EXHIIBT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated May 22, 1996, between Summit Bancorp.,
a New Jersey business corporation ("Summit"), and Central Jersey Financial
Corporation, a New Jersey business corporation ("Central Jersey").
W I T N E S S E T H :
WHEREAS, the respective boards of directors of Summit and Central Jersey
deem it advisable and in the best interests of their respective shareholders to
merge Central Jersey 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 Central Jersey 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 Central Jersey 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), Central Jersey
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 Central Jersey Capital Stock.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of any shareholder of Central Jersey:
(1) All shares of the Common Stock, no par value, of Central Jersey
("Central Jersey Stock") which immediately prior to the Effective
Time are either owned beneficially by Summit or a subsidiary of
Summit (other than Central Jersey Stock held in a fiduciary capacity
or as a result of debts previously contracted), if any, or held in
the treasury of Central Jersey, 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 Central
Jersey Stock; and
(2) Subject to Sections 1.03(a)(1), 1.03(a)(3) and 1.08, each share of
Central Jersey Stock outstanding immediately prior to the Effective
Time shall be converted at the Exchange Ratio (as determined in
accordance with this Section 1.03(a)(2)) into the Common Stock, par
value $1.20 per share, of Summit ("Summit Stock"). In the event the
Average Price (as defined in Section 1.03(b) below) is:
(i) equal to or greater than $32.57, the Exchange Ratio shall be
.875 shares of Summit Stock for each share of Central Jersey
Stock; or
(ii) less than $32.57 but equal to or greater than $28.75, the Board
of Directors of Central Jersey shall have the right,
exercisable only until 11:59 p.m. on the third business day
following the Determination Date (as defined in Section 9.01),
to terminate this Agreement by giving Summit notice of such
termination, referring to this Section 1.03(a)(2)(ii), and this
Agreement shall be terminated pursuant to such notice,
effective as of 11:59 p.m. on the third business day following
receipt of such notice by Summit, unless Summit shall, prior to
11:59 p.m. on the third business day following receipt of such
termination notice, send notice to Central Jersey agreeing that
the Exchange Ratio shall be equal to the quotient obtained by
dividing $28.50 by the Average Price, whereupon the Exchange
Ratio shall be such number (rounded to the fourth decimal
place) of shares of Summit Stock for each share of Central
Jersey Stock.
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(3) In the event the Average Price is less than $28.75, the Board of
Directors of Central Jersey shall have the right, exercisable only
until 11:59 p.m. on the third business day following the
Determination Date, to terminate this Agreement by giving Summit
notice of such termination, referring to this Section 1.03(a)(3),
and this Agreement shall be terminated pursuant to such notice,
effective upon receipt of such notice by Summit.
(b) For purposes of this Agreement:
(1) "Average Price" means the average (rounded to the nearest penny) of
the closing prices of a share of Summit Stock on the New York Stock
Exchange - Composite Transactions Tape for the 10 consecutive
trading days ending on the Determination Date as reported in The
Wall Street Journal, or if not reported therein, as reported in an
authoritative source mutually agreeable to Summit and Central
Jersey.
(2) "business day" shall mean a calendar day other than a Saturday, a
Sunday or the weekdays that member banks of the Federal Reserve
Board (as defined at Section 4.01) are permitted to close pursuant
to regulations of the Federal Reserve Board.
(c) 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 occurs 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 Central Jersey Stock
shall be appropriately adjusted so that Central Jersey 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
Central Jersey 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 Central Jersey Stock
according to the Exchange Ratio, Summit shall issue the Shares upon the
effectiveness of the Merger to Central Jersey 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 Central Jersey, 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
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representing whole shares of Summit Stock ("Summit Certificates") and cash in
lieu of fractional shares of Summit Stock for certificates representing shares
of Central Jersey Stock ("Central Jersey Certificates") and, upon the
effectiveness of the Merger, Summit shall deliver to the Exchange Agent
sufficient Summit Certificates and cash as shall be required to satisfy Summit's
obligations to Central Jersey Shareholders hereunder.
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 Central Jersey 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 Central Jersey Certificates.
(a) After the Effective Time, each Central Jersey Shareholder (except
Summit to the extent provided in Section 1.03), upon surrender of all Central
Jersey 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 Central Jersey Shareholder is entitled to receive pursuant
to the conversion effected by Section 1.03 and the terms of Section 1.08 and the
cash payment (by check) such Central Jersey Shareholder may be entitled,
pursuant to Section 1.08, to receive in lieu of a fractional share of Summit
Stock. Until so surrendered, outstanding Central Jersey Certificates held by
each Central Jersey Shareholder, other than Central Jersey Stock not converted
pursuant to Section 1.03, shall be deemed for all purposes (other than as
provided below with respect to unsurrendered Central Jersey 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 Central Jersey 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 Central Jersey Certificates
dividends or other distributions, if any, payable to holders of Summit Stock;
provided, however, that upon the surrender and exchange of Central Jersey
Certificates following a dividend or other distribution by Summit there shall be
paid to such Central Jersey 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 Central Jersey Certificates as of the Effective Time shall
cease to be, and shall have no further rights as, shareholders of Central
Jersey.
