with respect to any exercise notice pursuant to Section 2(e), Issuer
shall not be obligated to continue any registration process with respect to the
sale of Option Shares.
(b) Additional Persons With Registration Rights. Upon receiving any
request under this Section 6 from any Grantee, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall Issuer be obligated to effect more than two registrations pursuant to this
Section 6 by reason of the fact that there shall be more than one Grantee as a
result of any assignment or division of this Agreement.
(c) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option rights or Option Shares are
being registered, printing expenses and the costs of special audits or "cold
comfort" letters, expenses of underwriters, excluding discounts and commissions
but including liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special experts)
in connection with each registration pursuant to this Section 6 (including the
related offerings and sales by Grantee and Owners) and all other qualifications,
notification or exemptions pursuant to Section 6.
(d) Indemnification. In connection with any registration under this
Section 6, Issuer hereby indemnifies the Grantee, and each officer, director and
controlling person of Grantee, any Owner, and each underwriter thereof,
including each person, if any who controls such holder or underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, losses,
claims, damages and liabilities caused by any untrue, or alleged untrue,
statement contained in any registration statement or prospectus or notification
or offering circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expenses, losses,
claims, damages or liabilities of such indemnified party are caused by any
untrue statement or alleged untrue statement that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to Issuer by such indemnified
party expressly for use therein, and Issuer and each officer, director and
controlling person of Issuer shall be indemnified by such Grantee, Owner, or by
such underwriter, as the case may be, for all such expenses, losses, claims,
damages and liabilities caused by any untrue, or alleged untrue, statement, that
was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such Grantee, Owner, or such underwriter, as the case may
be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party agrees to pay the same, (ii) the indemnifying party fails to
assume the defense of such action with counsel satisfactory to the indemnified
party, or (iii) the indemnified party has been advised by counsel that one or
more legal defenses may be available to the indemnifying party that may be
contrary to the interests of the indemnified party. No indemnifying party shall
be liable for the fees and expenses of more than one separate counsel for all
indemnified parties or for any settlement entered into without its consent,
which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
Grantee, any Owner and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall any Grantee or Owner be responsible, in the aggregate, for any amount
in excess of the net offering proceeds attributable to its Option rights and
Option Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any Grantee or Owner to
indemnify shall be several and not joint with other Grantees or Owners.
(e) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Owner thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144A. Issuer shall at its expense provide the Owner with any information
necessary in connection with the completion and filing of any reports or forms
required to be filed by Owner under the Securities Act or the Exchange Act, or
pursuant to any state securities laws or the rules of any stock exchange.
SECTION 7. Repurchase at the Option of Grantee or Owner. (a) Upon the
occurrence of a Repurchase Event (as defined below), (i) at the request (the
date of such request being the "Request Date") of Grantee, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from Grantee at a price (the "Option Repurchase Price") equal to the
amount by which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this Option may then
be exercised and (ii) at the request (the date of such request being the
"Request Date") of an Owner), delivered within 12 months of the occurrence of an
Exercise Termination Event (or such later period as provided in Section 9),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
the market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per share
of Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the highest last sale price for shares of Common Stock within the 90-day
period ending on the Request Date quoted on the NASDAQ National Market (as
reported by The Wall Street Journal, or, if not reported thereby, another
authoritative source), (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, divided by the number of shares of Common Stock
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be determined by a
nationally-recognized independent investment banking firm selected by Grantee or
the Owner, as the case may be, whose determination shall be conclusive and
binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within the later to occur of (x) five
business days after the surrender of the Option and/or certificates representing
Option Shares and the receipt of such notice or notices relating thereto and (y)
the time that is immediately prior to the occurrence of a Repurchase Event,
Issuer shall deliver or cause to be delivered to Grantee the Option Repurchase
Price or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited from so delivering under applicable
law and regulation.