(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 Central Jersey Stock as of the Effective Time ("Central
Jersey Shareholders") (including the address and social security number of and
the number of shares of Central Jersey Stock held by each Central Jersey
Shareholder) from Central Jersey ("Final Shareholder List"), Summit shall cause
the Exchange Agent
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to send to each Central Jersey Shareholder instructions and transmittal
materials for use in surrendering and exchanging Central Jersey Certificates for
the Merger Consideration (as defined in Section 1.08 below). If Central Jersey
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 Central
Jersey cause the Exchange Agent to cancel and exchange Central Jersey
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 Central Jersey of the shares of Central Jersey Stock
which were outstanding immediately prior to the Effective Time.
Section 1.08. Fractional Shares. All Central Jersey Stock held in the
aggregate by each Central Jersey Shareholder shall be multiplied by the Exchange
Ratio to determine the number of shares of Summit Stock each such Central Jersey
Shareholder is entitled to receive in the Merger. Each Central Jersey
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 Central Jersey Shareholder would otherwise be entitled by
the Average Price. 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 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. Central Jersey Stock Options.
(a) At the Effective Time, each holder of a Central Jersey Option (as
defined below) shall be entitled to receive, in exchange for such Central Jersey
Options, at the election of such holder, either:
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(i) cash equal to the Cash Value (as defined below) of the particular
Central Jersey Option ("Cash Amount"); or
(ii) (A) the whole shares of Summit Stock obtained by dividing the Cash
Value of the particular Central Jersey Option by the Market Price of
a share of Summit Stock , and (B) cash in lieu of any fractional
share of Summit Stock resulting from such division determined by
multiplying such fractional share amount by the Market Price of a
share of Summit Stock (collectively, the "Stock Consideration").
Holders of Central Jersey Options shall deliver to Summit at the Closing (as
defined at Section 9.01) an election to receive under this Section 1.11 either a
Cash Amount or the Stock Consideration with respect to all Central Jersey
Options held by such holder and holders failing to deliver such an election at
the Closing shall be deemed to have elected to receive the Cash Amount with
respect to all Central Jersey Options held by such holder. Summit shall send, no
later than ten business days following the Effective Time, to each holder of a
Central Jersey Option, as appropriate, (i) a check representing the aggregate
Cash Value such holder may be entitled to receive pursuant to this Section 1.11,
or (ii) a certificate representing the aggregate whole shares of Summit Stock
such holder may be entitled to receive pursuant to this Section 1.11 and a check
representing any cash such holder may be entitled to receive pursuant to this
Section 1.11 in lieu of a fractional share of Summit Stock; provided, however,
that with respect to individuals holding more than one Central Jersey Option the
aggregate whole shares of Summit Stock such holder is entitled to receive shall
be determined by adding together the Cash Values of all such Central Jersey
Options and dividing the resultant sum by the Market Price of a share of Summit
Stock and cash such holder is entitled to receive shall be determined by
multiplying the fractional share interest resulting from such division by the
Market Price of a share of Summit Stock. The Central Jersey Options which become
subject to this Section 1.11 shall be deemed terminated as of the Closing Date
(as defined at Section 9.01) and Central Jersey shall not on or after the
Closing Date issue Central Jersey Stock upon any attempted exercise of such
Central Jersey Option. Central Jersey shall deliver to Summit at Closing a list
of all Central Jersey Options (including the address and social security number
of each holder thereof and the Central Jersey Options held by such holder broken
down by plan, type (incentive or nonqualified), grant date, expiration date,
exercise price and the number of shares of Central Jersey Stock subject
thereto).
(b) For purposes of this Section 1.11:
(1) "Central Jersey Option" is hereby defined to mean a stock option for
Central Jersey Stock outstanding on the date hereof granted under the Central
Jersey 1993 Stock Option and Incentive Plan or Central Jersey Non-Employee
Director Stock Option Plan ("Central Jersey Option Plans") or pursuant to
Section 4.05(g), and not subsequently exercised, terminated or expired prior to
the Closing Date.
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(2) "Cash Value" of a Central Jersey Option is hereby defined to be the
amount obtained by multiplying (A) the number of Summit Equivalent Shares (as
defined below) represented by the particular Central Jersey Option, times (B)
the difference obtained by subtracting the Summit Equivalent Exercise Price (as
defined below) of the particular Central Jersey Option from the Market Price (as
defined below) of a share of Summit Stock;
(3) "Market Price" of a share of Summit Stock is hereby defined to mean
the last sale price of a share of Summit Stock on the last trading day
immediately preceeding the Closing Date as reported on the New York Stock
Exchange--Composite Transactions List (by The Wall Street Journal or, in the
event of its unavailability, by any other authoritative source agreeable to
Summit and Central Jersey).
(4) "Summit Equivalent Shares" is hereby defined to mean the number
obtained by multiplying the number of shares of Central Jersey Stock covered by
a particular Central Jersey Option times the Exchange Ratio.
(5) "Summit Equivalent Exercise Price" is hereby defined to mean the
number obtained by dividing the exercise price of the particular Central Jersey
Option by the Exchange Ratio.
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 Central Jersey 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 Central Jersey or otherwise, all such deeds, bills of sale,
assignments and assurances and to take, in the name and on behalf of Central
Jersey, 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 Central Jersey Shareholders to surrender
and exchange Central Jersey Certificates for Merger Consideration, Summit may,
at its election, continue to retain the Exchange Agent for purposes of the
surrender and exchange of Central Jersey Certificates or take possession of such
unclaimed Merger Consideration, in which such latter case, Central Jersey
Shareholders who have theretofore failed to surrender and exchange Central
Jersey 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, Central Jersey, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Central Jersey Stock for any property properly
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delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
Section 1.14. Lost Central Jersey Certificates. In the event any Central
Jersey Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Central Jersey Certificate
to be lost, stolen or destroyed and, if required by Summit, 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
Central Jersey Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Central Jersey Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
Section 1.15. Liquidation Account. The liquidation account established by
Central Jersey pursuant to the plan of conversion adopted in connection with its
conversion from mutual to stock form shall, to the extent required by applicable
law, continue to be maintained after the Effective Time for the benefit of those
persons and entities who were savings account holders of Central Jersey on March
31, 1984, and who continue from time to time to have rights therein.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF CENTRAL JERSEY
Central Jersey represents and warrants to Summit as follows:
Section 2.01. Organization, Capital Stock.
(a) Each of Central Jersey 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, on Central Jersey 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 in 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 Central Jersey and its subsidiaries on a
consolidated basis, or (ii) the ability of Central Jersey to perform its
obligations under, and to consummate the transactions contemplated by, this
Agreement (a "Central Jersey Material Adverse Change"). However, a Central
Jersey 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 Central Jersey and its 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
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lease its properties, 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) Central Jersey is registered as a unitary savings and loan holding
company under the Home Owners' Loan Act of 1933 ("HOLA").
(c) Central Jersey or one of its subsidiaries is the holder and beneficial
owner of all of the outstanding capital stock of all of Central Jersey's direct
and indirect nonbank subsidiaries.
(d) (1) The authorized capital stock of Central Jersey consists of
25,000,000 shares of Common Stock, each of no par value, and 15,000,000 shares,
each of no par value, of Preferred Stock, and as of the date hereof there were
issued and outstanding 2,668,269 shares of the Common Stock of Central Jersey
and no shares of the Preferred Stock of Central Jersey.
(2) All issued and outstanding shares of the capital stock of Central
Jersey 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.
(3) Except as set forth above in this Section 2.01(d) or in Section
2.01(a), except for director and employee stock options outstanding under the
Central Jersey Option Plans and except for Central Jersey Stock issuable in
connection with the Central Jersey Option Plans, there are no other Equity
Securities of Central Jersey or any subsidiary of Central Jersey outstanding, in
existence, the subject of an agreement or reserved for issuance.
(4) "Equity Securities" of an issuer means capital stock or other
equity securities of such issuer, options, warrants, scrip, rights to subscribe
to, call or commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock or other Equity
Securities of such issuer, or contracts, commitments, understandings or
arrangements by which such issuer is or may become bound to issue additional
shares of its capital stock or other Equity Securities of such issuer, or
options, warrants, scrip or rights to purchase, acquire, subscribe to, calls on
or commitments for any shares of its capital stock or other Equity Securities.
(5) There are no plans of Central Jersey providing for the granting
of stock options, stock appreciation rights or other securities or derivative
securities to directors or employees other than the Central Jersey Option Plans.
The Central Jersey Option Plans, including all amendments thereto, have been
approved by the shareholders of Central Jersey in accordance with the
shareholder approval requirements of the Code and Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Copies of the
Central Jersey Option Plans, including all amendments thereto, have been
previously provided to Summit. All material information in the aggregate
relating to
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outstanding grants under the Central Jersey Option Plans, including director and
employee stock options and stock appreciation rights ("SARs") (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 Central Jersey Schedule
2.01(d)(5).
(e) Central Jersey owns no bank subsidiary other than Central Jersey
Savings Bank, SLA ("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. Bank is duly authorized to
conduct all activities and exercise all powers 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 Central Jersey Schedule 2.01(f). Central Jersey is the holder and beneficial
owner of all shares of the issued and outstanding capital stock of Bank, other
than director qualifying shares. 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. No Equity Securities of Bank exist other than those
set forth on Central Jersey Schedule 2.01(f). No options covering the capital
stock of Bank, warrants to purchase or contracts to issue capital stock of Bank,
or any other contracts, presently exercisable rights (including preemptive
rights), commitments or convertible securities entitling anyone to acquire from
Central Jersey or any of its subsidiaries or obligating them to issue any
capital stock, or securities convertible into or exchangeable for shares of
capital stock, of Bank are outstanding, in existence, or the subject of an
agreement.
(g) All Equity Securities of its direct and indirect subsidiaries
beneficially owned by Central Jersey or a subsidiary of Central Jersey 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) Central Jersey's annual report to shareholders
for the fiscal year ended March 31, 1995, (b) Central Jersey's annual report on
Form 10-K filed pursuant to the Exchange Act for the fiscal year ended March 31,
1995 and (c) Central Jersey's quarterly reports on Form 10-Q filed pursuant to
the Exchange Act for the fiscal quarters ended June 30, 1995, September 30, 1995
and December 31, 1995 (the "Central Jersey 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
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accepted accounting principles the consolidated statements of condition, income,
changes in stockholders' equity and cash flows of Central Jersey and its
subsidiaries at its respective date and for the period to which it relates,
except as may otherwise be described therein. The Central Jersey 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 Central Jersey Financial Statements, in light of
the circumstances under which they were made, misleading in any respect.
Section 2.03. No Conflicts. Except as set forth in Schedule 2.03, Central
Jersey 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 Central Jersey, or the consummation of the
transactions contemplated hereby including the Merger by Central Jersey 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 Central Jersey or any of its
subsidiaries or upon any of the Equity Securities of Central Jersey or any of
its subsidiaries, or constitute an event which could, with the lapse of time,
action or inaction by Central Jersey 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 Central Jersey 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 Central Jersey or any of its subsidiaries is a party or by which
Central Jersey 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 Central Jersey Material Adverse Change,
or enable any person to enjoin the transactions contemplated hereby.