(c) Issuer hereby undertakes to use its reasonable efforts to obtain
all required regulatory and legal approvals and to file any required notices as
promptly as practicable in order to accomplish any repurchase contemplated by
this Section 7. Nonetheless, to the extent that Issuer is prohibited under
applicable law or regulation, from repurchasing the Option and/or the Option
Shares in full, Issuer shall promptly so notify Grantee and/or the Owner and
thereafter deliver or cause to be delivered, from time to time, to Grantee
and/or the Owner, as appropriate, the portion of the Option Repurchase Price and
the Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to Section 7(b) is prohibited under
applicable law or regulation, from delivering to Grantee and/or the Owner, as
appropriate, the Option Repurchase Price or the Option Share Repurchase Price,
respectively, in full or in any substantial part, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking into
account any such revocation and (ii) deliver, as appropriate, either (A) to
Grantee, a new Agreement evidencing the right of Grantee to purchase that number
of shares of Common Stock equal to the number of shares of Common Stock
purchasable immediately prior to the delivery of the notice of repurchase less
the number of shares of Common Stock covered by the portion of the Option
repurchased or (B) to the Owner, a certificate for the number of Option Shares
covered by the revocation.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any Bank Subsidiary or any purchase,
lease or other acquisition of all or a substantial portion of the assets of
Issuer or any Bank Subsidiary, other than any such transaction which would not
constitute an Acquisition Transaction pursuant to the proviso to Section 2(b)(i)
hereof or (ii) upon the acquisition by any person of beneficial ownership of
securities representing 50% or more of the aggregate voting power of Issuer or
any Bank Subsidiary, provided that no such event shall constitute a Repurchase
Event unless an Extension Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's obligations to
repurchase the Option or Option Shares under this Section 7 shall not terminate
upon the occurrence of an Exercise Termination Event if an Extension Event shall
have occurred prior to the occurrence of an Exercise Termination Event.
(e) Issuer shall not enter into any agreement with any party (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other party thereto assumes all the obligations of Issuer pursuant to this
Section 7 in the event that Grantee or the Owner elects, in its sole discretion,
to require such other party to perform such obligations.
SECTION 8. Substitute Option in the Event of Corporate Change. (a) In
the event that prior to an Exercise Termination Event, Issuer shall enter into
an agreement (i) to consolidate or merge with any person, other than Grantee or
a Grantee Subsidiary, and shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger represent less
than 50% of the aggregate voting power of the merged company, or (iii) to sell
or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Grantee, of either (x) the Acquiring
Corporation (as defined below) or (y) any person that controls the Acquiring
Corporation (the Acquiring Corporation and any such controlling person being
hereinafter referred to as the Substitute Option Issuer)
(b) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7) multiplied by the number of
shares of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise price of
the Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Option Price multiplied by a
fraction in which the numerator is the number of shares of the Common Stock for
which the Option was theretofore exercisable and the denominator is the number
of shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided further that the terms of
the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or any substantial part of the Issuer's
assets (or the assets of Issuer Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average last sale price
of a share of the Substitute Common Stock (as reported by The Wall Street
Journal or, if not reported therein, by another authoritative source) for the
one year immediately preceding the consolidation, merger or sale in question,
but in no event higher than the last sale price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls or is controlled by such
person, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (e), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the clause (e). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee and the Substitute Option Issuer.
SECTION 9. Extension of Time for Regulatory Approvals. Notwithstanding
Sections 2(e), 6, 7 and 11, if Grantee has given the notice referred to in one
or more of such Sections, the exercise of the rights specified in any such
Section shall be extended (a) if the exercise of such rights is prohibited due
to any injunction, order or similar restraint issued by a court or Governmental
Authority of competent jurisdiction, to the extent necessary for such
injunction, order or restraint to either have been dissolved or become permanent
and no longer subject to appeal, (b) if the exercise of such rights requires
obtaining regulatory approvals, to the extent necessary to obtain all regulatory
approvals for the exercise of such rights, and (c) to the extent necessary to
avoid liability under Section 16(b) of the Securities Exchange Act by reason of
such exercise; provided that in no event shall any closing date occur more than
18 months after the related Notice Date, and, if the closing date shall not have
occurred within such period due to the failure to dissolve any such injunction,
order or restraint or to obtain any required approval from the Federal Reserve
Board or any other Governmental Authority despite the reasonable efforts of
Issuer or the Substitute Option Issuer, as the case may be, to obtain such
approvals, the exercise of the Option shall be deemed to have been rescinded as
of the related Notice Date. In the event (a) Grantee receives official notice
that an approval of the Federal Reserve Board or any other Governmental
Authority required for the purchase and sale of the Option Shares will not be
issued or granted or (b) a closing date has not occurred within 18 months after
the related Notice Date due to the failure to obtain any such required approval,
Grantee shall be entitled to exercise the Option in connection with the resale
of the Option Shares pursuant to a registration statement as provided in Section
6. Nothing contained in this Agreement shall restrict Grantee from specifying
alternative exercising of rights pursuant to Sections 2(e), 6, 7 and 11 hereof
in the event that the exercising of any such rights shall not have occurred due
to the failure to obtain any required approval referred to in this Section 9.