Section 2.04. Absence of Undisclosed Liabilities. Central Jersey 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 Central Jersey or any of its subsidiaries), and no loss contingency (as
defined in Statement of
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Financial Accounting Standards No. 5), other than (a) those reflected in the
Central Jersey Financial Statements or disclosed in the notes thereto, (b)
commitments made by Central Jersey or any of its subsidiaries in the ordinary
course of its business which are not in the aggregate material in frequency or
amount to Central Jersey and its subsidiaries, taken as a whole, and (c)
liabilities arising in the ordinary course of its business since March 31, 1995,
which are not in the aggregate material in frequency or amount to Central Jersey
and its subsidiaries, taken as a whole. Other than as reported in the Forms 10-Q
of Central Jersey referred to in Section 2.02, neither Central Jersey nor any of
its subsidiaries has, since March 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 or other like liabilities 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 Central Jersey or its subsidiaries
which materially and adversely affects Central Jersey and its subsidiaries,
taken as a whole, and there are no actions, arbitrations, claims, charges,
suits, investigations or proceedings (formal or informal) material to Central
Jersey and its subsidiaries, taken as a whole, pending or, to Central Jersey's
knowledge, threatened, against or involving Central Jersey 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 Central Jersey referred to in Section 2.02 and in
Central Jersey Schedule 2.05. Neither Bank nor Central Jersey 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 Central Jersey 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 Central Jersey has any reason to believe that
it 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 Central Jersey's business.
Section 2.06. Brokers' Fees. Central Jersey 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 Advest, Inc. ("Advest"). Central Jersey Schedule 2.06 consists of true and
complete copies of all agreements between Central Jersey and Advest with respect
to the transactions contemplated by this Agreement.
Section 2.07. Material Filings. At the time of filing, all filings made by
Central Jersey 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
12
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. Central Jersey has since December
31, 1993 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 Central
Jersey of this Agreement, the Merger and the other transactions contemplated
hereby in accordance with Central Jersey's Certificate of Incorporation and the
New Jersey Act at a meeting of such holders to be duly called and held, Central
Jersey 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
Central Jersey 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 Central Jersey 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 Central
Jersey 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 Central Jersey in authorizing
the execution of this Agreement has determined, at the date of this Agreement,
to recommend to the shareholders of Central Jersey 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 Central Jersey Material Adverse Change reported in the Forms 10-Q of
Central Jersey referred to in Section 2.02. Except as disclosed in Central
Jersey Schedule 2.09 or reported in the Forms 10-Q of Central Jersey referred to
in Section 2.02, neither Central Jersey nor any of its subsidiaries has since
March 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 Central Jersey or other subsidiaries of Central Jersey and an
ordinary cash dividend of $.12 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 Central Jersey and its subsidiaries, other than
the redemption by Central Jersey of its 7% Convertible Subordinated Debentures,
due April 1, 2003, and related conversion into Central Jersey 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
13
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 any transactions which in the aggregate exceeded
$250,000 other than in the ordinary course of business; or (g) acquired the
assets or capital stock of another company, 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. To the knowledge of
Central Jersey, at March 31, 1995 and thereafter the allowances for loan and
lease losses of Central Jersey 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 Central Jersey's knowledge, the loan and lease portfolios of
Central Jersey in excess of such allowances are collectible in the ordinary
course of business. Central Jersey Schedule 2.10 constitutes a list of all loans
and leases made by Central Jersey 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 Central Jersey 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 Central Jersey 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. Amounts required to be withheld
have been withheld from employees by Central Jersey 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 Central Jersey 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 Central Jersey or its appropriate subsidiary.
Neither Central Jersey 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 Central Jersey or its appropriate subsidiary for all unpaid
taxes, whether or not disputed, that may become due and payable by Central
Jersey 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
Central Jersey for all taxable years ended on or prior to March 31, 1992 and the
State of New Jersey has not audited the New Jersey income tax returns of Central
Jersey and its subsidiaries during the past nine years. Neither Central Jersey
nor any of its subsidiaries has been notified that it is subject to an audit or
review of its tax returns by any state other than the State of New Jersey.
Central Jersey 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
14
specified in Section 897(c)(1)(A)(ii) of the Code. Neither Central Jersey 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 Central Jersey's knowledge, threatened against
Central Jersey 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 Central Jersey 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 Central Jersey or any of its subsidiaries, and neither Central Jersey nor any
of its subsidiaries has any knowledge that the IRS has proposed any such
adjustment or change in accounting method. Central Jersey 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. To the knowledge of Central Jersey, it 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 Central Jersey 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 Central Jersey Financial Statements or which in the aggregate do not
materially adversely affect or impair the operation of Central Jersey and its
subsidiaries taken as a whole. Central Jersey 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 result in a Central
Jersey Material Adverse Change, 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 Bank and its subsidiaries taken as a whole.
Section 2.13. Condition of Properties; Insurance. All real and tangible
personal properties owned by Central Jersey or any of its subsidiaries or used
by Central Jersey 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
Central Jersey or such subsidiary subject to exceptions which are not, in the
aggregate, material to Central Jersey and its subsidiaries, taken as a whole.
Central Jersey and each of its subsidiaries maintains insurance (with companies
which, to the best of Central Jersey'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 Central Jersey and each of
its subsidiaries from any adverse loss resulting from risks and liabilities
reasonably foreseeable at the date hereof, and are disclosed on Central Jersey
Schedule 2.13. All material claims thereunder have been filed in a due
15
and timely fashion. Since December 31, 1991, neither Central Jersey 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 Central Jersey Schedule 2.14(a), neither
Central Jersey 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 Central Jersey Schedule 2.14(b), neither
Central Jersey 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 Central Jersey 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 Central Jersey and its subsidiaries taken as a whole
and not made in the ordinary course of business.
(c) Neither Central Jersey 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 Central Jersey, is
materially adverse, onerous, or harmful to any aspect of the business of Central
Jersey and its subsidiaries taken as a whole.
Section 2.15. Pension and Benefit Plans.
(a) Neither Central Jersey 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 Central Jersey Schedule 2.15(a)
(individually a "Central Jersey Plan" and collectively the "Central Jersey
Plans"). In its present form each Central Jersey Plan complies in all material
respects with all applicable requirements under ERISA and the Code. Each Central
Jersey Plan and the trust created thereunder is qualified and exempt under
Sections 401(a) and 501(a) of the Code, and Central Jersey or the subsidiary
whose employees are covered by such Central Jersey 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 Central Jersey Plan has been administered and
communicated
16
to the participants and beneficiaries in all material respects in accordance
with its terms and ERISA. No employee or agent of Central Jersey or any
subsidiary whose employees are covered by a Central Jersey 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 Central Jersey 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 Central Jersey Plan or
has been misled as to his or her rights under such Central Jersey Plan. No
Central Jersey Plan is subject to Section 412 of the Code or Title IV of ERISA.
No person has engaged in any prohibited transaction involving any Central Jersey
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 Central Jersey Plans or any fiduciary thereof
which would subject Central Jersey 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
Central Jersey 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
Central Jersey or any of its subsidiaries or ERISA affiliates has any obligation
to contribute. There has been no change in control of any Central Jersey 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 Central Jersey or any of
its subsidiaries other than the Central Jersey Plans with an annual cost in
excess of $25,000 (collectively "Benefit Plans") are listed in Central Jersey
Schedule 2.15(b) (unless already listed in Central Jersey 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 Central
Jersey 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
17
subject Central Jersey 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 Central Jersey 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, Central
Jersey 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 Central Jersey 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 Central Jersey 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 Central Jersey's and its subsidiaries'
past claim experience.
Section 2.17. Labor Matters. Hours worked by and payment made to employees
of Central Jersey 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 Central Jersey 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 Central Jersey or its appropriate subsidiary. Central Jersey 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 Central
Jersey or any of its subsidiaries. Since December 31, 1992, no employee of
Central Jersey 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 Central Jersey 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 Central Jersey pending with, or, to the
knowledge of Central Jersey, threatened by, any labor organization or group of
employees of Central Jersey.
18
Section 2.18. Books and Records. The minute books of Central Jersey and
each of its subsidiaries contain, in all material respects, 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 Central Jersey
and each of its subsidiaries fairly and accurately reflect the transactions to
which Central Jersey 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. No customer or affiliated group of
customers (i) is owed by Central Jersey or any subsidiary of Central Jersey an
aggregate amount equal to more than 5% of the shareholders' equity of Central
Jersey or such subsidiary (including deposits, other debts and contingent
liabilities) or (ii) owes to Central Jersey or any of its subsidiaries an
aggregate amount equal to more than 5% of the shareholders' equity of Central
Jersey or such subsidiary (including loans and other debts, guarantees of debts
of third parties, and other contingent liabilities).
Section 2.20. Trademarks and Copyrights. Neither Central Jersey nor any of
its subsidiaries has received notice or otherwise knows that the manner in which
Central Jersey 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 Central Jersey nor any of its
subsidiaries owns, directly or indirectly, except for the equity interest of
Central Jersey in Bank, 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 disclosed in Schedule 2.22 or in the Forms 10-K and 10-Q of
Central Jersey 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
Central Jersey 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 Central Jersey 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 Central Jersey 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;
19
(2) Neither Central Jersey 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 Central Jersey 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 Central Jersey 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 Central Jersey 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
$1,000,000, 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.
20
Section 2.23 Accounting, Tax and Regulatory Matters. Neither Central
Jersey 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 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 Central Jersey 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, of
which 93,504,424 shares were issued and outstanding as of April 30, 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 April 30, 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 Change"). However, a 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 Bank Holding Company Act of 1956, as amended ("Bank Holding Company Act").
21
(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 and current prospectus 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 capital stock of its bank subsidiaries. No options covering capital
stock of Summit or any of its bank subsidiaries, warrants to purchase or
contracts to issue capital stock of Summit or any of its bank subsidiaries, or
any other contracts, rights (including preemptive rights), commitments or
convertible securities entitling anyone to acquire from Summit or any of its
subsidiaries or obligating them to issue any capital stock, or securities
convertible into or exchangeable for shares of capital stock, of Summit or any
of its bank subsidiaries are outstanding, in existence, or the subject of an
agreement, 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 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
report on Form 10-Q pursuant to the Exchange Act for the fiscal quarter ended
March 31, 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
22
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 disclosed in the Forms 10-K and 10-Q of Summit referred to in
Section 3.02 or as previously provided to Central Jersey. 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.
23
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 timely made all filings required by the
Securities Act and the Exchange Act.
Section 3.06. Corporate Action. Assuming due execution and delivery by
Central Jersey, 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.
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 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
24
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 be likely to 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 be
likely to 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 be likely to result in
a Summit Material Adverse Change.