SECTION 10. Issuer Warranties. Issuer hereby represents and warrants to
Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, except as enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
institutions the deposits of which are insured by the Federal Deposit Insurance
Corporation 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.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) Upon receipt of the necessary regulatory approvals as contemplated
by this Agreement, the execution, delivery and performance of this Agreement
does not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of, or a default under, its certificate of incorporation or by-laws, or the
comparable governing instruments of any of its subsidiaries, or (ii) a breach or
violation of, or a default under, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject, that would in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in any
material respect.
SECTION 11. Assignment of Option by Grantee. (a) Neither of the parties
hereto may assign any of its rights or delegate any of its obligations under
this Agreement or the Option created hereunder to any other person without the
express written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event;
provided, however, that until the date 15 days following the date at which the
Federal Reserve Board approves an application by Grantee under the BHC Act to
acquire the shares of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase securities representing in excess of 2% of the aggregate voting
power of Issuer, (iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (iv) any other manner approved by the
Federal Reserve Board. Grantee will pay any reasonable out-of-pocket costs and
expenses of Issuer in connection with any such assignment. The term "Grantee" as
used in this Agreement shall also be deemed to refer to Grantee's permitted
assigns.
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
"The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under the
Securities Act of 1933, as amended and to certain provisions of an agreement
between Summit Bancorp. and B.M.J. Financial Corp. ("Issuer") dated as of the
29th day of August, 1996. A copy of such agreement is on file at the principal
office of Issuer and will be provided to any permitted assignee of the Option
without change upon receipt by Issuer of a written request therefor."
It is understood and agreed that (i) the reference to the resale restrictions of
the Securities Act in the above legend shall be removed by delivery of
substitute assignments without such reference if Grantee shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute assignments without such reference if the Option has been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such assignments shall
bear any other legend as may be required by law.
SECTION 12. Application for Regulatory Approval. If Grantee is entitled
to exercise the Option and has sent a notice to Issuer pursuant to Section 2(e),
each of Grantee and Issuer will use its reasonable efforts to make all filings
with, and to obtain consents of, all third parties and the Federal Reserve Board
and other Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application for listing or quotation, as the case may be, of the shares
of Common Stock issuable hereunder on the NASDAQ National Market and applying to
the Federal Reserve Board under the BHC Act and to state banking authorities for
approval to acquire the shares issuable hereunder.
SECTION 13. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties shall hereto be enforceable
by either party hereto through injunctive or other equitable relief. Both
parties further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
SECTION 14. Separability of Provisions. If any term, provision,
covenant or restriction contained in this Agreement is held by a court or a
federal or state regulatory agency of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and effect,
and shall in no way be affected, impaired or invalidated. If for any reason such
court or regulatory agency determines that Grantee is not permitted to acquire,
or Issuer is not permitted to repurchase, pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1 (as adjusted pursuant hereto),
it is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.
SECTION 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 18. Expenses. Except as otherwise expressly provided herein,
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
SECTION 19. Entire Agreement; No Third-Party Beneficiaries. Except as
otherwise expressly provided herein or in the Merger Agreement, this Agreement
contains the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto, any Owners, and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
SECTION 20. Merger Agreement. Nothing contained in this Agreement shall
be deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
SECTION 21. Majority in Interest. In the event that any selection or
determination is to be made by Grantee or the Owner hereunder and at the time of
such selection or determination there is more than one Grantee or Owner, such
selection shall be made by a majority in interest of such Grantees or Owners.