Section 3.11. Benefit Plans. Summit is in compliance with all laws and
regulations applicable to its employee benefit plans where the failure to so
comply would be likely to result in a Material Adverse Change.
Section 3.12. Accounting, Tax and Regulatory Matters. Neither Summit 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 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.
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ARTICLE IV.
COVENANTS OF CENTRAL JERSEY
Central Jersey hereby covenants and agrees with Summit that:
Section 4.01. Preparation of Registration Statement and Applications for
Required Consents. Central Jersey 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 Central Jersey to solicit shareholders
of Central Jersey for approval of the Merger. In connection therewith, Central
Jersey will furnish all financial or other information, including using best
efforts to obtain customary consents, certificates, opinions of counsel and
other items concerning Central Jersey 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). Central Jersey 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 Bank Holding Company Act of
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), the required approval under HOLA of the Office of Thrift Supervision of
the Department of the Treasury ("OTS"), 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 Central Jersey and its counsel a reasonable opportunity to
comment on such filings and regulatory applications and will give due
consideration to any comments of Central Jersey and its counsel before making
any such filing or application; and Summit will provide Central Jersey 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.
Central Jersey covenants and agrees that all information furnished by Central
Jersey 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 Central Jersey 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. Central Jersey will furnish to Advest such
information as Advest may reasonably request for purposes of the opinion
referred to in Section 8.07.
26
Section 4.02. Notice of Adverse Changes. Central Jersey 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 Central
Jersey contained in this Agreement or the Central Jersey 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 Central Jersey Material
Adverse Change, (c) any inability or perceived inability of Central Jersey 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 Central Jersey or any of its subsidiaries or assets, which, if
determined adversely to Central Jersey or any of its subsidiaries, would have a
material adverse effect upon Central Jersey 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 Central Jersey or a subsidiary subsequent to the date
hereof and prior to the Effective Time, under any agreement, indenture or
instrument to which Central Jersey or a subsidiary is a party or is subject and
which is material to the business, operation or condition (financial or
otherwise) of Central Jersey 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. Central Jersey
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. Central Jersey 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 in all material respects 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, Central Jersey 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, Central Jersey 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 Central Jersey or the public.
Section 4.05. No Material Transactions. Until the Effective Time, Central
Jersey 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
Central Jersey to Central Jersey or other subsidiaries of Central Jersey except
that Central Jersey may declare, set aside and pay a dividend up to and
including the greater of $.12 per
27
share 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) subject to the fiduciary duties of the
Central Jersey Board of Directors, merge with, consolidate with, or sell any
material asset to any other corporation, bank, or person (except for mergers of
subsidiaries of Central Jersey into other subsidiaries of Central Jersey) 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 of 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
Central Jersey and its subsidiaries taken as a whole; (f) 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 or which when
considered with all such increases or agreements to increase constitutes an
average annualized rate exceeding five percent (5%), or pay any employee
bonuses; (g) create, adopt or modify any employment or severance arrangement or
any pension or profit sharing plan, bonus, deferred compensation, death benefit,
retirement or other employee or director benefit 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 or any stock appreciation rights except
pursuant to the exercise of director and employee stock options under the
Central Jersey 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 Central Jersey 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 Central Jersey Benefit Plans; (m)
make any employer contribution to a Central Jersey Plan or a Benefit Plan which
under the terms of the particular plan is voluntary and within the sole
discretion of Central Jersey to make, except such contributions made in
accordance with plan terms in effect on the date hereof; or (n) make any
determination or take any action, by its Compensation Committee or otherwise,
under or with respect to any Central Jersey Option Plan other than routine
administration of outstanding awards thereunder.
28
Section 4.06. Operation of Business in Ordinary Course. Central Jersey, 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 Central Jersey or any of its subsidiaries may terminate any
employee for unsatisfactory performance or other reasonable business purpose,
and provided further, however, that Central Jersey will notify and consult with
Summit prior to terminating any of the five highest paid employees of Central
Jersey; (d) will use their best efforts to continue to maintain fidelity bonds
insuring Central Jersey 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 Central
Jersey 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 Central Jersey
and its subsidiaries taken as a whole; and (f) will not change their methods of
accounting in effect at March 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 March 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 Central Jersey's independent
certified public accountants.
Section 4.07. Further Actions. Central Jersey 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) subject to the fiduciary duties of the
Central Jersey Board of Directors 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, Central Jersey 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 efforst to cause its
counsel and independent certified public
29
accountants, to be available on reasonable request to answer questions of
Summit's representatives covering the business and affairs of Central Jersey 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, Central Jersey will furnish to or make
available to Summit all the documents, contracts, agreements, papers, and
writings referred to in the Central Jersey Schedules or called for by the list
attached hereto as Exhibit B (the "Post-Signing Disclosure List").
Section 4.10. Applicable Laws. Central Jersey and its subsidiaries will
use their best efforts to comply promptly with all requirements which federal or
state law may impose on Central Jersey 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. Central Jersey agrees
to furnish to Summit, not later than 10 business days prior to the date of
mailing of the Proxy-Prospectus, a list containing the name of each person who
is identified in a letter received from counsel to Central Jersey as an
affiliate of Central Jersey for the purposes of Rule 145 under the Securities
Act (a "Central Jersey Affiliate") and shall use its best efforts to cause each
Central Jersey 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 Central Jersey 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
Central Jersey or its representatives pursuant hereto shall be treated as the
sole property of Summit and, if the Merger shall not occur, Central Jersey 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 Central Jersey or any committee thereof for the purpose of
considering this Agreement, the Merger and the related transactions may be kept
and maintained by Central Jersey with other records of Board, and Board
committee, meetings subject to a continuing obligation of confidentiality.
Central Jersey 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 Central Jersey's
possession prior to the disclosure thereof by Summit, (y) was then generally
known to the public, or
30
(z) was disclosed to Central Jersey 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, Central Jersey 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, Central Jersey 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. Central Jersey will coordinate with Summit the
declaration of any dividends and the record and payment dates thereof so that
the holders of Central Jersey Stock will not be paid two dividends for a single
calendar quarter with respect to their shares of Central Jersey 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.
Section 4.15. Acquisition Proposals. Central Jersey agrees that neither
Central Jersey nor any of its subsidiaries nor any of the respective officers
and directors of Central Jersey or its subsidiaries shall, and Central Jersey
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
Central Jersey 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 or endorse any Acquisition
Proposal (as defined below); provided however, that the Board of Directors of
Central Jersey may furnish or cause to be furnished nonpublic information and
may participate in such discussions and negotiations directly or through its
representatives and may authorize or enter into any agreement or agreement in
principle concerning, or recommend or endorse any Acquisition Proposal (as
defined below), 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 negotiations and discussions or authorize or enter into or recommend or
endorse any agreement or agreement in principle relating to an Acquisition
Proposal 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 Central Jersey or any of its subsidiaries or the
acquisition of any assets (otherwise than as permitted by Section 4.05) or
securities of Central Jersey or any of its subsidiaries. Central Jersey 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. Central Jersey 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, Central Jersey 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
31
with respect to a proposed acquisition of Central Jersey 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 Central Jersey.
Section 4.16 Tax Opinion Certificates. Central Jersey shall 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 (as defined at Section 6.03), dated as of the date of effectiveness of
the Registration Statement and as of the Closing Date, and Central Jersey shall
use its best efforts to cause each of its executive officers, directors and
holders of five percent (5%) or more of outstanding Central Jersey 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.
ARTICLE V.
COVENANTS OF SUMMIT
Summit hereby covenants and agrees with Central Jersey that:
Section 5.01. Approvals and Registrations. 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, (c)
with the OTS, an application for approval of Summit as a savings and loan
holding company, and (d) 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 Central Jersey 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,
Federal Reserve Board and OTS, 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
Advest, investment bankers advising Central Jersey, 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
Central Jersey 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,
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(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 Central Jersey of any of the provisions of Articles VI or
VIII.
Section 5.03. Copies of Filings. Summit shall promptly provide to Central
Jersey and its counsel copies of the applications filed with the Federal Reserve
Board and the OTS 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 Central Jersey 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 Central Jersey 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 Central Jersey in connection with any such requirements imposed
upon Central Jersey or on any of its subsidiaries in connection with the Merger.
Section 5.06. Unpaid Central Jersey Dividends. By virtue of the Merger and
without further action on anyone's part, Summit shall assume the obligation of
Central Jersey to pay dividends, if any, on Central Jersey 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 Central
Jersey from time to time may reasonably request, and will cause its managerial
employees, counsel and independent certified public
33
accountants to be available on reasonable request to answer questions of Central
Jersey's representatives covering the business and affairs of Summit or any of
its subsidiaries.
Section 5.08. Confidentiality. All information furnished by Central Jersey
to Summit or its representatives pursuant hereto shall be treated as the sole
property of Central Jersey and, if the Merger shall not occur, Summit and its
representatives shall return to Central Jersey 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
Central Jersey, (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 Central Jersey 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 Central Jersey 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 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.
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
Central Jersey or any subsidiary of Central Jersey 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
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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 Central Jersey or any subsidiary of Central Jersey 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 Central Jersey (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. Central Jersey 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 Central Jersey referred to herein are intended to be
third party beneficiaries and shall be enforceable by the such persons and their
heirs and representatives.
(d) If Summit or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then in each such case, Summit or
such successor or assign shall take such actions as shall be necessary for the
successors or assigns of Summit to assume the obligations set forth in this
Section 5.10.
Section 5.11. Employee Matters.
(a) After the Effective Time, Summit may in its discretion maintain,
terminate, merge or dispose of (i) the Central Jersey Plans, (ii) the Benefit
Plans, and (iii) all other medical, major medical, disability, life insurance,
accidental death and dismemberment insurance, dental, vision care, or other
health or welfare plan maintained by Central Jersey (the "Health or Welfare
Plans"); provided, however, that any action taken by Summit shall comply with
ERISA and 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 Central Jersey Plan, a Benefit Plan or a Health or Welfare Plan available
to all Central Jersey employees generally, then, if such Central Jersey plan is
terminated by Summit or is otherwise rendered inactive by Summit,
35
Summit shall offer to the former employees of Central Jersey 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 Central Jersey 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, Central Jersey 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.
(c) Following the Effective Time, Summit shall assume the obligations of
Central Jersey with respect to the following agreements, policies or plans
existing prior to the date hereof which have been disclosed in the Central
Jersey Schedules: (i) employment agreements and (ii) severance pay plan, but
excluding from the coverage of this clause (ii) persons party to employment
agreements covered by clause (i).