SECTION 22. Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and such Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
SECTION 23. No Rights as Shareholder. Except to the extent Grantee
exercises the Option, Grantee shall have no rights to vote or receive dividends
or have any other rights as a shareholder with respect to shares of Common Stock
covered hereby.
SECTION 24. Grantee Representation. The Option and any Option Shares or
other securities acquired by Grantee upon exercise of the Option are not being,
and will not be, as the case may be, acquired with a view to the public
distribution thereof in the United States except as provided for in Sections 6
and 11 hereof and neither the Option nor any Option Shares or other securities
acquired by Grantee upon exercise of the Option will be transferred or otherwise
disposed of by Grantee except in a transaction registered or exempt from
registration under the Securities Act.
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUMMIT BANCORP.
By: /s/ Robert G. Cox
Robert G. Cox
President
B.M.J. FINANCIAL CORP.
By: /s/ Edwin W. Townsend
Edwin W. Townsend
Chairman of the Board
(letterhead)
SUMMIT
Bancorp
301 Carnegie Center
P.O. Box 2066
Princeton, NJ 08543-2066
Phone (609) 987-3200
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NewsNewsNewsNewsNewsNewsNews
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Release: Immediate
Contact: At Summit Bancorp:
C. Scott Rombach, SVP
Corporate Communications
(609) 987-3350
At B.M.J. Financial Corp.:
John F. Tremblay,
President and CEO
The Bank of Mid-Jersey
(609) 291-5117
SUMMIT BANCORP TO ACQUIRE B.M.J. FINANCIAL CORP.
Princeton, New Jersey, August 29, 1996--Summit Bancorp (NYSE:SUB) and B.M.J.
Financial Corp. (NASDAQ:BMJF) jointly announced today that they have entered
into a definitive merger agreement in which Summit will acquire B.M.J.
Financial, in a tax-free exchange of stock. B.M.J. Financial, which operates The
Bank of Mid-Jersey, has assets of $650 million in 20 community branches
throughout Burlington, Mercer, and Ocean counties.
T. Joseph Semrod, Summit chairman and chief executive officer, said, "This
acquisition will enhance Summit's presence in key central and southern New
Jersey counties comprising nearly 5,000 businesses and half a million
households."
Summit Bancorp will improve its market share position to number three in
Burlington County among commercial banks and thrifts while strengthening its
number two rank in Mercer and Ocean counties. Burlington and Mercer rank among
the nation's top 100 counties in per capita income, and are among New Jersey's
top ten. This acquisition complements our recent announcement to acquire Central
Jersey Financial Corp. In Middlesex County.
Edwin W. Townsend, B.M.J. Financial Corp. chairman, said "The opportunity to
join with the Summit organization is beneficial to our shareholders, customers,
and employees. In addition, our customers will benefit from Summit's extensive
products and services. Both banks are already regional leaders in supermarket
banking."
The agreement contemplates that each share of B.M.J. Financial common stock will
be exchanged for 0.560 of a share of Summit common stock. Summit will receive an
option to purchase up to 19.9 percent of B.M.J. Financial's common stock if
certain conditions occur.
Based on Summit's closing stock price last night of $38.875, this transaction is
valued at approximately $164.5 million, or $21.77 for each B.M.J. Financial
share. B.M.J. Financial had 7.56 million common shares outstanding on June 30,
1996.
Additionally, the agreement allows for B.M.J. Financial to declare quarterly
common dividends until the closing date in an amount equivalent to the common
dividend rate declared by Summit Bancorp.
The transaction is expected to be completed in the first quarter of 1997,
subject to B.M.J. Financial shareholder and regulatory approvals. It is
anticipated that it will be accounted for as a pooling-of-interests.
Summit Bancorp, headquartered in Princeton, is New Jersey's largest bank with
$22 billion in assets, 328 community banking offices and six supermarket
branches of Summit Bank in New Jersey and Pennsylvania, and 500 ATMs. Its major
lines of business include commercial, retail and mortgage banking, investment
management, and private banking. These core businesses and non-bank subsidiaries
offer a full array of financial services.