(d) If Summit or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then in each such case, Summit or
such successor or assign shall take such actions as shall be necessary for the
successors or assigns of Summit to assume the obligations set forth in this
Section 5.11.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE RESPECTIVE OBLIGATIONS OF SUMMIT
AND CENTRAL JERSEY
The respective obligations of Summit and Central Jersey 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 Central Jersey in
accordance with Section 10.09:
Section 6.01. Receipt of Required Consents. Summit and Central Jersey
shall have received the Required Consents; the Required Consents shall not, in
the reasonable opinion of Summit or Central Jersey, 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
36
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 Central Jersey, 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, each of Summit and Central
Jersey 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 Central Jersey 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 Central Jersey 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 Central Jersey Stock for which it is exchanged, assuming that such Central
Jersey 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 Central Jersey 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 Central Jersey 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 Central Jersey 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.
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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 March 31, 1995 to
the Closing Date there shall not have been any Central Jersey Material Adverse
Change, and Central Jersey 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 Central Jersey 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 Central Jersey in this Agreement and
the Central Jersey 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. Central Jersey shall have complied in all material
respects with all covenants and agreements contained herein to be performed by
Central Jersey on or before the Closing Date.
Section 7.03. Secretary's Certificate. Central Jersey 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 Central Jersey relating to
this Agreement, the Merger Agreement and the Merger and related transactions, a
copy of which resolutions shall be attached to such certificate, which such
certificate shall be signed by the Secretary of Central Jersey 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. Central Jersey shall have furnished
to Summit a certificate signed by the President of Central Jersey, 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 Central Jersey, and at Sections 7.01, 7.02, 7.07 and 7.10.
Section 7.05. Opinion of Central Jersey's Counsel. Summit shall have
received an opinion of counsel to Central Jersey, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for Summit,
substantially to the effect provided in Exhibit D.
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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 Central Jersey 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 Central Jersey 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 Central Jersey and its subsidiaries on a
consolidated basis, shall have been obtained.
Section 7.08. FIRPTA Affidavit. Central Jersey shall have delivered to
Summit an affidavit of an executive officer of Central Jersey stating, under
penalties of perjury, that Central Jersey 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 Central Jersey, 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 Central Jersey's Certificate of Incorporation and By-Laws.
Section 7.10. Absence of Regulatory Agreements. Neither Central Jersey nor
any Central Jersey 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 Central Jersey and its subsidiaries
taken as a whole, and neither Central Jersey 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.
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.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATION OF CENTRAL JERSEY
The obligation of Central Jersey 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 Central Jersey 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, 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
Central Jersey 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 Summit relating to
this Agreement, the Merger Agreement and the Merger and related transactions, a
copy of which resolutions shall be attached to such certificate, 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
Central Jersey 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.
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Section 8.05. Opinions of Summit Counsel. Central Jersey shall have
received an opinion of the General Counsel for Summit, dated the Closing Date
and reasonably satisfactory in form and substance to counsel for Central Jersey,
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 Central Jersey, 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 Advest, 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 Central Jersey 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. Central Jersey Shareholder Approval. The shareholders of
Central Jersey, 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 Central Jersey's Certificate of
Incorporation and By-Laws.
The receipt of the documents required by this Article VIII by Central Jersey
shall in no way constitute a waiver by Central Jersey 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 Central Jersey, at the office of Summit, 301 Carnegie
Center, Princeton, New Jersey, commencing at 10:00 a.m., which date shall not be
later than
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30 days after the last to occur of the following:
(a) the date of the approval of the Merger by the shareholders of Central
Jersey 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 Central Jersey, to the
consummation of the transactions contemplated herein or such prior date as
Summit and Central Jersey 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". In the Closing
Notice, Summit shall specify the "Determination Date" for purposes of
determining the Average Price, which date shall not be more than ten business
days prior to 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 Central Jersey 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 Central Jersey 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
42
party (provided that the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement contained
herein);
(iii) Central Jersey's investment banker is unable to deliver to Central
Jersey by September 30, 1996 the opinion required by Section 8.07; or
(iv) the Closing is not consummated on or before March 31, 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 8.07 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 or
Sections 1.03(a)(2) or 1.03(a)(3) 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 Statement and the
Registration Statement, and the filing fees of regulatory authorities or
self-regulatory organizations, shall be borne equally by Summit and
Central Jersey; provided, however, that: (A) if Central Jersey terminates
this Agreement pursuant to Section 9.02(a)(ii) or Section 9.02(b), Summit
shall reimburse Central Jersey 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), Central Jersey 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
Central Jersey does not execute and deliver the Option Agreement by the day
immediately following the date hereof.
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(e) Notwithstanding any termination of this Agreement, (i) Central Jersey
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 Central Jersey and (ii) Summit shall indemnify and hold Central Jersey
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, Central Jersey 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 Central
Jersey Schedules, and the Exhibits 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
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change the forms of consideration to be received by the shareholders of Central
Jersey contemplated by this Agreement, unless such modification is submitted to
a vote of the shareholders of Central Jersey.
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
Central Jersey: Central Jersey Financial Corporation
591 Cranbury Road
East Brunswick, New Jersey 08816
Attention: Mrs. L. Doris Fritsch, President
Telephone No.: 908-254-6600
Facsimile No.: 908-254-5364
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With a copy to: John J. Spidi, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W., Suite 700 East
Washington, DC 20005
Telephone No.: 202-434-4660
Facsimile No.: 202-434-4661
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 Bank, 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 Central Jersey.
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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________________________________________
John G. Collins
Vice Chairman of the Board
CENTRAL JERSEY FINANCIAL
CORPORATION
By /s/L. Doris Fritsch
----------------------
L. Doris Fritsch
President
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